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Item 9A. Controls and Procedures

2026-05-22 compared with 2025-05-23 · 229 added, 223 removed, 953 unchanged (32% of the section changed)

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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.

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.

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

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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, 2026, 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.

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, 2026, as stated in their report that is included in Part II, Item 8 of this Annual Report.

Changes to Internal Control over Financial Reporting

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Other Information.

The Company’s directors and officers (as defined in Rule4 16a-1 under the Exchange Act) may enter into trading plans or other arrangements with financial institutions to purchase or sell shares of the Company’s common stock.

These plans or arrangements may be intended to comply with the affirmative defense provisions of Rule 10b5-1 of the Exchange Act, which are referred to as Rule 10b5-1 trading arrangements, or they may represent non-Rule 10b5-1 trading arrangements.

On March 9, 2026 , Michael G.

Combs , Chairman of the Board, Chief Executive Officer, and President , adopted a Rule 10b5-1 trading arrangement to sell up to 28,500 shares of the Company's common stock over a period ending December 15, 2026, subject to certain conditions.

No other directors and officers adopted or terminated any contract or written plan to purchase or sell Company securities.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Directors, Executive Of ficers and Corporate Governance.

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.

The full text of the Company’s code of ethics and business conduct is posted on the Company’s website at www.corvel.com.

The Company intends to disclose future amendments to certain provisions of the Company’s code of ethics and business conduct, or waivers of such provisions, applicable to the Company’s directors and executive officers, at the same location on the Company’s website identified above.

The inclusion of the Company’s website address in this annual report does not include or incorporate by reference the information on the Company’s website into this annual report.

The information required by this Item will be disclosed in the Company’s Definitive Proxy Statement on Schedule 14A for its 2026 Annual Meeting of Shareholders and is incorporated herein by reference.

The Company’s Proxy Statement will be filed with the SEC within 120 days after March 31, 2026 (the “Proxy Statement”).

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" in the Company’s Proxy Statement, and is incorporated herein by reference.

The information required by this item will be disclosed in the Proxy Statement and is incorporated herein by reference.

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

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.

The information required by this item will be disclosed in the Proxy Statement and is incorporated herein by reference.

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

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.

The information required by this item will be disclosed in the Proxy Statement and is incorporated herein by reference.

Principal Accou ntant Fees and Services.

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.

The information required by this item will be disclosed in the Proxy Statement and is incorporated herein by reference.

Exhibit and Financial State ment Schedules.

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Incorporated herein by reference to Exhibit 3.2 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.

Description of Securities

Description of Capital Stock

Filed herewith.

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Incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 11, 2021 (File No.

Fidelity Master Plan for Savings and Investment, and amendments (P) Paper filing

Fidelity Master Plan for Savings and Investment, and amendments

Incorporated herein by reference to Exhibits 10.16 and 10.16A to the Company’s Registration Statement on Form S-1 Registration No.

33-40629 initially filed on May 16, 1991.

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.

Stock Option Agreement, dated November 5, 2020, by and between CorVel Corporation and Brandon O’Brien, providing for performance vesting.

Stock Option Agreement, dated November 5, 2020, by and between CorVel Corporation and Michael G.

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.

Stock Option Agreement, dated November 5, 2020, by and between CorVel Corporation and Diane J.

Blaha, providing for performance vesting.

Stock Option Agreement, dated November 5, 2020, by and between CorVel Corporation and Brandon T.

O’Brien, providing for performance vesting.

Incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on November 12, 2020 (File No.

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Incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on November 12, 2020 (File No.

Stock Option Agreement, dated December 8, 2021, by and between CorVel Corporation and Michael Combs, providing for performance vesting.

Incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2021 filed on February 3, 2022 (File No.

Stock Option Agreement, dated December 8, 2021, by and between CorVel Corporation and Brandon O’Brien, providing for performance vesting.

Stock Option Agreement, dated December 8, 2021, by and between CorVel Corporation and Michael G.

Combs, providing for performance vesting.

Incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2021 filed on February 3, 2022 (File No.

Stock Option Agreement, dated December 8, 2021, by and between CorVel Corporation and Diane J.

Blaha, providing for performance vesting.

Stock Option Agreement, dated December 8, 2021, by and between CorVel Corporation and Brandon T.

O’Brien, providing for performance vesting.

Incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2021 filed on February 3, 2022 (File No.

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Incorporated herein by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2021 filed on February 3, 2022 (File No.

CorVel Corporation 2025 Stock Incentive Plan.

Incorporated herein by reference to Appendix A to the Company’s Definitive Proxy Statement filed on June 24, 2025.

Forms of Notice of Stock Option Grant and Stock Option Agreement

Incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-8 (File No.

333- 291331) filed on November 6, 2025.

Insider Trading Policy

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(Principal Executive Officer)

/s/ Brandon T.

