CorVel Corp (CRVL) 2008 Q2 法說會逐字稿

Welcome to the CorVel Corporation earnings release conference call. During the course of this conference call, 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 and that actual events or results may differ materially. CorVel refers you to the documents the company files from time to time with the Securities and Exchange Commission, specifically the company's last 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. At this time all participants are in a listen-only mode. A question-and-answer session will be conducted later in the call with instructions being given at that time. As a reminder, this conference call is being recorded. (OPERATOR INSTRUCTIONS) I'd now like to turn the conference over to your host, Mr. Gordon Clemons. Please go ahead, sir.

Well, actually, I think I would like to turn it over to Dan Starck. Dan, why don't you start this off and I'll pick it up later on?

Certainly, Gordon, thank you. Thank you, Luan, and good morning, everyone. Thank you for joining us for this morning's discussion to review CorVel's September quarter results. As you can tell, I'm joined here by Gordon Clemons, our Chairman, and for the call I will handle most of the current business discussion and the quarter results and Gordon will cover the product development section.

So let's get to the September results. Revenue in the quarter was $73.5 million, up 9% over the same quarter of the prior year. Earnings per share was $0.40 for the June quarter -- excuse me, for the September quarter, up 18% from $0.34 in the same quarter of last year. During the September quarter, in our traditional business lines, the Network Solutions product lines savings results continue to expand, as we've seen in prior quarters, and our Case Management results showed improvement as well. Enterprise Comp, our strategic initiative of bringing a new approach to the management of workers' comp claims also made progress this quarter. From a market place perspective industry claims volumes continue to be soft as do the insurance premiums. Claims volumes have continued at historic lows. Claim volumes are off 35% nationally over the course of the past ten years and in some states, such as California, approaching a 60% reduction. However, the cost of claims continues to climb. Health care inflation also continues to climb and forecasts have cost increases ranging from high single-digits to the low double-digits. These marketplace trends emphasize the importance of CorVel's medical review services. Regulatory reform continues, individual states continue to be fairly active. Their interest seem to be focused on changes to both provider reimbursement and eCommerce. One of CorVel's responses to reform is to enter the clearinghouse business. In our product development section, Gordon will discuss our initiative of getting into the clearinghouse business. Consolidation activity within the PPO industry picked up again this quarter and certainly creates an interesting scenario in that industry. However, despite challenging industry conditions, CorVel's results continue to improve, as we'll discuss here. Our strategy is developed around the market opportunities that exist and we believe that our acquisition activity and continued emphasis on improving our execution internally will move us forward quickly.

Now I would like to discuss our product-line specific results and our key initiatives. In Patient Management, revenues for the quarter were $31.5 million. This represents a 20% increase over the September quarter of last year and a 4.2% increase over the June quarter. Profits increased 24.2% over the September quarter of last year and 32.5% over the June quarter of this year. As we have discussed before, in the first two quarters of the year, CorVel acquired two claims administration companies and the results of these operations are included in our Patient Management product line reporting in today's call. We continue to reposition our entire Patient Management product line. Within our existing Case Management business, we continue to evaluate our pricing and internal operations in order to improve our net profitability.

The September quarter results demonstrate that we may be making some headway in this area. On a sequential quarter basis, revenues in Case Management were very comparable with the June quarter, while internal costs were reduced by 3%, making this a very nice contributor for the September quarter. With the addition of our claims administration capabilities, we've opened CorVel to new markets and to new services. We've experienced positive net affects from our newly acquired businesses, and as we integrate our service delivery, we'll be able to deliver our integrated product throughout our national footprint. The transfer of our internal operations from client server application to the CareMC porthole will continue this quarter as well. We're nearing 100% completion of the conversion process and expect to have it finished in early 2008.

In Network Solutions, revenues for the quarter were $42 million. This represents a 2.2% increase over the September quarter of last year and a 4.7% reduction from the June quarter of this year. Profits were up 10.3% over last year's September quarter and a 1.2% decrease from the June quarter of this year. Most of the sequential decline is basically due to one less business day in the September quarter versus June. Our results in Network Solutions reflect the ongoing improvements we're making to our software, our specialty review services, and our improvement in internal efficiencies. Our customer savings are up and our internal costs are down, reflecting the strides that our field organization is making in improving our operating efficiencies. CorVel has now recorded 11 consecutive quarters of margin percentage improvement in our Network Solutions product. This is a direct result of two main drivers. Number one, our ability to leverage our technology investment in order to improve both customer savings and internal efficiencies, and two our continued emphasis on our specialty review service products.

