What changed in this filing

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Item 9A. Controls and Procedures

2025-05-23 compared with 2024-05-24 · 147 added, 136 removed, 1029 unchanged (22% of the section changed)

5 unchanged sentences

Our management is responsible for establishing and maintaining a system of internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of our financial reporting and preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

with accounting principles generally accepted in the United States.

Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions;

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Management conducted an assessment of the effectiveness of our internal control over financial reporting based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission in the 2013 Internal Control—Integrated Framework .

Based on this assessment, our management, including our principal exectuive officer and principal financial officer, concluded that our internal control over financial reporting was effective as of March 31, 2024 to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America.

Based on this assessment, our management, including our principal executive officer and principal financial officer, concluded that our internal control over financial reporting was effective as of March 31, 2025, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America.

Our independent registered public accounting firm, Haskell & White LLP, has audited our consolidated financial statements included in this annual report and has issued an attestation report on the effectiveness of our internal control over financial reporting as of March 31, 2025, as stated in their report that is included in Part II, Item 8 herein.

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Directors, Executive Of ficers and Corporate Governance.

Information required by this Item will be included under the captions "Election of Directors — Nominee Information", "Section 16(a) Beneficial Ownership Reporting Compliance," "Executive Officers," "Corporate Governance—Standing Committees and Attendance at Board and Committee Meetings," and "Corporate Governance — Corporate Governance Guidelines, Committee Charters and Code of Business Conduct" of the Registrant's Proxy Statement for its 2024 Annual Meeting of Shareholders (the "Proxy Statement") to be filed within 120 days after March 31, 2024, and is incorporated herein by reference.

The information required by this Item will be included under the captions "Election of Directors — Nominee Information", "Section 16(a) Beneficial Ownership Reporting Compliance," "Executive Officers," "Corporate Governance—Standing Committees and Attendance at Board and Committee Meetings," and "Corporate Governance — Corporate Governance Guidelines, Committee Charters and Code of Business Conduct" in the Company's Definitive Proxy Statement on Schedule 14A for its 2025 Annual Meeting of Shareholders (the "2025 Annual Meeting") to be filed within 120 days after March 31, 2025 (the "Proxy Statement"), and is incorporated herein by reference.

Insider Trading Policies and Procedures

The Company has an insider trading policy and procedures governing the purchase, sale and/or other dispositions of the Company’s securities that applies to all directors, officers, employees and certain other persons.

It is also the Company’s policy to take appropriate steps to comply with applicable federal and state securities laws and regulations, as well as applicable stock exchange listing standards, when the Company engages in transactions in the Company’s securities.

The Company believes that its insider trading policy and procedures are reasonably designed to promote compliance with insider trading laws, rules and regulations, and listing standards applicable to the Company.

A copy of the Company’s insider trading policy is filed as Exhibit 19.1 to this annual report.

Code of Ethics

The Board of Directors has adopted a code of ethics and business conduct that applies to all of the Company’s employees, officers and directors.

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Executi ve Compensation.

The information required by this Item will be included under the captions "Compensation Discussion and Analysis," "Summary Compensation Table," "Employment and Change in Control Arrangements," "Corporate Governance—Director Compensation," "Report of the Compensation Committee of the Board of Directors on Executive Compensation," and "Compensation Committee Interlocks and Insider Participation" of the Registrant's Proxy Statement, and is incorporated herein by reference.

The information required by this Item will be included under the captions "Compensation Discussion and Analysis," "Summary Compensation Table," "Employment and Change in Control Arrangements," "Corporate Governance—Director Compensation," "Report of the Compensation Committee of the Board of Directors on Executive Compensation," and "Compensation Committee Interlocks and Insider Participation" in the Company’s Proxy Statement, and is incorporated herein by reference.

Security Ownership of Certain Beneficial Ow ners and Management and Related Stockholder Matters.

The information in the sections titled “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” and “Equity Compensation Plan Information” appearing in the Company’s definitive proxy statement for the 2024 Annual Meeting is incorporated herein by reference.

The information required by this Item will be included under the captions “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” and “Equity Compensation Plan Information” in the Company’s Proxy Statement, and is incorporated herein by reference.

Certain Relationships and Related P arty Transactions, and Director Independence.

The information in the sections titled “Certain Relationships and Related-Person Transactions,” “Proposal One:

Election of Directors,” “Information Regarding Director Nominees,” and “Corporate Governance, Board Composition and Board Committees” appearing in the Company’s definitive proxy statement for the 2024 Annual Meeting is incorporated herein by reference.

The information required by this Item will be included under the captions “Certain Relationships and Related-Person Transactions,” “Election of Directors,” “Information Regarding Director Nominees,” and “Corporate Governance, Board Composition and Board Committees” in the Company’s Proxy Statement, and is incorporated herein by reference.

Principal Accou ntant Fees and Services.

The information under the captions “Principal Accountant Fees and Services,” “Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm” and “Proposal Two:

Ratification of Appointment of Independent Registered Public Accounting Firm” appearing in the Company’s definitive proxy statement for the 2024 Annual Meeting is incorporated herein by reference.