Chief Financial Officer

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competition from other managed care companies and third party administrators;

the Company’s ability to renew or maintain contracts with its customers on favorable terms or at all;

the ability to expand certain areas of the Company’s business;

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shifts in customer demands;

increases in operating expenses, including employee wages, benefits, and medical inflation;

the ability of the Company to produce market-competitive software;

changes in operating expenses, including employee wages, benefits, and medical inflation;

cost of capital and capital requirements;

dependence on key personnel;

the impact of potential cybersecurity incidents;

on the Company’s ability to attract and retain key personnel;

the impact of potential cybersecurity incidents on the Company’s business;

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

changes in regulations affecting the workers’ compensation, insurance and healthcare industries in general;

governmental and public policy changes, including but not limited to legislative and administrative law and rule implementation or change;

the impact of recently issued accounting standards on the Company’s consolidated financial statements;

the continued availability of financing in the amounts and at the terms necessary to support the Company’s future business and the other risks identified in Part I, Item 1A of this annual report, “Risk Factors.”

the availability of financing in the amounts, at the times, and on the terms necessary to support the Company’s future business, and the other risks identified in Part I, Item 1A of this Annual Report, “Risk Factors.”

The Company is an independent nationwide provider of medical cost containment and managed care services designed to address the escalating medical costs of workers’ compensation benefits, automobile insurance claims, and group health insurance benefits.

The Company’s services are provided to insurance companies, TPAs, governmental entities, and self-administered employers to assist them in managing the medical costs and monitoring the quality of care associated with healthcare claims.

The Company’s services are provided to insurance companies, TPAs, governmental entities, and self-administered employers to assist them in managing the medical costs of workers’ compensation, group health and auto insurance, and monitoring the quality of care provided to claimants.

Network Solutions Services

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Patient management services include the processing of claims for self-insured payors with respect to property and casualty insurance.

Organizational Structure

The Company’s management is structured geographically with regional vice presidents who are responsible for all services provided by the Company in his or her particular region and responsible for the operating results of the Company in multiple states.

These regional vice presidents have area and district managers who are also responsible for all services provided by the Company in their given area and district.

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

Business Enterprise Segments

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There are generally fewer working days for our employees to generate revenue in the third fiscal quarter due to employee vacations, inclement weather and holidays.

Company Stock Split

During fiscal year 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 have been retroactively adjusted to reflect the stock split .

Summary of Fiscal 2026 Annual Results

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 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 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%.

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 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%.

The Company's revenues increased to $959 million in fiscal year 2026 from $896 million in fiscal year 2025, an increase of $63 million, or 7%.

This increase was due to an increase in revenues primarily from network solutions activity with existing customers due to utilizing additional services with the Company.

During fiscal year 2026, the Company’s gross profit increased to $233 million from $210 million in fiscal year 2025, an increase of $23 million, or 11%.

This increase was primarily due to the increase of 7% in revenue mentioned above, secondarily, a significant part of the growth was from the higher margin services of network solutions.

During fiscal year 2026, the Company’s general and administrative expenses increased to $89.7 million from $88.9 million in fiscal year 2025, an increase of $0.8 million, or 1%.

Historically, general and administrative expenses have been between 9% and 10% of revenues.

During fiscal year 2026, the Company’s net income before tax increased to $143.1 million from $120.8 million in fiscal year 2025, an increase of $22.3 million, or 18%.

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

During fiscal year 2026, the Company’s income tax expense increased to $32.8 million from $25.7 million in fiscal year 2025, an increase of $7.1 million, or 28%.

The increase was due to an increase in income before income taxes.

The Company’s effective income tax rate was 23% for fiscal year 2026 and 21% for fiscal year 2025.

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.

Diluted weighted average shares were 51.6 million shares in fiscal year 2026 and 52.0 million shares in fiscal year 2025, with a decrease of 369,000 shares, or 0.7%.

This decrease was primarily due to the repurchase of 782,744 shares of common stock in fiscal year 2026 under the Company’s stock repurchase program.

Since commencing this program in the fall of 1996, the Company has repurchased 115,259,435 shares of its common stock through March 31, 2026, at a cost of $888 million.

These repurchases were funded primarily from the Company’s operating cash flows.

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%.

Diluted earnings per share increased to $2.14 per share in fiscal year 2026 from $1.83 per share in fiscal year 2025, an increase of $0.31 per share, or 17%.

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, revenue from patient management services decreased from fiscal 2023 to fiscal 2025 and network solutions services grew from fiscal 2023 to fiscal 2025.

As noted in the table above, the percentage of revenue from patient management services decreased from fiscal year 2024 to fiscal year 2026 and the percentage of revenue from network solutions services grew from fiscal year 2024 to fiscal year 2026.

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

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Fiscal 2026 Compared to Fiscal 2025

Revenues increased to $959 million in fiscal year 2026 from $896 million in fiscal year 2025, an increase of $63 million, or 7%.

Network solutions services revenues increased to $362 million from $314 million, an increase from fiscal year 2025 of 15%.

This increase was primarily attributable to growth with existing customers that expanded their use of the Company’s enhanced bill review programs services, resulting in higher revenue per bill.

Most of the increase is primarily attributable to the growth with existing customers in enhanced bill review programs services due to expanding the use of our services.

Patient management services increased to $596 million from $581 million, an increase from fiscal year 2025 of 3%.

