CorVel Corporation Q4 FY2022 earnings call

• Business performance: March quarter revenues were $171 million, 18% higher than the March 2021 quarter; EPS for the quarter ended March 31, 2022, was $1.09, a 35% increase year-over-year. Fiscal 2022 revenues were $646 million, up 17%, and EPS was 3.66%, a 44% increase. - Operational highlights: Continued strengthening of fundamentals due to increased new bookings, especially in the commercial health-focused CERiS, and improved productivity from automation and augmentation across business enterprise systems. Product development focused on adding to TPA and Network Solutions business and enhancing the CERiS payment integrity platform. - Market interactions: Met with partners and prospects at the RIMS Conference in San Francisco, with positive responses to system enhancements. - Claim volumes: Returned to pre-pandemic levels, and with labor market rebalancing, expect workers' comp claims to increase. - Inflation impact: Affects markets served, with rising costs increasing demand for risk management services; focused on automation and process optimization to mitigate inflation impact. - Medical case management: Nurses and case managers navigate physician and nurse shortages, connect patients to virtual care services. - CareIQ performance: Fiscal 2022 revenue 47% higher than the previous year due to physical therapy network expansion and system enhancements; its adjudication engine is unique in the workers' compensation industry. - CERiS status: Leads in prepayment itemized bill review, saves more money than other solutions, and adds services like reviewing surgical implant device bundles. - Technological innovations: Introducing conversational AI into contact centers to streamline processes; implemented a claim risk score in CareMC Edge for real-time risk assessment.

For the March quarter, Patient management revenue was $111 million, representing a 15% annual increase. Gross profit for the March 2021 quarter increased by 4%. For the fiscal year ended March 31, 2022, Patient management revenue was $424 million, a 15% annual rise, with fiscal year gross profit up 6%. Network Solutions had a March quarter revenue of $60 million, a 24% increase from the prior year's same quarter. Gross profit in the wholesale business for the March 2021 quarter was up 38%. Network Solutions' fiscal year ended March 31 revenue was $222 million, a 21% annual increase, and fiscal year gross profit rose 41%. Patient management encompasses third-party administration, TPA services, and traditional case management, while Network Solutions includes CERiS and other wholesale market services.

• Expect workers' comp claims to increase as the labor market rebalances. - CareIQ's integration presents new growth opportunities within the carrier and managed care space. - Total addressable markets in the health and government segments (largely Medicaid and Medicare) are significantly larger than the company's current primary market in workers' compensation.

• Inflation is a macro-level factor affecting markets served; while rising costs impact, they also increase demand for risk management services. - Labor market conditions, including the Great Resignation, may influence claim volumes. - Hospitals, clinics, and provider practices face physician and nurse shortages, causing delays in care.