As a result of other industry consolidation, CorVel is now one of only two national workers' compensation PPOs. In order to ensure that our PPO is able to compete head-to-head with our largest competitors, we're continuing to invest in our PPO development. During the quarter we signed an agreement with integrated health plan in order to augment the overall performance of the PPO. In future quarters, we'll continue to look at future areas of opportunity for strengthening our PPO results.

In operations for 2007, we continue to focus on five basic initiatives. The first initiative is the expansion of our Network Solutions business. As we have discussed before, the performance of the Network Solutions business line continues to be a major contributor to our overall performance and we continue to invest in its future. In the September quarter, we made some internal organization changes that created a senior position that will have specific responsibility for the performance of the Network Solutions product line. This role will be focused on continually improving our customer savings and also making sure that our internal execution across the entire continuum of Network Solutions continues to improve. Another area that we continue to enhance is making our software commercially available on an ASP basis. We've had significant interest in leasing our ability software by companies that perform this process in-house. While what we believe that the best solution is for CorVel to provide the entire service, we also recognize that this scenario is not always an option for all customers. The second project is focused on improving margins in the Case Management service line. We've had limited success in this area thus far. The September quarter showed improvement. However, we want to continue to refine our approach to the delivery of this service in order to make our recent success sustainable. Just as we transformed both our process and our results in our Network Solutions business, we will take many of the lessons that we learned from that process to improve our Case Management business.

The third project is the continued expansion of our sales efforts. In an industry with contracting claims volumes, we have been able to achieve moderate growth in our Network Solutions products. A few members of our existing sales team and a couple of our new additions have helped create some of the mix change that we are starting to see in our Specialty Review services. The segmentation of our sales team in order to create a national presence has been in place for the past two quarters. While we expect this type of change to take a fairly long time, we have seen noticeable results and we expect this to continue. Some of the most exciting news we have this quarter, I believe, is the progress on our fourth project, Enterprise Comp. Enterprise Comp involves providing new claims management technologies to all of our customers, employers, insurers, and TPAs. We believe the Enterprise Comp approach will improve claims management outcomes. Much of the quarter was spent integrating our newly acquired claims administration companies. We made steady progress on all of the key integration fronts, cultural, business, and information technology. We expect that in the next few months, we'll have our different claims administrations businesses converted to our designated claims system. Expanding Enterprise Comp to achieve a national presence has been and will continue to be a major focus for CorVel. The platform that we have created with the acquired companies and the existing CorVel infrastructure gives us the ability to quickly deliver this product on a national basis. Currently, we're able to deliver Enterprise Comp services in 34 states and we're working to expand this to cover the entire CorVel footprint that exists in 49 states. Overall, we're pleased with the financial performance of the acquired companies, the associated integration progress into CorVel, and the other progress of the product line this year.

The last project is the continued investment in our CareIQ line of direct care networks. We have recently made both management investments, as well as software investments in this product line and we are positive about the future of this product. Now I would like to turn the call over to Gordon Clemons to discuss product development.

Thanks, Dan. I'll discuss the software development and product development in the same sequence in which Dan covered our major operating projects. Our total effort in this area comprises over 100 projects, which I'll try to consolidate under the five primary operating priorities. The most important point is that as health care information processing becomes more and more sophisticated and work flow tools become integrated within our systems, almost all projects become in some way interrelated as differing health care activities share redundant information. The first project is the network solutions area. Software development here is focused on integrating our specialty medical review products more fully within the existing medical review in MedCheck and our porthole CareMC. We're also adding features to facilitate the integration of additional PPO affiliates. New PPO affiliates can offend have contracting structures that require us to add to our software. As we recently announced, we've added a major inpatient network that will improve our overall PPO results. Improving total savings is a always a key priority and new forms of Smart Routing are an ongoing initiative that produces improved results for our customers. The total MedCheck in CareMC continuum in medical review is quite complex. Recent legislation in some states now extends this total service line to include the receiving and transmitting of medical bills from providers to payors. These state initiatives in the clearinghouse arena, as it's referred to, require capabilities we first developed several years ago to support CorVel's Activ project. We see the clearinghouse services as logical extensions of our MedCheck software. In the long-term the medical review business in health care is going to evolve much as transaction processing has been modernized in other sectors of the Financial Services sector. Being an efficient and technically sophisticated participant will be critical to those firms who do not want to go the way of the stock brokers who once dominated securities transactions.