Fiscal 2025 Compared to Fiscal 2024

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

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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

Revenues increased to $795 million in fiscal 2024 from $719 million in fiscal 2023, an increase of $77 million, or 11%.

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

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

Total new claims increased by 4% during fiscal 2024 compared to fiscal 2023.

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

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.

Cost of Revenue

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The largest of the field indirect costs are (i) manager salaries and bonuses, (ii) account executive base pay and commissions, (iii) salaries of administrative and clerical support, field systems personnel and PPO network developers, along with related payroll taxes and fringe benefits, and (iv) office rent.

During fiscal 2025 and 2024, approximately 33% and 34%, respectively, of the costs incurred in the field were considered field indirect costs, which support both the patient management services and network solutions services operations of the Company’s field operations.

During both fiscal year 2026 and 2025, approximately 33% of the costs incurred in the field were considered field indirect costs, which support both the patient management services and network solutions services operations of the Company’s field operations.

Change in Cost of Revenue

Fiscal 2026 Compared to Fiscal 2025

The Company’s cost of revenues increased to $686 million in fiscal 2025 from $624 million in fiscal 2024, an increase of $62 million, or 10%.

The increase in cost of revenues was primarily due to the increase in total revenues of 13%.

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

Additionally, there was an increase in salaries of 9% resulting from increased average headcount of 6% in field operations and growth in average annual salary increases due to wage inflation.

Headcount increased due to an increase in business volume.

The Company’s cost of revenues increased to $726 million in fiscal year 2026 from $686 million in fiscal year 2025, an increase of $40 million, or 6%.

This increase was primarily due to the increase of 7% in revenue mentioned above, secondarily, a significant part of the growth was from the higher margin services of network solutions.

Fiscal 2025 Compared to Fiscal 2024

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Fiscal 2026 Compared to Fiscal 2025

General and administrative expenses increased to $89.7 million in fiscal year 2026 from $88.9 million in fiscal year 2025, an increase of $0.8 million, or 1%.

Historically, general and administrative expenses have been between 9% and 10% of revenues.

Fiscal 2025 Compared to Fiscal 2024

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%.

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

Income Tax Provision

Fiscal 2026 Compared to Fiscal 2025

The Company’s income tax expense increased to $25.7 million for fiscal 2025 from $18.8 million for fiscal 2024, an increase of $6.8 million.

Income before income tax provision increased to $121 million in fiscal 2025 from $95 million in fiscal 2024, an increase of $25.7 million.

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

The Company’s income tax expense increased to $32.8 million for fiscal year 2026 from $25.7 million for fiscal year 2025, an increase of $7.1 million.

Income before income tax provision increased to $143 million in fiscal year 2026 from $121 million in fiscal year 2025, an increase of $22.3 million.

The Company’s effective income tax rate was 23% for fiscal year 2026 and 21% for fiscal year 2025.

The effective tax rate is less than the statutory tax rate primarily due to the impact of stock option exercises for both periods.

The effective tax rate for fiscal year 2026 increased over fiscal year 2025 primarily due to a decrease in benefit from stock option exercises.

Fiscal 2025 Compared to Fiscal 2024

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Fiscal 2026 Compared to Fiscal 2025

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.

The Company’s net income was $110.3 million in fiscal year 2026 and $95.2 million in fiscal year 2025, an increase of $15.2 million, or 16%.

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

Fiscal 2025 Compared to Fiscal 2024

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 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.

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

Earnings per Share

Fiscal 2026 Compared to Fiscal 2025

The Company’s 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 Company’s diluted earnings per share increased to $2.14 per share in fiscal year 2026 from $1.83 per share in fiscal year 2025, an increase of $0.31 per share, or 17%.

This was primarily due to an increase in net income.

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The Company expects days sales outstanding (known as DSO) to remain in the low to mid 40-day range.

The Company’s historical profit margins and historical ratio of investments in assets used in the business has allowed the Company to generate sufficient cash flow to repurchase $832 million of its common stock during the past 29 fiscal years, on inception-to-date net earnings of $903 million.

The Company’s historical profit margins and historical ratio of investments in assets used in the business has allowed the Company to generate sufficient cash flow to repurchase $888 million of its common stock during the past 30 fiscal years, on inception-to-date net earnings of $1 billion.

The Company repurchases shares during periods of excess liquidity, which has occurred in all 35 years that the Company has been public.

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Working capital increased to $234 million at March 31, 2026, from $183 million at March 31, 2025.

This is primarily due to the increase in net income, and to a lesser extent, a decrease in spending to repurchase shares of the Company’s common stock under its stock repurchase program.

This is primarily due to the increase in net income.

The Company is not a party to off-balance sheet arrangements as defined by the SEC.

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As of March 31, 2026, the Company had $233 million in cash and cash equivalents, invested primarily in short-term, interest-bearing, highly-liquid, investment-grade securities with maturities of 90 days or less.

The Company believes that the cash balance at March 31, 2025, along with anticipated internally-generated funds will be sufficient to meet the Company’s expected cash requirements for at least the next twelve months and beyond.

