Thank you for standing by. Welcome to the CorVel Corporation Quarterly Earnings Release Conference Call. During the course of this conference call, CorVel Corporation may make projections or other forward-looking statements regarding future events or the future financial performances of the company. CorVel wishes to caution you that these statements are only predictions, and that actual events or results may differ materially. CorVel refers to the documents the company files from time-to-time with the Securities and Exchange Commission, specifically the company's last Form 10-K and 10-Q filed for the most recent fiscal year and quarter. These documents contain and identify important factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements. At this time all participants are in a listen-only mode. A question-and-answer session will be conducted later in the call with instructions being given at that time. As a reminder this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Gordon Clemons. Sir, please go ahead.

Thank you for joining us to review CorVel's December quarter. Revenues for the December quarter were $122.4 million, 1% over the revenue for the December 2013 quarter. Earnings per share for the quarter ended December 31, 2014, were $0.33, in the same quarter of the prior year earnings per share were $0.41. Sales continue to grow in the enterprise comp TPA services and in our Sirius hospital bill review services. As in the September quarter, we continue in this quarter to operate between new sales that will be implemented later in the March quarter and some managed care sales lost due to consolidation into integrated programs that occurred earlier last year. We expect no new wins going live at the end of the quarter and at the end of the current quarter to offset the losses from last year and for our momentum in the more rapidly growing services to again be visible in our results. Integrated programs for workers comp claims is the general trend in the industry. Integration is particularly suited to CorVel’s product mix and business strategy. I will discuss this further later on the call. Major TPAs attempt to control as much of each program as possible. We are in a good period here regarding the new service features we are introducing and our growing position in the market. We have had a mismatch of changes in our business mix, but I feel good about the momentum in our business. I will speak first to the market environment. We expect this year in the Healthcare Insurance markets to include continuing adjustments by the large carriers to the Affordable Care Act, responses which reflect the planning done last year. Programs which slowed in 2014 are indicated to pick back up this year. CorVel’s Sirius line of hospital…

[Operator Instructions] We do have a question coming from the line of Brian Ross from Fulton & Company.

Hey, guys. Good morning. Thanks for taking my questions here. I guess, first, I was wondering if you guys could maybe elaborate a little bit more on the Sirius product and some of the pilots that you have been working on. The past few quarters you have mentioned that your carriers were evaluating results and considering the service on a larger scale. So just wondering if you can talk about what percentage of revenues at businesses today, kind of where we are in the related growth trajectory, and maybe some of your outlook for growth, and the timing of when we might or maybe see that business to ramp a little bit more materially as some of those pilots move to full commercialization?

Sure, yeah. And good morning, Brian. This is Gordon. Let’s see the service is actually a large database, which cross-maps the chargemasters of different hospitals into a common database, so that what it creates is the ability to compare hospitals both within the community and across different communities by bringing all of their chargemasters into one standard format. The result is the ability to both keep track of how given hospital is invoicing over time and what discounts they have accepted in the past, as well as to understand the pricing practices of hospitals in the community. Usually, it’s not -- I wouldn’t say efficacious to compare a hospital in Los Angeles with a one in Boston, but within the LA Basin, you can make comparisons and understand what the market will bear. So it provides a very detailed way of understanding hospital billing and has been popular both in workers compensation and in the regular healthcare marketplace. Understanding where it’s going to go is a challenge. The major carriers operating in regular healthcare, as well as administering some Medicare and even Medicaid programs are all interested. They have substantial volumes, but in fairness they do have existing practices, not the same as what Sirius provides, but they do have existing practices. And they -- so to pick us up they have to make changes. Also our reviews tend to save more money or reduce hospital bills more than they normally have been and the provider community can react to that. Our reductions are based upon the detail and as opposed to a negotiation, so they’re accurate, but if they may not pleased that the people who are seeing a lower compensation. So I think as the carriers try to figure out how to be competitive under ObamaCare, they’re going through quite a few evaluations on their end and it’s been bumpy for us. We get things going and we get us to set up quite a bit of production and then people will pause to see how they feel about some of the kind of pushback that they get from the providers. So it’s been a good growth business for us but we did set up for quite a bit of expansion and we haven’t had as much as we would like. And I think it’s -- the market is dramatic in size compared to CorVel, but the real unknown is to what degree adoption will be picked up and I don’t think we’re in least so far. We’ve not been the best of predicting that, so I’d be hesitant to give any real guidance on that.

Okay. I appreciate that. And there are a couple pilots I think that you talked about in the past -- talk about some -- maybe just sort of some large carriers where -- are those still in that pilot phase or you’ve done some work upfront to evaluating the results and considering at a larger scale maybe across the full geography organization? Are those still on pilot form?

Well, I’d say, yes. We are working with almost all the major carriers and they do have small volumes relative to their total potential with us. Some are little better, the one or two are little better established and have chosen certain segments of their business where they employ this. It can require in some of their programs, but they actually re-contract with their networks, so that they can take some of the discounts with a little more comfort and little more, let say, advance warning to the providers. So there are and they do re-contract annually, so some of this can be dragged out for a year or so. And then they can put the programs in either to review bills before they paid or they can review bills after they’ve been paid and to attempt to get refund. So there are a number of different segments of their business. So we might be in and working normally in one segment and then piloting in the couple of others or we might be with the carrier who has piloted for awhile and has paused to evaluate the result, it really varies quite a bit.

Okay. All right. That’s helpful. And then just switching over on the TPA side? Can you just give a sense of -- is the relative size of the enterprise comp TPA business to really, I guess, the standalone, where I know, you’re seeing nice growth in the enterprise comp side, but some of that’s been offset by as you lose some of the standalone business. So just trying to get a sense of how big is that that the growing enterprise comp versus what were you losing a little bit on the standalone side?

