CorVel Corp (CRVL) 2024 Q3 法說會逐字稿

Thank you for standing by, and welcome to the CorVel Corporation 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 performance 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 that the company files from time to time with the Securities and Exchange Commission, specifically the company's last Form 10-K and 10-Q files 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.

感謝您的耐心等待，歡迎收看 CorVel Corporation 季度收益發佈網路廣播。在本網路廣播期間，CorVel Corporation 可能會對未來事件或公司未來財務表現做出預測或其他前瞻性陳述。CorVel 希望提醒您，這些陳述僅是預測，實際事件或結果可能存在重大差異。CorVel 請您參考公司不時向美國證券交易委員會提交的文件，特別是公司最近一個財政年度和季度的最後一份 10-K 表格和 10-Q 表格文件。這些文件包含並確定了可能導致實際結果與我們的預測或前瞻性陳述中包含的結果有重大差異的重要因素。

I would now like to turn it over to Michael Combs, President and Chief Executive Officer.

現在我想將其交給總裁兼執行長 Michael Combs。

Good morning. Thank you for joining us to review CorVel's December quarter. Brandon O'Brien, CorVel's Chief Financial Officer, is on the call with me today. Today, I will review business performance, the current environment and market trends, and progress on new product and service offerings. Brandon will then provide additional details on the financial results for the quarter.

早安.感謝您與我們一起回顧 CorVel 的 12 月季度。CorVel 財務長 Brandon O'Brien 今天與我通話。今天，我將回顧業務績效、當前環境和市場趨勢，以及新產品和服務的進展。布蘭登隨後將提供有關本季度財務業績的更多詳細資訊。

The December quarter revenues were $202 million, a 13% increase over the $179 million of revenue for the December 2022 quarter. Earnings per share for the quarter were $0.99, a 3% increase from $0.96 per share in the same quarter of the prior year. We ended the 2023 calendar year with a 34% increase in new business sold with balanced bookings across CorVel's Network Solution and Patient Management segments.

12 月季度的營收為 2.02 億美元，比 2022 年 12 月季度的 1.79 億美元營收成長 13%。本季每股收益為 0.99 美元，比去年同期的每股收益 0.96 美元增長 3%。截至 2023 年曆年，CorVel 網路解決方案和病患管理部門的平衡預訂新銷售業務成長了 34%。

Customer retention as measured by gross revenue retention for the year was 95%, while net revenue retention was 108%. These achievements are testament to the diligence and determination of our sales, account management, and operations teams. While we're pleased with customer retention and new partner bookings, the path to meaningful growth can be uneven. The quarter's results were adversely impacted by elevated costs for our self-insurance healthcare as well as in the commercial health sector, volume-based price adjustments, and continued tuning of the DRG review process. The items adversity affecting results were primarily offset by a one-time work in progress with adjustment.

以當年總收入保留率衡量的客戶保留率為 95%，而淨收入保留率為 108%。這些成就證明了我們的銷售、客戶管理和營運團隊的勤奮和決心。雖然我們對客戶保留和新合作夥伴預訂感到滿意，但實現有意義成長的道路可能並不平坦。本季度的業績受到自我保險醫療保健以及商業健康領域成本上升、基於數量的價格調整以及 DRG 審查流程的持續調整的不利影響。影響績效的項目逆境主要被一次性進行中的調整所抵銷。

In our P&C business, the [WIP] cycle is relatively short, meaning work is completed, and revenue is generally recognized within 30 days. The WIP revenue recognition cycle can be much longer on the commercial health side, especially with post-pay programs. Based on the actual experience with DRG claims reviewed, we've modified the WIP process to more accurately reflect the percentage of work completed earlier in the review cycle. The one-time adjustment benefited the December quarter results.

在我們的財產保險業務中，[WIP]週期相對較短，這意味著工作完成，收入通常在 30 天內確認。在商業健康方面，WIP 收入確認週期可能會更長，特別是對於後付款計劃。根據審核 DRG 聲明的實際經驗，我們修改了 WIP 流程，以更準確地反映審核週期早期完成的工作百分比。這項一次性調整有利於 12 月季度業績。

There is increased activity in the property and casualty segment of the business with companies that have been loyal to their current vendors for many years, even decades, now exploring other options in the market. The effective application of advanced technology and the corresponding program impact is an increasing expectation.

