Gordon Clemons - Chairman, President, CEO and COO.

Analysts:.

Welcome to the CorVel Corporation Earnings release conference call. During the course of this conference call CorVel Corporation may make projections or other forward looking statements regarding future events or the future financial performances of the Company.

CorVel wishes to caution you that these statements are only prediction and that actual events or results may differ materially.

CorVel refers you to the documents that the company filed from time to time with the Securities and Exchange Commission, specifically the Company's last Form 10-K and 10-Q filed for the most recent fiscal yearend quarter, this 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.

At this time all participants are in a listen-only mode, a question and answer session will be conducted later in the call, with instructions being given at that time, as a reminder this conference call is being recorded, I would now like to turn the conference over to your host Mr. Gordon Clemons..

Thank you for joining us to review CorVel's September quarter. In the quarter our Enterprise Comp TPA added a number of important clients, we took steps in the expansion of our medical review services in the health markets and expansions to our preferred provider networks were implemented.

Each of these initiatives are expected to begin adding to our results in the coming year. Revenues for the September quarter were a $119 million, 13% over the revenue for the September 2012 quarter, earnings per share for the quarter ended September 30th 2013 were $0.41, up 39% from the same quarter of the prior year.

I'll speak first to the markets for our services. As we’re all well aware the Affordable Care Act, the implementation has implications for every aspect of any healthcare or healthcare insurance services. Both providers and payers are under pressure to reduce costs.

The first impact on CorVel from the legislation has been an increase in the demand for our network solution services, specifically our proprietary mid check select hospital bill review services, we see opportunities in each segment of the market place, whether that is in the private carrier market, Medicaid or Medicare.

In workers' compensation the company's market for self insured and high deductible programs for employers has continued to be receptive to our offering. This is the market for CorVel's full service programs, fall under the brand name Enterprise Comp. We have continued to expand both our staff and our systems in this segment of the business.

Our long term technology strategy remains a cornerstone of our business development. As CorVel grows, our ability to make such investments also increases. Our business strategy had evolved somewhat over the last year. We are expanding our investments in medical review and provider networks.

The Enterprise Comp TPA area will require continued development but is more established each year. Mobile computing, new three or four years ago is now reaching the development phase where a number of the obstacles to its effectiveness are beginning to be addressed by the constant releases of new technology.

Our decision to move into mobile apps has been a success and we're now moving from the early developmental phase into one of market recognition and acceptance with this form of interaction with our systems. It is though differentiator for CorVel rather than a source of incremental revenue in and of itself.

While we continue to make information management technology the cornerstone of our enterprise, the changes facing healthcare seem likely to place demands upon our resources for the foreseeable future. This has required us to make strategic decisions regarding upon which markets we will focus. Our customer base has gradually changed as a result.

However we have found the investments we've made over the years in our national network of branches and professionals has positioned the company to effectively explore new opportunities. This past quarter was one where we made additional investments in the general health market; an effort which we believe will produce results in the coming quarters.

I'd like to now discuss our product line results. Patient management revenue for the quarter was 61 million, an increase of 12% for the year. Gross profit increased 25% over the September quarter of 2012. Patient management includes third party administration that is TPA services and traditional case management.

TPA services have been growing at over 20% annual rates and are an important driver of overall company results. The company's claims management services are continuing to expand, and our organization reflects this change in the mix of our business.

We have an active backlog of additional projects planned to continue our expansion of capabilities in the TPA market. Network solutions with the medical review sold into the payer marketplace, revenue in that service for the quarter was 58 million, up 14.5% from the same quarter of the prior year. Gross profit was up 17% year over year.

The PPO network CorVel provides with this service was expanded in the quarter further improving the results we expect to deliver to our clients in the coming year.

Implementation of the PPO expansion was an active project in the quarter, the results of this expansion will be reflected in the current quarter and more completely in the results over the coming year. This product line includes services applicable in the health market.

The company has had established relationships in that market to whom we've committed capacity as they adjust to the Affordable Care Act, as we expand our capacity we will introduce our service to other segments of the health market. CorVel has a proprietary database of in-patient pricing information.

It provides unique reviews of hospital reimbursement. We expect to begin seeing growth in the current quarter and particularly over the coming year. Product development remains the key to our growth.

Last quarter I spoke to trends and technology which have supported our progress, these include hardware virtualization, work flow and document management, dynamic load balancing which promises to reduce the redundancy involved in systems recovery investments, and the ongoing progress in data storage and its cost.

These infrastructure advances are driving three current application trends throughout all industries and not just our own. They are the move from PCs to mobile devices, the movement from onsite applications to cloud environments and of course the expansion of data analytics. These trends are important to CorVel ongoing developments.

In the move from PCs to mobile CorVel real time tools for claims intake are critical to our early intervention that helps to manage the cost of healthcare; making smartphones an effective insurance claims reporting vehicle continues to be a key project.

Our customers' feedback has been important to our planning, resolving how best to use mobile devices a challenge in our business as it is in others. Tablets and smartphones for our nurse case managers are differentiating our service in the market place and adding value to our case management services.

These tools can shrink delays in claims management facilitating more timely outpatient care and speeding the approvals necessary to return an employee to work.

While mobile computing is a big trend in itself, the ability of such tools to feed information to [indiscernible] and back into automated workflow important opportunities to further improve the workers compensation model. The movement of onsite applications to the prior cloud environment continues.

Private cloud environments like CorVel's CareMC allow technical and specialty tasks to be handled by CorVel while the system shares employee placing activities with the employer and with healthcare professionals. As mobile device use grows, private clouds become more and more central to systems development.

Conducting real time interactions with our customers places a high demand upon the stability of such systems. And we expect to continue to have a full play to pending development. Each new technical or software capability though open new ideas for even further service enhancements.

Data analytics continues to expand at CorVel, analytics continues to be an increasingly important aspect of our total service. We expanded our resources in the quarter and continued developing predictive processes.

Our system's increasingly are configured to present alerts and notify clients of claims events, improving the ease of use and relevance of the information developed, our initiatives that will extend through the coming year. Now I'd like to add a couple of statistics that I left to the end here.

The quarter ending cash balance was 22 million, our DSO was 41 days. 372,000 shares were repurchased in the quarter and 1,750,000 shares have been repurchased over the last year reducing shares outstanding by 6%. We have now returned 321 million to shareholders in the last 16 years.

Shares outstanding at the end of the quarter were 20,987,000 and diluted EPS shares were 21,377,000 for the quarter. I would like to now turn the call back over to the operator and open the call to the question-and-session. Thank you..

(Operator Instructions). And there are no further questions. Mr.

Gordon do you have any further comments?.

Yes I did want to mention that our tax rate in the quarter was a little higher than normal, we’re making up for an oversight in the past that kind of saw our tax rate was about 42.5% in the quarter that took $0.02 a share of earnings and will continue for two more quarters and then should return to about 40% in the future.

That's all I really had to offer today. I appreciate the attendance on the call and we'll look forward to seeing you guys on the next quarter. Thank you..

This concludes our conference call for today. Thank you for your participation, please disconnect at this time..