Q3 2021 CorVel Corp Earnings Call
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Thank you for standing by and welcome to the Corp. A corporation quarterly earnings release webcast. During the course of this webcast <unk> Corporation may make projections or other forward looking statements regarding future events with future financial performances of the company.
[laughter] Corabelle wishes to caution you that these statements are only predictions and actual events or results may differ materially.
Corabelle refers you to the documents the company files from time to time with the Securities and Exchange Commission, specifically the company's last form 10-K, and 10-Q files for the most recent fiscal year and 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 Michael Combs, President and Chief Executive Officer.
Good day, and thank you for joining us to review <unk> December quarter.
Joining me on the call today is Brandon O'brien, Carvell, Chief Financial Officer.
Today I'll be discussing the current environment business performance market trends and progress on strategic software initiatives. Brandon will then provide additional insight into our financial results for the December quarter.
Earnings per share for the quarter ended December 31, and 2020, we're 63 up 26% from the same quarter of the prior year.
Revenues were 142 million.
And we're still recovering during the pandemic from $148 million of revenue in the December quarter of 2019.
The company's claims management services have continued their market share growth with margins assisted by some of the economies associated with the work from anywhere and technologies cortisol and implemented before the virus outbreak.
Given the considerable uncertainty and concern everyone felt in late March and throughout April and the company's results for 2020 demonstrate our organization's resilience and sound Technology Foundation.
We come to the beginning of 2021, having finished a strong year, our cash flow has been stronger than ever new sales were a record for the year with particular success and claims administration and are serious commercial health review business.
And now for an overview of sales.
Self assessment of our sales results before last year identified this as an area, where we believe we can and should improve.
Global has strong product offerings and a number of managed care and claims management services and workers' compensation.
We have increased our focus on the drivers of sales success with good results and the first year of this effort. This remains a continued area of emphasis.
Sales results reflect a healthy balanced growth and network solutions enterprise comp Tpa and service Medical review service offerings.
And area of focus has been system enhancements to meet the needs of Midmarket carriers.
These enhancements are translating to increased sales and the network solutions segment of the market.
Also we have aggressively expanded our sales team over the last several months and expect continued healthy sales momentum and this new year.
Digging a bit deeper into our strategic focus.
<unk> has invested and information management technologies from the outset over 30 years ago.
And these past investments provide a foundation upon which the company expects to build new capabilities not imaginable, just a few years ago.
Investments and artificial intelligence and machine learning will be built to leverage existing investments and bolt the management of care and transaction processing within the healthcare industry.
For more than 11 months now the pandemic has had a profound impact on the markets we serve.
And the implications will extend well beyond 2021.
<unk> Technical foundation supported the agility to quickly transition our team to work from home easily scaled to meet the 10 fold increase and telehealth demand and effectively respond to evolving customer needs.
From a strategic perspective, we are optimistic about our position and our ability to continue adapting responding and thriving in this dynamic environment.
Artificial intelligence and machine learning technologies with real promise.
There is increasing interest in this area of technology and its potential impact on risk management results. However, there is also growing hype and confusion regarding the various claims vendors are making.
We're being thoughtful and intentional and our approach to AI.
And by blending industry and technical expertise with strategic partnerships, we're able to provide increased insight prescriptive actions and and enhanced strategic engagement for our clients. The culmination of these efforts will be and new product cogency, and a new surface Sim strategic and.
Site management.
Cogent and CD and advanced business intelligence platform Visualizes data insights distilled from the large volumes of data accessible to our systems.
Business intelligence techniques, including machine learning natural language processing and data mining provide accurate and scalable results, which yield actionable information for our clients.
Sim is a collaborative engagement to assist our clients with navigating the dynamic risk management landscape.
Led by a tenured advisor and supported by a dedicated group of technical experts and Cogency. This team will work with clients stakeholders to optimizer solution and drive improved outcomes.
These long term investments and innovative technology and services positioning <unk> to gain competitive advantage as the pace of change increases now.
Now, let's turn to the markets we serve.
And our workers' compensation business, we have seen some delays and claims progression.
And the ability of claimants to return to work has been adversely affected by furloughs and layoffs also there had been interruptions of care and brick and mortar locations that have impacted the patient's ability to reach maximum medical improvement.
Virtual care that is managing episodes of care using telephonic and system based communications will increasingly augment some of what previously had been brick and mortar venues.
And <unk> virtual care services are a bright spot for the company.
As the pandemic continues the need for additional virtual and at home services will continue to increase however, as the pandemic subsides, we expect to continue expanding our presence and telehealth.
Managing medical spend and providing proactive care are both cornerstones of the core volume model and they remain Paramount for claims administration and case management services.
During the December quarter, there was a slight increase in claims volume primarily in the sectors most impacted by COVID-19.
The severity of those claims remained flat with non notable increase to date.
We are expanding our telehealth program to include add home access to self administered non invasive COVID-19 testing.
Available for our customers and their employees this testing and reduces the risk of exposure.
As part of the virtual triage process unemployed and who is having symptoms or who may have been exposed to the virus will receive and at home test kit. The test kit will be returned to the laboratory V. A biologically safe envelope.
Certified report will be available within 36 hours of receipt by the lab.
This offering eliminates the need to find and external laboratory and streamlines the testing process and it gives employers the critical information they need to get people safely back to work.
We are currently treating mild and moderate COVID-19 patients and we look to continue to manage the spread of this disease using this new service offering and.
