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 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..
Thank you for joining us to review CorVel's March quarter and fiscal year 2022 results. On the call with me today is Brandon O'Brien, CorVel's Chief Financial Officer. Today, I will be reviewing business performance, the current environment and market trends and progress on system developments.
Brandon will then provide an overview of our March quarter and fiscal year financial results. The March quarter revenues were $171 million, 18% over the revenue for the March 2021 quarter. The earnings per share for the quarter ended March 31, 2022, were $1.09, an increase of 35% over the prior year's same quarter.
Revenues for fiscal 2022 were $646 million, up 17%. Earnings per share were 3.66%, an increase of 44%. The quarter saw continued strengthening in our fundamentals.
The results achieved are attributed to increased new bookings, particularly within our commercial health-focused operation, CERiS and improved productivity resulting from automation and augmentation being applied incrementally across our business enterprise systems.
Our product development efforts have been focused on key additions to our TPA and Network Solutions business and enhancements to our CERiS payment integrity platform. The workers' compensation focused market investments will enhance the ability to address the evolving carrier needs.
In contrast, those in CERiS, for the commercial health market, will support the seamless integration of additional payment integrity services. Last month, we met with many of our partners and prospects in person at the RIMS Conference in San Francisco. It was wonderful to be back together and feel a sense of normalcy and interactions.
We had many meetings with prospects, brokers and partners. We were quite pleased with the responses regarding the latest enhancements to our systems. The new functionality further augments the capacity of our team members to create best-in-class service.
The advancements allow staff to increase focus on the most important things, helping employees get back to wellness instead of being bogged down with menial tasks. CorVel's claim volumes have returned to pre-pandemic levels. As the labor market rebalances, we expect workers' comp claims to increase.
While the Great Resignation continues to impact the overall labor market, we have been pleased with our record of retaining and attracting talented team members. Our team grew consistently through 2021 in support of servicing the record new bookings closed in 2020 and 2021.
Our designation as a great place to work is helpful towards this end and we are grateful to the now 4,000-plus employees who are part of the CorVel team. Inflation is an additional macro-level factor affecting the markets we serve. In the P&C and commercial health markets, rising costs tend to increase demand for our risk management services.
In addition, we're focused on increasing automation and process optimization to further mitigate the impact of inflation on those with which we partner. Hospitals, clinics and provider practices are experiencing physician and nurse shortages which can cause delays in care.
Our medical case managers are uniquely equipped to navigate the current environment and deliver continuity of care. Their local relationships and knowledge of Centers of Health Care Excellence help patients receive the timely care and attention they require. At CorVel, we are also overcoming delays by connecting patients to virtual care services.
Our nurses provide the best of care for telehealth or virtual care physical therapy, free or postsurgical rehab and virtual reality cognitive behavioral therapy.
Results in the past year were particularly strong in CorVel's CareIQ, CarIQ provides nationwide network access and clinical outcomes management for physical therapy, imaging and diagnostics, medical equipment, home health care, medical transportation and interpretation services.
Driven by significant expansion within our physical therapy networks and supported by system enhancements, the 2022 fiscal year revenue was 47% higher than the previous year. CareIQ's adjudication engine, unique in the workers' compensation industry, is embedded within the bill review platform.
Integration with CorVel's bill review system allows our proprietary automation to optimize network utilization. Additionally, because CareIQ is within bill review, it leverages applicable rules for determining maximum state allowable fees.
We are the only full-service ancillary benefits program that guarantees all charges are compliant with states medical fee schedules. This integration has presented us with new opportunities for growth within the carrier and managed care space.
Our technical foundation has been established to provide timely and accurate ancillary benefits management and our demonstrated ability to execute effectively in this area is being well received in the market. CorVel is increasingly being viewed as a better alternative to establish vendors in this space.
CorVel's payment integrity provider, CERiS, continues to lead the industry and prepayment itemized bill review, saving money on the vast majority of claims processed. Statistically, we have found the solutions other companies deploy resulted only 60% of the savings achieved by CERiS.
In addition, 97% of proposed savings are accepted compared to the industry average of 90%. While the itemized bill review savings are significant, CERiS has been adding further services to strengthen control over costs.
Surgical implant device bundles, high-end medical devices and specialty services experienced pricing irregularities, repairs being billed from more devices that were implanted or overbuilt for the devices or services themselves.
CERiS' reviews identify and provide the manufacturers' true costs by utilizing our proprietary repository of implant invoice data. CERiS' reviews in this area reduced device bundling and establish a recommended reasonable payment for these services.
In addition, specialty care reviews are conducted to isolate overcharging and identify providers with consistent patterns of billing outside industry norms. The Office of Inspector General for the Department of Health and Human Services reports that Medicare was overbilled $636 million for neurostimulators.
