CorVel Corporation ( CRVL) F2Q11 (Qtr End 9/30/10) Earnings Call November 02, 2010 11:30 a.m. ET Executives Dan Starck - President, CEO & COO Gordon Clemons - Chairman Presentation Operator Welcome to the CorVel Corporation Earnings Release Conference Call.
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Revenue for the September quarter was $93.4 million, an increase of 13% from the September 2009 quarter. Earnings per share, was $0.62 for the quarter an increase of 24% from the $0.50 reported in the September of 2009 quarter. The quarter's results were impacted by two nearly offsetting adjustments. In the September quarter the company accrued $2.8 million on a pre-tax basis for an estimated liability related to the to the Southern Illinois class action law suit that is being disclosed in the 10K and the 10Q for the past two years.This amount is included with the general administrative cost in the income statement. Additionally the company was able to resolve some outstanding state tax issues which resulted in a reduction to the income tax liability or buy $1.8 million and approximately offset the cost of law suit. We do not expect any future impact from either of these adjustments moving forward. Now back to the business, during the September quarter we continued the expansion of a strategic initiative Enterprise Comp by adding new customers in new geographies and our network solutions results continue to reflect growth in our pharmacy and directed care product lines. While case management results continue to improve. From a marketplace perspective, the labor market remains soft with anticipation of a long recovery. With softness in the labor market is contributed to keep claimed audience at historical lows, however claim costs continue to increase as medical inflation increases. The claim volume declined as having various effects on the industry. First to our growth and claims, industry participants are looking for ways to internalize more services and bring those services to clients in order to feel organic growth. Secondarily, there has been increase in consolidation activity in recent months. Consolidations is being driven by both private equity as well as two strategy buyers as there has been several transactions in the past few months. The twin characteristics of the inventory would suggest this could continue further into the future.
Industry is largely fragmented, it can provide good margins and synergies exists with the right combination of service providers. The industry environment only seems to confirm the CorVel strategic decision to reposition the company.We have expanded our services and opened ourselves a new market; these decisions and overall quality of our products have enabled CorVel to overcome the growth challenges that face the industry today. Now I would like to discuss our product line performance specific results and our key initiatives for 2010. In Patient Management, revenue for the quarter was $44 million which is an annual increase of 23%, profit increased by 68% over the September 2009 quarter. Included in the Patient Management results, our third party administration product and our price comp and our traditional case management product. Our Enterprise Comp products has been major contributor to our growth both in the September quarter and throughout this past year. The growth that we have experienced has served as a level to increase the level of name recognition of CorVel in the TPA business as well as the penetration of CorVel into the employer market, the target market from a price comp. Our growth is been achieved both by acquisition as well as organic growth. Each of the three claims administration companies that we acquired over the past couple of years have been largely immigrated into CorVel and each of them is growing since the transaction. Yes providing growth platforms for us in the individual geographies and with integration and national platform. These oppositions coupled with our increasing organic growth rate as well as our investments and software development and infrastructure have moved us through the start of phase to a fully matured product that's able to meet the needs of those small and large clients regionally as well as nationally.
We now have 28 claims offices across the country. A growth of over 60% over the past two years, CorVel is on price comp product is no longer a boutique product the one that scaleable and national.Read the rest of this transcript for free on seekingalpha.com