CorVel Corporation (CRVL) Bundle
Understanding CorVel Corporation (CRVL) Revenue Streams
Understanding CorVel Corporation’s Revenue Streams
CorVel Corporation generates revenue primarily from two main service lines: patient management services and network solutions services. The revenue breakdown for the six months ended September 30, 2024, is as follows:
| Service Line | Revenue (2024) | Revenue (2023) | Change ($) | Change (%) |
|---|---|---|---|---|
| Patient Management Services | $286,345,000 | $257,643,000 | $28,702,000 | 11.1% |
| Network Solutions Services | $149,757,000 | $128,132,000 | $21,625,000 | 16.9% |
| Total Revenue | $436,102,000 | $385,775,000 | $50,327,000 | 13.0% |
For the three months ended September 30, 2024, the revenue figures were:
| Service Line | Revenue (2024) | Revenue (2023) | Change ($) | Change (%) |
|---|---|---|---|---|
| Patient Management Services | $147,173,000 | $129,805,000 | $17,368,000 | 13.4% |
| Network Solutions Services | $77,207,000 | $65,717,000 | $11,490,000 | 17.5% |
| Total Revenue | $224,380,000 | $195,522,000 | $28,858,000 | 14.8% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rates reflect a consistent upward trend. For the six months ended September 30, 2024, total revenue increased by 13.0% compared to the same period in 2023. This growth was driven by both service lines, with patient management services increasing by 11.1% and network solutions services by 16.9%.
For the quarter ended September 30, 2024, total revenue also showed strong growth, rising by 14.8% from the previous year, with patient management services growing by 13.4% and network solutions services by 17.5%.
Contribution of Different Business Segments to Overall Revenue
The contribution of each segment to total revenue for the six months ended September 30, 2024, is illustrated below:
| Segment | Revenue Contribution (%) |
|---|---|
| Patient Management Services | 65.7% |
| Network Solutions Services | 34.3% |
For the quarter ended September 30, 2024, the contribution remained similar:
| Segment | Revenue Contribution (%) |
|---|---|
| Patient Management Services | 65.6% |
| Network Solutions Services | 34.4% |
Analysis of Significant Changes in Revenue Streams
In the most recent reporting periods, a notable increase in revenue was attributed to higher activity levels in both patient management and network solutions services. The increase in patient management services is largely due to higher revenues from Third-Party Administrator (TPA) and related services, while the network solutions segment has benefitted from enhanced bill review programs and growth in both new and existing customer bases.
New claims have also seen a rise of 2.2% during the six months ended September 30, 2024, which correlates with the increased revenue figures. The overall market dynamics and demand for managed care services continue to support this growth trajectory.
A Deep Dive into CorVel Corporation (CRVL) Profitability
A Deep Dive into CorVel Corporation's Profitability
Gross Profit, Operating Profit, and Net Profit Margins
For the three months ended September 30, 2024, the company reported:
- Revenues: $224,380,000
- Cost of Revenues: $173,632,000
- Gross Profit: $50,748,000
- Net Income: $23,398,000
The gross profit margin for this period was calculated as:
Gross Profit Margin: 22.6%
The net profit margin was:
Net Profit Margin: 10.4%
Trends in Profitability Over Time
Comparing the results from the three months ended September 30, 2023 to the same period in 2024 shows:
- Revenues increased: from $195,522,000 to $224,380,000 (an increase of 14.8%)
- Gross Profit increased: from $44,252,000 to $50,748,000 (an increase of 14.7%)
- Net Income increased: from $19,898,000 to $23,398,000 (an increase of 17.6%)
Comparison of Profitability Ratios with Industry Averages
As of September 30, 2024, the profitability ratios are as follows:
- Gross Profit Margin: 22.6%
- Net Profit Margin: 10.4%
Industry averages for similar service sectors typically range from:
- Gross Profit Margin: 20% - 30%
- Net Profit Margin: 8% - 12%
Thus, the company is performing within the industry standards for both margins.
Analysis of Operational Efficiency
The company's operational efficiency can be assessed through its cost management and gross margin trends:
- General and Administrative Expenses: $22,078,000 for Q3 2024, representing 9.8% of revenues.
