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This description includes any and all changes (whether or not material) to, and supersedes, the description of the risk factors associated with our business previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2020, filed with the SEC on June 10, 2020.
−Removed: Past financial performance is not necessarily a reliable indicator of future performance.
−Removed: Investors in our common stock should not use historical performance to anticipate results or future period trends.
+Added: Past financial performance is not necessarily a reliable indicator of future performance, and investors in our common stock should not use historical performance to anticipate results or future period trends.
Investing in our common stock involves a high degree of risk.
−Removed: Investors should consider carefully the following risk factors, as well as the other information in this report and our other filings with the SEC, including our audited and unaudited consolidated financial statements and the related notes, before deciding whether to invest or maintain an investment in shares of our common stock.
+Added: Investors should consider carefully the following risk factors, as well as the other information in this report and our other filings with the SEC, including our consolidated financial statements and the related notes, before deciding whether to invest or maintain an investment in shares of our common stock.
If any of the following risks actually occurs, our business, financial condition, and results of operations would suffer.
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Additional risks that we currently do not know about or that we currently believe to be immaterial may also impair our business operations.
+Added: Our results of operations have been adversely affected and could in the future be materially adversely affected by the COVID-19 coronavirus pandemic.
+Added: The global spread of the COVID-19 coronavirus has created significant volatility, uncertainty, unemployment and economic disruption.
+Added: The extent to which the COVID-19 pandemic impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including:
+Added: the duration and scope of the pandemic;
+Added: governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic;
+Added: the impact of the pandemic on economic activity and actions taken in response;
+Added: the effect on our customers and customer demand for our services and solutions, that could cause a reduction in revenue;
+Added: our ability to sell and provide our services and solutions, including as a result of travel restrictions and employees working from home and widespread unemployment;
+Added: the ability of our customers to pay for our services and solutions;
+Added: the impact on our third party vendors;
+Added: any closures of our, and our customers’ and providers’ offices and facilities, and
+Added: any restrictions on our ability to provide services at a claim site or the location of a claimant whether for purposes of evaluating the claim or delivering services.
+Added: The closure of offices or restrictions inhibiting our employees’ ability to travel or interact with claimants and access claim sites, has disrupted, and could in the future disrupt our ability to provide our services and solutions to our customers.
+Added: In addition, widespread unemployment has resulted in fewer doctor visits and fewer workers’ compensation and general liability claims.
+Added: The majority of our workforce continues to work from home, which in the long run could have an impact on our level of service.
+Added: This may result in, among other things, decreased demand for our services, terminations of customer contracts, delays in our ability to perform services, an altering of the mix of services requested by customers and claimants, and other losses of revenue.
+Added: Customers may also slow down decision making, delay planned work or seek to terminate existing agreements.
+Added: Any of these events could cause or contribute to the risks and uncertainties enumerated in this report and could materially adversely affect our business, financial condition, results of operations and/or stock price.
+Added: Our sequential revenue may not increase and may decline.
+Added: As a result, we may fail to meet or exceed the expectations of investors or analysts which could cause our common stock price to decline.
+Added: Our sequential revenue growth may not increase and may decline in the future as a result of a variety of factors, many of which are outside of our control.
+Added: If changes in our sequential revenue fall below the expectations of investors or analysts, the price of our common stock could decline substantially.
+Added: Fluctuations or declines in sequential revenue growth may be due to a number of factors, including, but not limited to, those listed below and identified throughout this “Risk Factors” section:
+Added: the decline in manufacturing employment, the decline in workers’ compensation claims, the decline in healthcare expenditures, the considerable price competition in a flat-to-declining workers’ compensation market, litigation, the increase in competition, and the changes and the potential changes in state workers’ compensation and automobile-managed care laws which can reduce demand for our services.
+Added: These factors create an environment where revenue and margin growth is more difficult to attain and where revenue growth is less certain than historically experienced.
+Added: Additionally, our technology and preferred provider network face competition from companies that have more resources available to them than we do.
+Added: Also, some customers may handle their managed care services in-house and may reduce the amount of services which are outsourced to managed care companies such as us.
+Added: These factors could cause the market price of our common stock to fluctuate substantially.
+Added: There can be no assurance that our growth rate in the future, if any, will be at or near historical levels.
+Added: Natural and other disasters may adversely affect our business.
+Added: We may be vulnerable to damage from severe weather conditions or natural disasters, including hurricanes, fires, floods, earthquakes, power loss, communications failures, and similar events, including the effects of pandemics, war or acts of terrorism.