Our Phase I project will be introduced January 1 of 2008. With clearinghouse services, our processors and payors will extend from the receipt of bills from providers for transmission to medical review and then on to payors, all the way through the to the posting of payments to providers. The Smart Routing of supporting documentation will also be included. This work is related to the electronic medical records initiatives already underway in other segments of the health care industry.

Moving our Case Management business into CareMC, as Dan discussed, has been a key development project over the past couple of years. With the transfer of our business into CareMC largely complete, the development emphasis now has moved from accommodations necessary to hub all of this work to the improvement in the functionality of CareMC. I would like to compare this effort to the completing of each section of a large bridge. The bridge requires a lot of work, might take quite a bit of time, but does not really pay off until the last section is completed and cars can actually cross from one river bank to another. In a similar fashion, improvements to our service are often not visible until we complete these large projects. We have more work to do on the Case Management conversion, but are following a proven path when we moved our medical review to a work flow management process several years ago. Improvement -- important improvements to the Case Management process will continue throughout the coming year and certainly for years to follow. Increasingly, though, our supporting software vendors are also providing tools that facilitate CorVel's overall goals in this regard.

On the sales front, our support to that effort is provided primarily through our CRM Systems. We are improving the Systems in this area. However, we rely largely on lease software in this aspect of our business. We're also now working with business intelligence vendors to improve our knowledge of the marketplace and our ability to penetrate prospects. Another infrastructure effort is the steady move of our processing to colocation facilities. Just this last weekend, our IT staff worked through the night to complete another portion of this ongoing change during down hours and I think our ability to constantly improve our hardware and our ability to scale our applications without problems is a tremendous complement to the staff. Enterprise Comp support includes a number of efforts. We have been stalling, as Dan discussed, our medical review systems in the companies we have acquired. In addition, we are integrating the claims management software from the Schaffer acquisition into CareMC. It was a very nice bonus for us in getting together with Schaffer to find that they had software that we are quite impressed with and will certainly look forward to using across CorVel's infrastructure.

Firstly, we want to have a seamless continuum from the management if incoming claims reporting through to the claims management and medical management on each claim. Secondly, we want to bring new concepts from the management of workers' compensation claims into the operations we have acquired. As you know from prior calls, CorVel believes it's in the process of introducing a change in the way workers' comp claims are managed which will meaningfully improve the outcomes in that area. These are meaningful efforts that will stretch out in phases throughout the coming year, these improvements to our software will allow us to achieve additional synergies in our Enterprise Comp operations.

In addition, for both our Enterprise Comp customers as well as for those customers buying just a subset of our service, we are close to introducing a substantial expansion to our user interface tools in CareMC. Dashboards are popular these days and yet making one truly functional, easy-to-use and relevant in everyday operations is a challenge. In collaboration with some third-party partners, we have been developing a Next Generation product which is now ready for initial customer review. We have our national user group meeting just this coming few days and will be introducing some of our new developments at that time. CareIQ systems have been the most complex of our efforts, integrating call center operations with our distributed network of 150 offices in 49 states requires substantial capabilities. We've been implementing voice over IP over the last few years and combining a number of systems efforts to address the CareIQ needs. Our systems in this area have taken a full year longer to develop than we had originally anticipated. Nonetheless, we have persevered and continue to believe that directed care networks will be important to the future of PPOs. The more we have added to our overall systems functionality, the more each new expansion has been complementary to the base we have already built. It is difficult to do justice to the effort of our product development professionals. These complex projects are dependent upon the successful translation of business knowledge and software -- into software expressions. I would like to thank them and certainly express our appreciation for the long and steady record of success that our team has had. This is, I think, partly a product of the consistency of our strategic directions, but as always, ultimately a credit to the people who have undertaken all of those efforts on behalf of CorVel. At this point I would like to turn the call back to Dan to finish the -- some of the other subjects.

Thanks, Gordon. I would like to add a few more items prior to opening the call to questions. Cash flow improved $2.5 million with quarter-ended cash balance at $9.3 million. On the AR front, our DSO improved to 48 days, down from 52 days at the end of June. Stock repurchases, we did repurchase 153,000 shares in the quarter. We spent basically $158 million inception to date and have repurchased 11.5 million shares. Hard shares at the end of the quarter were 13.861 million, diluted EPS were 14.111 million. In summary, we're pleased with the progress we're making in a number of areas. We've been able to show growth in our more profitable lines while improving our internal efficiencies, resulting in a more profitable business. At the same time, we've been able to make progress on our strategic initiative, Enterprise Comp. We will continue to focus on areas that we believe will lead to growth opportunities from both the revenue perspective and earnings perspective. This concludes my comments, and we'd like to open the call to questions.

