Image source: The Motley Fool.
Date
Tuesday, November 4, 2025 at 11:30 a.m. ET
Call participants
Chief Executive Officer — Michael Combs
Chief Financial Officer — Brandon O’Brien
Need a quote from a Motley Fool analyst? Email [email protected]
Takeaways
Revenue -- $240 million, a 7% increase from $224 million in the September 2024 quarter.
Earnings Per Share (EPS) -- $0.54, up 20% from $0.45 in the same quarter of the prior year, with results adjusted for the December 2024 three-for-one stock split.
One-Time Events Impact -- The EPS increase was reduced by approximately nine percentage points due to the combined effect of one-time events in September.
Segment Performance -- Patient Management services drove approximately $4 million of the revenue growth in September. The total does not sum exactly to the full $16 million increase, indicating other small factors offset the subtotal.
Gross Margin and Net Income -- Net income rose to $28 million from $23 million in the previous year as product enhancements and operational management lowered direct costs.
Share Repurchases -- 143,774 shares bought back for $12.8 million during the quarter; in total, 114.7 million shares have been repurchased for $854 million, retiring 69% of total shares outstanding.
Cash Balance -- Quarter-end cash balance was $207 million, sustaining a debt-free position.
Days Sales Outstanding (DSO) -- DSO stood at 40 days in September, an improvement of 2 days from a year earlier.
AI Investment -- Significant deployment of Agentic AI to automate multi-step processes and enhance claims and software development efficiency.
Acquisition Activity -- Completed a June acquisition of assets and key talent from a privately held technology firm, expanding AI capabilities and enhancing product development.
Business Development -- Growth in the September 2025 quarter was driven by expanded business with existing partners and new services, particularly in payment and integrity health solutions.
Summary
CorVel (CRVL +4.02%) highlighted the growing impact of Agentic AI technology on productivity, development cycles, and product enhancement across core business areas. Management cited ongoing market challenges in the workers' compensation labor supply and commercial health pricing but pointed to internal training programs and automation as mitigation strategies. Strategic focus on expanding digital platforms and pursuing further merger and acquisition opportunities signals an intent to maintain momentum and scaling capacity.
CEO Combs said, "The workers' compensation field is experiencing what I define as a demographic shift," referencing labor shortfalls among experienced professionals and efforts through CorVel University to address talent gaps.
Brandon O’Brien said, "The repurchasing of shares continues to be funded from the company's strong operating cash flow," underscoring reliance on internal resources rather than new debt.
Management stated, "Agentic AI represents the next evolution in artificial intelligence" and described its use in increasing claims review efficiency and software delivery speed.
The company plans to "add dedicated resources to focus on synergistic opportunities" according to Brandon O’Brien, emphasizing ongoing efforts to broaden both capabilities and partner offerings.
Industry glossary
Agentic AI: Artificial intelligence systems capable of autonomously executing multi-step tasks and making process-level decisions to deliver targeted business outcomes.
CERES Ancillary Care: CorVel’s technology-enabled service platform for managing and reviewing medical bills and care episodes to optimize cost savings in claims.
Full Conference Call Transcript
Michael Combs: Good morning. Thank you for joining us to review CorVel's September results. I'm very pleased to welcome Brian Nichols, CorVel's Chief Financial Officer to the call today. Thank you, Michael, and good morning, everyone. It's a pleasure to join the call this morning. Today, we're going to review our operational performance, key growth drivers, and the market trends that are shaping our business. I'll also discuss how we're positioning the company to capture emerging opportunities and manage associated risks. Finally, I'll provide a closer look at our AI initiatives, highlighting the tangible benefits we're already seeing as well as the roadmap ahead. Brian, let's start with an overview of the quarter's financial results.
After that, would you please share a bit about your journey at CorVel and your perspective on the opportunities you see in your new role to further strengthen the organization?
Brandon O’Brien: Certainly. The September revenues were $240 million, 7% above the $224 million in the September 2024 quarter. The earnings per share for the quarter ending 09/30/2025, were $0.54, an increase of 20% over the same quarter of the prior year's EPS of $0.45. As a reminder to our listeners, the earnings per share results from the quarter and annual comparisons have been adjusted to account for the three-for-one stock split reported in December 2024. It's not unusual to have one-time events. Sometimes they work in our favor, other times like the September results, do not. The combined effect of one-time events in September softened the increase in EPS by approximately nine percentage points. Overall, the organization's fundamentals are strong.
