Gordon Clemons - Chief Executive Officer.

Thank you for standing by. Welcome to the CorVel Corporation Quarterly 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 predictions, and that 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 last Form 10-K and 10-Q filed 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. 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. Sir, please go ahead..

Thank you for joining us to review CorVel's fiscal year 2015 and March quarter. Revenues for fiscal 2015 were 493 million; earnings per share were $1.37. The March quarter revenues were 122.2 million, 2% over the revenue for the March 2014 quarter.

Earnings per share for the quarter ended March 31, 2015 were $0.27 in the same quarter of the prior year earnings per share were $0.39. These results were below our budget for the fiscal year although we knew we were going through transition period in our business we had some internal expense issues we could have better control.

March quarter was quite similar in strength to December quarter although seasonal taxes and some adjustments to our accounts receivable reduced net income from the preceding quarter. The June quarter will benefit from the absence of the seasonal March quarter factors.

Our strategic initiatives and service effectiveness are healthy so while we’re not happy with the short-term results we’ve had our strategies and the strength of our overall enterprise are well positioned. I’ll now discuss the internal and external aspects of the current environment.

Cost control and process efficiency are issues within our control when we have softer periods in the market it has been CorVel’s strategy to maintain our investments and new services and new service capabilities we do those seek to more tightly manage other expenses during such periods.

In this instance we were expecting more growth in the services carriers can employ in response to the Affordable Care Act than occurred and we acted too slowly reducing discretionary expenses. We're working on adjustments in each of those areas.

The market environment includes several important factors, one key variable to which we have to respond is the ongoing implementation of the Affordable Care Act particularly in the health markets.

The act is raising our own cost for healthcare and more importantly creating more change in our customer’s environment than they can address in a short period of time dealing with the act has diluted their ability to implement other changes in their approach to cost containment.

The major health insurance carriers are involved in a number of adjustments and that has made it difficult for them to deploy new services such as ours. This has caused a slowdown in CorVel’s Sirius business just as we were adding capacity in that service. Sirius has had increasing annual results but lumpy results within any given year.

We maintain internal forecast of business activity and plans for adjusting as the market evolves but thus far developments in the healthcare marketplace and the rollout of the act have made the market less predictable than in the past.

The longer term forecast for this business remains promising and we're continuing to evolve our service offerings as well as to begin expanding service in the Medicare and Medicaid sectors. Vendors in the cost containment and managed care service sectors of the healthcare markets are having a difficult year as well.

The RAC vendors that is the Recovery Audit Contractors for Medicare has seen their revenues fall in some instances by as much as 75%. The major healthcare providers have pushed back regarding changes in medical cost containment and we now expect an extended period during which time new initiatives will have to shakeout in the marketplace.

Our own internal healthcare costs are also impacted by the act. Our response is to seek adjustments which offset some of the increasing cost of healthcare benefits. Benefit design changes can be made annually.

By itself though design changes may not be enough, restructuring our employment and related workflow processes can help offset the increased the cost of healthcare plans under act. The changing workflows and staffing will require more time. The automation of some processes is another natural outgrowth of the cost increases created by the act.

In the workers compensation markets perspective claims administration customers continue to gradually become more aware of our services, as a new entrant in the market for TPA services we sold initially to public entity where our lower profile with brokers was not an impediment; however this market segment is also required to rebid contracts regularly.

The rebidding process opens opportunities but it also places contracted business at more risk than exist in the private sector of the same market. For these reasons new TPAs tend to win more public entity business initially and then if they succeed in establishing themselves, they move onto the private sector typically presented by brokers.

The brokerage community has become more familiar with our offerings and increasingly included us in our growing number of their request for proposal. At the same time competition for market share growth has been strong and price pressures are the natural byproduct.

In the intermediate term our product development will we believe separate our service from those firms providing more commoditized offering. I'll talk later about the status of our current R&D. CorVel's mix of private sector businesses increasing and we expect our profile in that segment of the market to continue improving.

During the quarter we added two midsized wholesale managed care programs selling our managed care programs to carriers is an important initiative for us.

Moving blocks of business in this market is challenging though as carriers do not like to disrupt their established processes, Carrier service volumes are important building blocks in the growth of our service breadth and depth.

Integrated programs for workers compensation claims is a general trend in an industry whose history has been one of unbundled collections of boutique vendors. Integration has been a cornerstone of CorVel's strategy as we own all of the key component services. The Phase 1 versions of our integration have demonstrated superior results.

We're well along in the development of ensuing extensions of the strategy. I will discuss this further in the product development portion of this call. As we expand our presence in the health market, we're planning to enter additional segments of that market, long-term care insurance is one such segment.

The pilot we began in calendar 2014 in long-term care insurance is proceeding on schedule. This program employs our case management staff to support claims management in that market. These services leverage our existing staff and the investment we've made in mobile computing for them.

In the September quarter we expect to expand the volume in the pilot. The long-term care insurance market faces growing volumes of claims as it matures and could be a market suited to CorVel's growing presence in group health.

Now moving to product development, product development includes a lot of exciting individual projects but it's a bit challenging to communicate this effectively and yet maintain appropriate confidentiality.

