Corvel Corp 10-Q for FY2023 Q2

Corvel Corp (CRVL)

10-Q 2022-11-03 For: 2022-09-30

Added on April 04, 2026

About this 10-Q

Corvel Corp filed this 10-Q on November 3, 2022, covering the quarter ended September 30, 2022 (FY2023 Q2).

Headline figures

Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $177.43M; up 12.5% from $157.74M a year earlier
Net income: $14.66M; down 8.8% from net income of $16.07M a year earlier
Diluted EPS: $0.83; down 5.7% from $0.88 a year earlier

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5128 Apache Plume Road, Suite 400
Fort Worth, TX		76109
(Address of principal executive offices)		(Zip Code)


Large accelerated filer	☑	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐


		Page

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	Consolidated Balance Sheets – September 30, 2022 (unaudited) and March 31, 2022	3
	Consolidated Income Statements (unaudited) – Three months ended September 30, 2022 and 2021	4
	Consolidated Income Statements (unaudited) – Six months ended September 30, 2022 and 2021	5
	Consolidated Statements of Stockholders’ Equity (unaudited) – Three and six months ended September 30, 2022 and 2021	6
	Consolidated Statements of Cash Flows (unaudited) – Six months ended September 30, 2022 and 2021	7
	Notes to Consolidated Financial Statements (unaudited) – September 30, 2022	8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24

Item 4.	Controls and Procedures	24

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	25

Item 1A.	Risk Factors	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3.	Defaults Upon Senior Securities	33

Item 4.	Mine Safety Disclosures	33

Item 5.	Other Information	33

Item 6.	Exhibits	34

	Signatures	35


	September 30, 2022			March 31, 2022
	(Unaudited)
Assets
Current Assets
Cash and cash equivalents	$	75,625,000		$	97,504,000
Customer deposits		75,770,000			69,781,000
Accounts receivable, net		84,787,000			82,586,000
Prepaid taxes and expenses		12,201,000			15,123,000
Total current assets		248,383,000			264,994,000
Property and equipment, net		82,506,000			76,268,000
Goodwill		36,814,000			36,814,000
Other intangibles, net		1,456,000			1,669,000
Right-of-use asset, net		29,930,000			35,020,000
Other assets		797,000			481,000
TOTAL ASSETS	$	399,886,000		$	415,246,000
Liabilities and Stockholders' Equity
Current Liabilities
Accounts and taxes payable	$	17,028,000		$	14,431,000
Accrued liabilities		158,482,000			156,939,000
Total current liabilities		175,510,000			171,370,000
Deferred income taxes, net		1,107,000			1,689,000
Long-term lease liabilities		25,436,000			29,792,000
Total liabilities		202,053,000			202,851,000
Commitments and contingencies
Stockholders' Equity
Common stock, $.0001 par value: 120,000,000 shares authorized at September 30, 2022 and March 31, 2022; 54,873,202 shares issued (17,314,186 shares outstanding, net of Treasury shares) and 54,788,712 shares issued (17,569,087 shares outstanding, net of Treasury shares) at September 30, 2022 and March 31, 2022, respectively		3,000			3,000
Paid-in capital		207,986,000			201,609,000
Treasury stock (37,559,016 shares at September 30, 2022 and 37,219,625 shares at March 31, 2022)		(706,806,000	)		(654,520,000	)
Retained earnings		696,650,000			665,303,000
Total stockholders' equity		197,833,000			212,395,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	399,886,000		$	415,246,000


	Three Months Ended September 30,
	2022		2021
REVENUES	$	177,426,000	$	157,743,000
Cost of revenues		141,332,000		121,082,000
Gross profit		36,094,000		36,661,000
General and administrative expenses		17,549,000		16,658,000
Income before income tax provision		18,545,000		20,003,000
Income tax provision		3,889,000		3,931,000
NET INCOME	$	14,656,000	$	16,072,000
Net income per common and common equivalent share
Basic	$	0.84	$	0.90
Diluted	$	0.83	$	0.88
Weighted average common and common equivalent shares
Basic		17,386,000		17,841,000
Diluted		17,650,000		18,232,000