The Company believes that the cash balance at March 31, 2026, along with anticipated internally-generated funds, will be sufficient to meet the Company’s expected cash requirements for at least the next twelve months.

Operating Cash Flows

Fiscal 2026 Compared to Fiscal 2025

Net cash provided by operating activities increased to $127.3 million in fiscal 2025 from $99.2 million in fiscal 2024, an increase of $28.1 million.

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.

Net cash provided by operating activities increased to $155.6 million in fiscal year 2026 from $127.3 million in fiscal year 2025, an increase of $28.3 million.

The increase in cash flow from operating activities was primarily due to an increase in net income of $15.2 million during fiscal year 2026.

Additionally, accounts receivable decreased compared to the prior fiscal year due to a decrease of five days in days sales outstanding.

Fiscal 2025 Compared to Fiscal 2024

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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.

Investing Activities

Fiscal 2026 Compared to Fiscal 2025

Net cash flow used in investing activities increased to $35.8 million in fiscal 2025 from $29.2 million in fiscal 2024, an increase of $6.5 million.

Net cash flow used in investing activities increased to $45.4 million in fiscal year 2026 from $35.8 million in fiscal year 2025, an increase of $9.6 million.

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

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Fiscal 2026 Compared to Fiscal 2025

Net cash flow used in financing activities decreased to $26.5 million in fiscal 2025 from $35.8 million in fiscal 2024, a decrease of $9.2 million.

During fiscal 2025, the Company spent $37.6 million to repurchase 377,154 shares of its common stock (at an average price of $99.71 per share).

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).

Net cash flow used in financing activities increased to $47.8 million in fiscal year 2026 from $26.5 million in fiscal year 2025, an increase of $21.3 million.

During fiscal year 2026, the Company spent $56.2 million to repurchase 782,744 shares of its common stock (at an average price of $71.81 per share).

During fiscal year 2025, the Company spent $37.6 million to repurchase 377,154 shares of its common stock (at an average price of $99.71 per share).

If the Company continues to generate cash flow from operating activities, the Company may continue to repurchase shares of its common stock on the open market, if authorized by the Company’s Board of Directors pursuant to the Company’s stock repurchase program, or seek to identify other businesses to acquire.

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The Company is also impacted by rising costs for certain inflation-sensitive operating expenses such as labor, employee benefits, and facility leases.

The Company does not believe these impacts were material to its revenues or net income in fiscal 2025;

however, the Company believes inflation could have a material impact to pricing and operating expenses in future years due to the state of the economy and current inflation rates.

The Company does not believe these impacts were material to its revenues or net income in fiscal year 2026;

however, the Company believes inflation could have a material impact on pricing and operating expenses in future years due to the state of the economy and current inflation rates.

Critical Accounting Estimates

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.

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Revenue Recognition :

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

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 receive 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.

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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.

Each service is priced separately and provides a distinct value to the customer.

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

Revenue is recognized at the point in time when the results of the medical bill review service are delivered to the customer, with the Company believes 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.

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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.

Segment Reporting:

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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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).

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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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.

Estimates of fair value are not intended to predict actual future events or the value ultimately realized by persons who receive equity awards.

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Recently Issued Accounting Standards

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software , which replaces the existing stage-based rules for internal-use software with a principles-based framework.

Under the new guidance, entities may capitalize eligible costs once management has authorized funding the software, the entity has committed to using the software, and it is probable the project will be completed.

Entities may elect to apply the guidance retrospectively, prospectively to software costs incurred after the adoption date or on a modified prospective basis.

The update is effective for fiscal years beginning after December 15, 2027, including interim periods within those annual reporting periods, with early adoption permitted.

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

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.

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

Improvements to Income Tax Disclosures , a new accounting standard to enhance the transparency and decision usefulness of income tax disclosures.

The new standard is effective for fiscal years beginning after December 15, 2024, with retrospective application permitted.

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

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which requires more detailed information about a reportable segment’s expenses.

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

Improvements to Income Tax Disclosures , enhances the transparency and decision usefulness of income tax disclosures.

The standard is effective for fiscal years beginning after December 15, 2024, and is required to be applied prospectively, with retrospective application permitted.

The Company adopted this standard prospectively in the fiscal year 2026 and provided the required disclosures in Note 6 - Income Taxes, to the consolidated financial statements.

REPORT OF INDEPENDENT REGIS TERED PUBLIC ACCOUNTING FIRM

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Retained earnings

1,013,429,000

Total stockholders’ equity

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Purchase of treasury stock

Adjusted shares outstanding

Balance – March 31, 2025

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Stock-based compensation expense

Stock issuance for asset acquisition

Purchase of treasury stock

Adjusted shares outstanding

Balance – March 31, 2026

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( 887,716,000

1,013,429,000

See accompanying notes to consolidated financial statements.

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Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

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Accrual of software license purchase

Asset acquisition for stock

See accompanying notes to consolidated financial statements.

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CorVel Corporation (“CorVel” or “the Company”), incorporated in Delaware in 1987, is an independent nationwide provider of medical cost containment and managed care services designed to address the escalating medical costs of workers’ compensation benefits, automobile insurance claims, and group health insurance benefits.