- General and Administrative Expenses (Q3 2023): $19,538,000, which was 10.0% of revenues.
This indicates an improvement in operational efficiency with a decrease in administrative costs as a percentage of revenue.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Revenues | $224,380,000 | $195,522,000 | +14.8% |
| Gross Profit | $50,748,000 | $44,252,000 | +14.7% |
| Net Income | $23,398,000 | $19,898,000 | +17.6% |
| General and Administrative Expenses | $22,078,000 | $19,538,000 | +13.0% |
| General and Administrative as % of Revenue | 9.8% | 10.0% | -0.2% |
Debt vs. Equity: How CorVel Corporation (CRVL) Finances Its Growth
Debt vs. Equity: How CorVel Corporation Finances Its Growth
Long-term Debt: As of September 30, 2024, CorVel Corporation reported a long-term debt of $0.
Short-term Debt: The company has a short-term debt of $0.
Debt-to-Equity Ratio: The debt-to-equity ratio stands at 0.00, indicating no debt compared to equity. This is significantly lower than the industry average of approximately 0.5.
| Metric | CorVel Corporation | Industry Average |
|---|---|---|
| Long-term Debt | $0 | $50 million |
| Short-term Debt | $0 | $20 million |
| Debt-to-Equity Ratio | 0.00 | 0.5 |
In 2024, the company has not issued any new debt and maintains a strong balance sheet with a focus on equity financing. The credit rating remains stable with no recent downgrades.
CorVel's strategy emphasizes balancing growth opportunities through equity funding while avoiding leverage. This approach allows for greater financial flexibility and reduces risk, particularly in volatile market conditions.
The company has historically funded its operations and capital expenditures primarily from cash flow from operations, and to a lesser extent, proceeds from stock option exercises. Working capital increased to $150.5 million as of September 30, 2024, from $117.7 million as of March 31, 2024, an increase of $32.7 million.
Cash increased to $138.3 million as of September 30, 2024, from $105.6 million as of March 31, 2024, primarily due to increased net income and reduced share repurchases.
| Financial Metric | September 30, 2024 | March 31, 2024 |
|---|---|---|
| Working Capital | $150.5 million | $117.7 million |
| Cash | $138.3 million | $105.6 million |
The company's focus on equity financing is also reflected in its stock repurchase program, which has seen a cumulative repurchase of 38,103,440 shares at an average price of $21.34 per share since inception. The repurchase program does not obligate the company to acquire any amount of common stock and may be suspended or discontinued at any time.
Assessing CorVel Corporation (CRVL) Liquidity
Assessing CorVel Corporation's Liquidity
Current and Quick Ratios
The current ratio of CorVel Corporation as of September 30, 2024, is calculated at 10.5. This indicates a strong liquidity position, as it shows that the company has 10.5 times more current assets than current liabilities. The quick ratio, which measures immediate liquidity without considering inventory, stands at 10.5 as well, confirming the company's solid short-term financial health.
Analysis of Working Capital Trends
Working capital has seen significant growth, increasing to $150.5 million as of September 30, 2024, from $117.7 million as of March 31, 2024. This represents an increase of $32.7 million, reflecting a robust improvement in the company's operational efficiency and financial flexibility.
Cash Flow Statements Overview
The cash flow from operating activities for the six months ended September 30, 2024, increased to $62.7 million, up from $54.6 million for the same period in the previous year. The cash flow from investing activities was ($17.6 million), compared to ($12.3 million) in the prior year, indicating increased investments in property and equipment. Cash flow from financing activities decreased to ($12.4 million) from ($21.9 million), primarily due to reduced share repurchase spending.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company holds $138.3 million in cash and cash equivalents, invested in short-term, interest-bearing securities. This strong cash position, alongside positive cash flows from operations, supports its ability to meet upcoming obligations and fund future growth. However, management has noted the potential for liquidity concerns if income or cash flows were to decline significantly, which could affect share repurchase activities.
| Metrics | September 30, 2024 | March 31, 2024 | September 30, 2023 |
|---|---|---|---|
| Current Ratio | 10.5 | 8.5 | 7.8 |
| Quick Ratio | 10.5 | 8.5 | 7.8 |
| Working Capital | $150.5 million | $117.7 million | $100.2 million |
| Cash and Cash Equivalents | $138.3 million | $105.6 million | $92.4 million |
| Cash Flow from Operating Activities | $62.7 million | $54.6 million | $48.3 million |
| Cash Flow from Investing Activities | ($17.6 million) | ($12.3 million) | ($10.5 million) |
| Cash Flow from Financing Activities | ($12.4 million) | ($21.9 million) | ($15.0 million) |
Is CorVel Corporation (CRVL) Overvalued or Undervalued?
