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 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 actual results to differ materially from those contained in our projections or forward-looking statements. .

I would now like to turn the call over to Mr. Michael Combs, Chief Executive Officer and President. .

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

I will be reviewing business performance, the current environment, market trends and progress achieved with systems development. Brandon will then provide additional details on the financial results for the September quarter. .

The September quarter revenues were $177 million, 12% over the $158 million of revenue for the September 2021 quarter. Earnings per share for the quarter were $0.83, decreasing 5.6% from $0.88 per share in the same quarter of the prior year. .

In prior earnings discussions, we've referred to the growing importance of CERiS, which serves the commercial health care market, on our financial results. We are pleased with the strength of existing and developing partnerships and the CERiS revenue trend line.

However, fluctuations in transaction volume, which requires a collaborative effort with providers and payers, occurred early in the September quarter. .

EPS for the quarter was impacted by this temporary impedance in CERiS transaction flow, increased investment in CERiS and elevated staffing levels in our property and casualty business. .

I'll now provide additional texture on the latter 2 of these items impacting earnings. As CERiS has gained traction with the current payment integrity suite of services, we've increased investment in the CERiS team, the SaaS platform, research and development and the implementation of new services.

As a result, we're actively laying the foundation for additional meaningful growth in 2023 and beyond. .

With the challenges presented by the pandemic and Great Resignation, the company has prioritized the quality of engagement, results and outcomes generated for our partners. In addition, the focus has been protecting our strong reputation in the markets we serve.

To that end, enhanced retention efforts, proactive hiring and increasing bench strength have been elements of our approach to mitigate the impact of the labor market challenges. .

An overall 97% customer retention rate for the year validates the efficacy of our efforts. While the objective was to remain near neutral with overall staffing to transaction volume ratios, recruiting efforts have exceeded attrition in the implementation of new business.

The existing labor market imbalances are being addressed primarily by new business being onboarded and attrition. We also expect the workforce pendulum to swing back to a more neutral position. .

Turning to markets served. An essential factor in the managed care and claims management segments of the workers' compensation market is the number of highly leveraged vendors owned by private equity firms. Higher interest rates and a recession, should it materialize, may create challenges for such entities.

However, time as well as the economy will reveal durable companies with solid foundations. .

At CorVel, we adhere to a long-term view of success that has sustained the organization since its inception. Along with a conservative fiscal model, the organization strategy remains to differentiate our services and results achieved through technological innovation.

Our balance sheet, strategic initiative road map and operational fundamentals are healthy. We have made intentional decisions that position us not only to weather but to thrive in these unusual economic times. .

Now looking at industry trends and opportunities. Musculoskeletal disorders account for 1/3 of workers' compensation costs. The financial impact of MSKs in the workplace is about $20 billion per year.

With the addition of indirect costs included training and lost productivity due to learning curves and replacement employees, related overtime and administrative cost for supervisors, the amount increases to over $45 billion. .

A growing number of digital health start-ups are focused on the MSK space. The belief is that technology can have a material impact on treatment efficacy and the management of costs. New entrants are proclaiming the benefits of all digital programming using apps and wearable devices.

However, there remains some ambiguity about who is advocating for the utilization of these solutions, as they are not yet originating from treating physicians and workers with injuries may be slow to accept the new treatment approaches. .

At CorVel, we're effectively minimizing medical spend in the musculoskeletal space through our networks and ancillary service programs using CareIQ physical therapy, which has proven to reduce average therapy visits per claim below industry standards.

We're exploring multiple solutions and partnerships specific to musculoskeletal injuries to achieve the optimal results for our partners. We are developing enhanced data-driven networks and treatment plans, including all brick-and-mortar and hybrid, a combination of brick-and-mortar and virtual solutions. .

In the health market, companies are increasingly becoming self-insured, and CFOs are looking for heightened accountability, transparency and control. As such, preemptive notification of large incoming expenditures and maximize savings on medical bills before payment are even more vital. .

CERiS has been successful in prepayment adjudication, medical record retrieval and itemized bill review, all of which are foundational to prepayment processing.

In addition, the services provided are consistently defensible, meet prompt pay guidelines and adhere to state-specific policies, making CERiS the partner of choice with best-in-class solutions that create maximum sustained savings. .

As I indicated earlier in the call, we've been very active with technological investments for CERiS. For example, workflow and distribution management are vital to processing transactions. In the September quarter, efforts to build and implement a new workflow management system were completed.

The enhanced design provides increased scalability, configurability and reduces impedance in the process, resulting in efficiency gains of up to 15% in overall labor costs. .

The team also introduced new technology to automate the review of medical records. This functionality eliminates manual processes. Early indications point to a 30% efficiency gain for the clinical review team performing diagnosis-related group audits. .

