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 the 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 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. I would now like to turn it over to Michael Combs, President and Chief Executive Officer..
Good morning. Thank you for joining us to review CorVel's June quarter. On the call with me today is Brandon O'Brien, CorVel's Chief Financial Officer. Today, we'll be discussing business performance, the current environment and market trends and then move on to system development.
Brandon will then provide an overview of our financial results for the June quarter. Revenues for the quarter ended June 30, 2021, were $153 million. Earnings per share for the quarter were $0.92, increasing 102% from $0.46 per share in the same quarter of the prior year.
The quarter ending cash balance was $139 million, up $45 million from June 30, 2020. This increase is a proxy for the strength of our service model. It reflects the enhanced levels of automation and resulting efficiencies in our system as well as the improvements to operations that have been accomplished in the dynamic environment during the pandemic.
The record revenue in the quarter ended June 30, 2021, is largely due to implementing and building on new business sold in 2020 and the first 2 quarters of this year as well as an increase in transaction volumes as the year progressed.
Prior to the June quarter, we experienced consecutive quarters of increased profit margins on relatively static revenues. In addition to increased investment in technology, we've expanded and enhanced our digital marketing strategy and engagement with various digital and print mediums.
We're being more effective with marketing automation, content marketing and brand activation. After taking time during the past 4 earnings calls to discuss the pandemic and its impact on business, it's refreshing to talk about things settling into a new normal.
With new accounts added, the resumption of medical procedures increased claims and billed volume and demand for managed care, service lines are meeting or exceeding pre-pandemic levels. I recently had the privilege of visiting field offices, where I was reminded of the resiliency and amazing accomplishments of our team during these last 18 months.
In a quarter in which there are many things to be grateful for, I am most pleased with the exemplary work of our teams across the country. The markets for all services strengthened through the quarter as the effects of the pandemic subsided.
But as the economy restarts, the record number of unfulfilled jobs, 9 million, presents a potential headwind in some sectors. As carriers and others in the industry experienced resourcing difficulties, there will be increased appeal for alternative solutions to those functions, which have historically been handled in-house.
These market forces tend to increase demand for the risk management services that CorVel provides. With our robust foundation and proven results, we're well positioned to address this increased need in the markets we serve. COVID-19 has been a catalyst for many in the workforce to assess what their new normal might be post-pandemic.
The number of people considering career changes is rising. Many are questioning their role due to concerns about career advancement with their current employers.
Consistent with CorVel's designation as a Great Place to Work, we have an established history of being a company where people can grow, advance and build a career, something of which we're tremendously proud.
The culture we've built and fostered is as important today as at any point in the company's history, and we'll continue to invest in our associates and the environment at CorVel. CorVel's new post-pandemic normal will include adjustments in our approach to physical offices.
Some locations will transition from traditional workspaces to collaboration centers, ultimately, reducing our overall carbon footprint. Office layouts will be modified to allow for additional meeting spaces and to enhance team collaboration.
Space will be configured to support team members working full-time in the office as well as those following a hybrid work model. As always, we remain an organization focused upon improving healthcare experiences for the employees of our client customers.
In the most recent quarters, efforts have been focused upon building our telehealth operations, strengthening and expanding the ability to integrate information across the various constituencies in an episode of care and adding sophisticated analytics tools to understand how best to improve outcomes.
During the last year, we had the opportunity to better define our highest development priorities in order to better serve the patients in our program. Automation and augmentation continue to be a focus for product development.
Within our proprietary business systems, managing claims, managing cases, bill adjudication and ancillary services, millions of transactions occur each month. Within each area and for each operation, there are multiple steps and typically multiple people involved in completing each unit of work.
Utilizing process mining tools, we are identifying those areas that will most benefit by the application of technology, specifically through automation.
This is an effort that's iterative and ongoing as we continue to make investments in existing foundational systems, the results will be increased capacity, quality and consistency with fewer exceptions. We're employing multiple tools to augment the work of our claims professionals, nurse case managers and bill review analysts.
Natural language processing is allowing us to zero in on and distill critical information from volumes of medical data, machine learning, speech analytics and data mining are increasingly being used to identify claims that require additional attention and oversight. These technologies are also being used to identify fraud, waste and abuse.
One additional example of the practical application of technology is rules-based utilization review, which identifies treatment outside standards of care and alerts the appropriate stakeholders to take action.
Early identification, combined with systematic notification and intervention is resulting in improved outcomes for the injured workers, enhanced workflow for internal teams and reduced cost for our partners. As we all know, the pandemic accelerated the acceptance of telehealth, virtual care and other digital tools used by employers and employees.
At CorVel, we've been building such services for several years, and the receptivity created by the pandemic gave our efforts a nice boost. We're also starting to see adoption of peripheral devices in digital therapeutics to augment virtual visits.