財產和意外傷害業務領域的活動有所增加，多年來甚至數十年來一直忠於現有供應商的公司現在正在探索市場上的其他選擇。人們越來越期望先進技術的有效應用以及相應的計劃影響。

The historical table stakes, however, program continuity, consultative engagement, quality and consistency, operational excellence, and ultimately, results have not changed. These are items we have been and will remain focused on, which is a key part of what makes us such an attractive option to potential partners in the current environment. The escalated activity in the market can be attributed to the cracks that have appeared in many programs due to the pandemic, great resignations, and for some, the increased cost of servicing their debt load.

然而，歷史賭注、計劃連續性、諮詢參與、品質和一致性、卓越營運以及最終結果並沒有改變。這些是我們一直並將繼續關注的項目，這是使我們成為當前環境下潛在合作夥伴如此有吸引力的選擇的關鍵部分。市場活動的升級可歸因於許多計劃因疫情、大量辭職以及某些人償還債務成本增加而出現的裂縫。

At CorVel, we've maintained modest claim loads, redoubled efforts in the area of operational excellence, and doubled down on the investment in our people, technology, and advancing our systems. With hyper focus on these critically important areas, we look to build upon the business development momentum achieved in 2023.

在 CorVel，我們保持了適度的索賠負擔，在卓越營運領域加倍努力，並加大了對人員、技術和先進系統的投資。透過高度關注這些至關重要的領域，我們希望在 2023 年實現的業務發展勢頭的基礎上再接再厲。

In the P&C arena, carriers seek alliances that improve the value proposition to their customers. Integration efforts consume and stretched limited IT resources. In the industry, it is not unusual for implementations with new vendors to take months, if not years, longer than initially planned. A consistent message from our carrier partners during the recent advisory conference was their desire for assistance in easing their IT resource constraints. We're collaborating with our partners to offer platform capabilities that enable them to engage with top-rated vendors while minimizing the burden on their technical teams.

在財產保險領域，業者尋求聯盟來改善其客戶的價值主張。整合工作消耗並耗盡了有限的 IT 資源。在業界，新供應商的實施時間比最初計劃的時間長幾個月甚至幾年的情況並不罕見。在最近的諮詢會議上，我們的營運商合作夥伴發出了一致的訊息：他們希望獲得協助以緩解 IT 資源限制。我們正在與合作夥伴合作提供平台功能，使他們能夠與頂級供應商合作，同時最大限度地減少其技術團隊的負擔。

In the commercial health market, medical care ratios have deteriorated due to increased costs of care. While of the drivers of the increases in cost is senior seeking services, we see delay due to the pandemic. Large payers are seeking innovative solutions to achieve cost of care savings and increased our ally from payment integrity vendors such as CERiS. We are responding to the evolving market requirements by expanding the team focused on bringing additional payment integrity reviews to fruition and enhancing system automation and augmentation. The current environment increases the appeal of services provided by CERiS.

在商業醫療市場，由於護理成本增加，醫療保健比率有所惡化。雖然成本增加的驅動因素是高級尋求服務，但我們看到由於大流行而造成的延遲。大型付款人正在尋求創新的解決方案來節省護理成本，並增加了我們與 CERiS 等支付誠信供應商的盟友。我們正在透過擴大團隊來應對不斷變化的市場需求，該團隊專注於實現額外的支付完整性審核並增強系統自動化和增強。目前的環境增加了 CERiS 提供的服務的吸引力。

Turning now to product development and operations. The quarter included additional enhancements to CorVel's business systems. Our investment strategy has been to focus on the ongoing development of technology and its application to our business. We've been incrementally optimizing processes within services to improve the operating efficiency. As it is in other industries, we view technology as vital to success in our industry, and we'll expand upon how we are seeing its benefits later in the call.

現在轉向產品開發和營運。本季度包括對 CorVel 業務系統的額外增強。我們的投資策略是專注於技術的持續發展及其在我們業務中的應用。我們一直在逐步優化服務流程，以提高營運效率。與其他行業一樣，我們認為科技對於我們行業的成功至關重要，我們將在稍後的電話會議中詳細介紹我們如何看待科技的好處。

Current efforts with generative AI are enhancing document viewing and processing, allowing for on-demand, predefined, and ad hoc searches; annotation capabilities; and the identification of critical data elements. Our claims team, the viewer reduces time spent on routine tasks, which allow more time for focus on essential activities, items requiring critical thinking which directly impacts patient experience and outcomes.