Basis of Presentation:

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Fair Value of Financial Instruments:

The Company applies ASC 820, “Fair Value Measurements and Disclosures,” which defines fair value, establishes a framework for measuring fair value, and provides for disclosures about fair value measurements, with respect to fair value measurements of (i) nonfinancial assets and liabilities that are recognized or disclosed at fair value in the Company’s consolidated financial statements on a recurring basis (at least annually) and (ii) all financial assets and liabilities.

The Company applies Accounting Standard Codification (“ASC”) 820, “Fair Value Measurements and Disclosures,” which defines fair value, establishes a framework for measuring fair value, and provides for disclosures about fair value measurements, to measure and disclose fair value for (i) nonfinancial assets and liabilities that are recognized or disclosed at fair value in the Company’s consolidated financial statements on a recurring basis, at least annually, and (ii) all financial assets and liabilities.

ASC 820 prioritizes the inputs used in measuring fair value into the following hierarchy:

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Revenue Recognition:

As the Company completes its performance obligations which are identified in Note 2, it has an unconditional right to consideration as outlined in the Company’s contracts.

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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.

Each service is priced separately and provides distinct value to the customer.

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

Accounts Receivable:

The majority of the Company’s accounts receivable are due from companies in the property and casualty insurance industries, self-insured employers and governmental entities.

The majority of the Company’s accounts receivable are due from companies in the property and casualty insurance industries, self-administered employers and governmental entities.

Credit is extended based on evaluation of a customer’s financial condition and, generally, collateral is not required.

Accounts receivable are generally due within 30 days and are stated at amounts due from customers net of an allowance for expected credit losses.

Accounts receivable are typically due within 30 days and are stated at amounts due from customers net of an allowance for expected credit losses.

Those accounts outstanding longer than the contractual payment terms are considered past due.

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Concentrations of Credit Risk:

Substantially all of the Company’s customers are payors of workers’ compensation benefits and property and casualty insurance, which include insurance companies, third party administrators, self-insured employers and government entities.

Substantially all of the Company’s customers are payors of workers’ compensation benefits and property and casualty insurance, which include insurance companies, TPAs, self-administered employers and government entities.

Credit losses consistently have been within management’s expectations.

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No customer accounte d for 10 % or more of revenue for fiscal 2026, 2025 or 2024.

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 .

Two customers accounted for 10 % or more of accounts receivable as of March 31, 2026 and 2025 .

Segment Reporting:

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Computer Software

The Company accounts for internally-developed software costs in accordance with ASC 350-40, “Internal Use Software”.

Capitalized software development costs, intended for internal use, totaled $ 42,756,000 (net of $ 170,041,000 in accumulated amortization) and $ 37,166,000 (net of $ 155,998,000 in accumulated amortization), as of March 31, 2025 and 2024 , respectively.

The Company accounts for internally-developed software costs in accordance with ASC 350-40, “Internal Use Software.” Capitalized software development costs, intended for internal use, totaled $ 49,581,000 (net of $ 185,936,000 in accumulated amortization) and $ 42,756,000 (net of $ 170,041,000 in accumulated amortization), as of March 31, 2026 and 2025 , respectively.

These costs are included in computer software in property and equipment and are amortized over a period of five years .

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Cost of Revenues:

Cost of services consists primarily of the compensation and fringe benefits of field personnel, including managers, medical bill analysts, field case managers, telephonic case managers, systems support, administrative support, account managers and account executives, and related facility costs including rent, telephone and office supplies.

Historically, the costs associated with these additional personnel and facilities have been the most significant factor driving increases in the Company’s cost of services.

Cost of revenues consists primarily of the compensation and fringe benefits of field personnel, including managers, medical bill analysts, field case managers, telephonic case managers, systems support, administrative support, account managers and account executives, and related facility costs including rent, telephone and office supplies.

Historically, the costs associated with these additional personnel and facilities have been the most significant factor driving increases in the Company’s cost of revenues.

Income Taxes:

The Company provides for income taxes in accordance with provisions specified in ASC 740, “Accounting for Income Taxes”.

Accordingly, deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities.

The Company provides for income taxes in accordance with provisions specified in ASC 740, “Accounting for Income Taxes.” Accordingly, deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities.

These differences will result in taxable or deductible amounts in the future, based on tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.

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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 .

During fiscal year 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

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software , which replaces the existing stage-based rules for internal-use software with a principles-based framework.

Entities may elect to apply the guidance retrospectively, prospectively to software costs incurred after the adoption date or on a modified prospective basis.

The update is effective for fiscal years beginning after December 15, 2027, including interim periods within those annual reporting periods, with early adoption permitted.

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

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

Improvements to Income Tax Disclosures , a new accounting standard to enhance the transparency and decision usefulness of income tax disclosures.

The new standard is effective for fiscal years beginning after December 15, 2024, with retrospective application permitted.

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

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which requires more detailed information about a reportable segment’s expenses.

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

Improvements to Income Tax Disclosures , enhances the transparency and decision usefulness of income tax disclosures.

The standard is effective for fiscal years beginning after December 15, 2024, and is required to be applied prospectively, with retrospective application permitted.

