CorVel Corporation Q3 FY2022 earnings call

• New sales remained robust in the quarter, with new bookings in 2021 reaching a record high. The sales staff navigated the new normal of virtual and in-person meetings well. - The December quarter was affected by the New Year's holiday falling in December, but the March quarter will benefit from more working days. - The organization adjusted well during the pandemic, with strong recruiting and retention due to an entrepreneurial culture, work-from-home flexibility, and robust production systems. - Responding to wage inflation by balancing salary adjustments with investments in customer service, and leveraging historical investments in web-based production systems to offset inflation impacts. - Flexed with pandemic changes, expanding telehealth activities and investing in care management systems. - Private equity has left competitors highly leveraged, and higher interest rates may increase industry churn. - Innovative care delivery (virtual care) reduces costs, and CorVel is well-positioned with proprietary systems. - Symbeo offers on-demand revenue cycle management, using technology to improve service. - Payment integrity programs are crucial, with CERiS core to prepayment review, relying on technology for differentiated solutions. - Project development focuses on expanding prepay payment integrity solutions, enhancing interfaces, optimizing virtual care, AI/ML, and system automation.

For the December 2021 quarter, revenues were $164 million. The patient management segment (including third-party administration, TPA services, and traditional case management) had revenue of $108 million, an annual increase of 12%. Gross profit in this segment decreased 2% from the prior year quarter due to calendar effects. The Network Solutions segment, which sells in the wholesale market, had revenue of $57 million, up 26% from the prior year quarter. Gross profit in the wholesale business was up 30% from the prior year quarter, with gross margins increasing due to a higher percentage of health market business within Network Solutions. Revenue contribution: Patient management likely contributed a significant portion, with Network Solutions also making a notable contribution.

• The March quarter will benefit from an increased number of working days without the typical New Year's holiday. - Investments in technology are expected to continue neutralizing increased costs due to inflation. - The strong new sales in 2021 provide positive tailwinds into future quarters.

• Higher interest rates are likely to impact highly leveraged market competitors. - Inflation and corresponding higher interest rates may increase churn in the competitive environment as the debt of highly leveraged companies matures. - The pandemic changed the mix of workplace injuries and made healthcare facilities challenging to manage.