In broad terms, we're a number one steadily increasing the deployment of hub activities and related technologies; number two converting insurance claims processing from a largely administrative activity to one more of care managed through a workflow process, and number three building the next generation of electronic payment processing as we continue our emphasis on the management of networks of healthcare providers.

While that can sound like a lot of mumbo jumbo. During fiscal 2015 we made important progress in those broadly defined aspects of our product development. As retailing in general is now deploying tools to consumers' smartphone, we expect similar changes to come to healthcare.

Our monthly software releases move us step by step toward more productive integrations of patients, providers and employers. I spoke last quarter to some of the individual initiatives involved and refer you to that transcript for more detail on those projects.

We believe improvements in healthcare outcomes are likely to be achieved in somewhat subtle way that is straightforward cost reductions for existing activities while seeming to be more intuitively clear goals are not in reality the most likely opportunities for improvement instead shortening time delays in an episode of care and changes in the mix of serious versus limited losses are the more likely sources of savings in the book of business to add an employer.

Our integrated service model shortens delays in the healthcare workflow and permit some claims to be addressed without meaningful offer productive time on the job. We found that we have to combine a fairly large number of workflow improvements to create meaningful movement in the overall results for any given employer.

Our long-term strategy remains to differentiate our services through constant implementations of information management technology. For that end we seek to invest more than do our competitor and to structure our enterprise to involve our operations teams in the funnel of ideas that feed our development projects.

This last quarter we moved our Portland, Oregon data center to new facilities collocated with our Scan One business services enterprise. CorVel’s Scan One operations provide payables automation and management services to major enterprises as well as supporting CorVel’s managed care and claims administration operations.

The new location offers state-of-the-art facilities for the combined technology group. This year CorVel will be converting to ICD-10 along with the entire healthcare industry having already met the previous federal deadline last fall. The new collocation facility in Nevada continues to expand operations.

We’re moving to 64 bit processing, implementing Internet Explorer-11 and deploying web services as customers are able to accept these ruling upgrades. Continuously upgrading our technology keeps the company on the front of the way of new capabilities possible in computing.

During the current quarter we will be extending our care management workflows to include telemedicine as well as concierge services and support of patients during their episode of care.

Telemedicine and the increasing automation of supporting pharmacy management services create a continue of care which believe will eliminate some of the delays incumbent to current diagnosis and treatment processes and improved outcomes.

Our ability to integrate the activities of patients, providers, employers and the managed care activities is a natural byproduct of the long-term investment we’ve been making in CareMC our platform -- our web based platform for smart processing tools. Ongoing progress has been made in the automation of our interface to healthcare providers.

The company’s provider portal is popular with healthcare organizations and the usage has expanded nicely. CorVel’s proprietary network of healthcare professionals is a key to the strength of our network solutions product line and further improvements to that network is an important initiative this year.

I’d now like to discuss our product line results. Patient management increasingly becoming patient engagement includes third-party administration that is TPA services and traditional case management. Revenue for the quarter was 67.6 million, an increase of 6.5%. Gross profit decreased 15.5% from the March quarter of 2014.

TPA services continued to grow at double-digit annual rates despite the loss of some public sector accounts. Margins were pressured by some expense items we expect to balance out in future quarters.

Also we had a period of years, a couple of years ago, actually we have just a short period a couple of years ago where we didn’t adjust to a change in pricing tactics in the industry and had as a result slower sales. We have since adjusted that the lagged effect of that slow patch has impacted current quarters.

Case management revenues in total were down slightly. We are piloting an application in the group health marketing continued to also increasing value in our own TPA accounts. We have continued the work to more tightly integrate our case management services or other components of both managed care and claims management.

This can potentially enhance the value for customers using various forms of our case management. Network solutions revenue sold in the wholesale market for the quarter was 55 million down 3.8% from the same quarter of the prior year but up 2% sequentially. Gross profit in the whole sale business was down 14% year-over-year.

Network solution sold through our TPA services was up year-over-year by double-digit percentage. Total network solutions revenue including volume sold was part of our enterprise comp TPA service line was up slightly year-over-year.

Sirius specialty hospital review services were down in the quarter, but are expected to rebound in the current quarter and for the remainder of the calendar year. As we’ve discussed carrier adjustments to the Affordable Care Act have created lumpy results than this service.

We are adding service from Medicare and Medicaid programs managed by private carriers. Now I’d like to cover a couple of additional statistics. The quarter ending cash balance was 26 million and our DSO that is our day sales outstanding and receivables was 43 days just as it was a year ago. 260,500 shares were purchased in the quarter for 9.1 million.

We have returned 360 million to shareholders in the last 18 years repurchasing approximately 33 million shares. Shares outstanding at the end of the quarter were 20,251,000 and diluted EPS shares were 20,515,000 for the quarter. Shares outstanding were reduced 3.5% this last year.

I’d now like to turn the call back over to the operator to open the question-and-answer session. Thank you..

Operator:.

All right. Thank you very much. We appreciate everyone being on the call today and we look forward to talking to you again at the end of the June quarter which is only a couple of months away. Thank you..

Thank you. Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time and thank you for your participation..