The Company adopted this standard prospectively in the fiscal year 2026 and provided the required disclosures in Note 6 - Income Taxes, 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.

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

Revenue generated from the patient management service line is recognized over time as services are provided and performance obligations are satisfied.

Revenue generated from the network solutions service line 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 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.

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

Patient Management Service Line

The patient management service line provides services primarily related to workers’ compensation claims management and case management.

This service line also includes additional services such as accident and health claims programs.

Each claim referred by the customer is considered an additional optional purchase of claims management services under the agreement with the customer.

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

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 patient management service line provides services primarily related to workers’ compensation claims management and case management, as well as additional services such as accident and health claims programs.

Each claim referred by the customer is considered an optional purchase of additional claims management services under the customer agreement.

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

The Company recognizes revenue over time as services are provided and performance obligations are satisfied.

These performance obligations are satisfied as the Company researches, investigates, evaluates, documents, and reports on each claim, and control of the services transfers to the customer.

The Company recognizes revenue using a portfolio approach based on historical claim closure rates, claim type, and the passage of time, which claims generally remaining open 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.

The period between a customer’s payment of consideration and the completion of the promised services is generally less than one year.

There is no difference between the amount of promised consideration and the cash selling price of the promised services.

These contracts typically have one year terms;

however, many include 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 before services are transferred to the customer, however, the Company begins performing services immediately.

The period between the customer’s payment of consideration and the completion of the promised services is generally less than one year.

The amount of promised consideration is no different than the cash selling price of the promised

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

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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 for 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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The network solutions service line consists primarily of medical bill review and third-party services.

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

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.

Medical bill review services analyze medical charges for customers’ claims to identify potential savings opportunities.

The Company recognizes revenue from medical bill review services at the point in time when control of the service transfers to the customer, which occurs when the results of the medical bill review service are delivered to the customer.

Medical bill review revenue is variable and is 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.

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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 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 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.

Third-party services revenue includes revenue from pharmacy, directed care services and other services, including amounts received from customers to reimburse the Company for certain third-party costs incurred in 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 pricing, performs program utilization review, directs payment to the provider, assumes the financial risk of loss associated with services rendered, and combines the services provided into an integrated solution, as specified within its customer contracts.

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

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

The following table presents revenues disaggregated by service line for the fiscal years ended March 31, 2026, 2025 and 2024:

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Arrangements with Multiple Performance Obligations

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

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 offers a suite of services under its patient management and network solutions service lines.

Although customers can select from a variety of services, the Company typically has one performance obligation per customer.

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

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Contract Balances

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

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

Unbilled receivables represent amounts due are due for services that have been performed but not yet billed , 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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Accounts receivable, net

When the Company receives consideration from a customer prior to transferring services to the customer under the terms of certain claims management agreements, it records deferred revenues on the Company’s consolidated balance sheets, which represents a contract liability.

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.

When the Company receives consideration from a customer prior to transferring services to the customer under the terms of certain claims management agreements, it records deferred revenues on the consolidated balance sheets, which represents a contract liability.

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

As of March 31, 2025 , the Company had $ 30.8 million of remaining performance obligations related to claims and non-claims services for which the price is fixed.

Remaining performance obligations consist of deferred revenues.

As of March 31, 2026 , the Company had approximately $ 32.2 million of remaining performance obligations related to claims and non-claims services for which the price is fixed.

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

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Costs to Obtain a Contract

The Company has an internal sales force compensation program where remuneration is based solely on the revenues recognized in the period and does not represent an incremental cost to the Company, which provides a future benefit expected to be longer than one year and would meet the criteria to be capitalized and presented on the Company’s consolidated balance sheets.

Practical Expedients Elected

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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 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.

The Company does not disclose the value of remaining performance obligations for (i) contracts under which revenue is recognized in the amount the Company has the right to invoice for services performed, or (ii) contracts in which variable consideration is allocated entirely to a single performance obligation.

Note 3 — Stock Options and Stock-Based Compensation

Under the Company’s Restated Omnibus Incentive Plan (formerly the Restated 1988 Executive Stock Option Plan) (“the Plan”) as in effect at March 31, 2025 , options exercisable for up to 61,845,000 shares of the Company’s common stock may be granted over the life of the Plan to key employees, non-employee directors, and consultants at exercise prices not less than the fair market value of the common stock on the date of grant.

Options granted under the Plan are non-statutory stock options and generally vest 25 % one year from the date of grant, with the remaining 75 % vesting ratably each month for the next 36 months.

The options granted to employees and the Company’s Board of Directors expire at the end of five years and ten years from date of grant, respectively.

All options granted in fiscal 2025 and 2024 were granted with an exercise price equal to the fair value of the Company’s common stock on the grant date.

The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model with the assumptions included in the table below.

The Company uses historical data, among other factors, to estimate the expected volatility, the expected dividend yield, and the expected option life.

The Company accounts for forfeitures as they occur, rather than estimate expected forfeitures.

As of March 31, 2025, 1,185,727 stock options were outstanding and 1,775,459 shares were available for issuance under the Company’s Restated Omnibus Incentive Plan (formerly the Restated 1988 Executive Stock Option Plan) (the “Omnibus Plan”) .

