CorVel Corp.

Thank you for standing by. Welcome to the Corvel Corporation's 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 that actual events or results may differ materially. Corwell refers you to the documents that the company files from time to time with the Securities and Exchange Commission, specifically the companies 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. Thank you.

Good morning, and thank you for joining us to review Corvell's June quarter results. Today, in my new role as Executive Chairman, I'm joined by Corvell's President and CEO, Sarah Scott, and our Chief Financial Officer, Brian Nichols. Before we begin, I'd like to acknowledge that this quarter marks an important milestone in Corvell's leadership. Sarah's appointment as president and CEO is the culmination of more than 18 months of deliberate succession planning by our board. Throughout that process, we evaluated the leadership capabilities needed to guide Corvel through its next phase of growth, and we are confident Sarah is the right person to lead the company. Her deep understanding of our business, our customers, and our culture, combined with the strength of our executive leadership team, provides both continuity and a strong foundation for the future. Now turning to today's agenda, I'll provide a high-level review of our financial performance. Brian will then discuss the quarter's financial results in greater detail, and Sarah will review business performance, the current operating environment, key market trends, and progress across our product and service offerings. The June quarter revenues were $260 million, 11% over the $235 million in revenue for the June 2025 quarter. Journeys for Share for the quarter ended June 30, 2026, were 63 cents. That's an increase of 22% over the same quarter of the prior year's EPS of 52 cents. These results reflect the strength of our business, the dedication of our associates, and the successful execution of our long-term strategy. As Executive Chairman, I look forward to supporting Sarah and our leadership team as they continue building on that momentum and creating long-term value for our customers and our shareholders. Brian will now provide additional information regarding the quarter. Brian?

Thank you, Michael, and good morning, everyone. Results for the quarter included some one-time items, which can be a normal part of operating our business. Within Cirrus, these items increased earnings by approximately $0.07 per share, primarily reflecting a settlement of legacy accounts receivable. Additionally in the quarter, increases to our effective tax rate did have a slight impact on net income. However, even excluding these items, underlying performance of the business remains strong. Total net income increased 18% in the June 2026 quarter compared to the year prior, with the impact of that result balanced by both our patient management and network solution services. Additionally, patient management and network solutions were both equal contributors to the increases in total revenue, each growing by approximately $12.5 million. Our Cirrus product was the top driver for the network solutions increase. Patient management growth was primarily driven by our enterprise claims TPA program. Claims volume grew by 8% comparing the June 2026 quarter to the June 2025 quarter. This improvement marked the largest annual quarter-over-quarter increase in claims volume since December of 2024. Quarterly year-over-year new customer sales improved by over 60%, with nearly half of the growth occurring in the month of June. Over the last 12 months, new sales posted a 40% increase compared to the prior 12-month period, demonstrating the strength of our sales organization and growing demand for our solutions. Additionally, RFP volume and average opportunity value were significantly improved in this quarter compared to the same quarter of last year. And now Sarah will discuss the market environment and industry trends shaping our business.