(OPERATOR INSTRUCTIONS) Your first question comes from John Sabo of Flintridge Capital.

Good morning. Thanks for taking the questions. My first question related to the Schaffer integration. Would you consider that to be completely done and the economics of that integration fully reflected in the September quarter, or do you think that we're going to see a little bit more of that into the next couple of quarters?

No, we don't believe it was fully completed in the quarter. We made the acquisition June 1 and through the course of the September quarter did -- we were able to complete some of the integration activities. However, there's a fair number of them that could stretch into -- as far as early into the first quarter of next year, converting some of the internal business as well as doing some of the system conversions. We don't believe that was fully recognized at this point.

This may be difficult, but if you had to put a percentage of the total economics that you were thinking about, what percentage of that made it into the September quarter?

That is a little difficult, but I would say it's probably 50%.

Okay all right, great.

Sure.

My other question was, clearly, the company is making a lot of investments to help grow the company and I noticed that the expenses did tick up a bit as a percentage of the total. Would you expect that to come back down or should we expect that to kind of stay at an elevated level as a percentage of revenue going forward given everything that Gordon just described?

I think we will make the technology investments -- or spend the dollars that we think are needed to advance. So we're in a nice position to where we have the cash to make that and make the investments so I think you'll continue to see the investments made. My guess is that it would be fairly comparable to where it was last quarter. I don't anticipate a significant downturn. We certainly, like I said, are in a nice position to be able to make significant investments and we think that that's best for the long-term stretch for the business.

Okay. Then just one more and I'll jump off.

Sure.

If you take out the two acquisitions that you've done, it looked to me like the revenue was just down slightly year-over-year. Obviously, I'll have to go back and look at the impact of that one less business day, whether that had an impact, but when do you think we might actually start to see some organic growth outside of the acquisition activity? Is that something that just can't mathematically improve as long as industry volumes are under pressure, or do you think that some of these acquisitions might actually lead to some growth, but they just have a long tail time in terms of the lead time to get there?

That's about -- I think that would probably justify about an hour-response, John. But I think there's a couple of things. One, from an organic growth perspective, I think one of the challenges that's masked in our numbers is that we've seen reductions in our Case Management business while we've grown our Network Solutions business. So purposefully, we've reduced that Case Management business just from walking away from low-priced business and that's masked a little bit of our growth in the aggregate. We are down on a base business very slightly from yea- to-year, but we believe that we are getting some traction in the Network Solutions business. So from an overall perspective, we have to obviously outpace the Case Management reductions with Network Solutions improvement and we've done some of that in prior quarters. However, basically, we have some pretty good headwind right now with where the claims volumes are in the industry. So we clearly have a strategy of trying to make investments in our sales team, try to get organic growth moving forward. However, if claim volumes continue to decline, it's pretty tough. If we were able to just see flat claim volumes, we believe that we'd be able to compete and actually win more business and have a growth rate that we believe is more acceptable at this point.

Okay. Then do you have a view on when that claim volume might turn around?

I wish we knew. I really don't. Gordon, any thoughts on that?

I've been wrong on forecasting that for about 15 years consecutively. I think it is hard to say, but claims do seem to be bottoming out. I think severity has been up, which indicates that some of the claims that went away were perhaps the less serious or perhaps not even real, who knows. Also, I would add to what Dan said in saying that there's been a change in our industry where some of the major TPAs wanted to take some of the business in-house in the Managed Care side and that was the emphasis for us entering the Enterprise Comp business so that some of the lack of growth in the last three or four years has been from that change in our industry. We have responded with a strategic initiative that I think will be successful and so I guess without wanting to give guidance, and I wouldn't want to go close to that, I do think that as our Enterprise Comp projects come together, we will see the natural organic growth that we used to accomplish as a company. I think outside the TPA sector, CorVel has always had the growth we would expect in our industry.

Okay. Thank you.

Your next question comes from Dan Hoover with Hoover Capital.

