CorVel Corporation (CRVL 2.01%)
Q1 2021 Earnings Call
May 27, 2021, 11:30 a.m. ET
- Prepared Remarks
- Questions and Answers
- Call Participants
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.
Michael Combs -- President and Chief Executive Officer
Thank you for joining us to review CorVel's fiscal year 2021, in the March quarter. Joining me on the call today is Brandon O'Brien, CorVel's Chief Financial Officer.
Today, I will be discussing business performance, current environment, market trends and progress on systems development initiatives. Brandon will then provide an overview of our financial results for the fiscal year in the March quarter. The March quarter revenues were $146 million. Earnings per share for the quarter were a record $0.81, an increase of 27% from $0.64 per share in the same quarter of the prior year. The primary contributors to the rise in earnings were increased systems automation and improvements in productivity, along with reduced discretionary spending. Improved administration of our self-insurance health program delivered enhanced benefits to our employees and also reduced the programs cost.
Revenues for fiscal 2021 were $553 million, with EPS of $2.55, which is unchanged from 2020. We have repeatedly heard the past year described as unprecedented. And while that is true for many reasons, the dedication, service and commitment to excellence our team showed was exemplary, consistent with how they have unfailingly responded when faced with adversity. In addition to the positive response from our team, we have the honor of celebrating 30 years on NASDAQ this year. And we were recently designated as a great place to work by our 3,700 plus team members.
We are pleased with the increase in new sales experienced during the last calendar year. Our team successfully transitioned the meeting virtually with prospects, a lot of Zoom meetings indeed. And the March quarter numbers indicate an even higher trajectory for the coming year. Overall, results in the first quarter reflects strong execution of our strategic plan, including a commitment to delivering innovative solutions for our partners. That commitment correspondingly resulted in an expanding scope of services offered to existing clients. We expect the positive momentum in the first quarter to continue through the balance of the year.
Additional executive leadership has been added to our operations team. We look to build on the growth momentum realized these last two quarters. The Great Place to Work designation, combined with the favorable work conditions at CorVel have been helpful as we've been aggressively growing the team to handle the new business being on-boarded.
In addition to providing an environment where CorVel team members can learn, grow and advance, make a meaningful difference for our partners and generate value for the CorVel shareholders. We are also committed to enhancing our sustainability practices. The pandemic demonstrated that working from home is a viable option for many of our teams, significantly reducing the carbon impact from the commutes. Because of the success we've experienced working remotely, we are committing to reducing overall office square footage and are working through a five-year plan based on current leases with the goal of additional reductions in our carbon footprint.
As the industry continues to watch the development of COVID-19 claims, we're seeing surges in some states even with vaccines being more readily available. The initial estimates for claims reopening due to long haul symptoms was previously in the 2% to 3% range, but that has now increased to 4% to 5%. State COVID presumption laws continue to evolve and include different thresholds and coverages and more changes are on the way as mental health challenges increase.
According to NCCI, five states enacted legislation addressing workers' compensation coverage for mental injuries in 2020. Another 16 states considered or are reviewing metal injury legislation in 2021. Several states passed legislation to cover PTSD incurred by first responders. We anticipate the COVID-related legislative initiatives will continue through the year, perhaps beyond. We will remain alert to these changes to ensure accurate and effective claims handling for our business partners, and appropriate and helpful treatment for covered patients.
We are also watching for the likely increase in claims volume as a result of employers reopening and some staff returning to their offices. It was an exciting quarter for our health focus division as CERiS gain momentum with a comprehensive prospective claim review service for client partners that pay medical claims. The expanded service produces the most complete and accurate review available for both itemized bills and DRG validation.Dual reviews validate coding on the DRG base rate and simultaneously perform an itemization review to identify invalid charges. All work is completed within prompt pay requirements with these turnkey pre-payment reviews.
CERiS remains at the forefront of the transition to pre-payment solutions with the ability to review all claim types. Their process is supported by technology that reduces provider friction, while verifying payment integrity to deliver industry-leading results to health plans and TPAs. Continued focus will remain on the health market, and we look forward to ongoing growth in this area.
Workers' compensation professionals have witnessed the rapid growth of technology, particularly in those outpatients required during the pandemic. The virus has in workers' compensation, as it has throughout industry, accelerated the adoption of new technologies. This is reflected particularly in the use of telemedicine, a service that CorVel was fortunate enough to have launched more than five years ago. The digital transformation wave has also created an increase in data available to machine learning and artificial intelligence applications. We expect these trends to be important drivers of success in our industry throughout the coming decade.
Our listeners may recall, CorVel has reported a marked increase in telehealth usage in the past year. As that trend continues, we can merge more information from telehealth visits into our ecosystem, making those providers more vital team members. By integrating enhanced provider data into the system, we can do the following. Number one, bring evidence-based guidelines to the forefront. Typically, tools like utilization review, formularies or case management are used retrospectively after treatment has been requested. Since we control the platform where providers chart, we can prompt them in real-time with evidence-based guidelines.
