CorVel Corp (CRVL) Q1 2027 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2026 (First Quarter of Fiscal Year 2027). CorVel Corporation is an independent nationwide provider of medical cost containment and managed care services, primarily serving workers' compensation, automobile insurance, and group health insurance payors. The company operates in a single reportable segment: managed care, divided into Patient Management and Network Solutions service lines.
Key Financial Metrics
| Metric | Q1 2027 (Ended June 30, 2026) | Q1 2026 (Ended June 30, 2025) |
|---|---|---|
| Revenues | $259.9 million | $234.7 million |
| Gross Profit | $67.8 million | $56.8 million |
| Gross Margin | 26.1% | 24.2% |
| Net Income | $32.2 million | $27.2 million |
| Diluted EPS | $0.63 | $0.52 |
| Operating Cash Flow | $49.9 million | $55.0 million |
| Cash and Equivalents | $255.9 million | $202.0 million |
| Total Liabilities | $280.8 million | $248.8 million |
| Working Capital | $244.7 million | $234.2 million |
Material Changes vs. Prior Period
- Revenue Growth: Revenues increased 11% ($25.2 million) driven by growth in both service lines. Network Solutions revenue rose 14% ($12.7 million) due to enhanced bill review services with existing customers. Patient Management revenue rose 9% ($12.5 million) alongside an 8% increase in total new claims.
- Profitability: Net income increased 18% ($5.0 million). Gross margin expanded by 190 basis points to 26.1%, outpacing the 8% increase in Cost of Revenues.
- Expenses: General and Administrative (G&A) expenses increased 14% ($3.0 million) to $24.5 million, primarily due to increased corporate system costs for software development and higher marketing/insurance costs. G&A as a percentage of revenue remained stable at 9.4%.
- Tax Rate: The effective tax rate increased to 26% from 23% in the prior year, attributed to a decrease in stock option exercises.
- Cash Flow: Operating cash flow decreased 9% ($5.1 million) to $49.9 million, primarily due to a $10.1 million increase in accounts receivable resulting from revenue growth.
Guidance, Outlook, and Management Commentary
- Leadership Transition: Effective July 1, 2026, Michael G. Combs transitioned from CEO/President to Executive Chair. Sarah A. Scott was appointed CEO and President.
- Outlook: Management expects G&A expenses to remain between 9% and 11% of revenues in future quarters. The company anticipates sufficient cash from operations and stock option exercises to fund operations, share repurchases, and strategic initiatives for the next 12 months.
- Stock Repurchases: The company repurchased 377,098 shares for $21.8 million during the quarter. As of June 30, 2026, approximately 1.36 million shares remained available under the current repurchase program.
- Risks: Key risks include declining workers' compensation claims, increased competition, inflationary pressure on labor costs, cybersecurity threats, and potential regulatory changes in healthcare and workers' compensation laws.
Investor Verification Checklist
- Verify the sustainability of the 190 basis point gross margin expansion given rising labor costs and inflation.
- Monitor the trend in accounts receivable days, as the $10.1 million increase in receivables contributed to a decline in operating cash flow despite higher net income.
- Assess the impact of the leadership transition on strategic execution and customer retention.
- Review the remaining capacity and future utilization of the stock repurchase program ($21.8M spent in Q1).
- Confirm the status of the recently acquired technology firm integration and its contribution to the Network Solutions revenue growth.