目前生成式人工智慧的努力正在增強文件檢視和處理，允許按需、預先定義和臨時搜尋；註釋功能；以及關鍵數據元素的識別。我們的理賠團隊，觀眾減少了花在日常任務上的時間，從而有更多時間專注於基本活動、需要批判性思維的項目，這些活動直接影響患者的體驗和結果。

Our professional review nurses are seeing a higher percentage of data accuracy and reporting process improvements of up to 50%. Advances like fees, in addition to the benefits already shared, will increase productivity, which will ultimately hold down costs for our partners during a time when costs are generally rising.

我們的專業審核護理師發現數據準確性更高，報告流程改善高達 50%。除了已經分享的利益之外，費用等預付款將提高生產力，最終將在成本普遍上升的時期降低我們合作夥伴的成本。

Pharmacy drug costs are a subset of medical costs and are dynamic in nature fluctuating throughout the year. During the quarter, the increase in generic drug costs was higher than usual, which resulted in the pharmacy programs gross margin experiencing a slight decline. These normal fluctuations typically balance over time. The design of our pricing model encourages the dispensing of cost saving generic drugs, which resulted in greater pharmacy savings to our partners.

藥局藥品費用是醫療費用的一部分，本質上是全年動態波動的。本季，仿製藥成本增幅高於平時，導致藥局專案毛利率略有下降。這些正常波動通常會隨著時間的推移而平衡。我們定價模型的設計鼓勵配發節省成本的仿製藥，從而為我們的合作夥伴節省更多的藥房費用。

Another example of rising costs and claims management is wage inflation. Average weekly wages reported nationally continue to rise. Liability claims costs are also experiencing steady growth due to the costs of labor and materials for property damage repairs and jury verdicts on bodily injury claims. The focus on automation and augmentation to enhance operational performance and the team's diligent investigation and negotiation of claims as early as possible in the claim life cycle ameliorate the effects of inflation for our partners.

成本和索賠管理上升的另一個例子是工資上漲。全國報告的平均週工資持續上漲。由於財產損失修復的勞動力和材料成本以及陪審團對人身傷害索賠的裁決，責任索賠成本也在穩步增長。專注於自動化和增強以提高營運績效，以及團隊在索賠生命週期中儘早進行索賠調查和談判，減輕了通貨膨脹對我們合作夥伴的影響。

At CorVel, we work diligently to curb the great resignations effects on our team being a great place to work, where people are treated with respect and have growth opportunities is tremendously important. While the great resignation has eased from its high early last year and rapid increases in compensation demands have slowed, we remain committed to intentionally attracting and maturing talent. The launch of CorVel University last year, we are taking deliberate steps to grow and develop claims professionals.

在 CorVel，我們努力遏制辭職對我們團隊的巨大影響，我們的團隊是一個優秀的工作場所，人們受到尊重並擁有成長機會非常重要。儘管員工離職率已從去年初的高點回落，薪酬需求的快速增長也有所放緩，但我們仍然致力於有意識地吸引和培養人才。去年科維爾大學成立後，我們正在採取審慎措施來培養和發展理賠專業人士。

In addition to hiring and training, the augmentation and automation being applied to our systems will help retain current team members and streamline the process for getting the next generation of claims professionals up to speed.

除了招募和培訓之外，我們系統中應用的增強和自動化將有助於留住現有的團隊成員，並簡化讓下一代理賠專業人員跟上步伐的流程。

The P&C and commercial markets have faced interesting challenges these last several years and remain dynamic in nature. While we've made some adjustments to operating parameters and technological focus, CorVel's core operating principles, conservative financial position, ongoing investment in technology, and our people and a long-term view of success position us well for further expansion in the current environment.

過去幾年，財產險和商業市場面臨著有趣的挑戰，本質上仍然充滿活力。雖然我們對營運參數和技術重點進行了一些調整，但 CorVel 的核心營運原則、保守的財務狀況、對技術的持續投資以及我們的員工和對成功的長期看法使我們能夠在當前環境下進一步擴張。

Brandon will now provide additional texture on the financial results for the December quarter. Brandon?