The information required by this Item will be included under the captions “Principal Accountant Fees and Services,” “Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm” and “Ratification of Appointment of Independent Registered Public Accounting Firm” in the Company’s Proxy Statement, and is incorporated herein by reference.

Exhibit and Financial State ment Schedules.

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Incorporated herein by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020 filed on August 6, 2020 (File No.

Certificate of Amendment of Fourth Amended and Restated Certificate of Incorporation of CorVel Corporation

Incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on December 26, 2024.

Second Amended and Restated Bylaws of CorVel Corporation.

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Stock Option Agreement, dated November 5, 2020, by and between CorVel Corporation and Michael Combs, providing for performance vesting.

Incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K/A filed on December 31, 2019 (File No.

Stock Option Agreement, dated November 5, 2019, by and between CorVel Corporation and Brandon O’Brien, providing for performance vesting.

Incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K/A filed on December 31, 2019 (File No.

Stock Option Agreement, dated November 5, 2019, by and between CorVel Corporation and Diane J.

Blaha, providing for performance vesting.

Incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K/A filed on December 31, 2019 (File No.

Stock Option Agreement, dated November 5, 2019, by and between CorVel Corporation and Michael Saverien, providing for performance vesting.

Incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K/A filed on December 31, 2019 (File No.

Stock Option Agreement, dated November 5, 2019, by and between CorVel Corporation and Maxim Shishin, providing for performance vesting.

Incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K/A filed on December 31, 2019 (File No.

Stock Option Agreement, dated November 5, 2019, by and between CorVel Corporation and Jennifer Yoss, providing for performance vesting.

Incorporated herein by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K/A filed on December 31, 2019 (File No.

Stock Option Agreement, dated November 5, 2020, by and between CorVel Corporation and Michael Combs, providing for performance vesting.

Incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 12, 2020 (File No.

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Insider Trading Policy

Filed herewith.

Incorporated herein by reference to Exhibit 19.1 to the Company’s Annual Report on Form 10-K for the period ended March 31, 2024 filed on May 24, 2024 (File No.

Subsidiaries of the Company.

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Executive Clawback Policy

Filed herewith.

Incorporated herein by reference to Exhibit 97.1 to the Company’s Annual Report on Form 10-K for the period ended March 31, 2024 filed on May 24, 2024 (File No.

Inline XBRL Instance Document

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/s/ Michael G.

Chief Executive Officer and President

Chairman of the Board, Chief Executive Officer, and President

(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this annual report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Gordon Clemons

Chairman of the Board

Gordon Clemons

/s/ Michael G.

Chief Executive Officer and President

Chairman of the Board, Chief Executive Officer, and President

(Principal Executive Officer)

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/s/ Steven J.

/s/ Joanna C.

/s/ J effrey J.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations may include certain forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including (without limitation) statements with respect to anticipated future operating and financial performance, growth and acquisition opportunities and other similar forecasts and statements of expectation.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations may include certain forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended, including without limitation statements with respect to anticipated future operating and financial performance, growth and acquisition opportunities and other similar forecasts and statements of expectation.

Words such as “expects,” “anticipates,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “potential,” “continue,” “strive,” “ongoing,” “may,” “will,” “would,” “could,” “should,” as well as variations of these words and similar expressions, are intended to identify these forward-looking statements.

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dependence on key personnel;

the impact of possible cybersecurity incidents;

the impact of potential cybersecurity incidents;

existing and possible litigation and legal liability in the course of operations and the Company’s ability to resolve such litigation;

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The network solutions services offered by the Company include automated medical fee auditing, preferred provider management and reimbursement services, retrospective utilization review, facility claim review, professional review, pharmacy services, directed care services, Medicare solutions, clearinghouse services, independent medical examinations, and inpatient medical bill review.

Network solutions services also includes revenue from the Company’s directed care network (known as CareIQ), including imaging, physical therapy, durable medical equipment, and translation and transportation.

Network solutions services also include revenue from the Company’s directed care network (known as CareIQ), including imaging, physical therapy, durable medical equipment, and translation and transportation.

Patient Management Services

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The Company had revenues of $896 million in fiscal 2025, an increase of $100 million, or 13%, compared to $795 million for fiscal 2024.

This increase was due to an increase in revenues from both patient management and network solutions activity primarily with existing customers.

This increase was due to an increase in revenues from both patient management and network solutions activity primarily with new customers.

During fiscal 2025, the Company’s gross profit increased to $210 million from $172 million in fiscal 2024, an increase of $38 million, or 22%.

This increase was primarily due to the increase of 13% in revenue mentioned above.

This was offset by an increase in salaries of 10% resulting from increased average headcount of 8% in field operations.

This was offset by an increase in salaries by 9% resulting from increased average headcount of 6% in field operations.

During fiscal 2025, the Company’s general and administrative expenses increased to $88.9 million from $76.6 million in fiscal 2024, an increase of $12.3 million, or 16%.