Hi. I was just wondering, can you talk a little bit more about the clearinghouse product and sort of what kind of impact that would have as far as revenues? I mean, is that 10% additional price per customer, 20% additional? How does that affect your business model?

This is Gordon. I'll take that one since I'm probably more of a fan of the whole clearinghouse area. I think the whole move by parties as large as Microsoft into electronic medical records is really the backdrop to this. It's not clear, I don't think, exactly how profitable or even meaningful clearinghouse efforts will be in the initial years. I would say that CorVel's in that business, one, because we have the tools to be successful in it. They are already developed.

This is not an entirely new effort for us, but also because it is likely, I believe, that the electronic processing of transactions and health care is in our long-term future, whether it's part of CorVel's business or just part of the industry and I believe strongly that our technical capabilities give us a real advantage in that marketplace. Some of the outgrowth from being in the clearinghouse business is not exactly here today. But I would say if you're involved in the flow of commerce and health care, a company the size of CorVel stands to gain substantially in the long-term. But that long-term could be five years away. I would suggest that investors look at that as just a responsible move by CorVel to take advantage of its position and not a precursor to some kind of meaningful financial differences in the coming couple years.

And can you tell us just historically as far as the number of workers' comp claims and the number of claims, what's historical been a sign that those have bottomed in past cycles? Is it went severity is up, or rates start getting cut, or is it just sort of more economic?

I would say historically we have not had a big decline like this. This is a ten-year decline that -- well, or even maybe as long as 15 years from the ultimate peak in the early 90s. Perhaps that was due to changes, perhaps, in legislation, let's say, or the environment for Comp and as some of those laws began to be pulled back a little bit, there was naturally going to be some retrenchment of the market. But the underlying growth in the workforce in the U.S. is the ultimate driver of workers' compensation if you take out the adjustment for benefit plans and some of the reforms that have taken place. So I think at some point we would expect the resumption of growth that was really always a part of our past. This drop has been far more than cyclical. It's been an infrastructure change, I would say, that's gone on for quite a while.

Okay, thanks.

Your next question comes from Kevin Malloy with Satellite.

Hey, Gordon, Dan. How are you?

Good, Kevin. How are you?

Great. So looks like you put up another pretty solid quarter in terms of year-over-year improvement in gross margins, gross margin expansion over 100 basis points. I'm just curious. We've talked a little bit before about this coming from mix shift to percent of saving type contracts, higher savings rates which you highlighted in your press release where you're benefiting together with your customers and also a mix shift generally to Network Solution. What would you say the drivers were in this quarter on a year-over-year basis and how should we be thinking about the opportunity there over the course of the next few quarters?

Kevin, this is Dan. We had a -- we had a phenomenal quarter in our Case Management business. Completely opposite of where we've been for the past number of quarters. Revenues were essentially flat to the June quarter and costs were down significantly. So that was a very nice contributor, but we have continued to see very strong performance in the Network Solutions business. We've seen some mix shift and some growth in our out of network product, which has produced some nice -- some nice piece of business. But the big driver for the quarter was Case Management. I alluded earlier to it to make it sustainable is I think something that one of the things we have to do is continue to build the process underneath with the system to make sure that the work flow continues to be driven that way so that we can make that change sustainable. But the big -- the real big change for us this quarter, again, was the Case Management business. Nice gains on the Network Solutions side, as far as a margin percentage, but the big dollar gain was actually on the Case Management business.

That's great. And I guess secondly, can you elaborate a little bit more on the TPA opportunity? Just additional bolt-on acquisitions that you see, what's the environment like? Is it target-rich? And what should our expectations be in terms of the deployment of capital towards those opportunities over the next year or two?

Well, we're certainly keeping our cash in an opportunity to execute more acquisitions. I wouldn't call it a target-rich environment, at this point. Certainly, we are interested in expanding our footprint into the Midwest and into the central part of the country. However, the receptiveness by the number of potential targets is just not there. So at this point, we will keep our powder dry, if you will, but we're also looking at how do we also jump-start our organic growth in that business.

Got it. Thanks very much.

You're welcome.

Are there any further questions? We do have a follow-up from John Sabo of Flintridge Capital.

Thanks. Just to follow-up on the question about the claims volume, do you think that sort of ten-year decline paralleled a decline in the manufacturing base in the country? And if so, do you think that sort of with what's going on with the dollar and the potential for increased exports coming out of this country given where the dollar is, do you see any signs that can employment in the manufacturing sector may turn around? And do you think that could actually affect the volume of claims at some point?