+Added: If a disaster were to occur, our ability to operate our business could be seriously or completely impaired or destroyed.
+Added: The insurance we maintain may not be adequate to cover our losses resulting from disasters or other business interruptions.
+Added: The rapid and widespread transmission of COVID-19 coronavirus beginning in late 2019 impacts us in significant ways.
+Added: To mitigate the spread of the COVID-19 disease, we implemented travel restrictions and remote working arrangements for most of our employees in order to minimize physical contact.
+Added: These measures might not fully mitigate COVID-19 risks to our workforce and we could experience unusual levels of absenteeism that might impair operations.
+Added: The pandemic reduces demand for some products due to delays or cancellations of elective medical procedures, consumer self-isolation, widespread unemployment and business closures, among other reasons.
+Added: The ongoing impacts of the pandemic might cause a prolonged general economic slowdown or recession in one or more markets, disruptions and volatility in global capital markets and other broad and adverse effects on the economy, business conditions, commercial activity and the healthcare industry.
+Added: The pandemic might impact our business operation, financial position and results of operation in unpredictable ways that depend on highly-uncertain future developments, such as determining the effectiveness of current or future government actions to address the public health or economic impacts of the pandemic.
+Added: Any of these risks might have a materially adverse effect on our business operations and our financial position or results of operations.
If we fail to grow our business internally or through strategic acquisitions we may be unable to execute our business plan, maintain high levels of service, or adequately address competitive challenges.
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Our business strategy and future success depend in part on our ability to capture market share with our cost containment services as national and regional insurance carriers and large, self-funded employers look for ways to achieve cost savings.
−Removed: We cannot assure you that we will successfully market our services to these insurance carriers and employers or that they will not resort to other means to achieve cost savings.
+Added: There can be no assurance that we will successfully market our services to these insurance carriers and employers or that they will not resort to other means to achieve cost savings.
Additionally, our ability to capture additional market share may be adversely affected by the decision of potential customers to perform services internally instead of outsourcing the provision of such services to us.
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If competition increases, our growth and profits may decline.
−Removed: The markets for our network services and patient management services are also fragmented and competitive.
+Added: The markets for our network services and patient management services are fragmented and competitive.
Our competitors include national managed care providers, preferred provider networks, smaller independent providers, and insurance companies.
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In addition, consolidation in the industry may result in carriers performing more of such services in-house.
−Removed: Our sequential revenue may not increase and may decline.
−Removed: As a result, we may fail to meet or exceed the expectations of investors or analysts which could cause our common stock price to decline.
−Removed: Our sequential revenue growth may not increase and may decline in the future as a result of a variety of factors, many of which are outside of our control.
−Removed: If changes in our sequential revenue fall below the expectations of investors or analysts, the price of our common stock could decline substantially.
−Removed: Fluctuations or declines in sequential revenue growth may be due to a number of factors, including, but not limited to, those listed below and identified throughout this “Risk Factors” section:
−Removed: the decline in manufacturing employment, the decline in workers’ compensation claims, the decline in healthcare expenditures, the considerable price competition in a flat-to-declining workers’ compensation market, litigation, the increase in competition, and the changes and the potential changes in state workers’ compensation and automobile-managed care laws which can reduce demand for our services.
−Removed: These factors create an environment where revenue and margin growth is more difficult to attain and where revenue growth is less certain than historically experienced.
−Removed: Additionally, our technology and preferred provider network face competition from companies that have more resources available to them than we do.
−Removed: Also, some customers may handle their managed care services in-house and may reduce the amount of services which are outsourced to managed care companies such as us.
−Removed: These factors could cause the market price of our common stock to fluctuate substantially.
−Removed: There can be no assurance that our growth rate in the future, if any, will be at or near historical levels.
−Removed: In addition, the stock market has in the past experienced price and volume fluctuations that have particularly affected companies in the healthcare and managed care markets resulting in changes in the market price of the stock of many companies, which may not have been directly related to the operating performance of those companies.
−Removed: Due to the foregoing factors and the other risks discussed in this report, investors should not rely on period-to-period comparisons of our results of operations as an indication of our future performance.
A cybersecurity attack or other disruption to our information technology systems could result in the loss, theft, misuse, unauthorized disclosure, or unauthorized access of customer or sensitive company information or could disrupt our operations, which could damage our relationships with customers or employees, expose us to litigation or regulatory proceedings, or harm our reputation, any of which could materially adversely affect our business, financial condition or results of operations.
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The loss, theft, misuse, unauthorized disclosure, or unauthorized access of such information could lead to significant reputational or competitive harm, result in litigation or regulatory proceedings, or cause us to incur substantial liabilities, fines, penalties or expenses.