Under the Omnibus Plan, the Company granted shares of common stock to key employees, non-employee directors, and consultants at exercise prices equal to or greater than the fair market value of the common stock on the grant date.

Options granted under the Omnibus Plan generally vested as to 25 % of the underlying shares one year after the grant date, with the remaining 75 % vesting ratably each month over the following 36 months.

O ptions granted to employees expire five years from the grant date, and options granted to directors expire ten years from the date of grant.

All options granted in fiscal year 2026 and 2025 had an exercise price equal to the fair value of the Company’s common stock on the grant date and are non-statutory stock options.

After August 7, 2025, the Company will not grant any further equity awards under the Omnibus Plan.

Outstanding awards under the Omnibus Plan will remain outstanding, unchanged and subject to the terms of the Omnibus Plan and their respective award agreements.

On August 7, 2025, the Company’s stockholders approved the 2025 Stock Incentive Plan (the “2025 SIP”) replacing the Omnibus Plan, which expires on June 30, 2026.

Consistent with the Omnibus Plan, the primary purpose of the 2025 SIP is to attract and retain qualified personnel.

The 2025 SIP has 1,775,459 shares of common stock reserved for issuance to employees, directors, consultants, independent contractors and advisors.

The 2025 SIP permits the issuance of stock options, restricted stock, stock appreciation rights, restricted stock units and performance awards.

Shares subject to awards that are forfeited, expire or are otherwise terminated without shares being issued, or shares withheld to pay the exercise price of an award or to satisfy tax withholding obligations, including shares subject to awards granted under the Omnibus Plan that are outstanding after June 30, 2026, will be returned to the pool of shares available for grant and issuance under the 2025 SIP.

As of March 31, 2026 , 1,447,857 shares of common stock remained available for future issuance under the 2025 SIP, subject to adjustment for future stock splits, stock dividends, and similar changes in capitalization.

The risk-free rate is based on the interest rate paid on a U.S.

Treasury issue with a term similar to the estimated life of the option.

The Company uses historical data, among other factors, to estimate the expected volatility, dividend yield and option life.

The Company accounts for forfeitures as they occur, rather than estimating expected forfeitures.

The fair value of each grant is estimated on the date of grant using the Black-Scholes option-pricing model.

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Effect on diluted earnings per share

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

Options granted

Options exercised

Options cancelled/forfeited

Options outstanding – end of fiscal year

During the fiscal year, weighted average exercise

Options granted

Options exercised

Options cancelled/forfeited

At the end of fiscal year:

Price range of outstanding options

$ 11.05 -$ 110.18

$ 11.05 -$ 78.45

$ 11.05 -$ 65.72

Weighted average exercise price per share

Options available for future grants

Exercisable options

The following table summarizes the status of stock options outstanding and exercisable at March 31, 2026:

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Deferred — State

The Company adopted ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , on a prospective basis.

As a result, disclosures for fiscal year 2026 reflect the requirements of ASU 2023-09, including the reconciliation of the statutory federal income tax rate and disaggregated tax payment information.

The disclosures for fiscal years 2025 and 2024 are presented under the prior disclosure requirements.

The following is a reconciliation of the income tax provision from the statutory federal income tax rate to the effective rate for the fiscal year ended March 31, 2026:

Income taxes at federal statutory rate

State income taxes, net of federal benefit (1)

Change in valuation allowance

Nondeductible items:

Stock-based compensation

§162(m) limitation and permanent items

Worldwide changes in unrecognized tax benefits

Deferred tax adjustment

State taxes in the following states made up the majority of the tax effect in this category:

California, Georgia, Illinois, Pennsylvania and Texas.

The following is a reconciliation of the income tax provision from the statutory federal income tax rate to the effective rate for the fiscal years ended March 31, 2025 and 2024:

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Valuation allowance

The cash paid for income taxes (net of refunds) during the fiscal year 2026 was as follows:

State and local:

State and local total

Foreign total

Net cash payments for income taxes were $ 28,095,000 and $ 22,874,000 in 2025 and 2024, respectively.

Deferred tax assets and liabilities at March 31, 2026 and 2025 are, as follows:

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The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.

During the fiscal years ended March 31, 2025, 2024 and 2023 , the Company recognized approximately $( 9,000 ), $( 14,000 ) and $( 13,000 ) in interest and penalties, respectively.

During the fiscal years ended March 31, 2026, 2025 and 2024 , the Company recognized approximately $( 8,000 ), $( 9,000 ) and $( 14,000 ) in interest and

penalties, respectively.

As of March 31, 2026, 2025 and 2024 , accrued interest and penalties related to uncertain tax positions were $ 23,000 , $ 31,000 and $ 40,000 , respectively.

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Note 7 — Employee Stock Purchase Plan

The Company maintains an Employee Stock Purchase Plan (as amended, “ESPP”) which allows employees of the Company and its subsidiaries to purchase shares of common stock on the last day of two six-month purchase periods (i.e.

March 31 and September 30) at a purchase price which is 95 % of the closing sale price of shares as quoted on NASDAQ on the last day of such purchase period.

