Q4 2020 Earnings Call

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Thank you for standing by welcome to the Corvel Corporation quarterly earnings release webcast. During the course of this webcast Corvel Corporation may make projections or other forward looking statements regarding future events with future financial performances of the company.

Corvel wishes to caution you that these statements are only predictions and the actual events or results may differ materially.

Corvel refers you to the documents the company files from time to time with the Securities and Exchange Commission, specifically the company's left form 10-K, and 10-Q filed for the most recent fiscal year in quarter.

These documents contain and identify important factors that could cause the actual results to differ materially from those contained in our projections or forward looking statements.

I'd now like to turn it over to Michel Combes, <unk>, President and Chief Executive Officer.

Thank you for joining us to review results fiscal year 2020 in the March quarter.

On the call with me today is Bruno Ryan Corvels, Chief Financial Officer.

Today, I will be discussing held roles responding to become good 19 pandemic market trends services on which we are focused and the progress we have made on key initiatives.

Random will then provide an overview of our financial results for the fiscal year and the March quarter.

Revenues for fiscal 2020 were 592 million.

Earnings per share were $2.55, an increase of 4% year over year.

The March quarter revenues were 147 million.

Earnings per share for the quarter were 64 cents, an increase of 2% from 63 cents per share in the same quarter over the prior year.

This call comes at a challenging time as the cobot 19 pandemic begins to recede.

The phrase uncertain times has been used appropriately so to describe these last several months.

Corvel is managing through the economic disruption and uncertainty by adhering to the same principles that have sustained us through many periods of uncertainty during or three plus years of operation.

We entered the pandemic from a position of strength with a solid balance sheet.

Cropped adjustments made to our operating plans have allowed us to maintain that position.

Corvels cash level remains in the mid 80 million range down somewhat from the peak due to tax payments and bonus payments.

With consideration for the implications of the economic slowdown, we completed business continuity planning and all forms of discretionary activity within the company had been slowed considerably.

Much of Corvel businesses tied to the volume of health care spending and during the pandemic elective surgeries and general physician care has been curtailed.

We have seen similar reduced activity in bill we view our other services, although increases have begun in the recent weeks.

Fortunately approximately 90% of our expenses are variable.

The majority of which are linked to the delivery of professional services.

Thus, we are able to adjust spending to match expected business volumes.

In other industries, most companies have a higher level of fixed costs.

We feel very somber about the adverse impact our unavoidable adjustments to staff have had upon the people in corvel.

Many of whom we've worked with for years.

The resilient and dedicated team that we haven't plays quickly adapt to working from home and continues to deliver exceptional service and outcomes to our partners.

It is appropriate to expect the economy to impact Corvel, yet I am confident we can continue to manage both expenses and cash flow.

Currently the company is operating ahead of internal business forecasts were conducted at the outset of the pandemic.

For the last 20 years, we have been expanding our capabilities in ecommerce in virtual services.

Our current telephonic claims intake capabilities are the results of long term efforts to create care management programs, which address the onset of illness or injury.

Claims intake kennen turn be tree eyes to telehealth services.

The telehealth applications and web based platforms, we have created.

Our effectively serving the increased demand during the pandemic.

The pace of change in health care management will continue to require investments in innovative solutions Corvel is well positioned in this dynamic environment. Our diversification into commercial health has also been helpful. During this time when the demand for workers compensation claims management services we.

Flex the reduced employment across the country.

The proprietary assets, we have built in the medical review segment of the workers comp market leveraged our strengths and has made the expansion into the closely related health market relatively straightforward.

Continuing to develop the strength of Cirrus is particularly important in this time as its markets are many fold larger than the workers comp markets.

Escalated 19 effects to health market business volumes and focus on payment integrity has generally remained robust.

Serious has made significant progress in the implementation of new clients as well as incremental growth and expansion of business lines with established partners.

As we continued to grow and develop payment integrity solutions will be a strategic focus in 2020 and beyond.

Silvio our provider of automated accounts payable services made advancements in key aspects of the payables process that shorten turnaround time and improved accuracy, which in turn decreased labor costs.

We've also increased the use of artificial intelligence and natural language processing.

Professional review nurses are already experiencing the benefits of using advanced optical character recognition and natural language processing in their daily work, increasing savings consistency and reducing their review time.

There is applicability for this technology to enhance operational performance in several segments of business in which we operate.

I would now like to talk about two product development efforts that are of particular interest and the environment created by the pandemic, the first being tele health and virtual services and the second the latest developments in our proprietary claims management platform.

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With all began building until the health service a number of years ago.

Initially we built a telephonic claims reporting module.

More recently, we added Tele health and now think of our services in this area as a virtual care service model.

Continuing the company's commitment to excellent service and outcomes, we released enhancements to service offerings and capabilities during the March quarter.

Corvels virtual care platform, which includes tele health ancillary benefits case management and pharmacy services is now fully integrated with 24 seven nursery our services.

Physical therapy, including virtual PT radiology services and durable medical equipment can be property scheduled.

