Corvel Corp 10-Q for FY2022 Q3

Corvel Corp (CRVL)

10-Q 2022-02-03 For: 2021-12-31

Added on April 04, 2026

About this 10-Q

Corvel Corp filed this 10-Q on February 3, 2022, covering the quarter ended December 31, 2021 (FY2022 Q3).

Headline figures

Quarter ended December 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $164.51M; up 16.3% from $141.51M a year earlier
Net income: $13.86M; up 21.8% from net income of $11.38M a year earlier
Diluted EPS: $0.76; up 20.6% from $0.63 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 – December 31, 2021 (unaudited) and March 31, 2021	3
	Consolidated Income Statements (unaudited) – Three months ended December 31, 2021 and 2020	4
	Consolidated Income Statements (unaudited) – Nine months ended December 31, 2021 and 2020	5
	Consolidated Statements of Stockholders’ Equity (unaudited) – Three and nine months ended December 31, 2021 and 2020	6
	Consolidated Statements of Cash Flows (unaudited) – Nine months ended December 31, 2021 and 2020	7
	Notes to Consolidated Financial Statements (unaudited) – December 31, 2021	8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25

Item 4.	Controls and Procedures	25

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	26

Item 1A.	Risk Factors	26

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34

Item 3.	Defaults Upon Senior Securities	34

Item 4.	Mine Safety Disclosures	34

Item 5.	Other Information	34

Item 6.	Exhibits	36

	Signatures	37


	December 31, 2021			March 31, 2021
	(Unaudited)
Assets
Current Assets
Cash and cash equivalents	$	115,538,000		$	139,716,000
Customer deposits		70,163,000			56,497,000
Accounts receivable, net		69,545,000			64,722,000
Prepaid taxes and expenses		13,429,000			8,006,000
Total current assets		268,675,000			268,941,000
Property and equipment, net		70,884,000			70,619,000
Goodwill		36,814,000			36,814,000
Other intangibles, net		1,778,000			2,104,000
Right-of-use asset, net		43,387,000			45,324,000
Deferred tax asset, net		1,584,000			613,000
Other assets		586,000			345,000
TOTAL ASSETS	$	423,708,000		$	424,760,000
Liabilities and Stockholders' Equity
Current Liabilities
Accounts and taxes payable	$	12,346,000		$	13,574,000
Accrued liabilities		158,191,000			148,886,000
Total current liabilities		170,537,000			162,460,000
Long-term lease liabilities		38,244,000			41,898,000
Total liabilities		208,781,000			204,358,000
Commitments and contingencies
Stockholders' Equity
Common stock, $.0001 par value: 120,000,000 shares authorized at December 31, 2021 and March 31, 2021; 54,727,393 shares issued (17,653,759 shares outstanding, net of Treasury shares) and 54,529,642 shares issued (17,876,090 shares outstanding, net of Treasury shares) at December 31, 2021 and March 31, 2021, respectively		3,000			3,000
Paid-in capital		198,984,000			185,941,000
Treasury stock (37,073,634 shares at December 31, 2021 and 36,653,552 shares at March 31, 2021)		(629,726,000	)		(564,435,000	)
Retained earnings		645,666,000			598,893,000
Total stockholders' equity		214,927,000			220,402,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	423,708,000		$	424,760,000


	Three Months Ended December 31,
	2021		2020
REVENUES	$	164,508,000	$	141,506,000
Cost of revenues		129,320,000		110,613,000
Gross profit		35,188,000		30,893,000
General and administrative expenses		17,506,000		16,937,000
Income before income tax provision		17,682,000		13,956,000
Income tax provision		3,824,000		2,576,000
NET INCOME	$	13,858,000	$	11,380,000
Net income per common and common equivalent share
Basic	$	0.78	$	0.64
Diluted	$	0.76	$	0.63
Weighted average common and common equivalent shares
Basic		17,785,000		17,899,000
Diluted		18,211,000		18,180,000


☒	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


	Nine Months Ended December 31,
	2021		2020
REVENUES	$	474,871,000	$	407,134,000
Cost of revenues		365,808,000		319,228,000
Gross profit		109,063,000		87,906,000
General and administrative expenses		50,810,000		48,084,000
Income before income tax provision		58,253,000		39,822,000
Income tax provision		11,480,000		8,275,000
NET INCOME	$	46,773,000	$	31,547,000
Net income per common and common equivalent share
Basic	$	2.62	$	1.76
Diluted	$	2.57	$	1.74
Weighted average common and common equivalent shares
Basic		17,841,000		17,939,000
Diluted		18,221,000		18,156,000