The Company maintains an Employee Stock Purchase Plan, as amended (the “ESPP”) which allows employees of the Company and its subsidiaries to purchase shares of common stock on the last day of two six-month purchase periods (i.e.

March 31 and September 30) at a purchase price that is 95 % of the closing sale price of shares as quoted on NASDAQ on the last day of such purchase period.

Employees are allowed to contribute up to 20 % of their gross pay.

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Note 8 — Treasury Stock

During each of the three fiscal years ended March 31, 2025 , the Company continued to repurchase shares of its common stock under a program originally approved by the Company’s Board of Directors in 1996.

During each of the three fiscal years ended March 31, 2026, 2025 and 2024 , the Company continued to repurchase shares of its common stock under a program originally approved by the Company’s Board of Directors in 1996.

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 facto rs.

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

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

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

The share repurchases for the fiscal years ended March 31, 2026, 2025 and 2024 and cumulatively since inception of the authorization, are as follows:

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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’s current lease agreements have remaining lease terms between one and seven year s.

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

The lease liability is initially measured at the present value of the unpaid lease payments as of the lease commencement date.

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.

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.

The lease liability is initially measured based on the present value of the unpaid lease payments as of the lease commencement date.

Key estimates and judgments used in determining the liability include the (1) discount rate the Company uses to discount the unpaid lease payments to present value, (2) lease term, and (3) lease payments .

ASC 842, “Leases,” 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.

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Because the Company does not generally borrow on a collateralized basis, it uses quoted interest rates obtained from financial institutions as an input to derive an appropriate incremental borrowing rate, adjusted for the amount of the lease payments, the lease term, and the effect on that rate of designating specific collateral with a value equal to the unpaid lease payments for that lease.

The Company’s lease agreements may include options to extend the lease following the initial term.

At the time of adopting ASC 842, the Company determined that it was reasonably certain it would exercise the option to renew;

accordingly, these options were considered in determining the initial lease term.

Some of the Company’s lease agreements include options to extend the lease following the initial term.

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 aftermath of the COVID-19 pandemic, the Company expects 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 from several lease obligations.

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.

For lease agreements entered into or reassessed after the adoption of ASC 842, the Company has elected the practical expedient to account for the lease and non-lease components as a single lease component.

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

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

For lease agreements entered into or reassessed after the adoption of ASC 842, “Leases,” the Company has elected the practical expedient to account for the lease and non-lease components as a single lease component.

Therefore, for those leases, the lease payments used to measure the lease liability include all of the fixed consideration in the contract.

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 balance sheet.

Leases with an initial term of 12 month s 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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operating lease liabilities

As of March 31, 2025, maturities of operating and financing lease liabilities for each of the next five years and thereafter are as follows:

As of March 31, 2026, maturities of operating lease liabilities for each of the next five years and thereafter are as follows:

Total lease payments

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As of March 31, 2026 , the Company has approximately $ 1.5 million of additional operating lease commitments that have not yet commenced.

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

This lease will commence in 2026 and has lease terms of 10 years.

Note 10 — Contingencies and Legal Proceedings

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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 Company operates within one operating segment.

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.

The Company derives its revenues from providing patient management and network solutions services.

Patient management services include claims administration, utilization review, medical case management, and vocational rehabilitation.

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Network solutions services

These regional vice presidents have area and district managers who are also responsible for all services provided by the Company in their given area and district.

Under ASC 280-10, two or more operating segments may be aggregated into a single operating segment for financial reporting purposes if aggregation is consistent with the objective and basic principles, if the segments have similar economic characteristics, and if the segments are similar in each of the following areas:

The Company’s management is structured geographically with regional vice presidents who are responsible for all services provided by the Company and the operating results of the Company within their respective regions.

Area and district managers support the regional vice presidents by overseeing all services provided by the Company within their given areas and districts.

All revenues are derived from customers within the United States, and all long-lived assets are located in the United States.

Under ASC 280-10, two or more operating segments may be aggregated into a single operating segment for financial reporting purposes if aggregation is consistent with the objective and basic principles of the accounting guidance, if the segments have similar economic characteristics, and if the segments are similar in each of the following areas:

(i) the nature of products and services, (ii) the nature of the production processes, (iii) the type or class of customer for their products and services, and (iv) the methods used to distribute their products or provide their services.

The Company believes each of the Company’s regions meet these criteria as they provide similar managed care services to similar customers using similar methods of production and distribution.

The Company believes its patient management and network solutions services meet these criteria as they provide similar managed care services to similar customers using similar methods of production and distribution.

All of the Company’s regions perform both patient management and network solutions services.

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, 2026, 2025 and 2024:

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Direct product expenses

Depreciation and amortization expenses

Income tax provision

Depreciation and amortization expenses

Occupancy Expense

Other items (1)

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Third Party Administrator Licenses

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.

Amortization expense is expected to be $ 174,000 in fiscal 2027, $ 42,000 in fiscal 2028, $ 18,000 in fiscal 2029, $ 18,000 in fiscal 2030, and $ 11,000 in fiscal 2031.

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