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 day, and thank you for joining us to review CorVel's December quarter. Joining me on the call today is Brandon O’Brien, CorVel's 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, 2020, were $0.63, up 26% from the same quarter of the prior year. Revenues were $142 million. 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 technologies CorVel had implemented before the virus outbreak.

Given the considerable uncertainty and concern everyone felt in late March and throughout April, 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 in claims administration and our CERiS commercial health review business..

And now for an overview of sales. A self-assessment of our sales results before last year identified this as an area where we believe we can and should improve. CorVel has strong product offerings in 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 in the first year of this effort. This remains a continued area of emphasis. Sales results reflect healthy balanced growth in Network Solutions, enterprise comp TPA and CERiS medical review service offerings.

An area of focus has been system enhancements to meet the needs of mid-market carriers. These enhancements are translating to increased sales in 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 in this new year..

Digging a bit deeper into our strategic focus. CorVel has invested in information management technologies from the outset over 30 years ago. These past investments provide a foundation upon which the company expects to build new capabilities not imaginable just a few years ago.

Investments in artificial intelligence and machine learning will be built to leverage existing investments in both the management of care and transaction processing within the health care 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.

CorVel's technical foundation supported the agility to quickly transition our team to work-from-home, easily scale to meet the tenfold increase in telehealth demand and effectively respond to evolving customer needs.

From a strategic perspective, we're optimistic about our position and our ability to continue adapting, responding and thriving in this dynamic environment..

Artificial intelligence and machine learning are technologies with real promise. There's 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 in our approach to AI.

By blending industry and technical expertise with strategic partnerships, we're able to provide increased insight, prescriptive actions and an enhanced strategic engagement for our clients. The culmination of these efforts will be a new product, Cogency, and a new service, SIM, strategic insight management..

Cogency, an 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 adviser and supported by a dedicated group of technical experts and Cogency, this team will work with client stakeholders to optimize their solution and drive improved outcomes.

These long-term investments in innovative technology and services position CorVel to gain competitive advantage as the pace of change increases..

Now let's turn to the markets we serve. In our workers' compensation business, we have seen some delays in claims progression. The ability of claimants to return to work has been adversely affected by furloughs and layoffs.

Also, there have been interruptions of care at 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 would previously have been brick-and-mortar venues.

CorVel's 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 in telehealth.

Managing medical spend and providing proactive care are both cornerstones of the CorVel 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 no notable increase to date..

We are expanding our telehealth program to include at-home access to self-administered noninvasive COVID-19 testing. Available for our customers and their employees, this testing reduces the risk of exposure.

As part of the virtual triage process, an employee who is having symptoms or who may have been exposed to the virus will receive an at-home test kit. The test kit will be returned to the laboratory via a biologically safe envelope. A certified report will be available within 36 hours of receipt by the lab.

This offering eliminates the need to find an external laboratory, it 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..

In the health market, payers are evolving and making changes to their payment integrity processes. There is a deliberate movement from the traditional approach, reviewing itemized 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. CorVel's payment integrity systems, developed by our CERiS operation, support prepayment processing..

Our solutions leverage advanced analytics to efficiently find billing inaccuracies and task automation to compress the time required to complete the process. The CERiS 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..

SYMBEO, our revenue cycle services business, has used recent months to upgrade processes and evaluate new market opportunities. A result of this evaluation is a new partnership with a marketing channel that increases exposure and sales to mid-market companies.

The strength of SYMBEO is its ability to effectively take in paper-based transactions and merge them efficiently with electronically-processed volumes. The transaction intake functionality has been transitioned to an OCR engine powered by the latest AI technology.

The new approach delivers increased reliability and reduced turnaround times with enhanced quality and better serves our AP 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, 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 in product development include expanding the use of machine learning, natural language processing, web service development and as previously mentioned, advanced analytics..

While the backlog of compelling product development 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 in both the insurance and health care markets to extend throughout the planning horizon..

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 in web-based smart processing tools. 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 in our bill review receipt process. We have moved from human verification of information to an integrated and fully-automated OCR approach. The process imports medical bills into the review platform.

It allows a 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 an automated QA process to flag and score bills for accuracy. Bills requiring human intervention are routed accordingly.

Enhancements such as this, along with others that are currently in process, allow our specialists to spend more time on tasks requiring their expertise, generating the most value in the adjudication process..

The workers' compensation market continues to be active, and our new service features have been well-received. In the December quarter, we released a dynamic electronic claim review platform, Insights, via the 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 in the industry for decades. As we glean additional data-based insight in 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 $0.63, a 26% increase from $0.51 per share in 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 long-term structural improvements. The revenue for patient management, including third-party administration, TPA services and traditional case management for the December quarter, was $97 million, an annual decrease of 2%.

Gross profit increased by 17% from the December quarter of 2019..

Our third-party administration services hit record levels and continue to be well-received in the marketplace. The enterprise comp integrated care model is tightly coordinated with the expanding avenues of care. CorVel's telehealth and Care IQ services provide immediate virtual care and concierge-level scheduling of in-office care.

In delivering favorable outcomes to employees, employers and CorVel, these services offer ongoing revenue expansion opportunities..

The revenue for Network Solutions sold in the wholesale market for the quarter was $45 million, a decrease of 10% from the same quarter of the prior year. Gross profit in the wholesale business was down 3% from the December quarter of 2019.

Gross margins increased as the CERiS 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 82,000 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 this program, the company has repurchased 67% of the total shares outstanding..

The quarter ending cash balance was a record-high $129 million. Our DSO, that is days sales outstanding and receivables, was 41 days, which is the same as a year ago and down 8 days from the September quarter. Cash flow remained 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..