CorVel Corp. (CRVL, Financial) filed Quarterly Report for the period ended 2010-06-30.
Corvel Corp. has a market cap of $478.7 million; its shares were traded at around $40.16 with a P/E ratio of 19.4 and P/S ratio of 1.4. Corvel Corp. had an annual average earning growth of 10.6% over the past 10 years. GuruFocus rated Corvel Corp. the business predictability rank of 2.5-star.CRVL is in the portfolios of Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates, Jeremy Grantham of GMO LLC.
The Companys cost of revenues increased from $60.2 million in the three months ended June 30, 2009 to $67.7 million in the three months ended June 30, 2010, an increase of $7.5 million or 12.5%. This increase was primarily due to the costs associated with the increase in demand for the Companys TPA services, pharmacy and directed care services, which are high-cost services. CorVel TPA service costs increased $2.3 million from the previous three month period. Pharmacy cost of goods sold increased $2.3 million from the previous three month period on a revenue increase of $3.5 million. Similarly, directed care costs increased $2.2 million from the prior year three month period on a revenue increase of $3.0 million. The increase in cost of revenues roughly approximated the increase in revenues. These cost increases were offset partially by other cost decreases.
General and administrative expense increased from $10.5 million in the three months ended June 30, 2009 to $11.5 million in the three months ended June 30, 2010, an increase of $1.0 million, or 9.9%. This increase is primarily due to an increase in the Companys systems and legal costs. Systems cost increased from $5.9 million to $6.3 million due to improvements to the companys proprietary claims systems and an increase in ongoing support and maintenance. From the December 2009 quarter through June 2010 quarters, software enhancements increased the Companys gross margin in patient management services. Additionally, during the December 2009 quarter, the Company began increasing software development expenditures to further the TPA product. The Company expects to continue to grow software development expenditures. Legal costs increased due to an increase in litigation related to claims administration, which is more litigious than the managed care market. With the exception of the Roche case discussed in Note H, management does not believe that any outcomes will result in material losses to the company.
The Company has historically funded its operations and capital expenditures primarily from cash flow from operations, and to a lesser extent, stock option exercises. Working capital increased $0.1 million, or 1%, from $27.2 million as of March 31, 2010 to $27.3 million as of June 30, 2010, primarily due to an increase in cash from $11.9 million as of March 31, 2010 to $13.7 million as of June 30, 2010. This increase in cash was offset by a decrease in prepaid income taxes in the June 2010 quarter.
Net cash provided by operating activities increased from $7.8 million in the three months ended June 30, 2009 to $11.5 million in the three months ended June 30, 2010. The increase in cash flow from operating activities was primarily due to the increase in net income to $7.8 million for the three months ended June 30, 2010 from $6.4 million for the three months ended June 30, 2009, an increase of $1.3 million. Additionally, accounts payable increased due to the vendor costs related to the increased in directed care services.
Net cash flow used in financing activities increased from $0.4 million for the three months ended June 30, 2009 to $4.6 million for the three months ended June 30, 2010, an increase of $4.2 million. The increase in cash flow used in financing activities was primarily due to an increase in purchases under the Companys share repurchase program, partially offset by an increase in the number and amount of stock options exercised by employees. During the three months ended June 30, 2010, the Company spent $5.5 million to repurchase 153,000 shares of its common stock. During the three months ended June 30, 2009, the Company spent $0.6 million to repurchase 30,000 shares of its common stock. The Company has historically used cash provided by operating activities and from the exercise of stock options to repurchase stock. The Company expects it may use some of the $13.7 million of cash on its balance sheet at June 30, 2010 to repurchase additional shares of stock.
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Corvel Corp. has a market cap of $478.7 million; its shares were traded at around $40.16 with a P/E ratio of 19.4 and P/S ratio of 1.4. Corvel Corp. had an annual average earning growth of 10.6% over the past 10 years. GuruFocus rated Corvel Corp. the business predictability rank of 2.5-star.CRVL is in the portfolios of Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates, Jeremy Grantham of GMO LLC.
Highlight of Business Operations:
Revenues increased from $81.3 million for the three months ended June 30, 2009 to $91.5 million for the three months ended June 30, 2010, an increase of $10.2 million or 12.5%. The Companys patient management revenues increased $9.1 million or 26.6% from $34.2 million in the three months ended June 2009 to $43.3 million in the three months ended June 2010. This increase was primarily due to improvements in customer utilization of the Companys TPA services. The Companys network solutions revenues increased slightly from $47.1 million in the three months ended June 2009 to $48.2 million in the three months ended June 2010, an increase of $1.1 million or 2.3%.The Companys cost of revenues increased from $60.2 million in the three months ended June 30, 2009 to $67.7 million in the three months ended June 30, 2010, an increase of $7.5 million or 12.5%. This increase was primarily due to the costs associated with the increase in demand for the Companys TPA services, pharmacy and directed care services, which are high-cost services. CorVel TPA service costs increased $2.3 million from the previous three month period. Pharmacy cost of goods sold increased $2.3 million from the previous three month period on a revenue increase of $3.5 million. Similarly, directed care costs increased $2.2 million from the prior year three month period on a revenue increase of $3.0 million. The increase in cost of revenues roughly approximated the increase in revenues. These cost increases were offset partially by other cost decreases.
General and administrative expense increased from $10.5 million in the three months ended June 30, 2009 to $11.5 million in the three months ended June 30, 2010, an increase of $1.0 million, or 9.9%. This increase is primarily due to an increase in the Companys systems and legal costs. Systems cost increased from $5.9 million to $6.3 million due to improvements to the companys proprietary claims systems and an increase in ongoing support and maintenance. From the December 2009 quarter through June 2010 quarters, software enhancements increased the Companys gross margin in patient management services. Additionally, during the December 2009 quarter, the Company began increasing software development expenditures to further the TPA product. The Company expects to continue to grow software development expenditures. Legal costs increased due to an increase in litigation related to claims administration, which is more litigious than the managed care market. With the exception of the Roche case discussed in Note H, management does not believe that any outcomes will result in material losses to the company.
The Company has historically funded its operations and capital expenditures primarily from cash flow from operations, and to a lesser extent, stock option exercises. Working capital increased $0.1 million, or 1%, from $27.2 million as of March 31, 2010 to $27.3 million as of June 30, 2010, primarily due to an increase in cash from $11.9 million as of March 31, 2010 to $13.7 million as of June 30, 2010. This increase in cash was offset by a decrease in prepaid income taxes in the June 2010 quarter.
Net cash provided by operating activities increased from $7.8 million in the three months ended June 30, 2009 to $11.5 million in the three months ended June 30, 2010. The increase in cash flow from operating activities was primarily due to the increase in net income to $7.8 million for the three months ended June 30, 2010 from $6.4 million for the three months ended June 30, 2009, an increase of $1.3 million. Additionally, accounts payable increased due to the vendor costs related to the increased in directed care services.
Net cash flow used in financing activities increased from $0.4 million for the three months ended June 30, 2009 to $4.6 million for the three months ended June 30, 2010, an increase of $4.2 million. The increase in cash flow used in financing activities was primarily due to an increase in purchases under the Companys share repurchase program, partially offset by an increase in the number and amount of stock options exercised by employees. During the three months ended June 30, 2010, the Company spent $5.5 million to repurchase 153,000 shares of its common stock. During the three months ended June 30, 2009, the Company spent $0.6 million to repurchase 30,000 shares of its common stock. The Company has historically used cash provided by operating activities and from the exercise of stock options to repurchase stock. The Company expects it may use some of the $13.7 million of cash on its balance sheet at June 30, 2010 to repurchase additional shares of stock.
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