Valuation Analysis
To determine whether the company is overvalued or undervalued, we analyze key financial ratios including price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA). Additionally, we will review stock price trends over the last 12 months, dividend yield and payout ratios, and analyst consensus on stock valuation.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is calculated using the most recent earnings per share (EPS). As of September 30, 2024, the diluted EPS was $2.60. The stock price on that date was approximately $311.57. Thus, the P/E ratio is:
P/E = Stock Price / EPS = $311.57 / $2.60 ≈ 119.08
Price-to-Book (P/B) Ratio
The book value per share is derived from the total equity divided by the number of shares outstanding. As of September 30, 2024, total stockholders' equity was $282,772,000, and the number of shares outstanding was 17,135,160. Therefore, the book value per share is:
Book Value per Share = Total Equity / Shares Outstanding = $282,772,000 / 17,135,160 ≈ $16.50
The P/B ratio is then:
P/B = Stock Price / Book Value per Share = $311.57 / $16.50 ≈ 18.89
Enterprise Value-to-EBITDA (EV/EBITDA)
To calculate EV/EBITDA, we first need the enterprise value (EV). This is calculated as:
- Market Cap = Stock Price × Shares Outstanding = $311.57 × 17,135,160 ≈ $5,344,520,000
- Total Debt = $0 (no long-term debt reported)
- Cash & Cash Equivalents = $138,300,000
- EV = Market Cap + Total Debt - Cash = $5,344,520,000 + $0 - $138,300,000 ≈ $5,206,220,000
For the six months ended September 30, 2024, EBITDA was approximately $62,747,000. Thus, EV/EBITDA is:
EV/EBITDA = EV / EBITDA = $5,206,220,000 / $62,747,000 ≈ 82.95
Stock Price Trends
Over the last 12 months, stock prices have seen significant fluctuations. Below is a summary of the stock price trend:
| Date | Stock Price |
|---|---|
| September 2023 | $272.06 |
| December 2023 | $298.49 |
| March 2024 | $311.57 |
| September 2024 | $311.57 |
Dividend Yield and Payout Ratios
As of September 30, 2024, the company does not have a declared dividend, resulting in a dividend yield of 0.00%. The payout ratio is also not applicable due to the absence of dividends.
Analyst Consensus on Stock Valuation
Analyst consensus as of October 2024 is as follows:
| Analyst Recommendation | Count |
|---|---|
| Buy | 5 |
| Hold | 3 |
| Sell | 1 |
The current financial health of the company, as reflected in its valuation ratios and stock performance, indicates a high P/E ratio and P/B ratio, suggesting it may be overvalued relative to its earnings and book value. The EV/EBITDA ratio also reflects a premium valuation. The absence of dividends further complicates the investment scenario.
Key Risks Facing CorVel Corporation (CRVL)
Key Risks Facing CorVel Corporation
Industry Competition: The managed care industry is characterized by intense competition. As of 2024, the company faced pressures from competitors offering similar services at competitive prices. This situation could potentially impact market share and pricing strategies.
Regulatory Changes: The healthcare sector is subject to stringent regulations. Changes in laws and regulations can affect operational practices and financial performance. The company must continuously adapt to comply with evolving healthcare regulations.
Market Conditions: Economic downturns may lead to reduced demand for managed care services. Fluctuations in the labor market and employment rates can significantly impact the volume of workers' compensation claims, directly affecting revenues.
Operational Risks: The company reported an increase in operational costs due to inflationary pressures. For the six months ended September 30, 2024, costs of revenues rose to $337.2 million, a 12.5% increase from $299.6 million in the same period of 2023.