	Three Months Ended December 31, 2021
	Common Shares		Stock Amount		Paid-in- Capital		Treasury Shares			Treasury Stock			Retained Earnings		Total Stockholders' Equity
Balance – September 30, 2021		54,701,476	$	3,000	$	196,174,000		(36,937,900	)	$	(604,190,000	)	$	631,808,000	$	223,795,000
Stock issued under stock option plan, net of shares repurchased		25,917		—		1,627,000		—			—			—		1,627,000
Stock-based compensation expense		—		—		1,183,000		—			—			—		1,183,000
Purchase of treasury stock		—		—		—		(135,734	)		(25,536,000	)		—		(25,536,000	)
Net income		—		—		—		—			—			13,858,000		13,858,000
Balance – December 31, 2021		54,727,393	$	3,000	$	198,984,000		(37,073,634	)	$	(629,726,000	)	$	645,666,000	$	214,927,000


	Three Months Ended December 31, 2020
	Common Shares		Stock Amount		Paid-in- Capital		Treasury Shares			Treasury Stock			Retained Earnings		Total Stockholders' Equity
Balance – September 30, 2020		54,378,892	$	3,000	$	175,897,000		(36,470,554	)	$	(546,204,000	)	$	572,704,000	$	202,400,000
Stock issued under stock option plan, net of shares repurchased		60,862		—		2,527,000		—			—			—		2,527,000
Stock-based compensation expense		—		—		1,251,000		—			—			—		1,251,000
Purchase of treasury stock		—		—		—		(82,157	)		(7,685,000	)		—		(7,685,000	)
Net income		—		—		—		—			—			11,380,000		11,380,000
Balance – December 31, 2020		54,439,754	$	3,000	$	179,675,000		(36,552,711	)	$	(553,889,000	)	$	584,084,000	$	209,873,000


	Nine Months Ended December 31, 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		196,217		—		8,888,000		—			—			—		8,888,000
Stock-based compensation expense		—		—		3,884,000		—			—			—		3,884,000
Purchase of treasury stock		—		—		—		(420,082	)		(65,291,000	)		—		(65,291,000	)
Net income		—		—		—		—			—			46,773,000		46,773,000
Balance – December 31, 2021		54,727,393	$	3,000	$	198,984,000		(37,073,634	)	$	(629,726,000	)	$	645,666,000	$	214,927,000

	Nine Months Ended December 31, 2020
	Common Shares		Stock Amount		Paid-in- Capital		Treasury Shares			Treasury Stock			Retained Earnings		Total Stockholders' Equity
Balance – March 31, 2020		54,254,557	$	3,000	$	168,935,000		(36,285,591	)	$	(531,764,000	)	$	552,537,000	$	189,711,000
Stock issued under employee stock purchase plan		3,173		—		257,000		—			—			—		257,000
Stock issued under stock option plan, net of shares repurchased		182,024		—		6,999,000		—			—			—		6,999,000
Stock-based compensation expense		—		—		3,484,000		—			—			—		3,484,000
Purchase of treasury stock		—		—		—		(267,120	)		(22,125,000	)		—		(22,125,000	)
Net income		—		—		—		—			—			31,547,000		31,547,000
Balance – December 31, 2020		54,439,754	$	3,000	$	179,675,000		(36,552,711	)	$	(553,889,000	)	$	584,084,000	$	209,873,000


	Three Months Ended		Three Months Ended
	December 31, 2021		December 31, 2020
Patient management services	$	107,711,000	$	96,554,000
Network solutions services		56,797,000		44,952,000
Total services	$	164,508,000	$	141,506,000


	Nine Months Ended		Nine Months Ended
	December 31, 2021		December 31, 2020
Patient management services	$	312,829,000	$	272,025,000
Network solutions services		162,042,000		135,109,000
Total services	$	474,871,000	$	407,134,000


	December 31, 2021			March 31, 2021
Billed receivables	$	48,963,000		$	50,783,000
Allowance for doubtful accounts		(2,668,000	)		(3,274,000	)
Unbilled receivables		23,250,000			17,213,000
Accounts receivable, net	$	69,545,000		$	64,722,000


	Nine Months Ended
	December 31, 2021
Beginning balance at April 1, 2021	$	22,514,000
Additions		29,160,000
Revenue recognized from beginning of period		(9,217,000	)
Revenue recognized from additions		(19,637,000	)
Ending balance at December 31, 2021	$	22,820,000


	Three Months Ended December 31, 2021					Three Months Ended December 31, 2020
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Options outstanding, beginning		778,982		$	72.17		975,917		$	57.97
Options granted		50,200			197.16		122,750			87.69
Options exercised		(25,917	)		62.78		(62,997	)		44.83
Options cancelled/forfeited		(6,407	)		81.62		(2,234	)		59.31
Options outstanding, ending		796,858		$	80.27		1,033,436		$	62.30