Number two, enhance communication. First, specific information can be communicated to the claim professional immediately following the telehealth visit. For example, when there is a need for a release to allow patients to return to work full-time, the system would alert the adjuster in real-time as the determination is made. Second, the reverse can occur, allowing the claims professional to communicate with the provider. We all know how difficult it can be to speak with the providers on visit times. By creating a simple messaging text for the claims professional in CareMC, we can ensure the provider will be notified and can read the information before the next visit. Number three, designate care by location. Employers who have onsite health clinics want to use their own clinics whenever possible. We can designate providers in the system and associate them with specific work locations to ensure the location-specific protocols are followed.
Technology has and will continue to be a key differentiator for CorVel. We remain committed to utilizing today's emerging technology to improve business processes and reduce repetitive human interaction, where automation is more effective when applied. Artificial intelligence continues to be a primary driver of innovation, as our systems will increasingly use machine learning to guide actions and decisions toward the best outcomes.
Towards that end, this quarter we released a litigation risk flag alert that indicates when the claim has low, medium, or high risk of reaching litigation. known likelihood of litigation on a claim impacts the claims professionals action and the employees response and can avoid costly legal fees. Our new model harnesses the power of claims data to produce meaningful actions in real time. In many cases, including this example, utilizing the data proactively changes the course of a claim.
The amount of data we create and collect in our business continues to increase, and this powers improvement in the application and effectiveness of analytics. However analytics alone will not give us what we're seeking. Information is what's needed for businesses to act, and that's what we're committed to providing.
Brandon will now provide an overview of the financial results for the fiscal year and the March quarter. Brandon?
Brandon O'Brien -- Chief Financial Officer
Thank you, Michael, and good morning, everyone. Revenues for the March quarter were $146 million, down 1% from the same quarter of the prior year. Earnings per share for the quarter were a record $0.81, an increase of 27% from the $0.64 per share in the same quarter of the prior year. The record quarterly earnings results were realized primarily through improved operational efficiencies across our service lines. Because we are a vertically integrated service Company, a high percentage of our total costs are variable. This allows us to be nimble by successfully adjusting cost to match market fluctuations as demonstrated by the pandemic. These efficiencies are driven by temporary reductions of discretionary spending, plus the longer-term adjustments in a leased office space. The pandemic revealed for CorVel, as it has for many businesses, the opportunity for us to create and evolve vision for our office network.
Revenue for the fiscal year ended March 31, 2021 was $553 million, down 7%. This is primarily attributable to reduced access to elective healthcare during the June and September quarters of the fiscal year, as well as lower injury rates during the pandemic. Earnings per share for the fiscal year ended March were $2.55, equaling the prior fiscal year's EPS results. The revenue for patient management, including third-party administration, TPA services, and traditional case management for the fiscal year ended March 31st was $369 million, an annual decrease of 5%.
Fiscal year gross profit increased 16%. Revenue for the March quarter was $97 million, an annual increase of 4%. Gross profit increased by 40% from the March quarter of 2020. Improved margins for underlying services plus a favorable mix shift of services toward greater utilization of higher margin services led to the 40% increase in profit.
The revenue for Network Solutions sold in the wholesale market for the fiscal year was $184 million, an annual decrease of 11%. Fiscal year gross profit decreased 16%. Network Solutions revenue for the quarter was $47 million, a decrease of 9% from the same quarter of the prior year. Gross profit in the wholesale business was down 1% from the March quarter of 2020.
New customer sales have remained especially robust throughout the entire fiscal year, with the March 2021 quarter resulting in sales that were 51% above record levels of new wins set during the March 2020 quarter. The customer relationships brought in from our new sales include a very healthy mix, ranging from existing customers expanding the breadth and depth of their services to establishing entirely new customer relationships. Amid the mix, were returning customers who had left, only to find after a few years that they wanted to return to CorVel's industry-leading services.
We recently had a meaningful example of a prior customer indicating the return. We are diligently working together to reestablish our service for our go live later in the calendar year. We're very pleased to be working with them again. New sales typically take some six to 12 months to fully realize their ultimate run rate. These new sales nicely position network solutions for future growth that's expected to reverse previous trends. Investments, specifically in our Edge platform and CERiS offerings have been a meaningful part of this success.
I would now like to review a few additional financial items. During the quarter, the Company repurchased 100,841 shares for a total price of $10.5 million. Inception to-date, the Company has repurchased 36.7 million shares for a cost of $564 million. through this program, the Company has repurchased 67% of the total shares outstanding. Quarter ending cash balance was $140 million. DSO, that is days sales outstanding of receivables was 41 days, which is the same as a year ago.
That concludes our remarks for today. Thank you for joining us. I will now return the call to our operator.
[Operator Closing Remarks]
Questions and Answers:
Duration: 16 minutes
Michael Combs -- President and Chief Executive Officer
Brandon O'Brien -- Chief Financial Officer