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CORVEL CORP (CRVL)·Q4 2024 Earnings Summary

Executive Summary

  • Quarter ended Dec 31, 2024 (Fiscal Q3 2025): Revenue grew 13% YoY to $228M and diluted EPS rose 39% YoY to $0.46; gross margin expanded to 23.2% from 20.8% YoY, reflecting mix and efficiency gains, especially in Network Solutions .
  • Segment momentum: Patient Management revenue was $146M (+11% YoY) on new TPA implementations; Network Solutions was $82M (+16% YoY) with wholesale gross profit up 33% YoY on gen-AI/process automation efficiencies balanced with lower price points .
  • Capital and cash: $163M cash and no debt; continued buybacks ($9.6M in the quarter); 3-for-1 stock split became effective Dec 24, 2024, increasing share accessibility .
  • Street comps: S&P Global consensus estimates were not retrievable at time of analysis; no formal guidance was issued, so we anchor on sequential and YoY trajectory and management commentary (consensus not shown due to data access limits).

What Went Well and What Went Wrong

  • What Went Well
    • Revenue, EPS, and gross margin outperformed YoY: “Revenues for the quarter were $228 million… EPS…$0.46… gross profit increased 25% to $52.9 million, at 23.2% gross margin” .
    • Network Solutions margin lift from technology: “Gross profit in the wholesale business was up 33%… stemming from the successful implementation of gen AI and other process automation tools… balancing improved margins with lower price points” .
    • Execution in Patient Management/TPA: “Patient management… was $146 million… grew primarily from new customer implementations” .
  • What Went Wrong
    • Sequential EPS roughly flat on split-adjusted basis (Q2 FY25 ≈$0.45 vs Q3 FY25 $0.46) despite strong YoY, implying limited sequential operating leverage this quarter .
    • Persistent medical cost inflation requires ongoing efficiency—management flagged NCCI survey indicating 2.5–3.5% workers’ comp medical inflation, a continuing industry headwind .
    • No formal guidance; limited external visibility for near-term modeling, keeping investors reliant on run-rate trends and commentary .

Financial Results

  • Periods are fiscal FY25 quarters; CRVL’s “Q4 2024” corresponds to quarter ended Dec 31, 2024 (Fiscal Q3 2025).
MetricQ1 FY25 (Jun 30, 2024)Q2 FY25 (Sep 30, 2024)Q3 FY25 (Dec 31, 2024)
Revenue ($M)$211.722 $224.380 $227.973
Gross Profit ($M)$48.155 $50.748 $52.858
Gross Margin (%)22.7% 22.6% 23.2%
Income from Operations ($M)$28.035 $28.670 $30.800
Net Income ($M)$21.577 $23.398 $23.771
Diluted EPS (split-adjusted)$0.42 (calc from $1.25/3) $0.45 (calc from $1.35/3) $0.46
YoY Revenue Growth+11% +15% +13%
YoY Diluted EPS Growth+10% +17% +39%

Notes: EPS for Q1–Q2 FY25 shown split-adjusted to 3-for-1 effective Dec 24, 2024 (reported $1.25 and $1.35 divide by 3) .

  • Segment Breakdown (Q3 FY25)
SegmentRevenue ($M)YoY Growth
Patient Management (incl. TPA, case mgmt)$146 +11% YoY
Network Solutions (wholesale incl. CERiS)$82 +16% YoY; wholesale gross profit +33% YoY
  • KPIs and Balance Sheet Highlights
KPIQ1 FY25Q2 FY25Q3 FY25
Cash & Equivalents ($M)$131.908 $138.349 $162.944
DSO (days)——42 (unchanged YoY)
Share Repurchases ($M)$9.5 $9.6 $9.6
Net Revenue Retention—110% (quarter) —
  • Results vs Consensus
    • S&P Global consensus estimates (EPS, revenue) were not retrievable at time of analysis due to access limits; therefore beat/miss vs consensus is not shown.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal guidance (revenue, margins, EPS, tax, etc.)Forward periodsNoneNoneNo formal guidance provided