In addition, hospice services are growing into a $30 billion business. The need for reviews and billing in these areas cannot be overemphasized. While they will not solve the rising health care costs single-handedly, they will make a significant difference for the single-payer of self-funded employer groups.
We are proud of the savings we are creating at CERiS and we'll continue to invest in these services to create new offerings for our partners. In 2010, Apple launched conversational artificial intelligence with Siri. Similarly, in 2014, Amazon launched AI with Alexa.
Today, we have a little thought to our interactions with conversational AI as it has become a norm on our phones or home devices and on our customer service calls.
The years and years of data collected from these conversations have enabled AI to answer a rapidly expanding list of questions and to make our lives easier and our interactions more efficient.
In our continual effort to leverage technology to better serve the patient population we work with, we are introducing conversational AI into CorVel's contact centers.
By using AI to answer calls immediately, lead times are essentially eliminated and the process of connecting injured workers to the appropriate medical care professional is streamlined. Claim reports will be quicker and the injured workers' overall experience enhanced. Another innovation this quarter was the implementation of a claim risk score.
Within CareMC Edge, our proprietary claims management platform, we are leveraging advanced technology to assess all data elements associated with each claim to establish a real-time risk assessment.
The risk score begins at day 1 of the claim and continuously recalculates and adjust during the life of the claim as additional information becomes available or changes. When each element is analyzed, corresponding events are triggered and prescriptive action is recommended.
This allows real-time assistance for the claims professional to proactively address possible issues and obtain the best outcomes. With pandemic and increasing inflation, CorVel's playbook remains unchanged.
Financial strength and fiscal conservatism have allowed us to increase investment in CorVel team as well as the rate at which we're introducing innovative solutions to market, the combined impact of which is being noticed in the industry and benefiting a growing list of partners.
Brandon will now provide an overview of the financial results for the March quarter and the fiscal year.
Brandon?.
Thank you, Michael and good morning, everyone. Revenues for the March quarter were $171 million, up 18% from the same quarter of the prior year. Earnings per share for the quarter were $1.09, an increase of 35% from the $0.81 per share in the same quarter of the prior year. Revenues for the fiscal year ended March 31, 2022, were $646 million, up 17%.
Earnings per share for the fiscal year ended March were $3.66, up 44% from the prior fiscal year's EPS result of $2.55. Patient management and Network Solutions both delivered double-digit year-over-year revenue growth. Profit growth percentages in excess of revenue were driven by a positive mix shift to higher-margin services.
The expansion of CorVel's growing suite of health market-related services under network solutions contributed to this positive shift. Network Solutions Service segment enjoys higher economies of scale, whereas patient management has higher variable expenses.
Within Network Solutions, CERiS has been expanding its service offerings to health carriers to encompass a full suite of payment integrity and cost containment solutions. Our CERiS offerings provide a welcome alternative to a shrinking number of independent offerings of cost containment vendors servicing the large health players.
The revenue for patient management, including third-party administration, TPA services and traditional case management for the March quarter was $111 million, an annual increase of 15%. Gross profit increased by 4% from the March quarter of 2021.
Patient management revenue for the fiscal year ended March 31, 2022, was $424 million, an annual increase of 15%. Fiscal year gross profit increased 6%. The revenue for Network Solutions sold in the wholesale market for the March quarter was $60 million, an increase of 24% from the same quarter of the prior year.
Gross profit in the wholesale business was up 38% from the March quarter of 2021. Network Solutions revenue for the fiscal year ended March 31 was $222 million, an annual increase of 21%. Fiscal year gross profit increased 41%.
CorVel is executing on our strategy of expanding our penetration in the health market with prior and current quarter investments bearing fruit.
As an example, the specialized DRG cost containment service added to the CERiS suite of offerings roughly a year ago, realized a near doubling of recognized savings volumes in the March quarter compared to the sequential December quarter.
The total addressable markets in health as well as the government segments represented primarily by Medicaid and Medicare are all many multiples the size of the company's current primary market and workers' compensation. I would now like to review a few additional financial items.
During the quarter, the company repurchased 145,991 shares at a total cost of $24.8 million. From inception to date, the company has repurchased 37.2 million shares for a cost of $655 million. Through this program, the company has repurchased 68% of the total shares outstanding.
The repurchasing of shares continues to be funded via the company's strong operating cash flow. Our DSO, as in days sales outstanding and receivables, was 44 days, up 4 days from a year ago. The quarter ending cash balance was $98 million.
The company's liquidity, strong balance sheet and consistent results delivered continued to reflect the healthy conditions of our business. This solid fiscal positioning and outcomes achieved are particularly desirable in a market environment that begins to separate the wheat from the chaff. 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..
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