Yes. We actually don’t break that out. Although, there may come a time in the future where we have to, obviously, as it grows. Our business was almost all managed care and as a result, most of it was either sold to carriers or some unbundled programs were sold to employers. A large employer can be a very attractive customer for a standalone piece of the business and we had and still have a number of those. The industry, I think change has come where a couple of the other big TPAs are trying to consolidate. They don’t like having us in their claims operations and we understand that actually. We still sell that service. But we don’t on likewise on our TPA service we are seeking to have an integrated environment. We feel our form of integration is sort of a complete generation ahead of what they're talking about. But nonetheless, they still don’t like this in their service. So I would say the TPA business is growing in the 20% range. It varies at times. We are seeing, I would say a nice increase in the number of bids that we are involved in this year, but the main change there for us as we go through the current years is that the brokers are gradually becoming better aware of us. That’s been I think the biggest remaining hurdle is just to become better known in the marketplace. At this point many of them do you know as well, but an individual producer in a large brokerage firm might just not have had an account, where we were involved and that would be fairly common two or three years ago. So it’s quite a learning curve going on there. But our market share in that business is, we estimate in the 4% range. The industry is give or take maybe $5 billion. So it’s those kinds of number roughly but there are -- Sedgewick is the largest TPA and they would be well over $1 billion in revenue.

Yes and that’s helpful. And I do I think to expand in the future. It would be helpful to see at least maybe some sort of supplemental on breaking those two apart just given the different I guess growth dynamics of those two pieces but I appreciate that commentary. And on the gross margins over the past few quarter looks like it’s just been, it’s come down a little bit. And I know you’ve talked a little bit about the different businesses that it might have some revenue pressures from pricing in the markets. So just curious, do you think in the most recent quarters what’s the biggest driver here, is it the pricing pressure that’s driving margins, is it the upfront investment maybe you're making in the anticipation of customer launches or I guess, you talked to us some of the computing advancing investments what’s -- looking at that margin upon the past few quarters, what’s been the biggest driver?

I would say at the corporate level, the biggest impact on our margins usually comes from mix changes in our business. So if we expand in the TPA space, which for us has had lower margins than our standalone bill review product or medical review products. So the combination of bill review and PPOs is a higher-margin business. If we lose a customer there and offset it with a customer in the full service TPA business, we are going to have a mix shift to the negative side on margins. In addition, I think it is appropriate I think to say that the industry is fairly price competitive right now. The private equity firms that have own couple of the TPAs are motivated to resell those businesses fairly quickly at least in the long-term planning horizon we think about. So they are anxious to build volume as quickly as they can, and then look for a sale. So that has brought more price pressure into the business than there was. But in fairness, I’d say at the same time CorVel is small and looking to expand. So we probably also compete on price when necessary, I think we like to feel that because we own our own software and our own PPO, we can be more price competitive than anybody in the business. So that has a negative short-term effect on our margins, but our goal is to look for scale in our own way just as the others are.

All right. Okay. And a last, I guess last one to just housekeeping on the SG&A just I saw, I guess, it’s up maybe a little over $1 million sequentially. And I know Q1 was higher but there was a comment about some one time items in there. So just curious if in this quarter if there is any one time items that pushed that higher if that is just -- in some of the investments you’ve been talking about and then the last piece I had just on the tax rate. I saw that it came in a bit lower than where it’s been. I was just wondering if there is anything unique in there and then like what level we should think about for going forward? Thanks.

Yes. I‘ll take the one I don’t like as much as the other. First, I don’t like to see our tax rate reported bounce around much that’s a function of Sarbanes-Oxley, I think to some degree which is a lot more of texture in that than there are used to be in. We’ve to adjust it to actual changes. The mix of our business by state can have some impact on our tax rate. I don’t see our tax rate changing a lot. It is a little lower than normal in the quarter I just reported though. And I would expect it to move back toward where it has been and I’m being told -- 38.5. Yes, I think something around 38.5 is probably, roughly where we expect to see it. But we’re -- sometimes it will move a little above that or little below that so. But it won’t be meaningfully below that, I would say. And then on G&A, which is a good question and one that I enjoy more, I guess. We try not to cut back on system’s development. And yet I would say that where we are having a more difficult stretch as we are in here that would not be an unreasonable expectation of say investors. But as you might understand not an expectation of our customers and we feel, we are pressing our advantage in that area. So, I would say I have been reluctant to economize in that area and we did. We are spending a little more than we were and maybe a little more than we like. But on subjects that are exciting and of interest to us, we don’t have sudden wins where we just create something that preempts the marketplace completely. But overtime, we do gradually create an advantage for ourselves and we’ve been able to move up in the marketplace. We began 30 years ago as the case management company. So, we’ve steadily worked our way. I’d like to think of it up into the industry and into the better segments and into better control of our business. So we have an ever more valuable asset. One-time, I’m nervous about saying, well [gee]; we don’t expect one time issues this quarter. And I think most companies have more one-time issues than they like to think. So, we did have a few in the December quarter. I hope we don’t have any this quarter. But all things equal, we do get surprises as we go along. And we are trying to expand in a business where regulation changes and there are forces out there that create issues for us at times, so that can happen. But we’ll probably be more cautious with overhead. I would say, for the next couple of quarters until we see ourselves back where we want to be. And on the other hand as we get bigger and things get -- results get better, we have a tendency to continue to invest in systems.

All right. Thanks, guys. That’s all I’ve got.

Okay. Thank you.

Thank you. [Operator Instructions] If there are no further questions, I will turn the call back over to Gordon Clemons for closing comments.

Thank you. And thank you all for joining us. We look forward to talking to you again next quarter. And thanks for attending our call today.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.