Thank you, Brian, and good morning. Having spent my career at Corvel, I'm pleased to be speaking with you for the first time as President and CEO. I have great confidence in our people, our strategy, and the opportunities ahead. Corvel has a strong foundation from which to build for the future, and her direction remains clear. My focus will be on disciplined execution, turning our investments into measurable results, and applying what works across the enterprise to create long-term value. We see meaningful opportunities to strengthen our existing business, expand the value we provide to clients, and pursue new areas of growth with the financial disciplines that has long defined Corvel. In June, we marked the 35th anniversary of Corvel's NASDAQ listing by ringing the opening bell with members of our executive leadership team. This milestone reflects the dedication of our employees, the competence of our clients and shareholders, and long-standing commitment to innovation and disciplined growth. Turning to our markets, Workers' compensation continues to be shaped by increasing claim complexity, medical cost inflation, changing workforce demographics, and evolving regulatory environment. These conditions reinforce the value of an integrated operating model that combines claims management, clinical expertise, data, and technology. This is an important area of differentiation for Corvel. Through Corvel Connected, we bring together workflow and data across claims management, clinical services, pharmacy, bill review, provider networks, and ancillary care. This allows us to apply intelligence across the broader claim lifecycle rather than to isolated tasks and remains an important source of differentiation for Corvel. We continue expanding artificial intelligence and automation across selected claims and clinical workflows. Capabilities currently in use include claim summarization, risk identification, and clinical decision support. These tools are intended to promote earlier intervention, greater consistency, and improve productivity. Our approach is practical. Use technology to augment professional judgment while maintaining appropriate transparency, governance, and clinical oversight. We have seen encouraging results from individual deployments, and use expands. As use expands, we are standardizing how we measure adoption, operational impact, and client value across the enterprise to guide continued development and investment. This quarter, we also launched Executive Advisory Services, which helps clients evaluate the overall performance of their workers' compensation and liability programs. The offering combines operational expertise, benchmarking, analytics, and technology to help clients identify priorities and develop a practical roadmap for improving outcomes and managing costs. In addition to its potential to provide value as a standalone service, it can deepen our understanding of client needs and identify opportunities to expand existing relationships. As Brian noted, claims volume increased 8% during the quarter, reflecting both new client implementation and tail claim activity. We continue investing in our people, processes, and technology to support the growth while maintaining service quality and operational consistency. Medical costs remain a significant component of workers' compensation expense. particularly for out-of-network services and in states with limited fee schedules. We recently introduced a new data-driven medical bill repricing capability that complements our existing bill review and network solutions. The capability is designed to support more informed reimbursement decisions, improve processing efficiency, and promote greater consistency in cost containment results. Turning to the group health market, health plans continue to face cost pressure, margin compression, and increasing regulatory requirements, reinforcing the need for effective payment integrity solutions. Clearance is responding by expanding its capabilities, developing solutions tailored to specialized claim segments, and creating additional value with existing client relationships. Industry consolidation and alliances amongst regional health plans are also changing the competitive landscape as organizations seek greater scale and efficiency. At the same time, evolving Medicare and Medicaid requirements are driving focus on sophisticated payment integrity solutions across both commercial and government health care programs. During the quarter, Cirrus continued investing in its teams and expanding its payment integrity capabilities while advancing the implementation of several new payer engagements and deepening relationships with existing clients. We also see meaningful longer-term opportunity to apply Cirrus' commercial payment integrity expertise within selected government healthcare programs. Capabilities such as line item bill review may be relevant as these programs seek additional ways to improve payment accuracy and manage healthcare costs. We will evaluate expansion based on market demand, program requirements, the investment required, and potential return. Across workers' compensation and group health, our focus remains consistent, applying our operational expertise, integrated technology, and data to strengthen client value and position Corvel for sustainable long-term performance. Brian, would you provide some additional context around our cash flow, balance sheet and capital allocation?

Certainly, Sarah. During the June quarter, Corvel repurchased 377,098 shares at a cost of $21.8 million. From inception to date, the company has repurchased 115.6 million shares for an aggregated total of $910 million. Through this program, the company has now repurchased 70% of the total shares outstanding at an average price of $7.87 per share. The repurchasing of shares continues to be funded from the company's strong operating cash flow. The company's management of receivables continues to improve and perform well. Corbel's day sales outstanding was 39 days in the June quarter, which is one day fewer than the same period of the previous year. At quarter end, the cash balance was $256 million. Free cash flow for the June 2026 quarter was $43.1 million, a $3.5 million increase compared to the June 2025 quarter, which was driven by quarterly year-over-year reduction in net cash flow used in investing activities. In conclusion, Fiscal responsibility remains a central focus of Corvell's financial strategy. As we survey the market spaces in which we compete, it is clear that technological and managerial agility are vital for long-term meaningful growth. To this end, Corvell's strong liquidity and debt-free position assures that we are in the best possible position to invest in our future. Thank you for your time this morning. I will now invite the operator to open the session for questions.

Thank you. To enter questions via the web, please type your question in the chat box on the web platform and click enter to submit.

Sharon, any questions?

There are not. And with that, this concludes today's webcast. You may disconnect your lines at this time. Thank you everyone for your attention.