This is Gordon. I'll take that one. I would say that that's kind of the, I think the layperson's general perspective is that offshoring of labor or the decline in the manufacturing section in the U.S are drivers, they certainly are contributors, but the decline appears to be more a part of the nature of the regulations in comp and just the kind of excesses that might have gotten into the system in the late 70s and throughout the 80s. There are a number of factors that contribute to the number of injuries and to some degree, certainly the number of illegals working in the workforce who don't turn in claims has some impact. The regulations and the reforms seem to be the biggest ones. Some decline in the manufacturing sector is a contributor. To some degree, as I said early on, there's also been a mix change in those claims. And that is that we do see growth in the severity of claims, in other words, the more serious claims. So I think that perhaps as comp has been reformed and as managed care is becoming increasingly effective, some of the smaller claims have just declined or not shown up in the numbers as much.

Okay. Gordon, could you give us an example of a change in regulations that may have affected the claims volume? Just so I could get a better understand of what that might be?

Yes, certainly. And California is kind of the mothership in workers' comp. What would it be? It's 10% of the U.S. population but 20% of the workers' comp market. In California at one point if more than 50% of your stress in life came from your job, you could file for workers' comp. That generated a lot of claims that were difficult to address for employers. That regulation has been changed and I don't think stress claims are much a part of the workers' comp environment anymore. So that took a bunch of claims out of the market. A second one was a very strong initiative in California to address fraud and some of the people participating in the marketplace that were not delivering real care. So I think California is kind of a bell weather in that regard there have been a lot of efforts that are related but somewhat different in other states. The big states in comp around the country tend to be California, Texas, Florida, and those are states where there have been a number of initiatives to try to address the problems in comp.

Now, I understand that California is looking at actually increasing workers' comp rates for '08 after a fairly significant decline in '07. Would that sort of track your comments on severity, or is there something else there?

Well, that's interesting. I don't know -- we're not in the premium part of the market, or in other words the insuring market, so we don't pay close attention to that. I thought loss ratios were remaining quite low. There might be efforts to increase the comp premium rates, but -- well, I don't know. I probably shouldn't comment because we're just not very close to that. But I would say loss ratios have been quite low the last few years.

Okay. Then just one other unrelated question. Do you see the company continuing to buy back stock? I know, I think, Dan made the comment about trying to keep the powder dry, but should we expect to see sort of similar levels of share repurchase going forward?

Actually, at this point, John, we're not planning on share repurchases. We are planning on, as I said, keeping our cash in order to execute acquisitions at this point.

Okay. Would that suggest, then, that the amount of capital that you could apply to that acquisition strategy could be bigger than what you've done in these last two deals?

Sure. We certainly do not carry -- as most people know, we don't carry any debt, so our ability to husband cash and then be able to utilize credit lines or debt facilities to finance acquisitions could be a meaningful-sized deal if we came across the right one. We've had several that we've passed on that were significant in size, but certainly for us, we want to be very careful in how we evaluate deals. We want to make sure that we get both the cultural and business fit in deals that we have received from both Schaffer and the MHRS acquisitions so the economic value is really driven. We're not buying just to buy. We're certainly buying in order to execute a strategic initiative and that's why what we're really trying to make sure we do is husband our cash and line up any credit or debt facilities that we need.

You put in a credit facility earlier this year and you have $10 million in cash. So I guess what you're saying then is that you wouldn't want to do both in terms of share repurchase and acquisitions?

Right. At this point, we wouldn't.

This is Gordon. We are also looking at other possible credit lines that -- or access to other forms of credit, more just on a contingency basis in the event we do come across a nice-sized opportunity. I think we're very excited about the synergies between the companies we've picked up the last year and our base business, the Enterprise Comp strategy has been working very nicely and is very supportive of doing more of that. So we just want to be a little careful on the husbanding of our cash.

Right. From my perspective, I always like it when companies buy back stock, but I like it even more when they can find very good acquisition opportunities with good returns on invested capital. It seems to me like you've got that with this TPA strategy. So I'd be all for seeing a few more acquisitions there. Okay. Thanks a lot.

Thanks, John.

And are there any further questions? There are no further questions. Mr. Clemons, do you have any further comments?

No. I think that's all for today. We would like to thank you all for joining us and we'll look forward to talking to you again next quarter.

This concludes our conference call for today. Thank you for your participation. Please disconnect at this time.