Q4 2022 CorVel Corp Earnings Call
Thank you for standing by welcome to the <unk> 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.
<unk> 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 would now like to turn it over to Michael Combs, President and Chief Executive Officer.
Thank you for joining us to review Corvallis March quarter and fiscal year 2022 results.
On the call with me today is Brandon O'brien, <unk> Chief Financial Officer.
Today, I will be reviewing business performance, the current environment and market trends and progress on system developers.
Brandon will then provide an overview of our march quarter and fiscal year financial results.
The March quarter revenues were 171 million, 18% over the revenue for the March 2021 quarter.
The earnings per share for the quarter ended March 31, 2020 to $1 nine an increase of 35% over the prior year same corner.
Revenues for fiscal 2022 were $646 million up 17% earnings per share were $3 66, an increase of 44%.
The quarter saw continued strengthening in our fundamentals. The results achieved are attributed to increased new bookings, particularly within our commercial health focused operation cerus, and improved productivity, resulting from automation and augmentation being applied incrementally across our business.
Enterprise systems.
Our product development efforts have been focused on key additions to our Tpa and network solutions business and enhancements to our service payment integrity platform the.
The workers compensation focused market investments will enhance the ability to address evolving carrier needs. In contrast, those in service for the commercial health market will support the seamless integration of additional payment integrity services.
Last month, we met with many of our partners and prospects in person at the Rims conference in San Francisco. It was wonderful to be back together and feel a sense of normalcy and interactions.
We had many meetings with prospects brokers and partners. We were quite pleased with the response is regarding the latest enhancements to our systems.
The new functionality further augments the capacity of our team members to create best in class service.
The advancements allows staff to increase focus on the most important things, helping employees get back to wellness and some being bogged down with menial tasks.
Who else claim volumes have returned to pre pandemic levels as the labor market rebalancing, we expect workers' comp claims to increase.
While the great resignation continues to impact the overall labor market, we have been pleased with our record of retaining and attracting talented team members.
Our team grew consistently through 2021 in support of servicing the record new bookings closed in 2020 and 2021.
Our designation as a great place to work is helpful. Towards this end and we are grateful to the now 4000, plus employees, who are part of the <unk> team.
Inflation is an additional macro level factor affecting the markets we serve.
In the P&C and commercial health markets rising costs tend to increased demands for our risk management services. In addition, we're focused on increasing automation and process optimization to further mitigate the impact of inflation on those with which we partner.
Hospitals clinics and provider practices are experiencing physician and nurse shortages, which can cause delays in care.
Our medical case managers are uniquely equipped to navigate the current environment and deliver continuity of care.
Their local relationships and knowledge of centers of healthcare excellence help patients receive the timely care and attention they require it.
At <unk>, we are also overcoming delays by connecting patients to virtual care services.
Our nurses provide the best care for telehealth, and virtual care physical therapy free or post surgical rehab and virtual reality cognitive behavioral therapy.
Results of the past year were particularly strong in core Bill sure IQ.
Sure IQ provides nationwide network access and clinical outcomes management for physical therapy imaging and diagnostics medical equipment home health care medical transportation and interpretation services.
Driven by a significant expansion within our physical therapy networks and supported by system enhancements. The 2022 fiscal year revenue was 47% higher than the previous year.
Sure queues adjudication engine unique in the workers compensation industry is embedded within the Bill review platform.
Integration with <unk> Bill review system allows our proprietary automation to optimize network utilization.
Additionally, because Kara Q is within Bill review it Leverages applicable rules for determining maximum state allowable fees.
We are the only full service ancillary benefits program.
Guarantees all charges are compliant with states medical fee schedules.
This integration has presented us with new opportunities for growth within the carrier and managed care space.
Our technical foundation has been established to provide timely and accurate ancillary benefits management and our demonstrated ability to execute effectively in this area is being well received in the market.
<unk> is increasingly being viewed as a better alternative to establish vendors in this space.
Corvallis payment integrity provider Sarah's continues to lead the industry in prepayment Itemized Bill review saving money on the vast majority of claims processed.
Statistically we have found the solutions other companies deploy resulted only 60% of the savings achieved by cerus.
In addition, 97% of proposed savings are accepted compared to the industry average of 90%.
While the itemized Bill review savings are significant service has been adding further services to strengthen control over costs.
Surgical implant device bundles high end medical devices, and specialty services experienced pricing irregularities with pears being billed for more devices are were implanted or overbuilt for the devices or services themselves Cirrus.
<unk> reviews identify and provide the manufacturers true costs by utilizing our proprietary repository of implant invoice data.
Services reviews in this area reduced device bundling and establish a recommended reasonable payment for these services.
In addition, specialty care reviews are conducted to isolate overcharging and identified providers with consistent patterns of billing outside industry norms.