This increase was primarily due to an increase in corporate system development costs.

In fiscal 2024, the Company had a one-time decrease in general and administrative expenses due to a one-time insurance recovery settlement from a lawsuit in 2011.

The Company expects general and administrative expenses to grow at the same rate as revenues.

During fiscal 2025, the Company’s net income before tax increased to $120.8 million from $95.1 million in fiscal 2024, an increase of $25.7 million, or 27%.

The increase in revenues was offset by a slight decrease in gross profit margin.

The increase was primarily due to an increase in revenues and pretax margin.

During fiscal 2025, the Company’s income tax expense increased to $25.7 million from $18.8 million in fiscal 2024, an increase of $6.8 million, or 36%.

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The Company’s effective income tax rate was 21% for fiscal year 2025 and 20% for fiscal year 2024.

Diluted weighted average shares were 17.3 million shares in fiscal 2024 and 17.6 million shares in fiscal 2023, with a decrease of 245,000 shares, or 1.4%.

This decrease was primarily due to the repurchase of 215,313 shares of common stock in fiscal 2024.

Diluted weighted average shares were 52.0 million shares in fiscal 2025 and fiscal 2024, with a decrease of 47,000 shares, or 0.1%.

This decrease was primarily due to the repurchase of 377,154 shares of common stock in fiscal 2025 under the Company’s stock repurchase program.

Since commencing this program in the fall of 1996, the Company has repurchased 114,476,691 shares of its common stock through March 31, 2025, at a cost of $832 million.

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Diluted earnings per share increased to $1.83 per share in fiscal 2025 from $1.47 per share in fiscal 2024, an increase of $0.36 per share, or 24%.

The increase in diluted earnings per share was primarily due to an increase in net income and a decrease in diluted weighted average common and common equivalent shares.

The increase in diluted earnings per share was primarily due to an increase in net income.

During fiscal 2025, the Company effected a three-for-one forward stock split of its common stock.

All prior period share, equity award and per share amounts and calculations in this annual report and in the consolidated financial statements contained in this annual report have been retroactively adjusted to reflect the stock split.

Results of Operations

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Network solutions services

As noted in the table above, patient management services and network solutions services have grown at the same rate, from fiscal 2023 to fiscal 2024.

As noted in the table above, revenue from patient management services decreased from fiscal 2023 to fiscal 2025 and network solutions services grew from fiscal 2023 to fiscal 2025.

This is primarily due to the Company’s increased focus in enhanced bill review programs services, which are included within network solutions services.

The following table shows the consolidated statements of income for the fiscal years ended March 31, 2025, 2024 and 2023, and the dollar changes, as well as the percentage changes for each fiscal year.

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Revenues increased to $896 million in fiscal 2025 from $795 million in fiscal 2024, an increase of $100 million, or 13%.

Patient management services increased to $530 million from $479 million, an increase of 11%.

Patient management services increased to $581 million from $530 million, an increase from fiscal 2024 of 10%.

This increase is primarily due to higher revenue from the Company’s TPA and related services.

Total new claims increased by 5% during fiscal 2025 compared to fiscal 2024.

Network solutions services revenues increased to $265 million from $240 million, an increase of 11%.

Network solutions services revenues increased to $314 million from $265 million, an increase from fiscal 2024 of 19%.

This increase is primarily due to increases in enhanced bill review programs services, which resulted in higher revenue per bill.

Most of the increase in revenues resulted from an increase in activity and services provided for existing customers.

Most of the increase is primarily attributable to the growth with new customers in managed care and enterprise companies and, to a lesser extent, growth with existing customers in enhanced bill review programs services.

Fiscal 2024 Compared to Fiscal 2023

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This increase is primarily due to increases in enhanced bill review programs services, which resulted in higher revenue per bill.

Most of the increase in revenues resulted from an increase in activity and services provided for existing customers and, to a lesser extent, an increase in new customers.

Most of the increase in revenues resulted from an increase in activity and services provided for existing customers.

Cost of Revenue

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Just over half the Company’s cost of revenue is labor cost.

There was an increase in salaries of 15% resulting from increased average headcount of 10% in field operations and growth in average annual salary increases due to wage inflation.

Headcount has increased due to an increase in new business and business volume.

Additionally, there was an increase in salaries of 10% resulting from increased average headcount of 8% in field operations and growth in average annual salary increases due to wage inflation.

Headcount increased due to an increase in business volume.

General and Administrative Expense

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General and administrative expenses increased to $88.9 million in fiscal 2025 from $76.6 million in fiscal 2024, an increase of $12.3 million, or 16%.

This increase was was primarily due to an increase in corporate system costs due to an increase spending in developed software.

This increase was primarily due to a one-time insurance recovery settlement from a lawsuit in 2011 during fiscal 2024.

The Company expects general and administrative expenses to grow at the same rate as revenues.

Fiscal 2024 Compared to Fiscal 2023

General and administrative expenses increased to $76.6 million in fiscal 2024 from $73.7 million in fiscal 2023, an increase of $2.9 million, or 4%.