And the health market payers are evolving and making changes to their payment integrity processes.
There is a deliberate movement from the traditional approach reviewing itemize medical bills subsequent to the provider being paid to prepayment reviewing bills before payment is issued.
With the prepay approach all work required to review the bill must be completed within stringent turnaround time requirements.
<unk> payment integrity systems developed by our surface operation support prepayment processing or.
Our solutions leverage advanced analytics to efficiently find billing and accuracies and task automation to compress the time required to complete the process.
The service approach allows clients to make payments with the confidence that the billing and coding information is accurate.
In addition to our Itemized Bill review process prepayment DRG review services have been rolled out to the marketplace and are gaining momentum going into this year.
Symbion and our revenue cycle services business has used recent months to upgrade processes and evaluate new market opportunities and <unk>.
<unk> of this evaluation is a new partnership with a marketing channel that increases exposure and sales to mid market companies.
The strength of Syn deal is this ability to effectively take and paper based transactions and merge them efficiently with electronically processed volumes.
The transaction intake functionality has been transitioned to and OCR engine powered by the latest AI technology.
New approach delivers increased reliability and reduce turnaround times with enhanced quality and better serves our customers.
Turning now to product development.
The release of new software enhancements continued at a good pace during the quarter.
Our investment strategy has been to leverage technology to differentiate the results achieved for our clients spin.
Specifically, ensuring effective delivery of care to return patients to work and reducing our clients' total cost of risk.
In addition to innovative enhancements, which I'll discuss shortly we are incrementally building more process workflow and automation into our business systems. The results of these efforts is improved operating efficiency quality and consistency some of the more exciting investments and product development include expanding the use.
Use of machine learning natural language processing Web service development and as previously mentioned advanced analytics.
While the backlog of compelling product development and enhancements is significant we are being increasingly judicious about the projects upon which we focus our efforts.
We have identified the markets and services, which are best suited to our strengths and have the highest total addressable market potential.
In addition, we're working aggressively to expand our software development capacity to translate the queue of enhancements into functional systems.
We expect the opportunities to innovate and both the insurance and healthcare markets to extend throughout the planning horizon our.
And our ability to integrate the activities of patients providers employers and managed care activities is a natural byproduct of the long term investments, we've been making and web based smart processing tools.
And we continually review our existing processes to see what portions can be replaced or enhanced with technology.
A recent example is the finalization of entry and verification steps and our Bill review receipt process. We have moved from human verification of information to and integrated and fully automated OCR approach the.
And the process imports medical bills into the review platform. It allows the seamless integration of medical information combined with an enhanced rules engine that ensures accuracy and efficiency for bill processing.
After entry the Bill review rules engine uses and automated QA process to flag and score builds for accuracy.
Bills, requiring human intervention are routed accordingly.
Enhancements such as this along with others that are currently in process.
Now our specialist to spend more time on task requiring their expertise generating the most value and the adjudication process.
The workers compensation market continues to be active and our new service features have been well received.
And the December quarter, we released a dynamic electronic claim review platform insights via D edge interface.
This platform transforms a paper based claim review to a collaborative live electronic claim review experience.
It allows for real time interaction between the claims and risk management teams to review and adjust claims within the system.
It also provides opportunity for immediate file updates documented next steps and the creation of tasks for all stakeholders to ensure appropriate follow through.
The insights functionality replaces manual paper based processes that had been the standard and the industry for decades and.
We glean additional data based insight and the claim direction, we continue to improve our executive dashboard to give customers a broader and more in depth view of their program.
Brandon will now provide additional texture on the financial results for the quarter.
Thank you Michael and good morning, everyone. The December quarter revenue was 142 million a 4% decrease from the same quarter of the prior year earnings per share were <unk> 63, a 26% increase from 51 cents per share and the same quarter of the prior year.
The earnings per share increase of 26% was primarily realized through improved operational efficiencies across our service lines.
These efficiencies are driven by temporary reductions of discretionary spend plus the long term structural improvements.
The revenue per patient management, including third Party administration, Tpa services and traditional case management for the December quarter was $97 million and annual decrease of 2%.
Gross profit increased by 17% from the December quarter of 2019.
Our third party administration services hit record levels and continues to be well received and the marketplace. The.
And the enterprise comp integrated care model is tightly coordinated with the expanding avenues of care corvid.
Corvallis Telehealth and <unk> services provide immediate virtual care and concierge level scheduling of in office care and delivery and favorable outcomes to employees and employers and core Val These services offer ongoing revenue expansion opportunities.
The revenue per network solutions sold and the wholesale market for the quarter was $45 million a decrease of 10% from the same quarter of the prior year.
Gross profit and the wholesale business was down 3% from the December quarter of 2019.
Gross margins increased as the serious business increased its revenue mix within network solutions at accretive margins.
I would now like to review a few additional financial items.
During the quarter. The company purchased 82000 shares for a total price of $7 7 million inception to date. The company has repurchased $36 6 million shares for a cost of $554 million through.
Through this program the company has repurchased 67 per cent of the total shares outstanding.
The quarter ending cash balance was a record high of 129 million. Our DSO that is day sales outstanding and receivables was 41 days, which is the same as a year ago and down eight days from the September quarter cash.
Cash flow remains strong and positive throughout the quarter.
That concludes our remarks for today. Thank you for joining US I will now return the call to our operator.
This concludes today's webcast you may disconnect your lines at this time.