CorVel stock soars to all-time high, but trading remains tepid

CorVel Corporation (NASDAQ: CRVL) stock soared to a 28-year high of $78.70 on Thursday as the shares are likely to be an attractive investment prospect. This comes on heels after the managed care services provider’s strong earnings results for the fourth quarter of 2018. Investors generally ignored the stock, which was not covered by Wall Street.

The company, which provides outsourced services and technology solutions to insurance providers, has remained unattractive as there was zero Wall Street analyst coverage despite a $1.45 billion market capitalization. Also, the average trading volume stood at about 65,000. As falling under-the-radar of insurance services/technology, the company remained under-covered as an undiscovered gem.

CorVel provides workers’ compensation solutions for employers, third party administrators, insurance companies, and government agencies seeking to control costs and promote positive outcomes.

The Irvine, California-based company also provides a range of patient management services comprising claims management, case management, 24/7 nurse triage, utilization management, vocational rehabilitation, life care planning, disability management, liability claims management, and auto claims management services.

For the fourth quarter, CorVel reported a 32% jump in earnings as the company’s Patient Management TPA business drove revenues higher by 5%. The bottom line also benefited from the improvements to economies of scale in the claim operations, more consistent revenue recognition of delivered services, and further customer utilization of value-add ancillary services.

The revenue from wholesale Network Solutions declined by 10% due to the churn in the government segment portion of this business. During the quarter, the company integrated the Executive Summary Dashboards in the Edge for all claims management and carrier customers. The Edge claims management platform is designed to attract a new round of Network Solutions wholesale customers who are interested in having their adjustors work on a modern cloud-based platform.

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To facilitate and improve the onboarding of large programs, CorVel has invested in the development of new processes and technologies to lower the time it takes to transition new clients while improving the accuracy of the data. During the quarter, the company made substantial progress in this area with the delivery of an automated onboarding program.

CorVel has a return on capital employed of 29%, which is substantially greater than the 12% average in the Healthcare industry. This suggested that the company is using capital more productively than other companies. The ROCE is boosted somewhat by its middling amount of current liabilities, which is equal to about 37% of its total assets of $314 million. The total liabilities stood at $117 million.

Till now, the company’s revenue growth has been robust and is expected to continue over the near term. The stock appears to be generally ignored by investors and remained not covered by Wall Street. For those taking a greater interest, the stock could serve as a positive catalyst.

Shares of CorVel opened higher on Thursday and is trading in the green territory on the Nasdaq. The stock has risen over 50% in the past year and over 24% in the year so far.

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