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 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 that 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. .

Good morning, and thank you for joining us to review CorVel's September quarter. On the call with me today is Brandon O’Brien, CorVel's Chief Financial Officer. .

Today, I'll be discussing the current environment, business performance, market trends, services we're focusing on and progress on strategic software initiatives. Brandon will then provide additional insight into our financial results for the September quarter. .

Earnings per share for the quarter ended September 30, 2020, were $0.65. Revenues for the period were $136 million. Though we remain in an uncertain environment, our business fundamentals are sound and performed well during the quarter.

In conjunction with robust year-to-date sales of new business, adjustments made to operational parameters in response to the pandemic contributed to strong cash flows. .

At the end of the March quarter, which also marked the start of the pandemic, we created both optimistic and pessimistic financial models to represent the potential impact of COVID-19 on our business. The results achieved during the quarter exceeded the most optimistic models, though they were lower than those of the September quarter of 2019.

Fortunes and fates are in our hands; we're capable of thriving in difficult times. .

Intellectual capital has become more important than financial capital, and we intend to do better converting the latter into the former. Our perspective for the future is one of optimism. The market is dynamic, and there are opportunities for those correctly positioned to meet evolving market needs.

I'll touch on a few market highlights here before we review the line of business results. .

The pandemic has accelerated adoption of new technology and driven our digital strategy forward. Our model in these last 30-plus years has been to pair industry professionals with expert systems to achieve enhanced results. In some cases, our vision has preceded the willingness of the industry to embrace new paradigms. .

CorVel was the first third-party administrator to introduce a patient advocacy model coupled with telehealth, something we did more than 5 years ago. The premise was that by compressing the amount of time it took to connect an injured employee with the appropriate medical professional, outcomes would improve.

Before the pandemic, there was a reticence by many employers and employees to embrace this model. But the results we've achieved with our partners using this approach have exceeded expectations. .

Over the last 6 months, we've seen an exponential increase in telehealth usage with a corresponding improvement in results achieved. .

In the workers' compensation market, there has been a decrease in claim volume due to continued work-from-home, layoffs and furloughs, with an increase in COVID-19 claims covered under workers' compensation. Net claim volume is down around 15%. .

Presumption of coverage is very dynamic in states that are changing their workplace illness legislation. Thus far, at least 18 states have extended workers' compensation coverage to include COVID-19 as a work-related illness. Many more are considering similar initiatives.

Multiple states have enacted legislation creating a presumption of coverage, meaning the illness is presumed to have happened on the job and therefore, should be covered. But employers will not necessarily pay for each of these claims as some state laws create a rebuttal presumption of causation. The coverage varies by state.

Some are limiting coverage to first responders and health care workers. Others cover essential workers such as grocery store employees. And a few have no limits. .

While the vast majority of COVID claims incur low costs, on average, $3,500 or less, a small percentage will require hospitalization and critical care. The National Council on Compensation Insurance estimates that there is a 2.3% chance that a COVID claim will result in permanent partial disability and a 0.05% chance of a permanent total disability.

There is still uncertainty regarding the impact of presumption in COVID claims on the industry in this very dynamic environment. .

COVID fatigue is not yet an established diagnosis, but isolation and limited interaction with others are having an adverse impact on mental health. Suicides, divorces and domestic violence have seen significant increases. And the strain on an already challenged health system may continue to escalate.

This will inevitably increase the need for virtual mental health visits, both in the work comp and health spaces. .

In addition, acceptance continues to rise for psychosocial models of treatment, the idea being that a patient should be viewed holistically for the best care and outcome. This is particularly important in pain management.

And psychosocial factors, in conjunction with poor coping skills, past abuse, patient age and general health can all contribute to pain, making it difficult to pinpoint causation.

Patient risk assessments and cognitive behavioral therapy consider degenerative conditions, poor conditioning and overall health because analysis has confirmed that lifestyle choices such as diet, exercise, smoking and mental health can compound pain issues. .

Virtual health and cognitive behavioral therapy have long been part of the CorVel model, and we expect they will be needed and adopted more and more in the coming quarters. The broader health care market continues to be important to CorVel's overall results and future plans.

The cost of health care continues to increase at rates above the growth of average incomes. New therapies, biotech cures and treatments and improved diagnostic technologies are driving inflationary costs. .

The expanded scope of services we've implemented are achieving exceptional return on investment for our health partners. These results have spurred increased collaboration as well as more investment to create additional payment integrity solutions. .