This increase was primarily due to an increase in legal costs related to data privacy compliance.

Additionally, there was an increase in corporate system costs due to an increase spending in developed software.

This increase was primarily due to an increase in corporate system costs due to an increase of spending in developed software.

Income Tax Provision

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Fiscal 2025 Compared to Fiscal 2024

The Company’s net income was $76.3 million in fiscal 2024 and $66.4 in fiscal 2023, an increase of $9.9 million, or 14.9%.

The Company’s net income was $95.2 million in fiscal 2025 and $76.3 million in fiscal 2024, an increase of $18.9 million, or 25%.

The increase was primarily due to an increase in revenues and pretax margin.

Fiscal 2024 Compared to Fiscal 2023

The Company’s net income was $76.3 million in fiscal 2024 and $66.4 million in fiscal 2023, an increase of $9.9 million, or 14.9%.

The increase in revenues was offset by a slight decrease in gross profit margin.

The increase in cost of revenue is due to an increase in headcount.

Fiscal 2023 Compared to Fiscal 2022

The Company’s net income was $66.4 million in fiscal 2023 and 2022.

The increase in revenues was offset by a decrease in gross profit margin.

The increase in cost of revenue is due to an increase in labor rates and headcount.

Earnings per Share

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The Company’s diluted earnings per share increased to $1.47 per share in fiscal 2024 from $1.26 per share in fiscal 2023, an increase of $0.21 per share, or 16.7%.

This was primarily due to a decrease in diluted weighted average shares.

This was primarily due to an increase in net income.

Liquidity and Capital Resources

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Cash flows generated from operating activities are principally from earnings before non-cash expenses.

The risk of decreased operating cash flow from a decline in earnings is partially

mitigated by the diversity of the Company’s services, geographies and customers, and the Company has had virtually no interest-bearing debt for the past 33 years.

The risk of decreased operating cash flow from a decline in earnings is partially mitigated by the diversity of the Company’s services, geographies and customers, and the Company has had virtually no interest-bearing debt for the past 33 years.

The Company has historically funded its operations and capital expenditures primarily from cash flow from operations, and to a lesser extent, stock option exercises.

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The increase in cash flow from operating activities was primarily due to an increase in net income of $18.9 million during fiscal 2025.

Additionally, accounts receivable increased at a lesser rate than prior year due to improvement in days sales outstanding.

Fiscal 2024 Compared to Fiscal 2023

Net cash provided by operating activities increased to $99.2 million in fiscal 2024 from $82.3 million in fiscal 2023, an increase of $16.9 million.

The increase in cash flow from operating activities was primarily due to the fact that during fiscal 2023, revenues increased while accounts receivable remained flat due to strong collections.

During fiscal 2022, accounts receivable increased which caused a decrease in operating cash flow.

The increase in cash flow from operating activities was primarily due to an increase in net income of $9.9 million during fiscal 2024.

Investing Activities

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Fiscal 2024 Compared to Fiscal 2023

Net cash flow used in investing activities decreased to $26.3 million in fiscal 2023 from $29.8 million in fiscal 2022, a decrease of $3.5 million.

The Company reduced its spending on furniture and leasehold improvements as the Company reduced its lease footprint.

Net cash flow used in investing activities increased to $29.2 million in fiscal 2024 from $26.3 million in fiscal 2023, an increase of $2.9 million.

This increase in investing activity was primarily due to an increase in software development efforts.

The Company expects future expenditures for property and equipment to increase if revenues increase.

Financing Activities

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Fiscal 2024 Compared to Fiscal 2023

Net cash flow used in financing activities increased to $82.1 million in fiscal 2023 from $79.6 million in fiscal 2022, an increase of $2.5 million.

Net cash flow used in financing activities decreased to $35.8 million in fiscal 2024 from $82.1 million in fiscal 2023, a decrease of $46.4 million.

During fiscal 2024, the Company spent $45.7 million to repurchase 645,939 shares of its common stock (at an average price of $70.76 per share).

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Our consolidated financial statements are prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”), which require management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes.

These accounting principles require us to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues and expenses, and the disclosure of contingent assets and liabilities at the date of our consolidated financial statements.

These accounting principles require us to make estimates and assumptions

that affect the reported amounts of assets and liabilities and revenues and expenses, and the disclosure of contingent assets and liabilities at the date of our consolidated financial statements.

We periodically evaluate our estimates and assumptions, including those relating to revenue recognition, leases, allowance for uncollectible accounts, goodwill and long-lived assets, accrual for self-insured costs, accounting for income taxes, legal and other contingencies, share-based compensation, and software development costs.

We base our estimates on historical experience and various assumptions that we believe to be reasonable based on specific circumstances.

Such estimates and assumptions could change in the

future as more information becomes known, which could impact the amounts reported and disclosed herein.

Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein.

We believe the following significant accounting estimates may involve a higher degree of judgment and complexity.

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Adverse changes in general economic conditions or trends in reimbursement amounts for the Company’s services could affect the Company’s contractual and bad debt allowance estimates, collection of accounts receivable, cash flows, and results of operations.