布蘭登現在將提供有關 12 月份季度財務業績的更多資訊。布蘭登？

Thank you, Michael, and good morning everyone. As Michael indicated at the top of the call, revenues for the December quarter were $202 million, 13% over the $179 million of revenue for the December 2022 quarter. Earnings per share for the quarter were $0.99, increasing 3% from the $0.96 per share in the same quarter of the prior year. The revenue for patient management, including third-party administration, TPA services, and traditional case management for the December quarter was $132 million, an annual increase of 11%. Gross profit increased by 9% from the December quarter of 2022.

謝謝你，邁克爾，大家早安。正如 Michael 在電話會議開頭指出的那樣，12 月季度的收入為 2.02 億美元，比 2022 年 12 月季度的 1.79 億美元收入增長了 13%。本季每股收益為 0.99 美元，較上年同期的每股 0.96 美元增長 3%。12 月季度患者管理（包括第三方管理、TPA 服務和傳統病例管理）的收入為 1.32 億美元，年增長率為 11%。毛利較 2022 年 12 月季度成長 9%。

CorVel's TPA business continues to be the leading growth driver in this segment. The TPA Enterprise Comp business experienced 50% growth in new client, closed annualized sales in 2023 compared to that of closed sales in the prior-calendar year. New client accounts generally take between 6 to 12 months to achieve their expected run rate and thus are expected to drive patient management revenue growth throughout 2024.

CorVel 的 TPA 業務仍然是該領域的主要成長動力。與上一日曆年相比，TPA Enterprise Comp 業務 2023 年的新客戶和年化銷售額成長了 50%。新客戶帳戶通常需要 6 至 12 個月才能達到預期運作率，因此預計將推動 2024 年患者管理收入的成長。

The revenue for Network Solutions sold in the wholesale market for the December quarter was $71 million, up 17% from the same quarter of the prior year. Gross profit in the wholesale business was up 1% from the December quarter of 2022. CERiS, included within Network Solutions, is actively broadening its range of services and enhancing scalability to meet the diverse and evolving needs of key health insurance clients.

12月季度網路解決方案在批發市場的銷售收入為7,100萬美元，比去年同期成長17%。批發業務的毛利較 2022 年 12 月季度成長 1%。CERiS 包含在 Network Solutions 中，正在積極擴大其服務範圍並增強可擴展性，以滿足主要健康保險客戶不斷變化的多樣化需求。

In the short term, activities such as strategic adjustments in pricing, continued tuning of the DRG offerings, plus initial capital and expenditure investments, temporary profit growth, but have been instrumental in reinforcing our partner relationships. This approach ultimately aligns the company for securing long-term profit growth with our top carrier partners. The current roadmap is robust with opportunities for increased volume through existing and expanding new services for the market.

從短期來看，定價策略調整、持續調整 DRG 產品、加上初始資本和支出投資、暫時的利潤成長等活動有助於加強我們的合作關係。這種方法最終使公司能夠與我們的頂級營運商合作夥伴保持長期利潤成長。目前的路線圖很穩健，有機會透過現有的和擴展的市場新服務來增加銷售量。

I would now like to review a few additional financial items. During the quarter, the company repurchased 43,991 shares at a total cost of $9.3 million. From inception to date, the company has repurchased 38 million shares at a cost of $785 million. Through the program, the company has repurchased 69% of the total shares outstanding. The repurchasing of shares continues to be funded via the company's strong operating cash flow. The DSO, as in days sales outstanding, of receivables was 42 days, the same as from a year ago. The quarter ending cash balance was $107 million. CorVel's strong and debt-free balance sheet generates improved earnings in contrast to many others in the segment facing increasing debt loads with associated interest rate cost headwinds.

我現在想回顧一些額外的財務項目。本季度，該公司回購了 43,991 股股票，總成本為 930 萬美元。自成立至今，該公司已回購3,800萬股股票，耗資7.85億美元。透過該計劃，公司回購了已發行股份總數的69%。股票回購繼續透過公司強勁的營運現金流提供資金。應收帳款的 DSO（以應收帳款天數計算）為 42 天，與一年前相同。季度末現金餘額為 1.07 億美元。CorVel 強勁且無債務的資產負債表帶來了更好的收益，與該領域許多其他面臨債務負擔增加和相關利率成本不利因素的公司相比。

That concludes our remarks for today. Thank you for joining us. I'll now return the call to the operator.

我們今天的演講到此結束。感謝您加入我們。我現在將電話回撥給接線生。

This concludes today's webcast. You may disconnect your lines at this time.

今天的網路廣播到此結束。此時您可以斷開線路。