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Six Months Ended September 30,
	2022		2021
REVENUES	$	353,733,000	$	310,363,000
Cost of revenues		277,770,000		236,489,000
Gross profit		75,963,000		73,874,000
General and administrative expenses		36,219,000		33,303,000
Income before income tax provision		39,744,000		40,571,000
Income tax provision		8,397,000		7,656,000
NET INCOME	$	31,347,000	$	32,915,000
Net income per common and common equivalent share
Basic	$	1.80	$	1.84
Diluted	$	1.77	$	1.81
Weighted average common and common equivalent shares
Basic		17,446,000		17,869,000
Diluted		17,726,000		18,226,000


	Three Months Ended September 30, 2022
	Common Shares		Stock Amount		Paid-in- Capital		Treasury Shares			Treasury Stock			Retained Earnings		Total Stockholders' Equity
Balance – June 30, 2022		54,832,358	$	3,000	$	204,839,000		(37,394,507	)	$	(681,208,000	)	$	681,994,000	$	205,628,000
Stock issued under employee stock purchase plan		2,636		—		346,000		—			—			—		346,000
Stock issued under stock option plan, net of shares repurchased		38,208		—		1,851,000		—			—			—		1,851,000
Stock-based compensation expense		—		—		950,000		—			—			—		950,000
Purchase of treasury stock		—		—		—		(164,509	)		(25,598,000	)		—		(25,598,000	)
Net income		—		—		—		—			—			14,656,000		14,656,000
Balance – September 30, 2022		54,873,202	$	3,000	$	207,986,000		(37,559,016	)	$	(706,806,000	)	$	696,650,000	$	197,833,000

	Three Months Ended September 30, 2021
	Common Shares		Stock Amount		Paid-in- Capital		Treasury Shares			Treasury Stock			Retained Earnings		Total Stockholders' Equity
Balance – June 30, 2021		54,642,752	$	3,000	$	192,431,000		(36,772,445	)	$	(578,631,000	)	$	615,736,000	$	229,539,000
Stock issued under employee stock purchase plan		1,534		—		271,000		—			—			—		271,000
Stock issued under stock option plan, net of shares repurchased		57,190		—		2,117,000		—			—			—		2,117,000
Stock-based compensation expense		—		—		1,355,000		—			—			—		1,355,000
Purchase of treasury stock		—		—		—		(165,455	)		(25,559,000	)		—		(25,559,000	)
Net income		—		—		—		—			—			16,072,000		16,072,000
Balance – September 30, 2021		54,701,476	$	3,000	$	196,174,000		(36,937,900	)	$	(604,190,000	)	$	631,808,000	$	223,795,000


	Six Months Ended September 30, 2022
	Common Shares		Stock Amount		Paid-in- Capital		Treasury Shares			Treasury Stock			Retained Earnings		Total Stockholders' Equity
Balance – March 31, 2022		54,788,712	$	3,000	$	201,609,000		(37,219,625	)	$	(654,520,000	)	$	665,303,000	$	212,395,000
Stock issued under employee stock purchase plan		2,636		—		346,000		—			—			—		346,000
Stock issued under stock option plan, net of shares repurchased		81,854		—		3,702,000		—			—			—		3,702,000
Stock-based compensation expense		—		—		2,329,000		—			—			—		2,329,000
Purchase of treasury stock		—		—		—		(339,391	)		(52,286,000	)		—		(52,286,000	)
Net income		—		—		—		—			—			31,347,000		31,347,000
Balance – September 30, 2022		54,873,202	$	3,000	$	207,986,000		(37,559,016	)	$	(706,806,000	)	$	696,650,000	$	197,833,000

