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CorVel Corp. Reports Operating Results (10-Q)

February 08, 2013 | About:
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10qk

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CorVel Corp. (CRVL) filed Quarterly Report for the period ended 2012-12-31.

Corvel Corporation has a market cap of $526.818 million; its shares were traded at around $46.9 with a P/E ratio of 22.7273 and P/S ratio of 1.2952. Corvel Corporation had an annual average earning growth of 11.5% over the past 10 years. GuruFocus rated Corvel Corporation the business predictability rank of 3-star.

Highlight of Business Operations:

The Company generated revenues of $107.3 million for the quarter ended December 31, 2012, an increase of $5.9 million, or 5.8%, compared to revenues of $101.4 million for the quarter ended December 31, 2011. The increase in revenues was primarily due to an increase in patient management.

Revenues increased from $101.4 million for the three months ended December 31, 2011 to $107.3 million for the three months ended December 31, 2012, an increase of $5.9 million, or 5.8%. The increase in revenues was primarily due to an increase in patient management which includes case management services that was consistent with the prior years increase, and all services sold to TPA customers which increased by 25% over the prior year. The 25% increase in TPA revenue was partially offset by a decrease in network solutions due to a decline in volume and the loss of a few customers which were not significant in size. The increase in patient management services was primarily due to an increase in the level of services provided to new TPA customers.

The Companys cost of revenues increased from $80.2 million in the three months ended December 31, 2011 to $85.6 million in the three months ended December 31, 2012, an increase of $5.4 million or 6.7%. As the Company has experienced a shift in managed care services to lower margin services, cost of revenue has increased and gross margin has decreased. TPA services require additional labor. The Company expects TPA revenue to continue growing and as a result, the Company expects continued decline in margins unless we are successful in improving operating efficiencies, increase prices, or growth in higher margin services. As we have added customers in this area, we have had to hire additional direct labor resources, causing the increase in cost of revenues. In addition, pharmacy costs have increased as the volume of prescription processing has increased.

Revenues increased from $308.2 million for the nine months ended December 31, 2011 to $317.4 million for the nine months ended December 31, 2012, an increase of $9.1 million, or 3.0%. The Companys patient management revenues increased $15.8 million, or 11%, from $147 million in the nine months ended December 31, 2011 to $163 million in the nine months ended December 31, 2012. The increase in patient management services was primarily due to an increase in the level of services provided to new and existing TPA customers. The Companys network solutions revenues decreased from $161 million in the nine months ended December 31, 2011 to $155 million in the nine months ended December 31, 2012, a decrease of $6.7 million, or 4%. The decrease in network solutions revenue was primarily due to a decrease in volume of higher priced services, such as bill review, offset by an increase in volume of lower priced services, such as pharmacy.

The Companys cost of revenues increased from $235.9 million in the nine months ended December 31, 2011 to $249.6 million in the nine months ended December 31, 2012, an increase of $13.7 million, or 5.8%. This increase was partially due to the increase in the volume of services which generated the 3.0% revenue increase for the same periods. Additionally, the Company had an increase in volume, as previously discussed, of lower margin services offset by a decrease in higher margin services which resulted in a cost increase greater than the revenue increase. Direct salaries increased from $62 million for the nine months ended December 31, 2011 to $68 million for the nine months ended December 31, 2012. The increase in salaries is due to hiring adjusters and growth in our call center staff. Direct pharmacy costs increased from $31 million for the nine months ended December 31, 2011 to $37 million for the nine months ended December 31, 2012.

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