I previously mentioned the impact of the Great Resignation at CorVel. While that is slowing, the talent gap created by boomers leaving the adjusting workforce will continue for many years. As well as mentoring and training, we believe a continued focus on system automation will significantly impact new and existing team members.

Ensuring our claims system is intuitive, streamlining workflows and removing mundane and repetitive objective tasks will optimize the team's effectiveness and enhance the overall outcomes for our partners. .

In addition to automation, the younger generation desires faster, more direct communication. One of the most prominent examples is the preference for text messaging over phone calls.

In claims, case management and our ancillary benefits management program, CareIQ, we are expanding the use of text messaging to enhance the efficacy of communication with all stakeholders, including the workers with injuries.

We also continue to enhance system dashboards and interactive interfaces in collaboration with partners' feedback during regular business and intentional forums like our partnership meeting, which I'll discuss later. .

Improvements to visibility assure more in-depth and real-time access to key performance indicators, and that facilitates better management for our book of business and individual partner programs. This collaborative development assures the creation of interfaces that provide the views most helpful to all stakeholders.

Most recently, this interactive process occurred with CorVel's return to work dashboard. .

The interface provides detailed information regarding which workers are off work, at work with restrictions or back to work full duty. Visibility into this information is vital for risk managers. Their input ensures the project results give them the most pertinent details. At the end of September, we were pleased to host our annual partnership meeting.

Each year, we bring partners to share innovative enhancements we've implemented and to preview new products and services we're developing. An essential objective for the meeting is to receive feedback on recent efforts and to explore additional areas of opportunity in the dynamic market landscape.

This meeting also provides invaluable insight to guide system and service initiatives and a chance to deepen our partner relationships. .

Additional opportunities to meet with our partners in the employer, broker and carrier markets were provided during the National Workers' Compensation and Disability Conference last month. It was rewarding to hear positive feedback, but one, in particular, stood out.

A carrier partner with whom we have won over a dozen accounts in the past year shared their annual internal TPA scorecard, which showed the results of the programs we handle versus competitors.

Based on the carrier scorecard, not only are CorVel's services producing higher savings and better results, but the conversion process to move to CorVel is more straightforward, and our system interface much preferred. .

Furthermore, we received the 2022 Risk Management Team of the Year from Business Insurance's U.S. Insurance Awards with our partner, Bass Pro Shops. Bass Pro is dedicated to ensuring its employees receive the most appropriate care and claim monitoring to achieve optimal recovery.

A dedicated team of CorVel nurses and coordinators works closely with adjusters, providers and the workers with injuries to ensure an effective and timely return to work with maximum medical improvement.

As a result, Bass Pro has seen decreased narcotics usage, reduced number of employees on temporary total disability and lowered overall medical costs in their program. We are grateful for our partnership with Bass Pro and look forward to continued success in the future. .

Brandon will now provide additional texture on the financial results for the September quarter.

Brandon?.

Thank you, Michael, and good morning, everyone. As Michael indicated at the top of the call, revenue for the September quarter was $177 million, up 12% from the same quarter of the prior year. Earnings per share were $0.83, a 5.6% decrease from the $0.88 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 September quarter was $119 million, an annual increase of 14%.

Gross profit decreased 9% from the September quarter of 2021, primarily due to the increased staffing costs influenced by our commitment to maintaining service quality while addressing the headwind pressures of the Great Resignation.

Advancements in AI-assisted solutions rolling out internally over the next 3 months and beyond provide stronger operational efficiencies, adding relief to the increasing cost pressures while delivering more timely service outcomes. .

The revenue for Network Solutions sold in the wholesale market during the September quarter was $58 million, a 9% increase from the same quarter of the prior year. Gross profit in the wholesale business was up 5% from the September quarter of 2021.

This growth is attributable to the change in business mix more towards the health market business within Network Solutions. .

Throughout the company, CorVel is embracing the hybrid work model, allowing employees to work from home but also to come into the office for team collaboration. This shift has created positive effects on productivity as well as employee morale, team culture and the environment.

Fewer designated desks and more conference rooms are designed to facilitate impactful team meetings. These design changes allow us to enhance the positives of the in-office experience through reduced office footprints while growing the business.

By 2025, we plan to realize a 40% decrease in total leased office space from our prior 2020 levels, providing ongoing cost structure efficiencies. .

I would now like to review a few additional financial items. During the quarter, the company repurchased 164,500 shares at a total cost of $26 million. From inception to date, the company has repurchased 37.6 million shares at a total cost of $707 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 of receivables, was 43 days, up 3 days from a year ago. The quarter ending cash balance was $76 million. .

CorVel's strong and debt-free balance sheet generates improved earnings in contrast to many others in the segment facing increasing debt loads with associated interest rate cost headwinds. .

That concludes our remarks for today. Thank you for joining us. I'll now return the call to the operator. .

This concludes today's webcast. You may disconnect your lines at this time..