One customer accounted for 10% or more of accounts receivable at March 31, 2024 and 2023.

Segment Reporting:

Based on the Company’s Chief Operating Decision Maker’s ("CODM") review and assessment of the Company’s operations for purposes of performance monitoring and resource allocation, the Company determined that its operations and the decisions to allocate resources and deploy capital are organized and managed on a consolidated basis.

Accordingly, management has identified one operating segment, which is its reportable segment, under this organizational and reporting structure.

Goodwill and Long-Lived Assets :

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Also, management tests for impairment of its amortizable intangible assets and long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The impairment test is conducted at the company

The impairment test is conducted at the company level.

The measurement of fair value is based on an evaluation of market capitalization.

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The Company accounts for share-based compensation in accordance with the provisions of ASC Topic 718 “Compensation – Stock Compensation”.

Under ASC 718, share-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity grant).

For the fiscal year ended March 31, 2024, the Company recorded share-based compensation expense of $4,982,000.

Under ASC 718, share-based compensation cost is measured at the grant date, based

on the calculated fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity grant).

The Company estimates the fair value of stock options using the Black-Scholes valuation model.

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These options were valued in the same manner as the time-based options.

However, the Company only recognizes stock compensation expense to the extent that the

targets are determined to be probable of being achieved, which triggers the vesting of the performance options.

However, the Company only recognizes stock compensation expense to the extent that the targets are determined to be probable of being achieved, which triggers the vesting of the performance options.

The Company’s management believes that this valuation technique and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of the Company’s stock options granted in fiscal 2025.

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Recently Issued Accounting Standards

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures , to require disaggregated disclosure of certain income statement expense line items, such as purchases of inventory, employee compensation, and depreciation and amortization.

The new standard is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The amendments should be applied prospectively, but retrospective application is permitted.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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The new standard is effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024, with retrospective application required.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

The Company adopted this pronouncement retrospectively in the fiscal year of 2025 and provided required disclosures in Note 12 Segment Reporting to the consolidated financial statements.

REPORT OF INDEPENDENT REGIS TERED PUBLIC ACCOUNTING FIRM

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Critical Audit Matter Description:

The Company recognizes revenue upon transfer of control of promised services or products to customers in an amount that reflects the consideration the Company expects to receive in exchange for those services or products.

Certain services and products involve estimation of the related transaction price that, in turn, led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to management’s judgments.

The Company recognizes revenue upon transfer of control of promised services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those services.

Certain services involve estimation of the related transaction price that, in turn, led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to management’s judgments.

Revenues that are most significantly impacted by management’s estimates and judgments include (i) bill review services that contain contractual provisions that allow the customer to compensate the Company only for services that it utilizes and (ii) directed care services at period-end for which the Company has not been billed by the related providers.

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The primary procedures we performed to address this critical audit matter included the following, among others:

▪ We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s process to estimate the most likely amount of consideration to which the Company will be entitled in exchange for transferring the promised services or products to a customer.

We tested the effectiveness of certain controls over revenue recognition, including management’s controls over the methodology used to determine estimated revenues.

▪ We tested the underlying data used by the Company to determine related bill review revenue estimates by examining customer contracts and analyzing historical utilization analyses completed by the Company.

We also examined subsequent period invoicing and cash collection activities to evaluate the reasonableness of management’s estimates.

▪ We evaluated the reasonableness of management’s estimates through tests of the underlying data used by the Company to determine related bill review revenue estimates.

We examined customer contracts and analyzed historical utilization analyses completed by the Company.

▪ We tested assumptions used in management’s calculations of period-end directed care revenues by analyzing historical time lag patterns between the provision of service and provider invoicing.

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Fiscal Years Ended March 31, 2024, 2023 and 2022

Paid-in-Capital

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( 111,658,875

( 654,520,000

Stock issued under employee stock

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( 113,453,598

( 748,195,000

Stock issued under employee stock

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( 114,099,537

( 793,905,000

Stock issued under employee stock

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Purchase of treasury stock

Adjusted shares outstanding

Balance – March 31, 2025

( 114,476,691

( 831,510,000

See accompanying notes to consolidated financial statements.

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Pricing is generally consistent for each service irrespective of the other services or quantities requested by the customer

In transactions related to third-party service revenue, which includes pharmacy, directed care services and other services provided by the Company’s integrated network solutions services, the Company is considered the principal, as it directs the third party, controls the specified service, performs program utilization review, directs payment to the provider, accepts the financial risk of loss associated with services rendered and combines the services provided into an integrated solution, as specified within the Company’s customer contracts.

The Company has the ability to influence contractual fees with customers and possesses the financial risk of loss in certain contractual obligations.

These factors indicate the Company is the principal and, as such, it is required to recognize revenue gross and service partner vendor fees in the cost of revenue in the Company’s consolidated income statements.

Accounts Receivable:

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No customer accounte d for 10 % or more of revenue for fiscal 2025, 2024 or 2023.

One customer accounted for 10 % or more of accounts receivable at March 31, 2024 and 2023 .