The health care market has experienced consolidation and a move towards internalizing payment integrity functions or the establishment of strategic partnerships with payment integrity vendors that are delivering innovative solutions. Toward that end, we are pleased to announce that CERiS has forged several additional long-term partnerships.

These strategic alliances improve health care payment operations through innovative technology. Our partners' health plan customers benefit from the enterprise-wide reviews conducted by CERiS. The reviews generate cost savings by identifying and reducing inappropriate spending.

Existing alliances currently include 1/3 of the covered lives in the United States. .

Before getting into more detail on product development and product line operations, I'd like to summarize how we're currently set up to move forward. We see our long-term investment in information processing as positioning the company to benefit from current and future trends in technology and data analytics.

We have been steadily moving computing work from colocation data centers to the cloud. We've made good progress on focusing on a closer integration with our partners, and we see this as an opening for additional opportunities in the future.

Efforts in analytics are evolving towards machine learning and artificial intelligence and are well supported by investments in software and our unified platform. These were not elements favored by the casualty industry in the past. And some questioned our orientation towards the digitization of services. .

Increasingly, throughout the service industry, however, information management is transforming how business is done and, thus, making service forms built on previous industry paradigms obsolete.

The ability to offer consultative engagement based on analytics is strengthening our competitive advantage, and we intend increasingly to leverage this approach in the marketplace. .

Development on strategic project initiatives has continued unabated during the pandemic, following our several highlights from our product development teams in the September quarter.

Our proprietary claims management platform, Edge, has expanded API functionality for managed care and carrier customers, allowing them to harness the rules, actions and associated insights.

By gaining visibility into the current status of a claim throughout its life cycle to managing claim-related activities, these customers have a greater ability to leverage their data with our rules, which leads to superior claim results.

We updated the executive dashboard in Edge to offer greater detail specific to pharmacy spend and drug utilization to address a continued need of our customers as opioid usage and drug spend persistently increase. .

Due to California's SB-1159 requirements specific to the reporting of nonrelated positive COVID test results, we delivered a customer-facing portal for entering and tracking all positive cases. This platform enables proactive logging to allow customers and account managers to take action should an outbreak be identified locally. .

Brandon will now provide an overview of the financial results for the September quarter. .

Thank you, Michael, and good morning, everyone. .

The September quarter revenue was $136 million. The earnings per share were $0.65, a decrease of 6% from $0.69 per share in the same quarter of the prior year. .

The financial theme of the quarter was one of building stability and strength by positioning the company to produce historical levels of overall margin with the recovering revenue. .

Revenue is up from the lows seen during the first few months of the pandemic. We have been successful in executing this plan as evidenced by our quarterly gross profit increasing to a 5-year high of 22.4%. This was led by our patient management quarterly profit and margins hitting all-time highs. .

The revenue for patient management, including third party administration, TPA services, and traditional case management for the September quarter was $90 million, an increase of 6%. Gross profit increased 20% from the September quarter of 2019.

CorVel enterprise comp TPA claims handling improved through successful claims handling cost initiatives exceeding reductions in claims revenue. Telehealth virtual care services with its ongoing revenue expansion contributed to the increase of margin and profit gains seen within the patient management segment. .

The revenue for network solutions sold in the wholesale market for the quarter was $46 million, a decrease of 11% from the same quarter of the prior year. Gross profit in the wholesale business was down 30% from the September quarter in 2019.

Ongoing COVID-19 restrictions and claimant unease regarding physically attending appointments are continuing to cap the full recovery of the number of medical bills relating to nonurgent appointments from the hospital and the provider setting. .

Although COVID-19 weighed heavily on our annual quarter comparisons, CorVel has seen a pattern of steady recovery from the June quarter through the September quarter. Sequential quarter revenue grew 5%, while net income and EPS increased over 40% from the June 2020 quarter. .

New sales continue to be a strong bright spot throughout the pandemic. This positions CorVel for future growth once the suppressive overhang of COVID-19 wanes. .

I would now like to review a few additional financial items. During the quarter, the company repurchased 150,325 shares for a total price of $12 million. Inception-to-date, the company has repurchased 36 million shares for a cost of $546 million. Through this program, the company has repurchased 67% of the total shares outstanding. .

The quarter ending cash balance was a record high $106 million. Our DSO, that is days sales outstanding, and receivables was 49 days, up 5 days from a year ago and up 2 days from the June quarter. Cash flow remains strong and positive throughout the quarter. .

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..