	Three Months Ended
	December 31, 2021	December 31, 2020
Risk-free interest rate	1.27%	0.33%
Expected volatility	36%	34%
Expected dividend yield	0.00%	0.00%
Expected weighted average life of option in years	4.4 years	4.5 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
$22.07 to $57.35		232,852		2.58	$	44.60		192,721	$	42.75
$57.36 to $77.93		227,247		2.27		68.91		85,914		65.74
$77.94 to $88.22		205,159		4.24		86.24		36,754		85.51
$88.23 to $197.16		131,600		5.06		153.70		—		—
Total		796,858		3.33	$	80.27		315,389	$	53.99


	Number of Options			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value as of December 31, 2021
Options outstanding at October 1, 2021		778,982		$	72.17
Granted		50,200			197.16
Exercised		(25,917	)		62.78
Cancelled – forfeited		(6,328	)		81.70
Cancelled – expired		(79	)		75.32
Ending outstanding		796,858		$	80.27		3.33	$	101,782,689
Ending vested and expected to vest		670,531		$	77.62		3.35	$	99,764,662
Ending exercisable at December 31, 2021		315,389		$	53.99		2.59	$	48,571,633



2022	$	3,793,000
2023		14,148,000
2024		10,773,000
2025		8,771,000
2026		6,593,000
Thereafter		12,076,000
Total lease payments		56,154,000
Less interest		(4,103,000	)
Total lease liabilities	$	52,051,000


	December 31, 2021		March 31, 2021
Accounts payable	$	11,821,000	$	12,353,000
Income taxes payable and uncertain tax positions		525,000		1,221,000
Total accounts and taxes payable	$	12,346,000	$	13,574,000


	December 31, 2021		March 31, 2021
Payroll, payroll taxes and employee benefits	$	38,570,000	$	43,998,000
Customer deposits		70,163,000		56,498,000
Accrued professional service fees		7,590,000		7,016,000
Self-insurance accruals		2,968,000		3,704,000
Deferred revenue		22,820,000		22,514,000
Operating lease liabilities		13,807,000		12,765,000
Other		2,273,000		2,391,000
Total accrued liabilities	$	158,191,000	$	148,886,000


	Three Months Ended			Three Months Ended						Percentage
	December 31, 2021			December 31, 2020			Change			Change
Revenue	$	164,508,000		$	141,506,000		$	23,002,000			16.3	%
Cost of revenues		129,320,000			110,613,000			18,707,000			16.9	%
Gross profit		35,188,000			30,893,000			4,295,000			13.9	%
Gross profit as percentage of revenue		21.4	%		21.8	%
General and administrative		17,506,000			16,937,000			569,000			3.4	%
General and administrative as percentage of revenue		10.6	%		12.0	%
Income before income tax provision		17,682,000			13,956,000			3,726,000			26.7	%
Income before income tax provision as percentage of revenue		10.7	%		9.9	%
Income tax provision		3,824,000			2,576,000			1,248,000			48.4	%
Net income	$	13,858,000		$	11,380,000		$	2,478,000			21.8	%
Weighted Average Shares
Basic		17,785,000			17,899,000			(114,000	)		(0.6	%)
Diluted		18,211,000			18,180,000			31,000			0.2	%
Earnings Per Share
Basic	$	0.78		$	0.64		$	0.14			21.9	%
Diluted	$	0.76		$	0.63		$	0.13			20.6	%


					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
October 1 to October 31, 2021		47,473	$	175.70		47,473		1,014,627
November 1 to November 30, 2021		43,889	$	191.30		43,889		970,738
December 1 to December 31, 2021		44,372	$	198.22		44,372		926,366
Total		135,734	$	188.10		135,734		926,366


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).

10.1†		Stock Option Agreement granted December 8, 2021 by and between CorVel Corporation and Michael G. Combs, providing for performance vesting.

10.2†		Stock Option Agreement granted December 8, 2021 by and between CorVel Corporation and Brandon T. O’Brien, providing for performance vesting.

10.3†		Stock Option Agreement granted December 8, 2021 by and between CorVel Corporation and Diane J. Blaha, providing for performance vesting.

10.4†		Stock Option Agreement granted December 8, 2021 by and between CorVel Corporation and Maxim Shishin, providing for performance vesting.

10.5†		Stock Option Agreement granted December 8, 2021 by and between CorVel Corporation and Jennifer L. Yoss, providing for performance vesting.

31.1		Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Chief Financial Officer 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).

†		Certain confidential information contained in this exhibit has been omitted by means of redacting a portion of the text and replacing it with empty brackets indicated by [ ] pursuant to Regulation S-K Item 601(b)(10)(iv) of the Securities Act of 1933, as amended. Certain confidential information has been excluded from the exhibit because it (i) is not material and (ii) would likely cause competitive harm to CorVel if publicly disclosed. An unredacted copy of the exhibit will be provided on a supplemental basis to the SEC upon request.


	CORVEL CORPORATION

	By:		/s/ Michael G. Combs
	Michael G. Combs, Chief Executive Officer and President

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