Two customers accounted for 10 % or more of accounts receivable as of March 31, 2025 and one customer accounted for 10 % or more of accounts receivable as of March 31, 2024 .

Segment Reporting:

Based on the Company’s Chief Operating Decision Maker’s (“CODM”) review and assessment of the Company’s operations for purposes of performance monitoring and resource allocation, the Company determined that its operations and the decisions to allocate resources and deploy capital are organized and managed on a consolidated basis.

Accordingly, management has identified one operating segment, which is its reportable segment, under this organizational and reporting structure.

Property and Equipment:

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However, future events or changes in current circumstances could affect the recoverability of the carrying value of goodwill and long-lived assets.

Goodwill amounted to $ 36,814,000 (net of accumulated amortization of $ 2,069,000 ) at March 31, 2024 and at March 31, 2023 .

Cost of Revenues:

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Diluted weighted average shares

During fiscal 2025, the Company effected a three-for-one forward stock split of its common stock .

All prior period share, equity award and per share amounts and calculations in these consolidated financial statements and elsewhere in this annual report have been retroactively adjusted to reflect the stock split.

Recently Issued Accounting Standards

The new standard is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The amendments should be applied prospectively, but retrospective application is permitted.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024, with retrospective application required.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

The Company adopted this pronouncement retrospectively in the fiscal year of 2025 and provided required disclosures in Note 12 Segment Reporting to the consolidated financial statements.

Note 2 – Revenue Recognition

Revenue from Contracts with Customers

The Company generates revenue through its patient management and network solutions service lines.

The Company operates in one reportable operating segment:

managed care.

Revenue is recognized when control of the promised services is transferred to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.

As the Company completes its performance obligations, which are identified below, it has an unconditional right to consideration as outlined in the Company’s contracts.

As the Company completes its performance obligations, which are described in greater detail below, it has an unconditional right to consideration pursuant to the Company’s contracts.

Generally, the Company’s accounts receivable are expected to be collected in 30 days in accordance with the underlying payment terms.

The Company generates revenue through its patient management and network solutions service lines.

The Company operates in one reportable operating segment, managed care.

Patient Management Service Line

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The transaction price is readily available from the contract and is fixed for each service.

Revenue is recognized over time as services are provided as the performance obligations are satisfied through the effort expended to research, investigate, evaluate, document, and report the claim and control of these services is transferred to the customer.

Revenue is recognized based on historical claim closure rates and claim type applied utilizing a portfolio approach based on time elapsed for these claims, generally between three and fifteen months .

The Company believes this approach reasonably reflects the transfer of the claims management services to its customer.

The Company’s obligation to manage claims and cases under the patient management service line can range from less than one year to multi-year contracts.

They are generally one year under the terms of the contract;

however, many of these contracts contain auto-renewal provisions and the Company’s customer relationships can span multiple years.

Revenue is recognized over time as services are provided and performance obligations are satisfied through efforts expended to research, investigate, evaluate, document, and report the claim and control of these services is transferred to the customer.

Revenue is recognized based on historical claim closure rates and claim type by utilizing a portfolio approach based on time elapsed for these claims, which is generally between three and fifteen months .

The Company believes this approach reasonably reflects the transfer of the claims management services to its customers.

The Company’s obligation to manage claims and cases under patient management service line contracts range from less than one year to multiple years.

The term of these contracts are typically one year;

however, many of these contracts contain auto-renewal provisions leading the Company’s customer relationships to span multiple years.

Under certain claims management agreements, the Company receives consideration from a customer at contract inception prior to transferring services to the customer, however, the Company would begin performing services immediately.

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The fee is billed upfront by the Company in order to provide customers with simplified and predictable ways of purchasing the Company’s services.

The patient management service line also offers the services of case managers who provide administration services by proactively managing medical treatment for claimants while facilitating an understanding of and participation in their rehabilitation process.

The patient management service line also offers the services of case managers who provide administration services by proactively managing medical treatment for claimants while also facilitating an understanding of and participation in their rehabilitation process.

Revenue for case management services is recognized over time as the performance obligations are satisfied through the effort expended to manage the medical treatment for claimants and control of these services is transferred to the customer.

Case management services are generally billed based on time incurred, are considered variable consideration, and revenue is recognized at the amount in which the Company has the right to invoice for services performed.

Case management services are generally billed based on time incurred, are considered variable consideration, and revenue is recognized at the amount in which the

Company has the right to invoice for services performed.

The Company believes this approach reasonably reflects the transfer of the case management service to the customer.

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Medical bill review services provide an analysis of medical charges for customers’ claims to identify opportunities for savings.

Medical bill review services revenues are recognized at a point in time when control of the service is transferred to the customer.

Revenue is recognized based upon the transfer of the results of the medical bill review service to the customer as this is the most accurate depiction of the transfer of the service to the customer.

Medical bill review revenues are variable, generally based on performance metrics set forth in the underlying contracts.

Each period, the Company bases its estimates on a contract-by-contract basis.