	Six Months Ended September 30, 2021
	Common Shares		Stock Amount		Paid-in- Capital		Treasury Shares			Treasury Stock			Retained Earnings		Total Stockholders' Equity
Balance – March 31, 2021		54,529,642	$	3,000	$	185,941,000		(36,653,552	)	$	(564,435,000	)	$	598,893,000	$	220,402,000
Stock issued under employee stock purchase plan		1,534		—		271,000		—			—			—		271,000
Stock issued under stock option plan, net of shares repurchased		170,300		—		7,261,000		—			—			—		7,261,000
Stock-based compensation expense		—		—		2,701,000		—			—			—		2,701,000
Purchase of treasury stock		—		—		—		(284,348	)		(39,755,000	)		—		(39,755,000	)
Net income		—		—		—		—			—			32,915,000		32,915,000
Balance – September 30, 2021		54,701,476	$	3,000	$	196,174,000		(36,937,900	)	$	(604,190,000	)	$	631,808,000	$	223,795,000


	Three Months Ended		Three Months Ended
	September 30, 2022		September 30, 2021
Patient management services	$	119,470,000	$	104,669,000
Network solutions services		57,956,000		53,074,000
Total services	$	177,426,000	$	157,743,000


	Six Months Ended		Six Months Ended
	September 30, 2022		September 30, 2021
Patient management services	$	234,279,000	$	205,118,000
Network solutions services		119,454,000		105,245,000
Total services	$	353,733,000	$	310,363,000


	September 30, 2022			March 31, 2022
Billed receivables	$	60,061,000		$	57,841,000
Allowance for doubtful accounts		(3,477,000	)		(2,562,000	)
Unbilled receivables		28,203,000			27,307,000
Accounts receivable, net	$	84,787,000		$	82,586,000


	Six Months Ended
	September 30, 2022
Beginning balance at April 1, 2022	$	25,796,000
Additions		22,021,000
Revenue recognized from beginning of period		(14,298,000	)
Revenue recognized from additions		(6,468,000	)
Ending balance at September 30, 2022	$	27,051,000


	Three Months Ended September 30, 2022					Three Months Ended September 30, 2021
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Options outstanding, beginning		722,343		$	90.94		846,625		$	68.50
Options granted		35,600			163.61		27,250			154.97
Options exercised		(39,947	)		52.97		(67,915	)		56.83
Options cancelled/forfeited		(11,268	)		130.12		(26,978	)		79.26
Options outstanding, ending		706,728		$	96.14		778,982		$	72.17


	Three Months Ended
	September 30, 2022	September 30, 2021
Risk-free interest rate	2.73%	0.72%
Expected volatility	36%	36%
Expected dividend yield	0.00%	0.00%
Expected weighted average life of option in years	4.3 years	4.3 years


Range of Exercise Price	Number of Outstanding Options		Weighted Average Remaining Contractual Life		Outstanding Options – Weighted Average Exercise Price		Exercisable Options – Number of Exercisable Options		Exercisable Options – Weighted Average Exercise Price
$33.16 to $59.32		182,608		2.38	$	49.94		166,104	$	49.64
$59.33 to $87.49		184,114		2.88		78.00		109,556		77.59
$87.50 to $148.89		212,914		3.41		105.95		52,901		94.41
$148.90 to $197.16		127,092		5.35		172.35		6,923		155.00
Total		706,728		3.35	$	96.14		335,484	$	68.00


	Number of Options			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value as of September 30, 2022
Options outstanding at July 1, 2022		722,343		$	90.94
Granted		35,600			163.61
Exercised		(39,947	)		52.97
Cancelled – forfeited		(11,216	)		130.31
Cancelled – expired		(52	)		88.22
Ending outstanding		706,728		$	96.14		3.35	$	34,655,033
Ending vested and expected to vest		628,545		$	93.50		3.39	$	31,619,989
Ending exercisable at September 30, 2022		335,484		$	68.00		2.69	$	23,742,300