Prescription cards can be sent to injured workers via text to Corvels pharmacy services.

The continued advancement of Corvels virtual care process provides industry, leading connectivity from the initial report of injury.

This proprietary system automates the integration of all medical notes reports and documents event instantly port claims professionals, allowing the needs of the injured workers to be their primary focus in an industry where immediate access to treatment then a team approach to patient care are of the utmost importance.

This integration significantly reduces traditional delays and care avoids duplicative efforts and allows for efficient coordination of treatment of the injured worker.

Our integrated claims management platform currency hedge received multiple enhancements during the quarter.

The groundbreaking claims insight interface was expanded to include a liability interface.

This new feature gives adjusters supervisors and risk managers complete visibility to easily manage all workers' compensation and liability claims activities, including claims details damages litigation and financials.

Sure I Q Corvel is directed care branch introduced a new care management platform in the edge for the complete oversight of ancillary care services.

This update allows claims professionals to better manage their claims with ancillary services to improve efficiencies and cost savings for our customers.

Additionally, we released an enhancement to the edge executive dashboard for wholesale and carrier customers. This dashboard provides a dynamic and interactive high level overview of a programs claims, including real time updates, which helps users proactively manage their program.

The current enhancements include several new views based on partner feedback expanded benchmarking to include business segments relevant to the customer and a new interface for pharmacy management.

Corvels goal is to be recognized as the leading care and cost management solutions provider utilizing advanced technology and industry, leading innovation to improve outcomes and reduce risk.

We are in a solid position for vibrant growth as we emerged from the pandemic.

My best wishes to everyone as we work through this pandemic and my sincere appreciation for those on the front lines.

Brandon will now provide an overview of the financial results for the fiscal year and the March quarter.

Brandon.

Thank you Michael and good morning, everyone revenues for fiscal 2024, or 592 million earnings per share or $2.55, an increase of 4% year over year.

Revenues for the March quarter were 147 million.

Earnings per share for the quarter were 64 cents, an increase of 2% from 63 cents per share in the same quarter of the prior year each quarter has positive and negative onetime events.

While each maybe unique and appropriately categorized as one time incurrence of such items as not unusual.

In the March quarter, we had two such events.

First item was the positive conclusion and insurance reimbursement of the remaining business interruption funds from July of 2019.

The second event was the escalation of the Coven 19 response in the United States, but the stay at home orders starting mid March.

Although both for fell within the quarter. They were somewhat offsetting normally occurring business fluctuations were the primary driver for the results of the quarter.

Revenue for patient management, including third party in administration Tapeie services and traditional case management for the fiscal year ended March 30, Onest or 387 million an annual increase of 5%.

Fiscal year gross profit increased 11% revenue for the March quarter was $93 million, an annual decrease of 3%.

Gross profit decreased by 10% from the March quarter of 2019.

Revenue for network solutions sold in the wholesale market for the fiscal year was 205 million annual decrease of 10% fiscal year gross profit decreased 7%.

Network solutions revenue for the quarter was 54 million a decrease of 2% from the same quarter of the prior year.

Gross profit in the wholesale business was down 2% from the March quarter of 2019 as the covert 19 pandemic hit the U.S. economy Corvel balance sheet was strong with near record high cash and no debt.

Our decisive and early actions realization of the cares acts payroll tax deferrals and the essential nature of care and cost management services allow corvel to continue to operate from a position a financial strength.

While avoiding the liquidity concerns that affect other organizations with excessive debt and now challenged revenue.

New sales during the first nine months of the fiscal year had been lower than years past, allowing some of the typical customer churn to appear more prominent when looking at the products growth numbers, new sales or robust in the March quarter greatly exceeding past performance. This trend has continued throughout the pandemic.

At Corvel, we are a technology company, but strive to maintain the human touch the success of this philosophy has been demonstrated during this time when relationships have to be managed through technology.

Our sales team has demonstrated prowess conducting and winning virtual finalist presentations, while sequestering at home.

The calendar year trends for a new sales are three times higher than 2019 calendar year sales through April and our pipeline as seasonally very strong.

New sales typically takes of six to 12 months for their ultimate run rate to be fully realized.

I would now like to review a few additional financial items.

During the quarter the company repurchased 233450 shares for a total price of 18.1 million inception to date. The company has repurchased 36.3 million shares for cost of 531.8 million.

This program the company has repurchased 67% of the total shares outstanding.

In order to provide the maximum flexibility to focus on serving our customers as we navigate the covered 19 pandemic corvel stock to repurchasing shares on March 20, Onest 2020.

Due to the current market uncertainties Corvel is evaluating the timing of resuming share repurchases and will remain nimble based on market conditions quarter, ending cash balance was 83 million as of this week bank cash is higher than the comparable value at quarter end.

So that is days sales outstanding and receivables was 41 days down two days from a year ago.

That concludes our remarks for today. Thank you for joining us I'll now return the call to our operator.

This concludes today's webcast you may disconnect your lines at this time.

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