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 FY25)Previous Mentions (Q2 FY25)Current Period (Q3 FY25)Trend
AI/AutomationAI in clinical bill review; enhanced CareMC communications platform Tech innovation cited as share/margin driver; strong NRR 110% “Generative-AI-based functionality” for document processing; weekly feature releases; efficiency/margin gains in Network Solutions Building; more concrete deployment and ROI claims
Medical Inflation——Workers’ comp medical inflation 2.5–3.5% per NCCI survey; analytics/dashboards to manage costs Ongoing headwind; CRVL positioning with data tools
TPA/Patient Mgmt Growth—Patient Mgmt growth from new customer implementations Continued growth from new TPA implementations Steady expansion
CERiS / Payment Integrity—Several large Network Solutions programs launched prior; wholesale strength CERiS platform contracts; multiple audits; lower thresholds; prepay expertise Expanding channels; shorter revenue cycles
Corporate Actions——3-for-1 stock split effective Dec 24, 2024 Neutral for ops; increases share accessibility
Leadership——Founder/Chairman V. Gordon Clemons retired Nov 26, 2024; CEO Michael Combs became Chairman Smooth transition; continuity emphasized

Management Commentary

  • Strategic messages
    • Rapid, weekly product iteration and deep in-house dev tenure viewed as a durable advantage, enabling faster translation of business needs into systems and automation .
    • AI/automation deployed across workflows (document processing, claim milestone detection, virtual assistants, integrated communications) to improve outcomes and productivity .
    • Balancing efficiency gains with competitive pricing has strengthened partner relationships and supported margin improvement in Network Solutions .
  • Selected quotes
    • “In the December quarter, generative-AI-based functionality was implemented to streamline the processing of demand packages… and identify key claim milestones” .
    • “Gross profit in the wholesale business was up 33%… from the successful implementation of gen AI and other process automation tools plus streamlined workflows… balancing improved margins with lower price points” .
    • “The quarter ending cash balance was $163 million. CorVel’s strong and debt-free balance sheet… contrasts [with] increasing debt loads and… interest rate cost headwinds” .

Q&A Highlights

  • The webcast contained prepared remarks without a live analyst Q&A session; no incremental quantitative guidance or clarifications were provided beyond prepared commentary .

Estimates Context

  • We attempted to retrieve S&P Global consensus for revenue and EPS for the quarter ended Dec 31, 2024 (Fiscal Q3 2025); consensus data could not be fetched due to access limits at the time of analysis, so beat/miss vs Street is not shown. The company did not provide formal guidance in the press release or 8-K .

Key Takeaways for Investors

  • Durable topline: Revenue grew 13% YoY to $228M with three straight quarters of sequential growth; momentum spans both Patient Management (new TPA wins) and Network Solutions (CERiS) .
  • Margin trajectory: Gross margin expanded to 23.2% (from 22.6% and 22.7% in prior quarters), underpinned by AI/process automation and workflow streamlining—especially in wholesale .
  • Operating leverage steady but modest sequentially: split-adjusted diluted EPS moved from ~$0.45 to $0.46, suggesting incremental operating leverage; watch for further mix/efficiency gains to accelerate EPS .
  • Payment integrity channel expansion: CERiS platform contracts enable access to multiple vendors via one integration and shorter revenue cycles—supporting growth and cash conversion .
  • Strong balance sheet and capital returns: $163M cash, no debt; buybacks continue ($9.6M in Q3); 3-for-1 stock split increases liquidity and investor accessibility .
  • Macro watch: Medical cost inflation (2.5–3.5%) remains a sector headwind; CRVL’s analytics and integrated data position it to manage payer costs but vigilance on inflation and fee schedules is warranted .
  • Modeling note: No formal guidance and limited external consensus visibility mean near-term modeling should rely on sequential run-rates, segment mix, and margin progress, with a focus on wholesale margin sustainability and TPA onboarding cadence .