The office of Inspector General for the Department of Health and Human services reports that Medicare was overbuilt 636 million for neuro Stimulators. In addition, hospice services are growing into a $30 billion business.
The need for reviews and billing in these areas cannot be overemphasized.
While they will not solve the rising health care costs single handedly, They will make a significant difference for the single payer of self funded employer groups.
We are proud of the savings we are creating at cerus and we will continue to invest in these services to create new offerings for our partners.
In 2010, Apple launched conversational artificial intelligence with CRE.
Similarly in 2014, Amazon launched AI with Alexa.
Today, we have little fought to our interactions with conversational AI as it has become the norm on our phones, our home devices in all of our customer service calls.
The years and years of data collected from these conversations have enabled AI to answer a rapidly expanding list of questions and to make our lives easier and our interactions more efficient.
And our continual effort to leverage technology to better serve the patient population. We work with we are introducing conversational AI in the core valve contact centers.
By using AI to answer calls immediately wait times are essentially eliminated in the process of connecting injured workers to the appropriate medical care professional streamlined clay.
Claim reports will be quicker and the injured workers overall experience enhanced.
Another innovation this quarter was the implementation of a claim risk score within currency edge. Our proprietary claims management platform. We are leveraging advanced technology to assess all data elements associated with each claim to establish a real time risk assessment the.
Risk score begins at day, one of the claim and continuously Recalculate center just during the life of the claim as additional information becomes available or changes when each element is analyzed corresponding events are triggered and prescriptive actions recommended.
This allows real time assistance for the claims professional to proactively address possible issues and obtain the best outcomes.
With pandemic and increasing inflation core mills playbook remains unchanged financial strength and fiscal conservatism have allowed us to increase investment in the <unk> team as well as the rate at which we are introducing innovative solutions to market.
The combined impact of which is being noticed in the industry and benefiting a growing list of partners.
Brandon will now provide an overview of the financial results for the March quarter, and the fiscal year Brendan.
Thank you Michael and good morning, everyone.
Revenues for the March quarter were 171 million up 18% from the same quarter of the prior year earnings per share for the quarter were $1.09 an increase of 35% from the 81 per share in the same quarter of the prior year.
Revenues for the fiscal year ended March 31, 2022 or $646 million up 17%.
Earnings per share for the fiscal year ended March or $3 66.
Up 44% from the prior fiscal year's EPS result of $2 55.
Patient management and network solutions, both delivered double digit year over year revenue growth profit.
Profit growth percentage is in excess of revenue were driven by a positive mix shift to higher margin services.
The expansion of Corvallis growing suite of health market related services under network solutions contributed to this positive shift.
Network Solutions service segment enjoys higher economies of scale, whereas patient management has higher variable expenses.
Within network solutions Sirius has been expanding its service offerings to health carriers to encompass a full suite of payment integrity and cost containment solutions.
Our service offerings provide a welcome alternative to a shrinking number of independent offerings of cost containment vendors servicing the large health players.
The revenue for patient management, including third Party administration, Tpa services and traditional case management for the March quarter was 111 million an annual increase of 15%.
Gross profit increased by 4% from the March quarter of 2021.
Management revenue for the fiscal year ended March 31, 2022 was 424 million an annual increase of 15% fiscal.
Fiscal year gross profit increased 6%.
The revenue for network solutions sold in the wholesale market for the March quarter was $60 million, an increase of 24% from the same quarter of the prior year.
Gross profit in the wholesale business was up 38% from the March quarter of 2021.
Network solutions revenue for the fiscal year ended March 31 was $222 million, an annual increase of 21%.
Fiscal year gross profit increased 41%.
Carville is executing on our strategy of expanding our penetration in the health markets with prior and current quarter investments bearing fruit.
As an example, the specialized DRG cost containment service added to the ferrous suite of offerings, roughly a year ago realized a near doubling of recognized savings volumes in the March quarter compared to the sequential December quarter.
The total addressable markets and health as well as the government segments represented primarily by Medicaid and Medicare are all many multiples the size of the company's current primary market and workers' compensation.
I would now like to review a few additional financial items.
During the quarter the company repurchased 145991 shares at a total cost of $24 8 million from inception to date. The company has repurchased $37 2 million shares for a cost of $655 million.
Through this program the company has repurchased 68% of the total shares outstanding.
The repurchase of shares continues to be funded via the company's strong operating cash flow.
Our DSO as in days sales outstanding and receivables was 44 days up four days from a year ago.
The quarter, ending cash balance was $98 million the company's liquidity strong balance sheet and consistent results delivered continued to reflect the healthy conditions of our business.
This solid fiscal positioning and outcomes achieved are particularly desirable in a market environment that begins to separate the wheat from the chaff.
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.