−Removed: Cybersecurity breaches of any of the systems on which we rely may result from circumvention of security systems, denial-of-service attacks or other cyber-attacks, hacking, “phishi ng” attacks, computer viruses, ransomware, malware, employee or insider error, malfeasance, social engineering, physical breaches or other actions.
−Removed: According to media reports, the frequency, intensity, and sophistication of cyber-attacks, ransomware attack s, and other data security incidents generally has significantly increased around the globe in recent years.
+Added: Cybersecurity breaches of any of the systems on which we rely may result from circumvention of security systems, denial-of-service attacks or other cyber-attacks, hacking, “phishing” attacks, computer viruses, ransomware, malware, employee or insider error, malfeasance, social engineering, physical breaches or other actions.
+Added: According to media reports, the frequency, intensity, and sophistication of cyber-attacks, ransomware attacks, and other data security incidents generally has significantly increased around the globe in recent years.
As with many other businesses, we have experienced, and are continually at risk of being subject to, attacks and incidents, including cybersecurity breaches such as computer viruses, unauthorized parties gaining access to our information technology systems and similar incidents.
−Removed: Cybersecurity breaches could cause us , and in some cases, materially, to experience r eputational harm, loss of customer s , l oss and /or delay of revenue, loss of proprietary data, loss of licenses, regulatory actions and scrutiny, sanctions or other statutory penalties, litigation, liability for failure to safeguard customer s’ information , financial losses or a drop in our stock price .
−Removed: We have invested in and continue to expend significant resources on information technology and data security tools, measures, processes, i nitiatives, policies and employee training designed to protect our information technology systems, as well as the personal, confidential or sensitive information stored on or transmitted through those systems, and to ensure an effective response to any cyber-attack or data security incident .
−Removed: T hese expenditures could have an adverse impact on our financial condition and results of operations, and divert management’s attention from pursuing our strategic objectives .
−Removed: In addition, t he cost and operational consequences of implementing, maintaining and enhancing further system protections measures could increase significantly as cybersecurity threats increase , and there can be no assurance that the security measures we employ will effectively prevent cybersecurity breaches or otherwise prevent unauthorized persons from obtaining access to our systems and informati on .
+Added: Cybersecurity breaches could cause us, and in some cases, materially, to experience reputational harm, loss of customers, loss and/or delay of revenue, loss of proprietary data, loss of licenses, regulatory actions and scrutiny, sanctions or other statutory penalties, litigation, liability for failure to safeguard customers’ information, financial losses or a drop in our stock price.
+Added: We have invested in and continue to expend significant resources on information technology and data security tools, measures, processes, initiatives, policies and employee training designed to protect our information technology systems, as well as the personal, confidential or sensitive information stored on or transmitted through those systems, and to ensure an effective response to any cyber-attack or data security incident.
+Added: These expenditures could have an adverse impact on our financial condition and results of operations, and divert management’s attention from pursuing our strategic objectives.
+Added: In addition, the cost and operational consequences of implementing, maintaining and enhancing further system protective measures could increase significantly as cybersecurity threats increase, and there can be no assurance that the security measures we employ will effectively prevent cybersecurity breaches or otherwise prevent unauthorized persons from obtaining access to our systems and information.
As these threats evolve, cybersecurity incidents could be more difficult to detect, defend against, and remediate.
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The existence of a stock repurchase program could also cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our stock.
−Removed: Additionally, repurchases under our stock repurchase program will diminish our cash reserves, which could impact our ability to pursue possible future strategic opportunities and acquisitions and could result in lower overall returns on our cash balances.
+Added: Additionally, repurchases under our stock repurchase program will diminish our cash reserves, which could strain our liquidity, could impact our ability to pursue possible future strategic opportunities and acquisitions and could result in lower overall returns on our cash balances.
There can be no assurance that any further stock repurchases will enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchased shares of stock.
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Declines in workers’ compensation claims may materially harm our results of operations.
−Removed: Within the past few years, as the labor market has become less labor intensive and more service oriented, there are fewer work-related injuries.
+Added: Within the past few years, as the labor market has become less labor intensive and more service oriented, there are flat-to-declining work-related injuries.
Additionally, employers are being more proactive to prevent injuries.
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If these payors reduce the amount of work they outsource, our results of operations would be materially adversely affected.
+Added: The decline in economic activity caused by COVID-19 has already adversely affected, and in future periods, could materially adversely affect our business, results of operations and financial condition.