Regarding my journey at CorVel, I've been with the company for fifteen years, much of that time spent with our ancillary care program. I started as a patient care coordinator providing administrative support for physical therapy cases. By the end of my first year, I was promoted to manager, and then to director over ancillary care operations a few years later. In 2016, I accepted the Vice President of Network Solutions role, which included all product and operational management of our ancillary care services. Subsequently, pharmacy, IME, and PPO programs were added to my span of management, giving me an opportunity to oversee a large portion of our network solutions and patient management services.
One of my goals now as CFO is to leverage my past CorVel product and operations experience in building resources and tools that will empower our business managers for maximizing growth opportunities. Thank you, Brian.
Michael Combs: I want to dive into some market trends. There are three key trends that I'll discuss this morning. The first are challenges in the workers' compensation labor market. The second, in the Commercial Health segment, our service division is operating in an environment of elevated pricing pressure, driving an increased focus on delivering savings and operational efficiencies. And the third market trend, the most significant of the three I will review, is the emergence of Agentic AI and its implications for our business.
Specifically, how we're leveraging this technology to implement enhancements to our systems more quickly, how we're leveraging it to generate optimized results for our partners, and also to ameliorate the impact of the first two trends, the workers' compensation labor market and the commercial health pricing pressure. But let's start with the labor market. The workers' compensation field is experiencing what I define as a demographic shift. The industry is losing experienced professionals faster than it's attracting replacements. Many entered the field in the 1980s and 1990s, that's the 1980s and 1990s, when compensation legislation was evolving rapidly, and they're now approaching retirement age.
Meanwhile, workers' compensation has not, let's say, traditionally been viewed as a destination industry for new graduates. It receives little exposure in business insurance or healthcare educational programs. As a result, it has become increasingly challenging to recruit and retain experienced claims management underwriting professionals. So what's CorVel's response? Well, we're investing in people. While this is an industry-wide challenge, we see the opportunity in it. Through CorVel University, now in its fourth class, we are bringing new professionals into both the industry and into CorVel itself. The program has delivered exceptional retention rates and continues to build the next generation of experts who serve our partners.
Although we'll acknowledge, we can't single-handedly solve the workforce challenges across the entire industry, CorVel University is making a measurable difference for our company and for our clients. At the same time, we're experiencing these labor challenges, technological innovation is arriving at what I would say is just the right moment to augment and accelerate workforce development. Generative AI and now Agentic AI are maturing rapidly, enabling us to rethink how work gets done across our business. Agentic AI represents the next evolution in artificial intelligence. Systems that not only analyze data but also take actions to complete tasks and deliver outcomes. By automating multi-step processes, Agentic AI can enhance productivity, reduce costs, and accelerate decision-making across the enterprise.
And I would say parenthetically that Agentic AI is going to have a greater impact than we've seen in the last couple of years with generative AI, that's entirely accurate. The brain underlying Agentic AI is in fact generative AI. At a very high level, we are leveraging Agentic AI to simplify the work of our claims professionals as one example, allowing them to focus on high-value judgment and care coordination rather than the administrative tasks. Agentic AI is also transforming the development of software itself. Rather than coding every line manually, developers can now orchestrate and audit intelligent, task-specific AI agents that execute components of a software build.
What once took weeks can now in many cases be completed in days. For CorVel, this shift means faster feature delivery within our business systems, greater agility in applying system enhancements, and improved outcomes for our partners, improved system interoperability across the care continuum, overall, we'll see increased operating leverage. And I want to point out that while the pace of AI innovation is accelerating, it is essential to note that our commitment to responsible AI principles remains unchanged, including continuous evaluation for bias, ensuring model accuracy, and promoting transparency in how AI supports our processes. Our approach centers on human expertise directing AI, not the other way around.
We use Agentic AI to enhance creativity, decision-making, and efficiency always with people at the core. The expertise of our teams is foundational to our success, and the investment in training, development, and tools amplify the capabilities and the quality of service we deliver. Now transitioning to the different segments within the organization, Cerner's continues to innovate under increasing pricing pressure from its payer partners as well as the expectation to deliver incremental additional savings each and every year. Recent AI-driven enhancements have improved both capacity and precision in identifying medical bills and claims with potential savings. By automating and augmenting review selection, we can now review more claims and identify savings more effectively.