Financial Risks: The company’s financial health is influenced by cash flow from operations. As of September 30, 2024, cash increased to $138.3 million, up from $105.6 million in March 2024. However, lower income or cash flows may necessitate a reduction in stock repurchase programs.
Strategic Risks: The company’s growth strategy relies on expanding its services and customer base. Failure to successfully implement these strategies could hinder growth opportunities. The effective tax rate was 20.7% for the six months ended September 30, 2024, slightly lower than 20.8% in the previous year, indicating potential impacts of strategic decisions on tax liabilities.
| Risk Factor | Description | Impact |
|---|---|---|
| Industry Competition | Intense competition with similar service offerings | Potential loss of market share |
| Regulatory Changes | Stringent healthcare regulations | Increased compliance costs |
| Market Conditions | Economic downturns affecting demand | Reduced revenue from claims |
| Operational Risks | Increase in operational costs due to inflation | Impact on profitability |
| Financial Risks | Dependence on cash flow from operations | Potential liquidity issues |
| Strategic Risks | Growth strategy dependent on service expansion | Hindered growth opportunities |
Litigation Risks: The company is involved in litigation arising in the ordinary course of business. While management believes that resolutions will not materially impact financial positions, ongoing legal challenges pose risks that could affect operational focus and financial resources.
Inflation Impact: Rising costs for labor, employee benefits, and facility leases due to inflation could materially impact pricing and operating expenses in future periods. The company noted that inflation could lead to increased pricing pressures and operating costs.
Future Growth Prospects for CorVel Corporation (CRVL)
Future Growth Prospects for CorVel Corporation
Analysis of Key Growth Drivers
CorVel Corporation is positioned for growth through several key drivers:
- Product Innovations: The company has consistently enhanced its service offerings, particularly in patient management and network solutions. For instance, revenues from patient management services increased to $147.2 million in Q3 2024, up from $129.8 million in Q3 2023, representing a growth of 13.4% .
- Market Expansions: CorVel's strategic focus on expanding into new geographic markets has contributed to a total revenue increase of 14.8%, reaching $224.4 million for the three months ended September 30, 2024 .
- Acquisitions: The company continues to evaluate potential acquisitions that could complement its existing services and enhance its market presence.
Future Revenue Growth Projections and Earnings Estimates
Looking ahead, analysts project continued revenue growth. For the six months ended September 30, 2024, revenues reached $436.1 million, an increase of 13.0% from $385.8 million in the same period of 2023 . Earnings estimates indicate a potential increase in net income to $44.975 million, up from $39.703 million, reflecting a growth rate of 13.3% .
Strategic Initiatives or Partnerships That May Drive Future Growth
CorVel is actively pursuing strategic initiatives to bolster its growth:
- Partnerships with Healthcare Providers: Expanding collaborations with healthcare providers to enhance service delivery and patient outcomes.
- Technology Investments: The company has invested significantly in technology to improve efficiency, with capital expenditures reaching $17.6 million in the first half of FY 2024 .
Competitive Advantages That Position the Company for Growth
CorVel holds several competitive advantages that facilitate its growth trajectory:
- Established Market Position: With a strong reputation in managed care services, CorVel has built a loyal customer base that contributes to stable revenue streams.
- Comprehensive Service Portfolio: The breadth of services offered allows the company to cater to diverse client needs, enhancing customer retention and attracting new clients.
| Financial Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Revenue | $224,380,000 | $195,522,000 | 14.8% |
| Net Income | $23,398,000 | $19,898,000 | 17.6% |
| Diluted EPS | $1.35 | $1.15 | 17.4% |
| Patient Management Revenue | $147,200,000 | $129,800,000 | 13.4% |
| Network Solutions Revenue | $77,200,000 | $65,700,000 | 17.5% |
These figures underscore the company's robust financial health and its capacity for sustained growth in the coming years.
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Resources:
- CorVel Corporation (CRVL) Financial Statements – Access the full quarterly financial statements for Q2 2024 to get an in-depth view of CorVel Corporation (CRVL)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View CorVel Corporation (CRVL)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.