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. .
Good morning, and 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, I will be reviewing business performance, the current environment and market trends and progress on system development. Brandon will then provide an overview of our financial results for the June quarter. .
The June quarter revenues were $176 million, increasing 16% over the $153 million for the June 2021 quarter. Earnings per share for the quarter were $0.94, increasing 2% from $0.92 per share in the same quarter of the prior year.
These results continue the top line growth from June quarters and the years prior, discounting for the pandemic low from 2020. .
We're adjusting to an increase in operational cost to improve bottom line performance. With the advent of the Great Resignation, hiring was increased aggressively to ensure the continued quality and consistency of the results, the outcomes delivered for our partners.
A return to more traditional attrition levels, combined with the continued focus on automation and operational efficiencies, will support increased transaction volume with a more conservative staffing model. .
As our listeners may recall, our CareIQ unit provides nationwide network access and clinical outcomes management for physical therapy, imaging and diagnostics, medical equipment, home health care, medical transportation and interpretation services.
During the quarter, revenue increases were recognized in all service lines in both prospective and retrospective billing. .
I am pleased with the sustained revenue growth in the year. And the contribution of CERiS with the payment integrity focus in the health market has been strong. I am also happy to share that we, once again, received the Business Insurance Innovation Award, this time for CogencyIQ, our advanced data analytics solution for claims management. .
For this recognition and the quarterly results in spite of the pandemic and the other economic factors in the labor market, I want to thank our 4,000-plus team members for their dedication to our partners and commitment to our mission. .
As we head into the third quarter, different variants of COVID continue to spread across the country. Inflation is at levels we've not experienced for many decades, and the threat of a recession looms. Economic dynamics are tamping down the elevated M&A activity that we've seen in these last few years.
Valuations for late-stage start-ups decreased in the first 6 months of 2022 following the record year for venture capital in 2021. We will continue to review synergistic acquisition opportunities, and the reduced valuations may present opportunities for CorVel. .
CorVel's conservative approach to business has allowed us to maintain a high return on equity through the challenges presented by the pandemic and the corresponding up and down cycles of the economy. We appreciate the investor following we have and the trust they place in us. .
The technology sector of the market has been adversely affected by the recent market adjustment. A result of this change and a slowdown in hiring by a few of the very large technology companies is increasing availability of high-caliber IT resources. This is an area in which we are increasing investment.
Having a greater pool of qualified candidates will bolster our efforts. .
In the workers' comp industry, carriers are reporting higher increases in mega claims, those with over $3 million in total cost. The aging workforce, in combination with the labor shortage, has caused workers to move into jobs where they have less experience and is resulting in more instances of very large claims.
The key drivers for the increased cost of these claims are inflation, liability risk, litigation and stalled or fragmented health care. .
At CorVel, our case managers, in conjunction with our integrated claims staff, assist with mitigating and driving cost-effective solutions.
As care facilitators, our case managers overcome obstacles to recovery, facilitate the injured worker's safe return to preinjury health and work status as quickly as possible while knowledgeable claim staff work with employers to export creative return-to-work options. .
With the increased demand for telehealth during the pandemic, many states relaxed state licensure laws or granted temporary licenses to out-of-state providers, which allowed virtual care to be provided across state lines.
33 states have joined the Interstate Medical Licensure Compact, which created binding agreements across participating states to streamline interstate practice.
While there is renewed urgency to make telemedicine work across state lines, largely due to the overturning of Roe versus Wade and a shortage of providers, updated regulations and state licensing agreements are still a work in progress.
The Federation of State Medical Boards has put forward a proposed policy, but it did not include full reciprocity between states. .
Regardless of regulatory issues, our telehealth and virtual care models are still experiencing significant demand. The accessibility of receiving medical attention at any time of day in any location without having to leave the work site has been found to be too convenient to abandon.
In addition to telehealth and virtual physical therapy, our PPO providers are utilizing technology to keep injured workers engaged in their own recoveries by the use of tools such as mobile applications for postsurgical recovery.
Active engagement, in conjunction with its assessment and efficiency of treatment, results in shorter case durations as well as reduced overall cost of care. .
CorVel continues our commitment to delivering innovative technological solutions, which enhance the injured worker's experience and reduce the cost of care. Through the pursuit of workflow automation, we are reducing the number of objective tasks presented to our team members and decreasing the lag time between episodes of care for the patient. .
By using process mining to visualize workflows, constrictions and inefficiencies are determined quantitatively, identifying areas of opportunity for optimization. Metrics are reviewed for specific processes, teams and individuals and can be compared against individual areas to check for operational inefficiencies.
In addition, opportunities for clinical decision support tools to be embedded in the system are identified. The more we remove monotonous tasks from desks in favor of automation, our staff become more efficient.
Intuitive systems also allow less experienced staff to come up to speed more quickly, which also results in improved outcomes for our patients and partners. .
Within Symbeo, our revenue cycle management arm, automation remains a leading priority due to the shrinking skilled workforce and a shift in finance organizations from transactional to strategic partners. This, in addition to persistent instability in supply chains, drives a greater need for automation, visibility and speed. .
During the summer, we are releasing our next-gen accounts payable invoice automation product, leveraging OCR, ML and AI to provide our partners with greater agility in the management of accounts payable. OCR, ML and AI are also being leveraged to enhance bill review processing workflows to combine disparate information from multiple sources.
The systematic improvements, which increased data quality and accuracy, help provider matching and speed our document capture and data verification processes. .
Brandon will now provide an overview of the financial results for the June quarter. .
Thank you, Michael, and good morning, everyone. Revenues for the June quarter were a record $176 million, up 16% from the same quarter of the prior year. Earnings per share were $0.94, an increase of 2% from the $0.92 per share in the same quarter of the prior year. .
The revenue for patient management, including third-party administration, TPA services and traditional case management for the June quarter was $115 million, an annual increase of 14%. Gross profit decreased 14% from the June quarter of 2021.
Rising claim volumes contributed to the increased revenue in conjunction with the additional managed care services associated with those claims. Patient management has a higher variable expense, making it more sensitive to the impacts of elevated levels of inflation.
Additional automation, operational efficiencies and staffing initiatives are being implemented to provide improved bottom line alignment relative to the positive revenue trends being achieved. .
The revenue for Network Solutions sold in the wholesale market for the June quarter was $61 million, an increase of 18% from the same quarter of the prior year. Gross profit in the wholesale business was up 24% from the June quarter of 2021.
Network Solutions enjoys higher economies of scale than patient management, especially through increasing CERiS volumes. CERiS is realizing this expansion by bringing class-leading payment integrity solutions to the largest health carriers.
Its payment integrity solution suite of services strive to strike the right balance of maximum cost containment savings facilitated by advanced and coordinated process workflow. This nuanced combination works to realize sustained savings while minimizing network disruption and noise. .
I would now like to review a few additional financial items. During the quarter, the company repurchased 174,822 shares at a total cost of $26.7 million. From inception to date, the company has repurchased 37.4 million shares for a cost of $681 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 42 days, up 2 days from a year ago. The quarter-ending cash balance was $94 million. The company's liquidity, strong balance sheet and the delivered quarterly results continue to reflect the healthy conditions of our business positioning. .
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..