Our adoption of advanced automation, analytics, and one-touch processing enables us to conduct a greater number of reviews per claim, thereby increasing both partner savings and CorVel's revenue opportunities. We've also prioritized transparency and explainability in our results, and this is incredibly important in the industry. This supports our strong acceptance rate amongst payers and medical partners. Finally, AI integration has strengthened our agility in adapting to regulatory and coding rule changes, keeping Cerus at the forefront of industry compliance and innovation. Now moving to the property and casualty space. We've implemented supervisory quality and compliance agents that enhance claims accuracy and ensure the timely completion of tasks.
Additionally, we've added an enhanced claims workflow that minimizes context switching, thereby improving efficiency and throughput across teams. We are also building a new digital communication platform for injured workers, integrated into our proprietary claims CareMC platform. The portal supports AI-powered summarization of communications, data extraction from transcripts, and the creation of intelligent alerts all designed to augment the work of claims professionals, supervisors, and managers. In summary, CorVel is addressing industry challenges leveraging emerging technology to its advantage. Through CorVel University, we're developing new talent. Through Agentic AI, we're empowering that talent with more intelligent systems, faster processes, optimized results, and deeper insights.
Together, these initiatives are positioning CorVel to continue delivering superior outcomes for our partners and the patients we serve. And regarding our product development organization, effectively leveraging technology is perhaps now more critical than at any point in CorVel's history. We're intensely focused on building our competency with AI, particularly now Agentic AI, and expanding our capacity to enhance our systems and deliver optimized results to our partners. Now moving to sales management. Expansion of business with existing partners has been a key driver of growth this year. We are proud of the consistently high-quality results our operation team delivers.
Organic growth with our existing partners by the addition of new services and offerings only occurs when we're delivering quality results for the services we already offer. Momentum in CorVel's payment and integrity health solution has also continued during September. Our growing customer base, strategic positioning within each partnership, and enhanced capabilities and cost containment services powered by AI distinguish Cerus in the market and provide a strong foundation to build upon. Brian, would you please provide an update on the acquisition completed in June, the additional focus on mergers and acquisitions, as well as further details on the quarter's results?
Brandon O’Brien: As reviewed in the August earnings release, CorVel completed the acquisition of assets and key talent from a privately held technology firm at the end of the June quarter. The assets acquired and the talent now engaged with CorVel's existing AI team are driving the progress outlined on today's call. We're pleased with the current trajectory, the meaningful impact already realized, and the pipeline of additional enhancements. To further progress our activity in the M&A space, we will add dedicated resources to focus on synergistic opportunities. The priority is to expand our suite of offerings to current partners and further enhance our existing team's technological expertise and capacity. And finally, I would like to review some additional financial items.
Revenue growth for September was driven by both our Patient Management and Network Solutions segments. As Michael noted earlier, organic growth and expanded activity with existing partners contribute meaningfully to performance across both areas. Within patient management services, claims operations generated approximately $4 million in revenue growth. Network Solutions increased by $12 million, primarily reflecting higher utilization of our CERES Ancillary Care and Bill Review solutions. The quarter also resulted in improved gross margin and net income, reaching $28 million, up from $23 million in the previous year. Ongoing product enhancements and strong operational management have generated lower direct costs.
Those efficiencies, along with sustained responsible management of general and administrative expenses, have placed CorVel in a position where revenue growth has outpaced expenses. During the quarter, CorVel repurchased 143,774 shares at a cost of $12.8 million. From inception to date, the company has repurchased 114.7 million shares for an aggregated total of $854 million. Through this program, the company has now repurchased 69% of the total shares outstanding. The repurchasing of shares continues to be funded from the company's strong operating cash flow. CorVel's days sales outstanding was forty days in September, an improvement of two days compared to the same period a year ago.
The quarter-ending cash balance was $207 million, and in contrast to many other organizations in the industry, who are facing increasing debt loads and associated interest costs, CorVel remains able to manage operational risk. The strong and debt-free balance sheet generates improved earnings, positioning CorVel well for continued product expansion and acquisition opportunities. Thank you for your time this morning. I will now invite the operator to open the session for questions.
Operator: Text box and click submit. We'll pause a moment to allow for any questions. On the webcast and click Submit. Or press star 1. On your telephone keypad. We'll pause just another moment. Thank you. Ladies and gentlemen, this concludes our Q&A session. And thus concludes our call today. We thank you for your interest and participation. You may now disconnect your lines.