The integration of these technologies into virtual care increases patient engagement and results in improved health outcomes. In the health market, wearable devices allowed for comprehensive exams and diagnosis at home. The virtual diagnostic process is conducted completely by the patient.
Data from peripheral and wearable devices, when combined with pharmacy, medical claim and psychosocial data, will continue to improve machine learning capabilities and the corresponding outcomes in workers' compensation. In the health market, CERIS is capitalizing on the pandemic-related advancement in hospital-specific electronic health records.
The patient care gap is continuing to shrink among all parties, electronic health records and related apps for medical documentation are becoming more and more accessible in real time. Health systems currently have institutional solutions, but they are opening their systems to interact with the marketplace.
Not only are we able to use digital information to assure accuracy of documentation and payments, we're also able to administer payments directly to providers, which ensures continuous care. With CERIS' natural language processing capture supported by artificial intelligence, coding is matched and affirmed or corrected prior to payment.
The precision and speed of processing will only continue to increase as the technology advances. Within CareMC Edge, our proprietary claims management platform, we have implemented a new program management interface for our carrier customers.
This tool provides a high-level view of program results and allows the user to benchmark their results against industry standards. The new interface also supports comparisons of different time intervals or subsections within the business.
We've also implemented a system, which builds increasingly real-time interfaces to improve the patient experience during an episode of care, supporting internal operations as well as our managed care partners.
These features support additional data integration and security and allows users to operate within a single integrated system, streamlining the business workflow. SYMBEO, our revenue cycle management arm delivered an updated machine learning AI-assisted digital capture solution that provides a 75% reduction in overall processing time.
The solution eliminates many of the inaccuracies with less automated solutions. In the post-COVID environment where physical offices are shrinking, transitioning to digital revenue cycle management processes is increasingly important for our partners.
SYMBEO's products and services remove the need, in many cases, for customers to maintain mail rooms and reduces the overall effort our partners have historically spent on the individual stages in revenue cycle processing. In addition to enhancements and additions in systems and services, we have an unrelenting focus on operational excellence.
A working group of operational managers is dedicated to continuous improvement, ensuring performance is always at or above our established standards of service. Quality and outcomes are the hallmark of our services, and we remain attentive to advancing results in this area.
Brandon will now provide an overview and additional texture on the financial results for the June quarter.
Brandon?.
Thank you, Michael, and good morning, everyone. Revenues for the June quarter were a record $153 million, up 18% from the same quarter of the prior year. Earnings per share were a record $0.92, an increase of 102% from the $0.46 per share in the same quarter of the prior year.
These results were made possible by the ongoing return of pre-pandemic market conditions for our existing customers, plus the realized impact of robust new customer sales throughout the pandemic.
The impact of new sales on revenue includes a healthy mix of services, ranging from existing customers, expanding the breadth and depth of their services to establishing entirely new customer relationships.
The profit generated during the quarter reflected improved operational efficiencies as the June quarter pretax operating margins increased from 8.4% in 2020 to a record 13.5% in 2021.
The combination of the 18% increase of revenue with the increased margins provided the foundation for the year-over-year doubling of net income and EPS from the June quarter of 2020.
Revenue for patient management, including third-party administration, TPA services and traditional case management for the June quarter was a record $100 million, an annual increase of 18%. Gross profit increased 24% from the June quarter of 2020.
Our third-party administration services hit record levels, leveraging increased market recognition and engagement of CorVel's enterprise comp. In fact, CorVel's engagement per finished score on the prominent professional social media platform has trended upward and now leads our third-party administration industry peers.
Revenue for Network Solutions sold in the wholesale market for the quarter was $52 million, up 18% from the same quarter of the prior year. Gross profit in the wholesale business was up 57% from the June quarter of 2020. Gross margins increased due to an improving business mix within both workers' compensation and health wholesale markets.
The average size of the medical bill review increased, providing additional opportunities for our medical cost containment services to be applied. This translates to increased recommended savings for our customers, producing higher network solutions revenue. I would now like to review a few additional financial items.
During the quarter, the company repurchased 118,893 shares at a total cost of $14.2 million. From inception to date, the company has repurchased 36.8 million shares for a total cost of $579 million. Through this program, the company has repurchased 67% of the total shares outstanding.
The repurchasing of shares continues to be exclusively funded via the company's strong operating cash flow.
The quarterly cash flow speaks to the strength of our service model, including increased levels of automation with resulting efficiencies plus improvements to operations that have been accomplished in the changing environment during the pandemic. Annualized return on net invested assets for the quarter was a very strong 81%.
Return on total equity has been consistently 20% or more every year. The quarter ending cash balance was $139 million. Our DSO, as in day sales outstanding and receivables, was 40 days, down 7 days from a year ago. 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..