The Company makes its best estimate of amounts the Company has earned and expects to be collected using historical averages and other factors to project such revenues.

Variable consideration is recognized in the amount that the Company concludes is probable that a significant revenue reversal will not occur in future periods.

Revenue from medical bill review services is recognized at a point in time when control of the service is transferred to the customer, based upon the transfer of the results of the medical bill review service to the customer as this is the most accurate depiction of the transfer of the service to the customer.

Medical bill review revenue is variable, generally based on performance metrics set forth in the underlying contracts.

Each period, the Company bases its revenue estimates on a contract-by-contract basis.

The Company makes its best estimate using amounts the Company has earned and expects to be collected using historical averages and other factors to project such revenues.

Variable consideration is recognized when the Company concludes it is probable that a significant revenue reversal will not occur in future periods.

Third-party services revenue includes pharmacy, directed care services and other services, and includes amounts received from customers compensating the Company for certain third-party costs associated with providing its integrated network solutions services.

The Company is considered the principal in these transactions as it directs the third party, controls the specified service and its pricing, performs program utilization review, directs payment to the provider, accepts the financial risk of loss associated with services rendered and combines the services provided into an integrated solution, as specified within the Company’s customer contracts.

The Company is considered the principal in these transactions as it directs the third party, controls the specified service and the pricing, performs program utilization review, directs payment to the provider, accepts the financial risk of loss associated with services rendered and combines the services provided into an integrated solution, as specified within the Company’s customer contracts.

The Company has the ability to influence contractual fees with customers and possesses the financial risk of loss in certain contractual obligations.

These factors indicate the Company is the principal and, as such, it is required to recognize revenue gross and service partner vendor fees in the operating expense in the Company’s consolidated statements of income.

These factors indicate that the Company is the principal and therefore required to recognize gross revenue and operating expense from service-partner fees within the Company’s consolidated statements of income.

The following table presents revenues disaggregated by service line for the fiscal years ended March 31, 2025, 2024 and 2023:

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Arrangements with Multiple Performance Obligations

For many of the Company’s services, the Company typically has one performance obligation;

however, the Company also provides the customer with an option to acquire additional services.

The Company offers multiple services under its patient management and network solutions service lines.

The Company typically provides a menu of offerings from which the customer may choose to purchase.

The price of each service is separate and distinct and provides a separate and distinct value to the customer.

While it provides a menu of offerings from which its customers may choose to purchase, the Company typically has one performance obligation per customer.

The Company always provides its customers with an option to contract additional services.

The price of each service is separate and distinct to each customer.

Pricing is generally consistent for each service irrespective of the other services or quantities requested by the customer.

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The timing of revenue recognition, billings and cash collections results in billed accounts receivables, unbilled receivables, and contract liabilities (reported as deferred revenues) on the Company’s consolidated balance sheets.

Unbilled receivables are due to the Company unconditionally for services already rendered except for physical invoicing and the passage of time.

Unbilled receivables are unconditionally due to the Company for services already rendered, except for physical invoicing and the passage of time.

Invoicing requirements vary by customer contract, but substantially all unbilled revenues are billed within one year .

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Certain services, such as claims management, are provided under fixed-fee service agreements and require the Company to manage claims over a contract period, typically for one year with the option for auto renewal, with the fixed fee renewing on the anniversary date of such contracts.

The Company recognizes deferred revenues as revenues when it performs services and transfers control of the services to the customer and satisfies the performance obligation which it determines utilizing a portfolio approach.

The Company recognizes deferred revenues as revenues when it performs services and transfers

control of the services to the customer and satisfies the performance obligation which it determines utilizing a portfolio approach.

For all fixed fee service agreements, revenues are straight-lined and recognized over the expected service periods by type of claim.

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Remaining performance obligations consist of deferred revenues.

The Company expects to recognize approximately 98 % of its remaining performance obligations as revenues within one year and the remaining balance thereafter.

The Company expects to recognize approximately 99 % of its remaining performance obligations as revenues within one year and expects to recognize the remaining balance as revenues thereafter .

See the discussion below regarding the practical expedients elected for the disclosure of remaining performance obligations.

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For patient management services that are billed on a time-and-expense incurred or per unit basis and for which revenue is recognized over time, the Company recognizes revenue at the amount to which it has the right to invoice for services performed.

The Company does not disclose the value of remaining performance obligations for (i) contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed, and (ii) contracts with variable consideration allocated entirely to a single performance obligation.

The Company does not disclose the value of remaining performance obligations for (i) contracts that the Company recognizes revenue for the amount it has the right to invoice for services performed, and (ii) contracts with variable consideration allocated entirely to a single performance obligation.

Note 3 — Stock Options and Stock-Based Compensation

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Effect on diluted earnings per share

The following table summarizes information for all stock options for the fiscal years March 31, 2024, 2023 and 2022:

The following table summarizes informa tion for all stock options for the fiscal years March 31, 2025, 2024 and 2023:

Options outstanding – beginning of fiscal year

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Including a 3,000,000 share expansion authorized in November 2022 by the Company’s Board of Directors, the total number of shares of common stock authorized to be repurchased over the life of the program is 117,000,000 shares of common stock.

