In the pandemic-hit healthcare market, CorVel Corporation (NASDAQ: CRVL) is facing a major uncertainty that is as unsettling as the virus itself. Being a provider of healthcare management services for workers’ compensation, the Irvine-based company is influenced by the virus outbreak in more ways than one.
CorVel’s stock entered 2021 on an upbeat note and climbed to an all-time high in early January, after crossing the $100-mark for the first time a few weeks ago. But the momentum waned since then and the stock pared some of the recent gains after Tuesday’s earnings release. However, it offers an investment opportunity that is worth considering.
The ongoing efforts to enhance technological capabilities helped the company stay agile during the crisis period — responding quickly to customers’ requirements and meeting the growing demand for facilities like telehealth. The uptick in the use of telehealth is an emerging trend CorVel looks to capitalize on, after launching the first patient advocacy model coupled with telehealth. The revised operational parameters also contributed to cash flow growth.
From CorVel’s Q4 2020 earnings conference call:
“CorVel has invested in information management technologies from the outset over 30 years ago. These past investments provide a foundation upon which the Company expects to build new capabilities not imaginable just a few years ago. Investments in artificial intelligence and machine learning will be built to leverage existing investments in both the management of care and transaction processing within the healthcare industry.”
The COVID-related healthcare challenges are setting the stage for the company to expand the scope of its services further, with the modalities of patient care changing according to the physiological, psychological and economic impact of the virus on patients. Going forward, the management’s focus will be on strategic partnerships, continued investment in the business, and ramping up digital capabilities by shifting more IT assets to the cloud,
For COVID patients, the company’s virtual care services, designed to provide care using telephonic and system-based communications, offer a convenient option to access care at a time when patients are compelled to avoid visiting healthcare facilities.
The worker’s compensation market witnessed a slowdown soon after the coronavirus outbreak, with claim volumes dropping steadily amid widespread workforce reduction and the mass shift to remote work. At the same time, a number of states expanded the purview of their workers’ compensation coverage to include COVID-19, considering it as a work-related health issue.
In the fourth quarter, CorVel’s earnings advanced to $11.4 million or $0.63 per share from $9.4 million or $0.50 per share in the same period of last year. Revenues, meanwhile, dropped 4% to $141.5 million. The positive bottom-line performance is attributable to a general improvement in operating performance and effective cost management.
CorVel’s target markets include employers, insurance companies, third party administrators, and regional governments. Last month, it clinched a partnership with privately held absence management solutions provider ReedGroup.
The stock dropped early Tuesday after the company reported mixed results for the December-quarter, and traded slightly above the $100-mark. After starting the year on a positive note, the shares changed course and shed about 4% since then.
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