+Added: Continued reductions in our customers’ exposure units (such as headcount, payroll, properties, the market values of their assets, plant and equipment, and other asset utilization levels, among other factors) will reduce the amount of claims administration services they need.
+Added: In addition, with unprecedented levels of unemployment and business closures, the number of newly arising workers’ compensation and general liability claims, which directly impact our fee revenues in our risk management operation, have declined.
+Added: The decline in economic activity due to COVID-19 has caused some of our customers to become financially less stable, and if this trend continues and customers enter bankruptcy, liquidate their operations or consolidate, our revenues and the collectability of our receivables will be adversely affected.
Healthcare providers are becoming increasingly resistant to the application of certain healthcare cost containment techniques;
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These cases may affect the use by insurers of certain cost containment services that we provide and may result in a decrease in revenue from our cost containment business.
−Removed: Matters relating to the Tax Cuts and Jobs Act, including future changes in tax laws, rules and regulations, disagreements with taxing authorities and imposition of new taxes, could adversely affect our results of operations and financial condition
−Removed: On December 22, 2017, the Tax Cuts and Jobs Act was enacted into law.
−Removed: Among numerous provisions included in the new law was the reduction of the corporate federal income tax rate from 35% to 21% effective January 1, 2018.
−Removed: As a result of this federal income tax rate change, during the quarter ended December 31, 2019, we reported an effective tax rate of 23.7%.
−Removed: However, we continue to analyze and assess the impact of the Tax Cuts and Jobs Act and believe that its impact on our business may not be fully known for some time.
−Removed: The final impact may differ, possibly materially, due to, among other things, changes in interpretations, assumptions made by us, the issuance of federal tax regulations and guidance, and actions we may take as a result of the Tax Cuts and Jobs Act.
−Removed: Depending on the final impact, our effective combined federal and state tax rate could be higher for the fiscal year ending March 31, 2020.
−Removed: In the absence of guidance on various uncertainties and ambiguities in the application of certain provisions of the Tax Cuts and Jobs Act, we are using what we believe are reasonable interpretations and assumptions in applying the Tax Cuts and Jobs Act, but it is possible that the U.S.
−Removed: Department of Treasury could issue subsequent rules and regulations, or the Internal Revenue Service could issue subsequent guidance or take positions on audit, that differ from our prior interpretations and assumptions, which could have a material adverse effect on our cash, tax assets and liabilities, results of operations, and financial condition.
Our failure to compete successfully could make it difficult for us to add and retain customers and could reduce or impede the growth of our business.
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A breach of security may cause our customers to curtail or stop using our services.
−Removed: We rely largely on our own security systems, confidentiality procedures, and employee nondisclosure agreements to maintain the privacy and security of CorVel’s and our customers’ proprietary information.
+Added: We rely largely on our own security systems, confidentiality procedures, and employee nondisclosure agreements to maintain the privacy and security of our and our customers’ proprietary information.
Accidental or willful security breaches or other unauthorized access by third parties to our information systems, the existence of computer viruses in our data or software, and misappropriation of our proprietary information could expose us to a risk of information loss, litigation, and other possible liabilities which may have a material adverse effect on our business, financial condition, and results of operations.
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As healthcare payors continue to increase their utilization of early intervention services, the revenue from our later stage network and healthcare management services will decrease.
−Removed: An interrup tion in our ability to access critical data may cause customers to cancel their service and/or may reduce our ability to effectively compete.
+Added: An interruption in our ability to access critical data may cause customers to cancel their service and/or may reduce our ability to effectively compete.
Certain aspects of our business are dependent upon our ability to store, retrieve, process, and manage data and to maintain and upgrade our data processing capabilities.
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In addition, new laws regulating the operation of managed care provider networks have been adopted by a number of states.
−Removed: These laws may apply to managed care provider networks having contracts with us or to provider networks which we may organize.
+Added: These laws may apply to managed care provider networks we have contracts with or to provider networks which we may organize.
To the extent we are governed by these regulations, we may be subject to additional licensing requirements, financial and operational oversight and procedural standards for beneficiaries and providers.
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Accordingly, our operating results may vary from quarter to quarter, depending on the impact of these weather conditions.
−Removed: Natural and other disasters may adversely affect our business.
−Removed: We may be vulnerable to damage from severe weather conditions or natural disasters, including hurricanes, fires, floods, earthquakes, power loss, communications failures, and similar events, including the effects of war or acts of terrorism.
−Removed: If a disaster were to occur, our ability to operate our business could be seriously or completely impaired or destroyed.
−Removed: The insurance we maintain may not be adequate to cover our losses resulting from disasters or other business interruptions.
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.