2023	$	6,833,000
2024		9,915,000
2025		7,693,000
2026		5,479,000
2027		3,846,000
Thereafter		5,566,000
Total lease payments		39,332,000
Less interest		(2,401,000	)
Total lease liabilities	$	36,931,000


	September 30, 2022		March 31, 2022
Accounts payable	$	16,744,000	$	14,080,000
Income taxes payable and uncertain tax positions		284,000		351,000
Total accounts and taxes payable	$	17,028,000	$	14,431,000


	September 30, 2022		March 31, 2022
Payroll, payroll taxes and employee benefits	$	31,879,000	$	36,066,000
Customer deposits		75,770,000		69,781,000
Accrued professional service fees		7,494,000		8,073,000
Self-insurance accruals		2,872,000		2,798,000
Deferred revenue		27,051,000		25,796,000
Operating lease liabilities		11,495,000		13,348,000
Other		1,921,000		1,077,000
Total accrued liabilities	$	158,482,000	$	156,939,000


	Three Months Ended			Three Months Ended						Percentage
	September 30, 2022			September 30, 2021			Change			Change
Revenue	$	177,426,000		$	157,743,000		$	19,683,000			12.5	%
Cost of revenues		141,332,000			121,082,000			20,250,000			16.7	%
Gross profit		36,094,000			36,661,000			(567,000	)		(1.5	%)
Gross profit as percentage of revenue		20.3	%		23.2	%
General and administrative		17,549,000			16,658,000			891,000			5.3	%
General and administrative as percentage of revenue		9.9	%		10.6	%
Income before income tax provision		18,545,000			20,003,000			(1,458,000	)		(7.3	%)
Income before income tax provision as percentage of revenue		10.5	%		12.7	%
Income tax provision		3,889,000			3,931,000			(42,000	)		(1.1	%)
Net income	$	14,656,000		$	16,072,000		$	(1,416,000	)		(8.8	%)
Weighted Average Shares
Basic		17,386,000			17,841,000			(455,000	)		(2.6	%)
Diluted		17,650,000			18,232,000			(582,000	)		(3.2	%)
Earnings Per Share
Basic	$	0.84		$	0.90		$	(0.06	)		(6.7	%)
Diluted	$	0.83		$	0.88		$	(0.05	)		(5.7	%)


					Total Number of
					Shares Purchased		Maximum Number
					as Part of Publicly		of Shares that may
	Total Number of		Average Price Paid		Announced		yet be Purchased
Period	Shares Purchased		Per Share		Program		Under the Program
July 1 to July 31, 2022		52,214	$	153.14		52,214		553,279
August 1 to August 31, 2022		55,948	$	164.35		55,948		497,331
September 1 to September 30, 2022		56,347	$	149.13		56,347		440,984
Total		164,509	$	155.58		164,509		440,984


3.1		Fourth Amended and Restated Certificate of Incorporation of the Company. Incorporated herein by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020 filed with the SEC on August 6, 2020 (File No. 000-19291).

3.2		Second Amended and Restated Bylaws of the Company. Incorporated herein by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly report period ended June 30, 2020 filed with the SEC on August 6, 2020 (File No. 000-19291).

31.1		Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) Promulgated under the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) Promulgated under the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

32.2*		Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

101.INS		Inline XBRL Instance Document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*		The certifications attached as Exhibit 32.1 accompany this Quarterly Report pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the registrant for purposes of Section 18 of the Exchange Act and are not to be incorporated by reference into any of the registrant’s filings under the Securities Act or the Exchange Act, irrespective of any general incorporation language contained in any such filing.


	CORVEL CORPORATION

Dated: November 3, 2022	By:	/s/ Michael G. Combs
	Michael G. Combs, Chief Executive Officer and President

Dated: November 3, 2022	By:	/s/ Brandon T. O’Brien
	Brandon T. O’Brien,
	Chief Financial Officer (Principal Financial Officer)