Purchases may be made from time to time depending on market conditions and other relevant factors.

Purchases may be made from time to time depending on market conditions and other relevant facto rs.

During fiscal 2025, the Compan y effected the three-for-one forward stock split.

The share repurchases for the fiscal years ended March 31, 2025, 2024 and 2023 and cumulatively since inception of the authorization, are as follows:

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Note 9 – Leases

The Company determines if an arrangement is or contains a lease at contract inception.

These lease agreements have remaining lease terms of 1 to 5 years .

The Company determines if an arrangement contains a lease at contract inception.

The Company’s current lease agreements have remaining lease terms between 1 and 8 years .

The Company recognizes a right-of-use (“ROU”) asset and a lease liability at the lease commencement date.

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Key estimates and judgments include how the Company determines (1) the discount rate it uses to discount the unpaid lease payments to present value, (2) the lease term, and (3) lease payments.

ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate.

Accounting Standard Codification ("ASC") 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate.

Generally, the Company cannot determine the interest rate implicit in the lease because it does not have access to the lessor’s estimated residual value or the amount of the lessor’s deferred initial direct costs.

Therefore, the Company uses its incremental borrowing rate as the discount rate for the lease.

Therefore, the Company generally uses its incremental borrowing rate as the discount rate for the lease.

The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

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The Company elected the practical expedient of hindsight in determining the option to renew.

The Company has since reassessed the assumption of the renewal term and determined that due to the COVID-19 pandemic, the Company is now expecting more of its workforce to be working from home permanently.

Therefore, expecting a reduction in overall square footage of office space needs, the Company no longer believes it is reasonably certain it will exercise most of its options to renew, and therefore, has removed the renewal term of several lease obligations.

The Company has since reassessed the assumption of the renewal term and determined that due to the aftermath of the COVID-19 pandemic, the Company expects more of its workforce to be working from home permanently.

The subsequent re-measurement reduced the right-of-use asset and related lease liability on the consolidated balance sheet, but had an immaterial impact on the income statement.

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Variable lease payments associated with the Company’s leases are recognized upon occurrence of the event, activity, or circumstance in the lease agreement on which those payments are assessed.

Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet.

Leases with an initial term of 12 months or less are not recorded on the balance sheet.

The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

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Total lease expenses

The following table presents assets and liabilities recorded on the Company’s consolidated balance sheets related to its operating leases:

The following table presents the lease related assets and liabilities recorded on the Company’s consolidated balance sheets related to its operating leases at March 31, 2025 and March 31, 2024:

March 31, 2025

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As of March 31, 2025 , the Company has approximately $ 1.1 million of additional operating lease commitments that have not yet commenced.

These leases commence in 2025 and have lease terms between 4 years and 5 years.

This lease commences in May 2025 and has lease terms of 5 years.

Note 10 — Contingencies and Legal Proceedings

The Company is involved in litigation arising in the ordinary course of business.

Management believes that resolution of these matters will not result in any payment that, in the aggregate, would be material to the consolidated financial position or results of operations of the Company.

From time to time, the Company is involved in litigation arising in the ordinary course of business.

Although the results of these ordinary course matters cannot be predicted with certainty, we believe that the resolution of these matters will not, individually or in the aggregate, have a material adverse effect on our financial position or results of operations.

Note 11 — Retirement Savings Plan

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Note 12 — Segment Reporting

The Company operates as one operating segment, and the Company’s Chief Operating Decision Maker ("CODM") is its Chief Executive Officer.

The CODM reviews segment financial information presented on a consolidated basis, including revenue, gross profit and operating expenses, and considers budget-to-actual variances for the purposes of making operating decisions, assessing financial performance and allocating resources.

The Company derives the majority of its revenues from providing patient management and network solutions services to payors of workers’ compensation benefits, automobile insurance claims and group health insurance benefits.

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Because the Company believes it meets each of the criteria set forth above and each of the Company’s regions has similar economic characteristics, the Company aggregates its results of operations in one reportable operating segment.

The following table presents the financial information for the Company’s one reportable and operating segment for fiscal years ended March 31, 2025, 2024 and 2023:

Labor expenses

Direct product expenses

Depreciation and amortization expenses

Income tax provision

Other items (1)

Includes other operating costs (such as marketing and maintenance expenses), net gain (loss) on asset sales and disposals and other costs.

Note 13 — Other Intangible Assets

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Amortization expense is expected to be $ 175,000 in fiscal 2026, $ 174,000 in fiscal 2027, $ 42,000 in fiscal 2028, $ 18,000 in fiscal 2029, $ 18,000 in fiscal 2030, and $ 11,000 thereafter.

Note 14 — Quarterly Results (Unaudited)

The following is a summary of unaudited quarterly results of operations for each of the quarters in the fiscal years ended March 31, 2024 and 2023:

Fiscal Year Ended March 31, 2024:

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Fiscal Year Ended March 31, 2023:

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures