10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2018

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM                      TO

Commission File Number 0-19291

CorVel Corporation

(Exact name of Registrant as specified in its Charter)

Delaware	33-0282651
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2010 Main Street, Suite 600 Irvine, California	92614
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (949) 851-1473

Securities registered pursuant to Section 12(b) of the Act: Common Stock, Par Value $0.0001 Per Share; Common stock traded on the NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  YES ☐  NO ☒

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.  YES ☐  NO ☒

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES ☒  NO ☐

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).  YES ☒  NO ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Fcyber

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐  (Do not check if a small reporting company)	Small reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES ☐  NO ☒

As of September 30, 2017, the aggregate market value of the Registrant’s voting and non-voting common equity held by non-affiliates of the Registrant was approximately $513,053,000 based on the closing price per share of $54.40 for the Registrant’s common stock as reported on the Nasdaq Global Select Market on such date multiplied by 9,431,130 shares (total outstanding shares of 18,824,953 less 9,393,823 shares held by affiliates) of the Registrant’s common stock which were outstanding on such date.  For the purposes of the foregoing calculation only, all of Registrant’s directors, executive officers and persons known to the Registrant to hold ten percent or greater of the Registrant’s outstanding common stock have been excluded in that such persons may be deemed to be affiliates.  This determination of affiliate status is not necessarily a conclusive determination for other purposes.

The number of shares of Registrant’s Common Stock outstanding as of June 5, 2018 was 18,945,318.

DOCUMENTS INCORPORATED BY REFERENCE

Information required by Items 10 through 14 of Part III of this Form 10-K, to the extent not set forth herein, is incorporated herein by reference to portions of the Registrant’s definitive proxy statement for the Registrant’s 2018 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year ended March 31, 2018.  Except with respect to the information specifically incorporated by reference in this Form 10-K, the Registrant’s definitive proxy statement is not deemed to be filed as a part of this Form 10-K.

CORVEL CORPORATION

2018 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

		Page
	PART I
Item 1.	Business	2
Item 1A.	Risk Factors	10
Item 1B.	Unresolved Staff Comments	17
Item 2.	Properties	17
Item 3.	Legal Proceedings	17
Item 4.	Mine Safety Disclosures	17
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	18
Item 6.	Selected Financial Data	19
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 8.	Financial Statements and Supplementary Data	20
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	20
Item 9A.	Controls and Procedures	20
Item 9B.	Other Information	21
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	22
Item 11.	Executive Compensation	22
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	22
Item 13.	Certain Relationships and Related Transactions, and Director Independence	22
Item 14.	Principal Accounting Fees and Services	22
	PART IV
Item 15.	Exhibits, Financial Statement Schedule	23
	Signatures	29

i

In this Annual Report on Form 10-K (“annual report”), the terms “CorVel”, “Company”, “we”, “us”, and “our” refer to CorVel Corporation and its subsidiaries.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This annual report contains forward-looking statements within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including, but not limited to, the statements about our plans, strategies and prospects in Part I, Item 1, “Business”, Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this annual report.  Words such as “expects”, “anticipates”, “intends”, “plans”, “predicts”, “believes”, “seeks”, “estimates”, “potential”, “continue”, “strive”, “ongoing”, “may”, “will”, “would”, “could”, and “should”, and variations of these words or similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on management’s current expectations, estimates and projections about our industry, management’s beliefs, and certain assumptions made by management, and we can give no assurance that we will achieve our plans, intentions or expectations. Certain important factors could cause actual results to differ materially from the forward-looking statements we make in this annual report. Representative examples of these factors include (without limitation):

• General industry and economic conditions, including a decreasing number of national claims due to decreasing number of injured workers;

• Cost of capital and capital requirements;

• Competition from other managed care companies;

• The Company’s ability to renew and/or maintain contracts with its customers on favorable terms or at all;

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

• Changes in interpretations or applications of the Tax Cuts and Jobs Act through regulations and guidance that may be issued by the U.S. Department of the Treasury:

• Possible litigation and legal liability in the course of operations, and the Company’s ability to settle or otherwise resolve such litigation;

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

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

• 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 ability to attract and retain key personnel;

• Shifts in customer demands;

• The availability of financing in the amounts, at the times, and on the terms necessary to support the Company’s future business;

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

• Growth in the Company’s sale of third party administrator (“TPA”) services.

Part I, Item 1A of this annual report, “Risk Factors”, discusses these and other important risk factors that may affect our business, results of operations and financial condition. The factors listed above and the factors described in Part I, Item 1A of this annual report, “Risk Factors”, and similar discussions in our other filings with the Securities and Exchange Commission are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could have material adverse effects on our future results.  Investors should consider these factors before deciding to make or maintain an investment in our securities.  The forward-looking statements included in this annual report are based on information available to us as of the date of this annual report. We expressly disclaim any intent or obligation to update any forward-looking statements to reflect subsequent events or circumstances.

1

PART I

Item 1. Business.

INTRODUCTION

CorVel is a national provider of workers’ compensation solutions for employers, third party administrators, insurance companies, and government agencies seeking to control costs and promote positive outcomes.  The Company applies technology, intelligence, and a human touch to the challenges of risk management so that its customers can intervene early and often while being connected to the critical intelligence they need to proactively manage risk.  CorVel specializes in applying advanced communication and information technology to improve healthcare management for workers’ compensation, group health, automobile and liability insurance claims management.  With a technology platform at its core, the Company’s connected solution is delivered by a national team of associates who are committed to helping customers deliver programs that meet their organization’s performance goals.

The Company’s services include claims management, bill review, preferred provider networks, utilization management, case management, pharmacy services, directed care and Medicare services.  CorVel offers its services as a bundled solution (i.e. claims management), as a standalone service, or as add-on services to existing customers. Customers of the Company that do not purchase a bundled solution generally use another provider, an in-house solution, or choose not to utilize such a service to manage their workers’ compensation costs. When customers purchase several products from CorVel, the pricing of the products sold is generally the same as if the products were sold on an individual basis. Bundled products are generally delivered in the same accounting period.

The Company was incorporated in Delaware in 1987, and its principal executive offices are located at 2010 Main Street, Suite 600, Irvine, California 92614. The Company’s telephone number is 949-851-1473.

INDUSTRY OVERVIEW

Workers’ compensation is a federally mandated, state-legislated insurance program that requires employers to fund medical expenses, lost wages, and other costs resulting from work-related injuries and illnesses. Workers’ compensation benefits and arrangements vary extensively on a state-by-state basis and are often highly complex. State statutes and court decisions control many aspects of the compensation process, including claims handling, impairment or disability evaluation, dispute settlement, benefit amount guidelines, and cost-control strategies.

In addition to the compensation process, cost containment and claims management continue to be significant employer concerns and many look to managed care vendors and third party administrators for cost savings solutions. The Company believes that cost drivers in workers’ compensation include: implementing effective return-to-work and transitional duty programs, coordinating medical care, medical cost management, recognizing fraud and abuse, and improving communications with injured workers. CorVel provides solutions using a holistic approach to cost containment and by looking for a complete savings solution. Often one of the biggest cost drivers is not recognizing a complex claim at the onset of an injury, often resulting in claims being open longer and resulting in a delayed return to work. CorVel uses an integrated claims model that controls claims costs by advocating medical management at the onset of the injury to decrease administrative costs and to shorten the length of the disability.

Some states have adopted legislation for managed care organizations (“MCOs”) in an effort to allow employers to control their worker’s compensation costs. A managed care plan is organized to serve the medical needs of injured workers in an efficient and cost-effective manner by managing the delivery of medical services through appropriate health care professionals. CorVel is registered wherever legislation mandates, where it is beneficial for the Company to obtain a license, or where the MCO has an effective utilized mandate. Since MCO legislation varies by state, CorVel’s state offerings vary as well. CorVel continually evaluates new legislation to ensure it is in compliance and can offer appropriate services to its customers and prospects.

FISCAL 2018 DEVELOPMENTS

Company Stock Repurchase Program

During fiscal 2018, the Company continued to repurchase shares of its common stock under a plan originally approved by the Company’s Board of Directors in 1996. In February 2017, the Company’s Board of Directors increased the number of shares of common stock authorized to be repurchased over the life of the plan by 1,000,000 shares of common stock to 36,000,000 shares of common stock. During fiscal 2018, the Company spent $11 million to repurchase 249,245 shares of its common stock. Since commencing this program in the fall of 1996, the Company has repurchased 34,881,079 shares of its common stock through March 31, 2018, at a cost of $431 million. These repurchases were funded primarily from the Company’s operating cash flows.

2

Appointment of President

Mr. Michael Combs was appointed as as President of the Company effective April 1, 2017.

Purchase of Building

During fiscal 2018, the Company entered into a purchase agreement to acquire a 32,000 square foot building located in Milwaukie, Oregon at a purchase price of $5.8 million.  This building will be used for the Company’s Symbeo business franchise, which consists of the Company’s provider reimbursement and scanning services.

BUSINESS — SERVICES

The Company offers services in two general categories, network solutions and patient management, to assist its customers in managing the increasing medical costs of workers’ compensation, group health and auto insurance, and in monitoring the quality of care provided to claimants. CorVel reduces claims costs by advocating medical management at the onset of an injury to control administrative costs and to shorten the length of the disability. These solutions offer personalized treatment programs that use precise treatment protocols to advocate timely, quality care for injured workers.

Network Solutions Services

CorVel offers a complete medical savings solution for all in-network and out-of-network medical bills including PPO management, specialty networks, medical bill repricing, true line item review, expert fee negotiations, professional nurse review, automated adjudication and electronic reimbursement. Each feature focuses on increasing processing efficiencies and maximizing savings opportunities.

Bill Review

Many states have adopted fee schedules, which regulate the maximum allowable fees payable under workers’ compensation for procedures performed by a variety of health treatment providers. Developed in 1989, CorVel’s proprietary bill review and claims management technology automates the review process to provide customers with a faster turnaround time, more efficient bill review and higher total savings. CorVel’s artificial intelligence engine includes over 102 million individual rules, which creates a comprehensive review process that is more efficient than traditional manual bill review processes.

Payors are able to review and approve bills online as well as access savings reports through an online portal, CareMC, which is discussed in further detail below. The process is paperless, through scanning and electronic data interface (“EDI”), while proving to be cost effective and efficient, which is discussed in further detail below. CorVel’s solutions are fully customizable and can be tailored to meet unique payor requirements.

Bill review services include:

• Coding review and re-bundling

• Reasonable and customary review

• Fee schedule analysis

• Out-of-network bill review

• Pharmacy review, which is discussed in further detail below

• PPO management, which is discussed in further detail below

• Repricing

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PPO Management

PPOs are groups of hospitals, physicians and other healthcare providers that offer services at pre-negotiated rates to employee groups. The Company believes that PPO networks offer the employer an additional means of managing healthcare costs by reducing the per-unit price of medical services provided to employees. CorVel began offering a proprietary national PPO network in 1992, and today it is comprised of over 750,000 board-certified providers. The Company provides the convenience of a PPO provider look-up mobile application for use with smart phones and tablets. The application is available to the public and makes it convenient to locate a provider in the CorVel network. Users can search providers based on quality, range of services, and location.

CorVel has a long-term strategy of network development, providing comprehensive networks to our customers and customization of networks to meet the specific needs of our customers. The Company believes that the combination of its national PPO strength and presence and the local PPO developers’ commitment and community involvement enables CorVel to build, support and strengthen its PPO in size, quality, depth of discount, and commitment to service.

The Company has a team of national, regional and local personnel supporting the CorVel network. This team of PPO developers is responsible for local recruitment, contract negotiations, credentialing and re-credentialing of providers, and working with customers to develop customer-specific provider networks. Each bill review operation has provider relations support staff to address provider grievances and other billing issues.

Providers are selected from criteria based on quality, range of services, price and location. Each provider is thoroughly evaluated and credentialed, then re-credentialed every three years. Through this extensive evaluation process, we are able to provide significant hospital, physician and ancillary medical savings, while maintaining high quality care. Provider network services include a national network for all medical coverages, board-certified physicians, provider credentialing, patient channeling, online PPO look-up, printable directories and driving directions, and MCOs.

CERiS^®

CERiS, CorVel’s enhanced review program, identifies and adjusts medical claims using multiple services for varying needs within our insurers and third party administrator’s medical payments.  The services range from hospital itemization review to make sure the charges are correct, repricing of claims using multi-variant methods, to code correction and negotiations for out of network claims.

Professional Review

CorVel’s services offer a complete audit and validation of facility bill accuracy. This solution also includes review of in-network facility bills. The Company’s experienced nurse auditors have clinical backgrounds in all areas of medicine, medical billing and coding to ensure an accurate, consistent and thorough review. If a bill is identified for professional review, the bill image and its associated medical reports are routed within the system to an experienced medical nurse for review and auditing.

Provider Reimbursement

One of the interfaces of CorVel’s bill review service is the automated issuance of provider reimbursements.  CorVel’s provider reimbursement service allows the ability to determine dollars spent and bills reviewed and to assist in setting reserves through charts available online.  Through the bill review system, CorVel has the capability to provide check writing or provider reimbursement services for its customers. The provider payment check can be added to the bill analysis to produce one combined document.

Scanning Services

We continue to leverage our scanning technologies, which include scanning, optical character recognition, and document management services. We continue to expand our existing office automation service line and all offices are selling scanning and document management. We have added scanning operations to most of the Company’s larger offices around the country, designating them “Capture Centers.” Our scanning service also offers a web interface (www.onlinedocumentcenter.com) providing immediate access to documents and data called the Online Document Center (known as ODC). Secure document review, approval, transaction workflow and archival storage are available at subscription-based pricing.

CorVel has branded its provider reimbursement and scanning services under the name Symbeo^SM.

4

Pharmacy Services

CorVel provides patients with a full-feature pharmacy program that offers formulary management, discounted prescriptions, drug interaction monitoring, utilization management and eligibility confirmation. Our pharmacy network of nationally recognized pharmacies provides savings off the retail price of prescriptions associated with a workers’ compensation claim. The Company’s pharmacy services program includes preferred access to a national pharmacy network, streamlined processing for pharmacies at point of sale, first fill and next fill programs, out-of-network management, medication review services and clinical modeling.

Directed Care Services

CorVel offers a national directed care network that provides access to specialty medical services, which may be required to support an injured worker’s medical treatment plan.  CorVel has contracted with medical imaging, physical therapy, diagnostics and ancillary service networks to offer convenient access, timely appointments and preferred rates for these services. The Company manages the entire coordination of care from appointment scheduling through reimbursement, working to achieve timely recovery and increased savings. The Company has directed care networks for CT and MRI, diagnostic imaging, physical and occupational therapy, independent medical evaluations, durable medical equipment and transportation and translation.

Medicare Solutions

The Company offers solutions to help manage the requirements mandated by the Centers for Medicare and Medicaid Services (“CMS”). Services include Medicare Set Asides and Agent Reporting Services to help employers comply with new CMS reporting legislation. As an assigned agent, CorVel can provide services for Responsible Reporting Entities (known as RREs) such as insurers and employers. As an experienced information-processing provider, CorVel is able to electronically submit files to the CMS in compliance with timelines and reporting requirements.

Clearinghouse Services

CorVel’s proprietary medical review software and claims management technology interfaces with multiple clearinghouses.  The Company’s clearinghouse services provide for medical review, conversion of electronic forms to appropriate payment formats, seamless submission of bills for payments and rules engines used to help ensure jurisdictional compliance.

Patient Management Services

CorVel offers a unique approach to patient management. Patient management services include claims management and all services sold to claims management customers, case management, 24/7 nurse triage, utilization management, vocational rehabilitation, and life care planning.  This integrated service model controls claims costs by advocating medical management at the onset of the injury to decrease administrative costs and to shorten the length of the disability. This automated solution offers a personalized treatment program for each injured worker, using precise treatment protocols to meet the changing needs of patients on an ongoing basis.  The Company offers these services on a stand-alone basis or as an integrated component of its medical cost containment services.

Claims Management

CorVel has been a TPA offering claims management services since January 2007. The Company serves customers in the self-insured and commercially-insured markets. Incidents and injuries are reported through a variety of intake methods that include a 24/7 nurse triage call center, website, mobile applications, toll-free call centers and traditional methods of paper and fax reporting. The reported incidents and injuries are immediately processed by CorVel’s proprietary rules engine, which provides alerts and recommendations throughout the life of a claim. This technology instantly assigns the claimant an expert claims professional, while simultaneously determining if a claim requires any immediate attention for triage.

Through this service, the Company serves customers in the self-insured or commercially-insured market through alternative loss funding methods, and provides them with a complete range of services, including claims administration, case management, and medical bill review. In addition to the field investigation and evaluation of claims, the Company also may provide initial loss reporting services for claims, loss mitigation services such as medical bill review and vocational rehabilitation, administration of trust funds established to pay claims and risk management information services.

Some of the features of claims management services include: automated first notice of loss, three-point contact within 24 hours, prompt claims investigations, detailed diary notes for each step of the claim, graphical dashboards and claim history scorecards, and litigation management and expert testimony.

5

Case Management

CorVel’s case management and utilization review services address all aspects of disability management and recovery, including utilization review (pre-certification, concurrent review and discharge planning), early intervention, telephonic, field and catastrophic case management, as well as vocational rehabilitation.

The medical management components of CorVel’s program focus on medical intervention, management and appropriateness. In these cases, the Company’s case managers confer with the attending physician, other providers, the patient and the patient’s family to identify the appropriate rehabilitative treatment and most cost-effective healthcare alternatives. The program is designed to offer the injured party prompt access to appropriate medical providers who will provide quality cost-effective medical care. Case managers may coordinate the services or care required and may arrange for special pricing of the required services.

The Telephonic Case Manager continues to impact the direction of the case, focusing on early return to work, maximum medical improvement and appropriate duration of disability. Facilitation of appropriate treatment, assertive negotiation with medical providers and directing the care of the injured worker continues to be the Telephonic Case Manager’s role until the closure criteria is met. Utilization review of provider treatment remains ongoing until discharge from treatment.

In the event that a claim may require an onsite referral, a Field Case Manager (“FCM”) will be assigned to the claim. Cases can be referred to CorVel based on geographic location and injury type to the most appropriate FCM. Specialized case management services include catastrophic management, life care planning, and vocational rehabilitation services. All FCMs have iPads that provide access to the Company’s proprietary mobile applications, providing instant access to detailed case information and the ability to enter case notes.  An additional feature of our iPad applications is the ability to electronically approve and email signed case management forms and documentation.

24/7 Nurse Triage

Injured workers can call at the time of injury or incident and speak with a registered nurse who specializes in occupational injuries. An assessment is immediately made to recommend self-care, or referral for further medical care if needed. CorVel is able to provide quick and accurate care intervention, often preventing a minor injury from becoming an expensive claim. The 24/7 nurse triage services provide channeling to a preferred network of providers, allows employer access to online case information, comprehensive incident gathering, and healthcare advocacy for injured workers.

Utilization Management

Utilization Management programs review proposed care to determine appropriateness, frequency, duration and setting. These programs utilize experienced registered nurses, proprietary medical treatment protocols and systems technology to avoid unnecessary treatments and associated costs. Processes in Utilization Management include: injury review, diagnosis and treatment planning, contacting and negotiating provider treatment requirements, certifying appropriateness of treatment parameters, and responding to provider requests for additional treatment. Utilization Management services include: prospective review, retrospective review, concurrent review, professional nurse review, second opinion, peer review, precertifications and independent medical evaluation.

Vocational Rehabilitation

CorVel’s Vocational Rehabilitation program is designed for injured workers needing assistance returning to work or retaining employment. This comprehensive suite of services helps employees who are unable to perform previous work functions and who face the possibility of joining the open labor market to seek re-employment. These services are available unbundled on an integrated basis as dictated by the requirement of each case and customer preference, or by individual statutory requirements. Vocational rehabilitation services include: ergonomic assessments, rehabilitation plans, transferable skills analysis, labor market services, job seeking skills, resumé development, job analysis and development, job placement, career counseling and expert testimony.

Life Care Planning

Life Care Planning is used to project long-term future needs, services and related costs associated with a catastrophic injury. CorVel’s Life Care Plans summarize extensive amounts of medical data and compile it into a comprehensive report for future care requirements, aiding improved outcomes and timely resolution of claims. The Life Care Plans also provide working guidelines and points of reference for the family of a disabled person.  Some of the features of the Company’s Life Care Planning services include: comprehensive documentation, projecting future care requirements, customized reporting, certified documentation and costs specific to local areas.

6

Disability Management

CorVel’s disability management programs offer a continuum of services for short and long-term disability coverages that advocate an employee’s early return to work. Disability management services include: absence reporting, disability evaluations, national preferred provider organizations, independent medical examinations, utilization review, medical case management, return-to-work coordination and integrated reporting.

Liability Claims Management

CorVel also offers liability claims management services that can be sold as a stand-alone service or part of patient management. Liability claims management services encompass auto liability, general liability, product liability, personal injury, professional liability and property damage, accidents and weather-related damage. These services include claims management, adjusting services, litigation management, claims subrogation, and investigations.

Auto Claims Management

Injury claims are one of the largest components of auto indemnity costs. Effective management of these claims and their associated costs, combined with an optimal healthcare management program, helps CorVel’s customers reduce claim costs. The Company’s auto claims services include national preferred provider organizations, medical bill review, first and third party bill review, first notice of loss, demand packet reviews and reporting and analytics.

SYSTEMS AND TECHNOLOGY

Infrastructure and Data Center

The Company utilizes a Tier III-rated data center as its primary processing site. Redundancy is provided at many levels in power, cooling, and computing resources, with the goal of ensuring maximum uptime and system availability for the Company’s production systems. The Company has fully embraced server virtualization and consolidation techniques to push the fault-tolerance of systems even further. These technologies bring increased availability, speed-to-production and scalability.

Adoption of Imaging Technologies and Paperless Workflow

Utilizing scanning and automated data capture processes allows the Company to process incoming paper and electronic claims documents, including medical bills, with less manual handling, which has improved the Company’s workflow processes. This has benefited both the Company, in terms of cost savings, and the Company’s customers, in improved savings results. Through the Company’s online portal, CareMC (www.caremc.com), customers can review bills as soon as they are processed and approve a bill for payment, streamlining the customer’s workflows and expediting the payment process.

Redundancy Center

The Company’s national data center is located near Portland, Oregon.  The redundancy center, which is located in Lone Mountain, Nevada, is the Company’s backup processing site in the event that the Portland data center suffers catastrophic loss. Currently, the Company’s data is continually replicated to Lone Mountain in near-real time, so that in the event the Portland data center is offline, the redundancy center can be activated with current information quickly. The Lone Mountain data center also hosts duplicates of the Company’s websites. The systems are maintained and exercised on a continuous basis as they host demonstration and pilot environments that mirror production, with the goal of ensuring their ongoing readiness.

CareMC^®

CareMC (www.caremc.com) is CorVel’s application platform which offers customers direct and immediate access to the Company’s primary service lines.  CareMC allows for electronic communication and reporting between providers, payers, employers and patients. Features of the website include: report an incident/injury, request for service, appointment scheduling, online bill review, claims information management, treatment calendar, medical bill adjudication and automated provider reimbursement.

Through CareMC, users can:

• Manage files throughout the life of the claim;

• Receive and relay case notes from case managers; and

• Integrate information from multiple claims management sources into one database.

7

CareMC facilitates healthcare transaction processing. Using artificial intelligence technology, the website provides situation alerts and event triggers, to facilitate prompt and effective decisions. Users of CareMC can quickly see where event outliers are occurring within the claims management process. If costs exceed pre-determined thresholds or activities fall outside expected timelines, decision-makers, i.e. the customer, can be quickly notified. Large amounts of information are consolidated and summarized to help customers focus on the critical issues.

Claims Processing

We continue to develop our claims system capabilities, which reflects the Company’s preference for owning and maintaining our own software assets. Integration projects, some already completed, are underway to present more of this claims-centric information available through the CareMC online portal. The Company’s goal is to continue to modernize user interfaces, give more rapid feedback and put real-time information in the hands of our customers.

INDUSTRY, CUSTOMERS AND MARKETING

CorVel serves a diverse group of customers that include insurers, third party administrators, self-administered employers, government agencies, municipalities, state funds, and numerous other industries. CorVel is able to provide workers’ compensation services to virtually any size employer and in any state or region of the United States. No single customer of the Company represented more than 10% of revenues in fiscal 2018, 2017 or 2016. Many claims management decisions in workers’ compensation are the responsibility of the local claims office of national or regional insurers. The Company’s national branch office network enables the Company to market and offer its services at both a local and national account level. The Company has placed increasing emphasis on national account marketing. The sales and marketing activities of the Company are conducted primarily by account executives located in key geographic areas.

COMPETITION AND MARKET CONDITIONS

The healthcare cost containment industry is competitive and is subject to economic pressures for cost savings and legislative reforms. CorVel’s primary competitors in the workers’ compensation market include third party administrators, MCOs, large insurance carriers and numerous independent companies. Many of the Company’s competitors are significantly larger and have greater financial and marketing resources than the Company. Moreover, the Company’s customers may establish the in-house capability of performing the kinds of services offered by the Company. If the Company is unable to compete effectively, it will be difficult to add and retain customers, and the Company’s business, financial condition and results of operations will be materially and adversely affected.

There has been unprecedented acceleration in technology in the past few years. The proliferation of smart phones and tablet computers allows the Company’s customers to stay connected at any time, from anywhere. This capability provides immediate access and begins to present business opportunities that were previously predicated on a less connected environment. The Company continues to leverage the new wave of technology in order to connect all of the parties involved in the workers' compensation process in ways that were unimaginable in the past. As with general health, according to the National Council on Compensation Insurance, the workers’ compensation line continues to migrate to being a medical management business, with policymakers, employers, and carriers struggling to manage and control the costs of medical care.  The Company will continue to focus the execution of its strategy on providing industry leading claims management and cost containment solutions to the market.

GOVERNMENT REGULATIONS

General

Managed healthcare programs for workers’ compensation are subject to various laws and regulations. Both the nature and degree of applicable government regulation vary greatly depending upon the specific activities involved. Generally, parties that actually provide or arrange for the provision of healthcare services, such as the Company, assume financial risk related to the provision of those services or undertake direct responsibility for making payment or payment decisions for those services. These parties are subject to a number of complex regulatory requirements that govern many aspects of their conduct and operations.

In contrast, the management and information services provided by the Company to its customers typically have not been the subject of regulation by the federal government or the states. Since the managed healthcare field is a rapidly-expanding and changing industry and the cost of providing healthcare continues to increase, it is possible that the applicable state and federal regulatory frameworks will expand to have a greater impact upon the conduct and operation of the Company’s business.

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Under the current workers’ compensation system, employer insurance or self-funded coverage is governed by individual laws in each of the 50 states and by certain federal laws. The management and information services that make up the Company’s managed care program serve markets that have developed largely in response to needs of insurers, employers and large TPAs, and generally have not been mandated by legislation or other government action. On the other hand, the vocational rehabilitation case management marketplace within the workers’ compensation system has been dependent upon the laws and regulations within those states that require the availability of specified rehabilitation services for injured workers. Similarly, the Company’s fee schedule auditing services address market needs created by certain states’ enactment of maximum permissible fee schedules for workers’ compensation services. Changes in individual state regulation of workers’ compensation may create a greater or lesser demand for some or all of the Company’s services or require the Company to develop new or modified services in order to meet the needs of the marketplace and compete effectively in that marketplace.

We are required to be licensed or receive regulatory approval in nearly every state and foreign jurisdiction in which we do business.  In addition, most jurisdictions require individuals who engage in claim adjusting and certain other insurance service activities to be personally licensed.  These licensing laws and regulations vary from jurisdiction to jurisdiction.  In most jurisdictions, licensing laws and regulations generally grant broad discretion to supervisory authorities to adopt and amend regulations and to supervise regulated activities.

Medical Cost Containment Legislation

Historically, governmental strategies to contain medical costs in the workers’ compensation field have been generally limited to legislation on a state-by-state basis. For example, many states have implemented fee schedules that list maximum reimbursement levels for healthcare procedures. In certain states that have not authorized the use of a fee schedule, the Company adjusts bills to the usual and customary levels authorized by the payor. Opportunities for the Company’s services could increase if more states legislate additional cost containment strategies. Conversely, the Company would be materially and adversely affected if states elect to reduce the extent of medical cost containment strategies available to insurance carriers and other payors, or adopt other strategies for cost containment that would not support a demand for the Company’s services.

SHAREHOLDER RIGHTS PLAN

During fiscal 1997, the Company’s Board of Directors approved the adoption of a shareholder rights plan (the “Shareholder Rights Plan”). The Shareholder Rights Plan provides for a dividend distribution to CorVel stockholders of one preferred stock purchase right for each outstanding share of CorVel’s common stock held by such stockholder (as used in this section, the “right” or the “rights”), only in the event of certain takeover-related events.  In April 2002, the Board of Directors of CorVel approved an amendment to the Shareholder Rights Plan to extend the expiration date of the rights to February 10, 2012, set the exercise price of each right at $118, and enable Fidelity Management & Research Company and its affiliates to purchase up to 18% of the shares of common stock of the Company without triggering the rights, with the limitations under the Shareholder Rights Plan remaining in effect for all other stockholders of the Company. In November 2008, the Company’s Board of Directors approved an amendment to the Shareholder Rights Plan to extend the expiration date of the rights to February 10, 2022, remove the ability of Fidelity Management & Research Company and its affiliates to purchase up to 18% of the shares of common stock of the Company without triggering the rights, substitute Computershare Trust Company, N.A. as the rights agent and effect certain technical changes to the Shareholder Rights Plan.

The rights are designed to assure that all shareholders receive fair and equal treatment in the event of a proposed takeover of the Company, and to encourage a potential acquirer to negotiate with the Board of Directors prior to attempting a takeover. The rights are not exercisable until the occurrence of certain takeover-related events, at which time they can be exercised at an exercise price of $118 per share of common stock which carries the right, subject to subsequent adjustment. The rights trade with the Company’s common stock.

Generally, the Shareholder Rights Plan provides that if a person or group acquires 15% or more of the Company’s common stock without the approval of the Company’s Board of Directors, subject to certain exceptions, the holders of the rights, other than the acquiring person or group, would, under certain circumstances, have the right to purchase additional shares of the Company’s common stock having a market value equal to two times the then-current exercise price of the right.

In addition, if the Company is thereafter merged into another entity, or if 50% or more of the Company’s consolidated assets or earning power are sold, then the right would entitle its holder to buy common shares of the acquiring entity having a market value equal to two times the then-current exercise price of the right. The Company’s Board of Directors may exchange or redeem the rights under certain conditions.

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EMPLOYEES

As of March 31, 2018, CorVel had 3,788 employees, including nurses, therapists, counselors and other employees. No employees are represented by any collective bargaining unit. Management believes the Company’s relationship with its employees to be good.

FINANCIAL INFORMATION ABOUT SEGMENT AND GEOGRAPHIC AREAS

Refer to Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations”, and Note 13, “Segment Reporting”, to our consolidated financial statements in Part IV of this annual report for information on our reportable operating segment and geographic areas.

AVAILABLE INFORMATION

Copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and any amendments to those reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Exchange Act, and other filings made with the Securities and Exchange Commission (“SEC”), are available free of charge through our website (http://www.corvel.com, under the Investor section) as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC. Our filings may also be read and copied at the Public Reference Room of the SEC at 100 F Street, NE, Washington, DC 20549.  Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

The inclusion of our website address and the address of any of our portals, such as www.caremc.com and www.onlinedocumentcenter.com, in this annual report does not include or incorporate by reference into this annual report any information contained on, or accessible through, such websites.

Item 1A. Risk Factors.

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. Investors should consider carefully the following risk factors, as well as the other information in this annual 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. In this case, the trading price of our common stock would likely decline. The risks described below are not the only ones we face. Additional risks that we currently do not know about or that we currently believe to be immaterial may also impair our business 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.

Our strategy is to continue internal growth and, as strategic opportunities arise in the workers’ compensation managed care industry, to consider acquisitions of, or relationships with, other companies in related lines of business. As a result, we are subject to certain growth-related risks, including the risk that we will be unable to retain personnel or acquire other resources necessary to service such growth adequately. Expenses arising from our efforts to increase our market penetration may have a negative impact on operating results. In addition, there can be no assurance that any suitable opportunities for strategic acquisitions or relationships will arise or, if they do arise, that the transactions contemplated could be completed. If such a transaction does occur, there can be no assurance that we will be able to integrate effectively any acquired business. In addition, any such transaction would be subject to various risks associated with the acquisition of businesses, including, but not limited to, the following:

• an acquisition may (i) negatively impact our results of operations because it may require incurring large one-time charges, substantial debt or liabilities; (ii) require the amortization or write down of amounts related to deferred compensation, goodwill and other intangible assets; or (iii) cause adverse tax consequences, substantial depreciation or deferred compensation charges;

• we may encounter difficulties in assimilating and integrating the business, technologies, products, services, personnel, or operations of companies that are acquired, particularly if key personnel of the acquired company decide not to work for us;

• an acquisition may disrupt ongoing business, divert resources, increase expenses, and distract management;

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• the acquired businesses, products, services, or technologies may not generate sufficient revenue to offset acquisition costs;

• we may have to issue equity or debt securities to complete an acquisition, which would dilute the position of stockholders and could adversely affect the market price of our common stock; and

• the acquisitions may involve the entry into a geographic or business market in which we have little or no prior experience.

There can be no assurance that we will be able to identify or consummate any future acquisitions or other strategic relationships on favorable terms, or at all, or that any future acquisition or other strategic relationship will not have an adverse impact on our business or results of operations. If suitable opportunities arise, we may finance such transactions, as well as internal growth, through debt or equity financing. There can be no assurance, however, that such debt or equity financing would be available to us on acceptable terms when, and if, suitable strategic opportunities arise.

If we are unable to increase our market share among national and regional insurance carriers and large, self-funded employers, our results may be adversely affected.

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. 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. 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. Furthermore, we may not be able to demonstrate sufficient cost savings to potential or current customers to induce them not to provide comparable services internally or to accelerate efforts to provide such services internally.

If competition increases, our growth and profits may decline.

The markets for our network services and patient management services are also fragmented and competitive. Our competitors include national managed care providers, preferred provider networks, smaller independent providers and insurance companies. Companies that offer one or more workers’ compensation managed care services on a national basis are our primary competitors. We also compete with many smaller vendors who generally provide unbundled services on a local level, particularly companies with an established relationship with a local insurance company adjuster. In addition, several large workers’ compensation insurance carriers offer managed care services for their customers, either by performance of the services in-house or by outsourcing to organizations like ours. If these carriers increase their performance of these services in-house, our business may be adversely affected. In addition, consolidation in the industry may result in carriers performing more of such services in-house.

Our sequential revenue may not increase and may decline. 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.

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. If changes in our sequential revenue fall below the expectations of investors or analysts, the price of our common stock could decline substantially. 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: 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. 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. Additionally, our technology and preferred provider network face competition from companies that have more resources available to them than we do. 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. These factors could cause the market price of our common stock to fluctuate substantially. There can be no assurance that our growth rate in the future, if any, will be at or near historical levels.

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.

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.

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The market price and trading volume of our common stock may be volatile, which could result in rapid and substantial losses for our stockholders.

The market price of our common stock may be highly volatile and could be subject to wide fluctuations. In addition, the trading volume in our common stock may fluctuate and cause significant price variations to occur.  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.  There can be no assurance that the market price of our common stock will not fluctuate or decline significantly in the future.

We cannot assure our stockholders that our stock repurchase program will enhance long-term stockholder value and stock repurchases, if any, could increase the volatility of the price of our common stock and will diminish our cash reserves.

In 1996, out Board of Directors authorized a stock repurchase program and, since then, has periodically increased the number of shares authorized for repurchase under the repurchase program.  The most recent increase occurred in February 2017 and brought the number of shares authorized for repurchase over the life of the program to 36,000,000 shares. There is no expiration date for the repurchase program. The timing and actual number of shares repurchased, if any, depend on a variety of factors including the timing of open trading windows, price, corporate and regulatory requirements, and other market conditions. The program may be suspended or discontinued at any time without prior notice. Repurchases pursuant to our stock repurchase program could affect our stock price and increase its volatility. 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. 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. 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. Although our stock repurchase program is intended to enhance long-term stockholder value, short-term stock price fluctuations could reduce the program’s effectiveness.

If the referrals for our patient management services decline, our business, financial condition and results of operations would be materially adversely affected.

In some years, we have experienced a general decline in the revenue and operating performance of patient management services. We believe that the performance decline has been due to the following factors: the decrease of the number of workplace injuries that have become longer-term disability cases; increased regional and local competition from providers of managed care services; a possible reduction by insurers on the types of services provided by our patient management business; the closure of offices and continuing consolidation of our patient management operations; and employee turnover, including management personnel, in our patient management business. In the past, these factors have all contributed to the lowering of our long-term outlook for our patient management services. If some or all of these conditions continue, we believe that revenues from our patient management services could decrease.

Declines in workers’ compensation claims may materially harm our results of operations.

Within the past few years, as the labor market has become less labor intensive and more service oriented, there are fewer work-related injuries.  Additionally, employers are being more proactive to prevent injuries.  If declines in workers’ compensation costs occur in many states and persist over the long-term, it would have a material adverse impact on our business, financial condition and results of operations.

We provide an outsource service to payors of workers’ compensation benefits, automobile insurance claims, and group health insurance benefits. These payors include insurance companies, TPAs, municipalities, state funds, and self-insured, self-administered employers. If these payors reduce the amount of work they outsource, our results of operations would be materially adversely affected.

Healthcare providers are becoming increasingly resistant to the application of certain healthcare cost containment techniques; this may cause revenue from our cost containment operations to decrease.

Healthcare providers have become more active in their efforts to minimize the use of certain cost containment techniques and are engaging in litigation to avoid application of certain cost containment practices. Recent litigation between healthcare providers and insurers has challenged certain insurers’ claims adjudication and reimbursement decisions. 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.

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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.

On December 22, 2017, the Tax Cuts and Jobs Act was enacted into law. 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. As a result of this federal income tax rate change, during the quarter ended December 31, 2017, we reported an effective tax rate of 5%. 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. During the quarter ended December 31, 2017, we applied the newly enacted corporate federal income tax rate to the remeasurement of U.S. deferred tax assets and liabilities resulting in a tax benefit of $3.0 million. The decrease in net deferred tax liabilities was reasonably estimated and based on the tax rates at which they are expected to reverse in the future. 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. Taking into account the change in the statutory federal rate as well as other permanent items, we expect our effective combined federal and state tax rate will be approximately 24% to 26% for the fiscal year beginning April 1, 2018. This expected effective rate assumes projected financial results consistent with recent trends and applies the new statutory rate and the impact of the Tax Cuts and Jobs Act relative to permanent differences between book and tax income. If our assumption that projected financial results will be consistent with recent trends turns out to be incorrect, our effective combined federal and state tax rate could be higher for the fiscal year beginning April 1, 2018. In the absence of guidance on various uncertainties and ambiguities in the application of certain provisions of the Tax Cuts and Jobs Act, we will use what we believe are reasonable interpretations and assumptions in applying the Tax Cuts and Jobs Act, but it is possible that the U.S. 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.

We face competition from PPOs, TPAs, and other managed healthcare companies. We believe that as managed care techniques continue to gain acceptance in the workers’ compensation marketplace, our competitors will increasingly consist of nationally-focused workers’ compensation managed care service companies, insurance companies, HMOs and other significant providers of managed care products. Legislative reform in some states has been considered, but not enacted to permit employers to designate health plans such as HMOs and PPOs to cover workers’ compensation claimants. Because many health plans have the ability to manage medical costs for workers’ compensation claimants, such legislation may intensify competition in the markets served by us. Many of our current and potential competitors are significantly larger and have greater financial and marketing resources than we do, and there can be no assurance that we will continue to maintain our existing customers, maintain our past level of operating performance, or be successful with any new products or in any new geographical markets we may enter.

A breach of security may cause our customers to curtail or stop using our services.

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. If security measures are breached because of third-party action, employee error, malfeasance, or otherwise, or if design flaws in our software are exposed and exploited, and, as a result, a third party obtains unauthorized access to any customer data, our relationships with our customers and our reputation will be damaged, our business may suffer, and we could incur significant liability. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures.

Exposure to possible litigation and legal liability may adversely affect our business, financial condition, and results of operations.

We, through our utilization management services, make recommendations concerning the appropriateness of providers’ medical treatment plans of patients throughout the country, and as a result, could be exposed to claims for adverse medical consequences. We do not grant or deny claims for payment of benefits and we do not believe that we engage in the practice of medicine or the delivery of medical services. There can be no assurance, however, that we will not be subject to claims or litigation related to the authorization or denial of claims for payment of benefits or allegations that we engage in the practice of medicine or the delivery of medical services.

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In addition, there can be no assurance that we will not be subject to other litigation that may adversely affect our business, financial condition or results of operations, including but not limited to being joined in litigation brought against our customers in the managed care industry. We maintain professional liability insurance and such other coverages as we believe are reasonable in light of our experience to date. If such insurance is insufficient or unavailable in the future at reasonable cost to protect us from liability, our business, financial condition, or results of operations could be adversely affected.

If lawsuits against us are successful, we may incur significant liabilities.

We provide to insurers and other payors of healthcare costs managed care programs that utilize preferred provider organizations and computerized bill review programs. Health care providers have brought, against us and our customers, individual and class action lawsuits challenging such programs. If such lawsuits are successful, we may incur significant liabilities.

We make recommendations about the appropriateness of providers’ proposed medical treatment plans for patients throughout the country. As a result, we could be subject to claims arising from any adverse medical consequences. Although plaintiffs have not, to date, subjected us to any claims or litigation relating to the granting or denial of claims for payment of benefits or allegations that we engage in the practice of medicine or the delivery of medical services, we cannot assure you that plaintiffs will not make such claims in future litigation. We also cannot assure you that our insurance will provide sufficient coverage or that insurance companies will make insurance available at a reasonable cost to protect us from significant future liability.

If the utilization by healthcare payors of early intervention services continues to increase, the revenue from our later-stage network and healthcare management services could be negatively affected.

The performance of early intervention services, including injury occupational healthcare, first notice of loss, and telephonic case management services, often result in a decrease in the average length of, and the total costs associated with, a healthcare claim. By successfully intervening at an early stage in a claim, the need for additional cost containment services for that claim often can be reduced or even eliminated. 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.

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. Interruption of data processing capabilities for any extended length of time, loss of stored data, programming errors or other system failures could cause customers to cancel their service and could have a material adverse effect on our business, financial condition, and results of operations.

In addition, we expect that a considerable amount of our future growth will depend on our ability to process and manage claims data more efficiently and to provide more meaningful healthcare information to customers and payors of healthcare. There can be no assurance that our current data processing capabilities will be adequate for our future growth, that we will be able to efficiently upgrade our systems to meet future demands, or that we will be able to develop, license or otherwise acquire software to address these market demands as well or as timely as our competitors.

We face competition for staffing, which may increase our labor costs and reduce profitability.

We compete with other healthcare providers in recruiting qualified management and staff personnel for the day-to-day operations of our business, including nurses and other case management professionals. In some markets, the scarcity of nurses and other medical support personnel has become a significant operating issue to healthcare providers. This shortage may require us to enhance wages to recruit and retain qualified nurses and other healthcare professionals. Our failure to recruit and retain qualified management, nurses, and other healthcare professionals, or to control labor costs could have a material adverse effect on profitability.

The increased costs of professional and general liability insurance may have an adverse effect on our profitability.

The cost of commercial professional and general liability insurance coverage has risen significantly in the past several years, and this trend may continue. In addition, if we were to suffer a material loss, our costs may increase over and above the general increases in the industry. If the costs associated with insuring our business continue to increase, it may adversely affect our business. We believe our current level of insurance coverage is adequate for a company of our size engaged in our business.  Additionally, we may have difficulty getting carriers to pay under coverage in certain circumstances.

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Changes in government regulations could increase our costs of operations and/or reduce the demand for our services.

Many states, including a number of those in which we transact business, have licensing and other regulatory requirements applicable to our business. Approximately half of the states have enacted laws that require licensing of businesses which provide medical review services such as ours. Some of these laws apply to medical review of care covered by workers’ compensation. These laws typically establish minimum standards for qualifications of personnel, confidentiality, internal quality control, and dispute resolution procedures. These regulatory programs may result in increased costs of operation for us, which may have an adverse impact upon our ability to compete with other available alternatives for healthcare cost control. In addition, new laws regulating the operation of managed care provider networks have been adopted by a number of states. These laws may apply to managed care provider networks having contracts with us 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.

Regulation in the healthcare and workers’ compensation fields is constantly evolving. We are unable to predict what additional government initiatives, if any, affecting our business may be promulgated in the future. Our business may be adversely affected by failure to comply with existing laws and regulations, failure to obtain necessary licenses and government approvals, or failure to adapt to new or modified regulatory requirements. Proposals for healthcare legislative reforms are regularly considered at the federal and state levels. To the extent that such proposals affect workers’ compensation, such proposals may adversely affect our business, financial condition, and results of operations.

In addition, changes in workers’ compensation, automobile insurance, and group healthcare laws or regulations may reduce demand for our services, require us to develop new or modified services to meet the demands of the marketplace, or reduce the fees that we may charge for our services.

The introduction of software products incorporating new technologies and the emergence of new industry standards could render our existing software products less competitive, obsolete, or unmarketable.

There can be no assurance that we will be successful in developing and marketing new software products that respond to technological changes or evolving industry standards. If we are unable, for technological or other reasons, to develop and introduce new software products cost-effectively, in a timely manner and in response to changing market conditions or customer requirements, our business, results of operations, and financial condition may be adversely affected.

Developing or implementing new or updated software products and services may take longer and cost more than expected. We rely on a combination of internal development, strategic relationships, licensing and acquisitions to develop our software products and services. The cost of developing new healthcare information services and technology solutions is inherently difficult to estimate. Our development and implementation of proposed software products and services may take longer than originally expected, require more testing than originally anticipated and require the acquisition of additional personnel and other resources. If we are unable to develop new or updated software products and services cost-effectively on a timely basis and implement them without significant disruptions to the existing systems and processes of our customers, we may lose potential sales and harm our relationships with current or potential customers.

The failure to attract and retain qualified or key personnel may prevent us from effectively developing, marketing, selling, integrating, and supporting our services.

We are dependent, to a substantial extent, upon the continuing efforts and abilities of certain key management personnel. In addition, we face competition for experienced employees with professional expertise in the workers’ compensation managed care area. The loss of key personnel, especially V. Gordon Clemons, our Chairman and Chief Executive Officer, and Michael Combs, our President, or the inability to attract qualified employees, could have a material adverse effect on our business, financial condition, and results of operations.

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If we lose several customers in a short period, our results may be materially adversely affected.

Our results may decline if we lose several customers during a short period. Most of our customer contracts permit either party to terminate without cause. If several customers terminate, or do not renew or extend their contracts with us, our results could be materially and adversely affected. Many organizations in the insurance industry have consolidated and this could result in the loss of one or more of our customers through a merger or acquisition. Additionally, we could lose customers due to competitive pricing pressures or other reasons.

We are subject to risks associated with acquisitions of intangible assets.

Our acquisition of other businesses may result in significant increases in our intangible assets and goodwill. We regularly evaluate whether events and circumstances have occurred indicating that any portion of our intangible assets and goodwill may not be recoverable. When factors indicate that intangible assets and goodwill should be evaluated for possible impairment, we may be required to reduce the carrying value of these assets. We cannot currently estimate the timing and amount of any such charges.

If we are unable to leverage our information systems to enhance our outcome-driven service model, our results may be adversely affected.

To leverage our knowledge of workplace injuries, treatment protocols, outcomes data, and complex regulatory provisions related to the workers’ compensation market, we must continue to implement and enhance information systems that can analyze our data related to the workers’ compensation industry. We frequently upgrade existing operating systems and are updating other information systems that we rely upon in providing our services and financial reporting. We have detailed implementation schedules for these projects that require extensive involvement from our operational, technological, and financial personnel. Delays or other problems we might encounter in implementing these projects could adversely affect our ability to deliver streamlined patient care and outcome reporting to our customers.

Our Internet-based services are dependent on the development and maintenance of the Internet infrastructure.

The Internet has experienced a variety of outages and other delays as a result of damages to portions of its infrastructure, and it could face outages and delays in the future. These outages and delays could reduce the level of Internet usage, as well as the availability of the Internet to us for delivery of our Internet-based services. In addition, our customers who use our Web-based services depend on Internet service providers, online service providers, and other website operators for access to our website. All of these providers have experienced significant outages in the past and could experience outages, delays, and other difficulties in the future due to system failures unrelated to our systems. Any significant interruptions in our services or increases in response time could result in a loss of potential or existing users, and, if sustained or repeated, could reduce the attractiveness of our services.

We are sensitive to regional weather conditions that may adversely affect our operations.

Our operations are directly affected in the short term by the weather conditions in certain regions of operation. Therefore our business is sensitive to the weather conditions of these regions. Unusually inclement weather, including significant rain, snow, sleet, freezing rain, or ice can temporarily affect our operations if customers are forced to close operational centers.  Accordingly, our operating results may vary from quarter to quarter, depending on the impact of these weather conditions.

Natural and other disasters may adversely affect our business.

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.  If a disaster were to occur, our ability to operate our business could be seriously or completely impaired or destroyed. The insurance we maintain may not be adequate to cover our losses resulting from disasters or other business interruptions.

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Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

The Company’s principal executive office is located in Irvine, California in approximately 13,000 square feet of leased space. The lease expires in January 2020. The Company leases approximately 84 branch offices in 43 states, which range in size from 200 square feet up to 59,000 square feet. The lease terms for the branch offices range from monthly to 10 years and expire at various dates through 2028. The Company owns a 32,000 square foot building located in Milwaukie, Oregon. The Company believes that its facilities are adequate for its current needs and that suitable additional space will be available as required.

Item 3. Legal Proceedings.

The Company is involved in litigation arising in the ordinary course of business. Management believes that resolution of these matters will not result in any payment that, in the aggregate, would be material to the financial position or results of operations of the Company.

Item 4. Mine Safety Disclosures.

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

The Company’s common stock is traded on the NASDAQ Global Select Market under the symbol CRVL. The quarterly high and low per share sales prices for the Company’s common stock for fiscal years 2018 and 2017 as reported by NASDAQ are set forth below for the periods indicated.  These prices represent prices among dealers, do not include retail markups, markdowns or commissions, and may not represent actual transactions.

	High		Low
Fiscal Year Ended March 31, 2018:
Quarter Ended June 30, 2017:	$	49.50	$	40.70
Quarter Ended September 30, 2017:		55.95		45.01
Quarter Ended December 31, 2017:		61.20		51.80
Quarter Ended March 31, 2018:		56.60		46.45
Fiscal Year Ended March 31, 2017:
Quarter Ended June 30, 2016:	$	53.19	$	38.86
Quarter Ended September 30, 2016:		47.48		35.60
Quarter Ended December 31, 2016:		38.65		31.00
Quarter Ended March 31, 2017:		43.75		36.00

Holders. As of June 5, 2018, there were approximately 1,016 holders of record of the Company’s common stock according to the information provided by the Company’s transfer agent.

Dividends. The Company has never paid any cash dividends on its common stock and has no current plans to do so in the foreseeable future. The Company intends to retain future earnings, if any, for use in the Company’s business. The payment of any future dividends on its common stock will be determined by the Board of Directors in light of conditions then existing, including the Company’s earnings, financial condition and requirements, restrictions in financing agreements, business conditions and other factors.

Unregistered Sales of Equity Securities. None.

Issuer Purchases of Equity Securities. None. 

In 1996, the Company’s Board of Directors authorized a stock repurchase program initially for up to 100,000 shares of the Company’s common stock. The Company’s Board of Directors has periodically increased the number of shares of common stock authorized for repurchase under the program.  In February 2017, the Company’s Board of Directors increased the number of shares of common stock authorized to be repurchased over the life of the program by 1,000,000 shares of common stock to 36,000,000 shares of common stock.  As of March 31, 2018, the Company has repurchased 34,881,079 shares of its common stock over the life of the program.  There is no expiration date for the program.

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STOCK PERFORMANCE GRAPH

The graph depicted below shows a comparison of cumulative total stockholder returns for the Company, the NASDAQ and the NASDAQ Health Services Index over a five year period beginning on March 31, 2013. The data depicted on the graph are as set forth in the chart below the graph. The graph assumes that $100 was invested in the Company’s Common Stock on March 31, 2013, and in each index, and that all dividends were reinvested. No cash dividends have been paid or declared on the Common Stock. Stockholder returns over the indicated period should not be considered indicative of future stockholder returns.

	2013		2014		2015		2016		2017		2018
CorVel Corporation		100.00		201.09		139.06		159.30		175.79		204.28
U.S. NASDAQ		100.00		128.51		149.99		149.04		180.92		216.17
U.S. NASDAQ Healthcare Services		100.00		138.78		187.77		151.03		167.68		185.72

Notwithstanding anything to the contrary set forth in any of our previous filings made under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate future filings made by us under those statutes, neither the preceding Stock Performance Graph, nor the information relating to it, is “soliciting material” or is “filed” or is to be incorporated by reference into any such prior filings, nor shall such graph or information be incorporated by reference into any future filings made by us under those statutes.

Item 6. Selected Financial Data.

The selected consolidated financial data of the Company appears in a separate section of this annual report immediately preceding Part II, Item 7 of this annual report, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and is incorporated herein by this reference.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” appears in Part II, Item 7 of this annual report and is incorporated herein by this reference.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates. We do not hold or issue financial instruments for trading purposes.

Interest rate sensitivity

We are exposed to interest rate risks primarily through borrowing under our credit facility. Interest on our borrowings is based upon variable rates. We did not have any outstanding borrowings on our credit facility as of March 31, 2018, March 31, 2017, or March 31, 2016. Interest income from cash equivalents is not material and is partially offset by interest expense, which represents interest from borrowings, if any, and various fees associated with the credit facility.

Item 8. Financial Statements and Supplementary Data.

The Company’s consolidated financial statements, as listed under Item 15, appear in a separate section of this annual report, and are incorporated herein by this reference.  The financial statement schedule is included below under Item 15(a)(2).

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act).  Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2018, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is (i) recorded, processed, summarized, and reported, within the time periods specified in the Commission’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive and principal accounting officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

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Management’s Report on Internal Control over Financial Reporting

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 of America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements in accordance with accounting principles generally accepted in the United States of America; providing reasonable assurance that our receipts and expenditures are made in accordance with authorizations of our management and directors; and providing reasonable assurance that unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements would be prevented or detected on a timely basis.

Management conducted an assessment of the effectiveness of our internal control over financial reporting based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission in the 2013 Internal Control—Integrated Framework. Based on this assessment, our management concluded that our internal control over financial reporting was effective as of March 31, 2018 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 issued an audit report on the effectiveness of our internal control over financial reporting as of March 31, 2018 as stated in their report that is included in Part II, Item 8 herein.

Changes to Internal Control over Financial Reporting

During the quarter ended March 31, 2018, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

On June 4, 2018, our Compensation Committee, in exercising its discretionary authority pursuant to the terms of all of our outstanding performance stock options, including those held by our officers, amended such stock options granted since 2015 to adjust upward all of the target earnings per share amounts.  Our Compensation Committee made such adjustments because it deemed them equitable to recognize the anticipated impact of the changes in tax laws under the Tax Cuts and Jobs Act that was signed into law on December 22, 2017.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information in the sections titled “Proposal One: Election of Directors,” “Corporate Governance, Board Composition and Board Committees,” “Executive Officers of CorVel,” and “Section 16(a) Beneficial Ownership Reporting Compliance” appearing in the Company’s Definitive Proxy Statement for the 2018 Annual Meeting of Stockholders is incorporated herein by reference.

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 under the “Investor Relations” section. 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.

Item 11. Executive Compensation.

The information in the sections titled “Executive Compensation,” “Compensation Discussion and Analysis,” “Compensation Committee Interlocks and Insider Participation,” “Compensation Committee Report,” and “Compensation of Directors,” appearing in the Company’s Definitive Proxy Statement for the 2018 Annual Meeting of Stockholders is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information in the sections titled “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matter” and “Equity Compensation Plan Information” appearing in the Company’s Definitive Proxy Statement for the 2018 Annual Meeting of Stockholders is incorporated herein by reference.

Item 13. Certain Relationships and Related Party Transactions, and Director Independence.

The information in the sections titled “Certain Relationships and Related Person Transactions,” “Proposal One: Election of Directors,” and “Corporate Governance, Board Composition and Board Committees” appearing in the Company’s Definitive Proxy Statement for the 2018 Annual Meeting of Stockholders is incorporated herein by reference.

Item 14.  Principal Accounting Fees and Services.

The information under the captions “Principal Accountant Fees and Services”, “Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors” and “Ratification of Appointment of Independent Auditors” appearing in the Company’s Definitive Proxy Statement for the 2018 Annual Meeting of Stockholders is incorporated herein by reference.

22

PART IV

Item 15.  Exhibits, Financial Statement Schedule.

(a)(1) Financial Statements:

The Company’s financial statements appear in a separate section of this annual report, beginning on the pages referenced below:

	Page
Report of Independent Registered Public Accounting Firm	43
Consolidated Balance Sheets as of March 31, 2018 and 2017	45
Consolidated Statements of Income for the Fiscal Years Ended March 31, 2018, 2017 and 2016	46
Consolidated Statements of Stockholders’ Equity for the Fiscal Years Ended March 31, 2018, 2017 and 2016	47
Consolidated Statements of Cash Flows for the Fiscal Years Ended March 31, 2018, 2017 and 2016	48
Notes to Consolidated Financial Statements	49

(2) Financial Statement Schedule:

The Company’s consolidated financial statements, as listed under Item 15(a)(1), appear in a separate section of this annual report and are incorporated herein by this reference. The Company’s financial statement schedule is as follows:

Schedule II — Valuation and Qualifying Accounts

	Balance at Beginning of Year		Additions Charged to Cost and Expenses		Deductions			Balance at End of Year
Allowance for doubtful accounts:
Fiscal Year Ended March 31, 2018:	$	3,001,000	$	2,559,000	$	(1,009,000	)	$	4,551,000
Fiscal Year Ended March 31, 2017:		1,821,000		2,335,000		(1,155,000	)		3,001,000
Fiscal Year Ended March 31, 2016:		1,645,000		1,357,000		(1,181,000	)		1,821,000

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(3) Exhibits:

EXHIBITS

Exhibit No.	Title	Method of Filing
3.1	Amended and Restated Certificate of Incorporation of the Company	Incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on August 10, 2011.
3.2	Amended and Restated Bylaws of the Company	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, 2006 filed on August 14, 2006.
3.3	Certificate of Designation Increasing the Number of Shares of Series A Junior Participating Preferred Stock	Incorporated herein by reference to Exhibit 3.1 to the Company’s Form 8-K filed on November 24, 2008.
4.1	Second Amended and Restated Preferred Shares Rights Agreement, dated as of November 17, 2008, by and between CorVel Corporation and Computershare Trust Company, N.A., including the original Certificate of Designation, the Certificate of Designation Increasing the Number of Shares, the form of Right Certificate (as amended) and the Summary of Rights (as amended) attached thereto as Exhibits A-1, A-2, A-3, B and C, respectively	Incorporated herein by reference to Exhibit 4.1 to the Company’s Form 8-K filed on November 24, 2008.
10.1*	Nonqualified Stock Option Agreement between V. Gordon Clemons, the Company and North Star together with all amendments and addendums thereto (P) Paper filing	Incorporated herein by reference to Exhibit 10.6 to the Company’s Registration Statement on Form S-1 Registration No. 33-40629 initially filed on May 16, 1991.
10.2*	Supplementary Agreement between V. Gordon Clemons, the Company and North Star (P) Paper filing	Incorporated herein by reference to Exhibit 10.7 to the Company’s Registration Statement on Form S-1 Registration No. 33-40629 initially filed on May 16, 1991.
10.3*	Amendment to Supplementary Agreement between V. Gordon Clemons, the Company and North Star (P) Paper filing	Incorporated herein by reference to Exhibit 10.5 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1992 filed on June 29, 1992.
10.4*	Restated Omnibus Incentive Plan (Formerly The Restated 1988 Executive Stock Option Plan)	Incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015 filed on November 5, 2015.
10.5*	Forms of Notice of Grant of Stock Option, Stock Option Agreement and Notice of Exercise Under the Restated Omnibus Incentive Plan (Formerly The Restated 1988 Executive Stock Option)	Incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2006 filed on November 9, 2006, Exhibits 10.7, 10.8 and 10.9 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1994 filed on June 29, 1994, Exhibits 99.2, 99.3, 99.4, 99.5, 99.6, 99.7 and 99.8 to the Company’s Registration Statement on Form S-8 (File No. 333-94440) filed on July 10, 1995, and Exhibits 99.3 and 99.5 to the Company’s Registration Statement on Form S-8 (File No. 333-58455) filed on July 2, 1998.
10.6*	Employment Agreement of V. Gordon Clemons (P) Paper filing	Incorporated herein by reference to Exhibit 10.12 to the Company’s Registration Statement on Form S-1 Registration No. 33-40629 initially filed on May 16, 1991.

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Exhibit No.	Title	Method of Filing
10.7*	Restated 1991 Employee Stock Purchase Plan, as amended	Incorporated herein by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015 filed on November 5, 2015.
10.8	Fidelity Master Plan for Savings and Investment, and amendments (P) Paper filing	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.
10.9	Second Amended and Restated Preferred Shares Rights Agreement, dated as of November 17, 2008, by and between CorVel Corporation and Computershare Trust Company, N.A., including the original Certificate of Designation, the Certificate of  Designation Increasing the Number of Shares, the form of Rights Certificate (as amended) and the Summary of Rights (as amended) attached thereto as Exhibits A-1, A-2, A-3, B and C, respectively	Incorporated herein by reference to Exhibit 4.1 to the Company’s Form 8-K filed on November 24, 2008.
10.10	Credit Agreement dated May 28, 2009 by and between CorVel Corporation and Wells Fargo Bank, National Association.	Incorporated herein by reference to Exhibit 10.16 to the Company’s Current Report on Form 8-K filed on June 4, 2009.
10.11	Revolving Line of Credit Note dated May 28, 2009 by CorVel Corporation in favor of Wells Fargo Bank, National Association.	Incorporated herein by reference to Exhibit 10.17 to the Company’s Current Report on Form 8-K filed on June 4, 2009.
10.12	First Amendment to Credit Agreement dated June 2, 2010 by and between CorVel Corporation and Wells Fargo Bank, National Association.	Incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 7, 2010.
10.13	Revolving Line of Credit Note dated June 2, 2010 by CorVel Corporation in favor of Wells Fargo Bank, National Association.	Incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on June 7, 2010.
10.14*	Stock Option Agreement dated December 6, 2010 between the company and Diane J. Blaha, providing performance vesting.	Incorporated herein by reference to Exhibit 10.32 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2014 filed on June 12, 2014.
10.15	Second Amendment to Credit Agreement dated September 1, 2011 by and between CorVel Corporation and Wells Fargo Bank, National Association.	Incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 31, 2011.
10.16	Revolving Line of Credit Note dated September 1, 2011 by CorVel Corporation in favor of Wells Fargo Bank, National Association.	Incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on August 31, 2011.
10.17*	Stock option agreement dated November 3, 2011, between the Company and Diane J. Blaha, providing performance vesting.	Incorporated herein by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2015 filed on June 11, 2015.
10.18	Third Amendment to Credit Agreement dated September 1, 2012 by and between CorVel Corporation and Wells Fargo Bank, National Association.	Incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 7, 2012.
10.19	Revolving Line of Credit Note dated September 1, 2012 by CorVel Corporation in favor of Wells Fargo Bank, National Association.	Incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 7, 2012.

25

Exhibit No.	Title	Method of Filing
10.20*	Stock option agreement dated March 1, 2013, between the Company and V. Gordon Clemons, providing performance vesting.	Incorporated herein by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2016 filed on June 10, 2016.
10.21*	Stock option agreement dated March 1, 2013, between the Company and Scott McCloud, providing performance vesting.	Incorporated herein by reference to Exhibit 10.21 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2016 filed on June 10, 2016.
10.22*	Stock option agreement dated March 1, 2013, between the Company and Donald C. McFarlane, providing performance vesting.	Incorporated herein by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2016 filed on June 10, 2016.
10.23*	Stock option agreement dated March 1, 2013, between the Company and Diane J. Blaha, providing performance vesting.	Incorporated herein by reference to Exhibit 10.23 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2016 filed on June 10, 2016.
10.24	Fourth Amendment to Credit Agreement dated September 1, 2013 by and between CorVel Corporation and Wells Fargo Bank, National Association.	Incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 5, 2013.
10.25	Revolving Line of Credit Note dated September 1, 2013 by CorVel Corporation in favor of Wells Fargo Bank, National Association.	Incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 5, 2013.
10.26*	Stock option agreement dated November 4, 2013, between the Company and Scott McCloud, providing performance vesting.	Incorporated herein by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2017 field on June 9, 2017.
10.27*	Stock option agreement dated November 4, 2013, between the Company and Donald C. McFarlane, providing performance vesting.	Incorporated herein by reference to Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2017 field on June 9, 2017.
10.28*	Stock option agreement dated November 4, 2013, between the Company and Diane J. Blaha, providing performance vesting.	Incorporated herein by reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2017 field on June 9, 2017.
10.29*	Stock option agreement dated November 4, 2013, between the Company and Richard J. Schweppe, providing performance vesting.	Incorporated herein by reference to Exhibit 10.29 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2017 field on June 9, 2017.
10.30*	Stock option agreement dated March 1, 2013, between the Company and Richard J. Schweppe, providing performance vesting.	Incorporated herein by reference to Exhibit 10.30 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2016 filed on June 10, 2016.
10.31	Fifth Amendment to Credit Agreement dated September 1, 2014 by and between CorVel Corporation and Wells Fargo Bank, National Association.	Incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 5, 2014.
10.32	Revolving Line of Credit Note dated September 1, 2014 by CorVel Corporation in favor of Wells Fargo Bank, National Association.	Incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 5, 2014.
10.33*†	Stock option agreement dated November 10, 2014, between the Company and Richard J.  Schweppe, providing performance vesting.	Refiled herewith.
10.34*†	Stock option agreement dated November 10, 2014, between the Company and Diane J. Blaha, providing performance vesting.	Refiled herewith.
10.35	Sixth Amendment to Credit Agreement dated September 1, 2015 by and between CorVel Corporation and Wells Fargo Bank, National Association.	Incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 4, 2015.

26

Exhibit No.	Title	Method of Filing
10.36	Revolving Line of Credit Note dated September 1, 2015 by CorVel Corporation in favor of Wells Fargo Bank, National Association.	Incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 4, 2015.
10.37*†	Stock option agreement dated November 10, 2015, between the Company and Richard J. Schweppe, providing performance vesting.	Refiled herewith.
10.38*†	Stock option agreement dated November 10, 2015, between the Company and Michael G. Combs, providing performance vesting.	Refiled herewith.
10.39*†	Stock option agreement dated November 10, 2015, between the Company and Diane J. Blaha, providing performance vesting.	Refiled herewith.
10.40	Seventh Amendment to Credit Agreement dated September 1, 2016 by and between CorVel Corporation and Wells Fargo Bank, National Association.	Incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 2, 2016.
10.41	Revolving Line of Credit Note dated September 1, 2016 by CorVel Corporation in favor of Wells Fargo Bank, National Association.	Incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 2, 2016.
10.42*†	Stock option agreement dated November 3, 2016 between the Company and Michael G. Combs, providing for performance vesting.	Refiled herewith.
10.43*†	Stock option agreement dated November 3, 2016 between the Company and Diane J. Blaha, providing for performance vesting.	Refiled herewith.
10.44*†	Stock option agreement dated November 3, 2016 between the Company Richard J. Schweppe, providing for performance vesting.	Refiled herewith.
10.45	Eighth Amendment to Credit Agreement dated September 1, 2017 by and between CorVel Corporation and Wells Fargo Bank, National Association.	Incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 5, 2017.
10.46	Revolving Line of Credit Note dated September 1, 2017 by CorVel Corporation in favor of Wells Fargo Bank, National Association.	Incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 5, 2017.
10.47*†	Stock Option Agreement dated November 2, 2017 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, 2017 filed on February 2, 2018.
10.48*†	Stock Option Agreement dated November 2, 2017 by and between CorVel Corporation and Diane J. Blaha, 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, 2017 filed on February 2, 2018.
10.49*†	Stock Option Agreement dated November 2, 2017 by and between CorVel Corporation and Michael D. Saverien, providing for performance vesting.	Incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2017 filed on February 2, 2018.
10.50*†	Stock Option Agreement dated November 2, 2017 by and between CorVel and Corporation and Maxim Shishin, providing for performance vesting.	Incorporated herein by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2017 filed on February 2, 2018.

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Exhibit No.	Title	Method of Filing
21.1	Subsidiaries of the Company.	Filed herewith
23.1	Consent of Independent Registered Public Accounting Firm, Haskell & White LLP.	Filed herewith.
31.1	Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith.
31.2	Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith.
32.1	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Furnished herewith.
32.2	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Furnished herewith.
101.0	The following materials from CorVel Corporation's Annual Report on Form 10-K for the fiscal year ended March 31, 2018, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of March 31, 2018  and March 31, 2017; (ii) Consolidated Statements of Income for the fiscal years ended March 31, 2018, 2017 and 2016; (iii) Consolidated Statements of Stockholders' Equity for the fiscal years ended March 31, 2018, 2017 and 2016; (iv) Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2018, 2017 and 2016; and (v) Notes to Consolidated Financial Statements	Furnished herewith.

* - Denotes management contract or compensatory plan or arrangement.

† - Confidential treatment has been requested for certain confidential portions of this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. In accordance with Rule 24b-2, these confidential portions have been omitted from this exhibit and filed separately with the Securities and Exchange Commission.

(P) – Previously filed only in paper.

(b) Exhibits

The exhibits filed as part of this annual report are listed under Item 15(a)-(3) of this annual report.

(c) Financial Statement Schedule

The Financial Statement Schedule required by Regulation S-X and Item 8 of Form 10-K is listed under Item 15(a)(2) of this annual report.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized.

Corvel Corporation
By:	/s/ V. Gordon Clemons
	V. Gordon Clemons
Chairman of the Board and Chief Executive Officer

Date: June 8, 2018

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

Signature	Title	Date
/s/ V. Gordon Clemons	Chairman of the Board and Chief	June 8, 2018
V. Gordon Clemons	Executive Officer
	(Principal Executive Officer)
/s/ Kenneth S. Cragun	Chief Financial Officer	June 8, 2018
Kenneth S. Cragun	(Principal Financial and Principal Accounting Officer)
/s/ Alan R. Hoops	Director	June 8, 2018
Alan R. Hoops
/s/ Steven J. Hamerslag	Director	June 8, 2018
Steven J. Hamerslag
/s/ R. Judd Jessup	Director	June 8, 2018
R. Judd Jessup
/s/ Jean H. Macino	Director	June 8, 2018
Jean H. Macino
/s/ Jeffrey J. Michael	Director	June 8, 2018
Jeffrey J. Michael

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SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data for each of the five fiscal years ended March 31, 2018 have been derived from the Company’s audited consolidated financial statements. The following data should be read in conjunction with the Company’s consolidated financial statements, the related notes thereto, and Part II, Item 7 of this annual report, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.  The following amounts are in thousands, except per share data and percentages.

	Fiscal Year Ended March 31,
	2018			2017			2016			2015			2014
Income Statement Data:
Revenues	$	558,350		$	518,686		$	503,584		$	492,625		$	478,816
Cost of revenues		451,097			413,894			399,040			392,656			370,335
Gross profit		107,253			104,792			104,544			99,969			108,481
General and administrative		59,350			57,243			58,484			54,405			51,974
Income before income taxes		47,903			47,549			46,060			45,564			56,507
Income tax provision		12,208			18,070			17,535			16,974			22,115
Net income	$	35,695		$	29,479		$	28,525		$	28,590		$	34,392
Net income per share:
Basic	$	1.90		$	1.52		$	1.44		$	1.38		$	1.63
Diluted	$	1.87		$	1.51		$	1.43		$	1.37		$	1.61
Shares used in computing net income per share:
Basic		18,825			19,418			19,826			20,669			21,104
Diluted		19,042			19,570			20,004			20,890			21,372
Return on beginning of year equity		25.7	%		22.3	%		22.3	%		22.6	%		30.9	%
Return on beginning of year assets		15.2	%		13.4	%		13.5	%		13.3	%		18.9	%

	2018			2017			2016			2015			2014
Balance Sheet Data as of March 31,
Cash and cash equivalents	$	55,771		$	28,611		$	32,779		$	25,516		$	34,866
Accounts receivable, net		64,940			62,841			59,747			57,537			57,229
Working capital		65,328			38,816			42,693			37,959			49,120
Total assets		274,004			235,383			220,269			211,573			214,481
Retained earnings		458,457			422,762			393,283			364,758			336,168
Treasury stock		(430,989	)		(419,802	)		(391,803	)		(360,278	)		(328,480	)
Total stockholders’ equity		171,176			138,646			131,948			127,923			126,522

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations may include certain forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including (without limitation) statements with respect to anticipated future operating and financial performance, growth and acquisition opportunities and other similar forecasts and statements of expectation. Words such as “expects,” “anticipates,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “potential,” “continue,” “strive,” “ongoing,” “may,” “will,” “would,” “could,” and “should” and variations of these words and similar expressions, are intended to identify these forward-looking statements. Forward-looking statements made by the Company and its management are based on estimates, projections, beliefs and assumptions of management at the time of such statements and are not guarantees of future performance.

The Company disclaims any obligations to update or revise any forward-looking statement based on the occurrence of future events, the receipt of new information or otherwise. Actual future performance, outcomes, and results may differ materially from those expressed in forward-looking statements made by the Company and its management as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) changes in interpretations or application of the Tax Cuts and Jobs Act through regulations and guidance that may be issued by the U.S. Department of Treasury; general industry and economic conditions, including a decreasing number of national claims due to a decreasing number of injured workers; cost of capital and capital requirements; existing and  possible litigation and legal liability in the course of operations and the Company’s ability to resolve such litigation; competition from other managed care companies; the ability to expand certain areas of the Company’s business; shifts in customer demands; the ability of the Company to produce market-competitive software; changes in operating expenses including employee wages, benefits, and medical inflation; governmental and public policy changes, including but not limited to legislative and administrative law and rule implementation or change; dependence on key personnel; the continued availability of financing in the amounts and at the terms necessary to support the Company’s future business; the impact of recently issued accounting standards on the Company’s consolidated financial statements; growth in the Company’s sale of TPA services and the other risks identified in Part I, Item 1A of this annual report, “Risk Factors”.

Overview

CorVel Corporation 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.

Network Solutions Services

The Company’s network solutions services are designed to reduce the price paid by its customers for medical services rendered in workers’ compensation cases, automobile insurance policies, and group health insurance policies. The network solutions services offered by the Company include automated medical fee auditing, preferred provider management and reimbursement services, retrospective utilization review, facility claim review, professional review, pharmacy services, Medicare solutions, clearinghouse services, independent medical examinations, and inpatient medical bill review. Network solutions services also includes revenue from the Company’s directed care network (known as CareIQ), including imaging, physical therapy and durable medical equipment.

Patient Management Services

In addition to its network solutions services, the Company offers a range of patient management services, which involve working one-on-one with injured employees and their various healthcare professionals, employers and insurance company adjusters. Patient management services include claims management and all services sold to claims management customers, case management, 24/7 nurse triage, utilization management, vocational rehabilitation, and life care planning.  The services are designed to monitor the medical necessity and appropriateness of healthcare services provided to workers’ compensation and other healthcare claimants and to expedite return to work. The Company offers these services on a stand-alone basis, or as an integrated component of its medical cost containment services.  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.

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Business Enterprise Segments

The Company operates in one reportable operating segment, managed care. The Company’s services are delivered to its customers through its local offices in each region and financial information for the Company’s operations follows this service delivery model. All regions provide the Company’s patient management and network solutions services to customers.  Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 280-10, “Segment Reporting”, establishes standards for the way that public business enterprises report information about operating segments in annual and interim consolidated financial statements. The Company’s internal financial reporting is segmented geographically, as discussed above, and managed on a geographic rather than service line basis, with virtually all of the Company’s operating revenue generated within the United States.

Under FASB 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: (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 its regions meet these criteria as each provides similar services and products to similar customers using similar methods of productions and similar methods to distribute the services and products.

Because we believe we meet each of the criteria set forth above and each of our regions have similar economic characteristics, we aggregate our results of operations in one reportable operating segment, managed care.

Seasonality

While we are not directly impacted by seasonal shifts, we are affected by the change in working days in a given quarter.  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.

Summary of Fiscal 2018 Annual Results

The Company had record revenues of $558 million for the fiscal year ended March 31, 2018, an increase of $40 million, or 8%, compared to $519 million for the fiscal year ended March 31, 2017.  This increase was primarily due to a 9.8% increase in patient management services, driven by an increase in TPA services.  Additionally, there was a 5% increase in network solutions services.

During fiscal 2018, the Company’s gross profit increased to $107 million from $105 million in fiscal 2017, an increase of $2 million, or 2%.  This increase was primarily due to an increase in revenues, although cost of revenues increased at a higher rate than revenues.

During fiscal 2018, the Company’s general and administrative expenses increased to $59.4 million from $57.2 million in fiscal 2017, an increase of $2.1 million, or 3.7%.  This increase was primarily due to an impairment to the investment in private equity and an increase in non-cash stock-based compensation from performance stock options.

During fiscal 2018, the Company’s operating income increased to $47.9 million from $47.5 million in fiscal 2017, an increase of $0.4 million, or 0.7%, relatively flat as the increase in revenues was nearly offset by increase in cost of revenues and general and administrative expenses.

During fiscal 2018, the Company’s income tax expense decreased to $12.2 million from $18.1 million in fiscal 2017, a decrease of $5.9 million, or 32.4%.  This decrease was primarily due to the impact of the Tax Cuts and Jobs Act, effective January 1, 2018, as the Company remeasured its U.S. deferred tax assets and liabilities at lower enacted corporate tax rates. In addition, the Company benefited from the lower corporate tax rates for the last quarter of fiscal 2018.

Weighted diluted shares decreased to 19.0 million shares in fiscal 2018 from 19.6 million shares in fiscal 2017, a decrease of 528,000 shares, or 2.7%. This decrease was primarily due to the repurchase of 249,245 shares of common stock in fiscal 2018.  In February 2017, the Company’s Board of Directors increased the number of shares authorized to be repurchased over the life of its stock repurchase program to 36,000,000 shares.  Since commencing this program in the fall of 1996, the Company has repurchased 34,881,079 shares of its common stock through March 31, 2018, at a cost of $431 million. These repurchases were funded primarily from the Company’s operating cash flows.

Diluted earnings per share increased to $1.87 in fiscal 2018 from $1.51 in fiscal 2017, an increase of $0.36 per share, or 23.8%. This increase was primarily due to the benefit of the lower corporate tax rates and the reduction in the number of shares outstanding of 2.7% due to the share repurchases described above.

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Results of Operations

The Company derives its revenues from providing patient management and network solutions services to payors of workers’ compensation benefits, automobile insurance claims, and group health insurance benefits. Patient management services include utilization review, medical case management, vocational rehabilitation, and claims processing. Network solutions services include fee schedule auditing, hospital bill auditing, independent medical examinations, directed care services, diagnostic imaging review services and preferred provider referral services.  The percentages of total revenues attributable to patient management and network solutions services for the fiscal years ended March 31, 2018, 2017 and 2016 are listed below.

	2018			2017			2016
Patient management services		56.7	%		55.6	%		55.1	%
Network solutions services		43.3	%		44.4	%		44.9	%
		100.0	%		100.0	%		100.0	%

As noted in the table above, from fiscal 2016 to fiscal 2018, the mix of the Company’s revenues moved 1.6 percentage points from network solutions services to patient management services. This mix shift is primarily due to the Company’s increased focus in the sale of TPA and related services, which are included within patient management services.  The Company expects to have more growth in the sale of TPA and related services than in its other services because it is focusing more of its efforts, and believes the opportunities for growth in revenue is better, in this area.

The following table shows the consolidated statements of income for the fiscal years ended March 31, 2018, 2017 and 2016 and the dollar changes, as well as the percentage changes for each fiscal year.  The following amounts are in thousands, except per share data and percentages.

	Fiscal 2018		Fiscal 2017		Fiscal 2016		Amount Change from Fiscal 2017 to 2018			Amount Change from Fiscal 2016 to 2017			Percent Change from Fiscal 2017 to 2018			Percent Change from Fiscal 2016 to 2017
Revenues	$	558,350	$	518,686	$	503,584	$	39,664		$	15,102			7.6	%		3.0	%
Cost of revenues		451,097		413,894		399,040		37,203			14,854			9.0			3.7
Gross profit		107,253		104,792		104,544		2,461			248			2.3			0.2
General and administrative		59,350		57,243		58,484		2,107			(1,241	)		3.7			(2.1	)
Income before income taxes		47,903		47,549		46,060		354			1,489			0.7			3.2
Income tax provision		12,208		18,070		17,535		(5,862	)		535			(32.4	)		3.1
Netincome	$	35,695	$	29,479	$	28,525	$	6,216		$	954			21.1	%		3.3	%
Net income per share:
Basic	$	1.90	$	1.52	$	1.44	$	0.38		$	0.08			25.0	%		5.6	%
Diluted	$	1.87	$	1.51	$	1.43	$	0.36		$	0.08			23.8	%		5.6	%
Shares used in net income per    share:
Basic		18,825		19,418		19,826		(593	)		(408	)		(3.1	%)		(2.1	%)
Diluted		19,042		19,570		20,004		(528	)		(434	)		(2.7	%)		(2.2	%)

As previously identified in Part I, Item 1A of this annual report, “Risk Factors”, the Company’s ability to maintain or grow revenues is subject to several risks including, but not limited to, changes in government regulations, exposure to litigation and the ability to add or retain customers. Any of these, or a combination of all of them, could have a material and adverse effect on the Company’s results of operations going forward.

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The following table sets forth, for the periods indicated, the percentage of revenues represented by certain items reflected in the Company’s consolidated statements of income. The Company’s past operating results are not necessarily indicative of future operating results.  The percentages for the fiscal years ended March 31, 2018, 2017 and 2016 are as follows:

Income Statement Percentages	2018			2017			2016
Revenues		100.0	%		100.0	%		100.0	%
Cost of revenues		80.8	%		79.8	%		79.2	%
Gross profit		19.2	%		20.2	%		20.8	%
General and administrative		10.6	%		11.0	%		11.6	%
Income before income taxes		8.6	%		9.2	%		9.2	%
Income tax provision		2.2	%		3.5	%		3.5	%
Net Income		6.4	%		5.7	%		5.7	%

Revenue

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

Change in Revenue

Fiscal 2018 Compared to Fiscal 2017

Revenues increased to $558 million in fiscal 2018 from $519 million in fiscal 2017, an increase of $40 million, or 8%.  The increase in revenues was due to an increase in patient management services, which increased by 9.8%, from $288 million to $316 million. This increase in revenues from TPA services was due to a 9% increase in the number of customers, which contributed to a 19% increase in the total number of claims opened during the fiscal year. The increase in patient management services was due to an increase in TPA services partially offset by a decrease in case management services to non-TPA customers. Network solutions services revenues increased by 5.0%, from $230 million to $242 million.  The increase was due to a 6.4% increase in the number of bills, and revenue per bill increased 2.4%, from $29.80 to $30.50.  Pharmacy service revenues increased $4.8 million, from $56.4 million to $61.1 million.

Fiscal 2017 Compared to Fiscal 2016

Revenues increased to $519 million in fiscal 2017 from $504 million in fiscal 2016, an increase of $15 million, or 3%.  This increase was primarily due to growth in TPA services within patient management due to an increase in customers and in network solutions services.  Patient management services revenues, which include TPA services revenues, increased to $288 million in fiscal 2017 from $277 million in fiscal 2016, an increase of $10.9 million, or 3.9%.  This increase in revenues from TPA services was due to a 12% increase in the number of customers, which contributed to an 11% increase in the total number of claims opened during the fiscal year. Network solutions services revenues increased to $230 million in fiscal 2017 from $226 million in fiscal 2016, an increase of $4.2 million, or 1.8%.

Cost of Revenue

The Company’s cost of revenues consists of direct expenses, costs directly attributable to the generation of revenue, and indirect costs which are incurred to support the operations in the field offices which generate the revenue. Direct expenses primarily include (i) case manager and bill review analysts salaries, along with related payroll taxes and fringe benefits, and (ii) costs associated with independent medical examinations (known as IME), prescription drugs, and MRI, physical therapy, and durable medical equipment providers. Most of the Company’s revenues are generated in offices which provide both patient management services and network solutions services. 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, (iv) office rent, and (v) telephone expenses. During fiscal 2018 and 2017, approximately 34% and 35% 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.

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Change in Cost of Revenue

Fiscal 2018 Compared to Fiscal 2017

The Company’s cost of revenues increased to $451 million in fiscal 2018 from $414 million in fiscal 2017, an increase of $37 million, or 9%.  The increase in cost of revenues was primarily due to revenue increasing in lower margin TPA services, which was slightly offset by an increase in higher margin network solutions revenue. Additionally, there was an increase of $5.7 million in salaries, from $120 million in fiscal 2017 to $126 million in fiscal 2018, due to an increase in headcount and direct labor costs of 159 employees.  Pharmacy service costs increased $5.1 million due to an increase in pharmacy service revenues. The Company also experienced a $4.6 million increase in the Company’s self-insured group medical costs due to a few large claims incurred during fiscal 2018.

Fiscal 2017 Compared to Fiscal 2016

The Company’s cost of revenues increased to $414 million in fiscal 2017 from $399 million in fiscal 2016, an increase of $15 million, or 3.7%.  This increase was primarily due to the 3% increase in revenues noted above.  The increase in cost of revenues was also due to an increase in lower margin patient management TPA services due to competitive pricing and a decrease in higher margin bill review services.  Additionally, our direct labor costs increased to $120 million in fiscal 2017 from $113 million in fiscal 2016 due to increased headcount in TPA services.

General and Administrative Expense

During fiscal years 2018, 2017, and 2016, approximately 54%, 59%, and 60%, respectively, of general and administrative costs consisted of corporate systems costs, which include the corporate systems support, implementation and training, rules engine development, national IT strategy and planning, depreciation of hardware costs in the Company’s corporate offices and backup data center, the Company’s nationwide area network, and other systems related costs. The Company includes all IT-related costs managed by the corporate office in general and administrative whereas the field IT-related costs are included in the cost of revenues.  The remaining general and administrative costs consist of national marketing, national sales support, corporate legal, corporate insurance, human resources, accounting, product management, new business development, and other general corporate expenses.

Change in General and Administrative Expense

Fiscal 2018 Compared to Fiscal 2017

General and administrative expense increased to $59.4 million in fiscal 2018 from $57.2 million in fiscal 2017, an increase of $2.1 million, or 3.7%   The increase in general and administrative expense was primarily due to an increase in the impairment of $1.2 million in the investment in private equity and an increase of $0.5 million in non-cash stock-based compensation from performance stock options.

Fiscal 2017 Compared to Fiscal 2016

General and administrative expense decreased to $57.2 million in fiscal 2017 from $58.5 million in fiscal 2016, a decrease of $1.3 million, or 2.1%.    Legal expenses decreased $0.6 million and IT expenses decreased $0.4 million in fiscal 2017.

Income Tax Provision

Fiscal 2018 Compared to Fiscal 2017

The Company’s income tax expense was $12.2 million for fiscal 2018 and $18.1 million for fiscal 2017, a decrease of $5.9 million. The decrease in income tax expense was primarily due to the decrease in the Company’s effective tax rate, which was 25% and 38% for fiscal 2018 and fiscal 2017, respectively. The effective tax rate decreased due to the impact of the Tax Cuts and Jobs Act as the Company remeasured its U.S. deferred tax assets and liabilities at lower enacted corporate tax rates, resulting in a tax benefit of $3.0 million in fiscal 2018. The tax benefit associated with stock option exercises also contributed to the lower tax rate in fiscal 2018 compared to fiscal 2017. Accounting for these tax savings resulted in an effective tax rate of 23% in the fourth quarter of fiscal 2018.

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Fiscal 2017 Compared to Fiscal 2016

The Company’s income tax expense was $17.5 million for fiscal 2016 and $18.1 million for fiscal 2017. The income tax expense was calculated based on a 38.1% tax rate for fiscal year 2016 and 38% for fiscal year 2017.  The increase of $0.5 million was primarily due to an increase in income before income taxes.  The income tax provision rates were based upon management’s review of the Company’s estimated annual income tax rate, including state taxes. This effective tax rate differed from the statutory federal tax rate of 35% primarily due to state income taxes and certain non-deductible expenses offset by tax credits.

Net Income

Fiscal 2018 Compared to Fiscal 2017

The Company’s net income increased to $35.7 million in fiscal 2018 from  $29.5 million in fiscal 2017, an increase of $6.2 million, or 21.1%.  This increase was primarily due to the benefit of the lower corporate tax rates, in addition to a 1.0% increase in pretax income.

Fiscal 2017 Compared to Fiscal 2016

The Company’s net income increased to $29.5 million in fiscal 2017 from $28.5 million in fiscal 2016, an increase of $1 million, or 3.3%.  This increase net income was due to an increase in pretax income, which was primarily due to a decrease in general and administrative expenses, along with a nominal increase in gross profit.

Earnings per Share

Fiscal 2018 Compared to Fiscal 2017

The Company’s diluted earnings per share increased to $1.87 in fiscal 2018 from $1.51 in fiscal 2017, an increase of $0.36.  This increase was primarily due to the benefit of the lower corporate tax rates and a decrease in diluted weighted average shares outstanding because of shares repurchased under the Company’s stock repurchase program.

Fiscal 2017 Compared to Fiscal 2016

The Company’s diluted earnings per share increased to $1.51 in fiscal 2017 from $1.43 in fiscal 2016, an increase of $0.08.  This increase was primarily due to a decrease in diluted weighted average shares outstanding because of shares repurchased under the Company’s stock repurchase program.

Liquidity and Capital Resources

The Company manages its liquidity and financial position in the context of its overall business strategy. The Company continually forecasts and manages its cash, investments, working capital balances and capital structure to meet the short- and long-term obligations of its businesses while seeking to maintain liquidity and financial flexibility. Cash flows generated from operating activities are principally from earnings before non-cash expenses. The risk of decreased operating cash flow from a decline in earnings is partially mitigated by the diversity of the Company’s services, geographies and customers, and the Company has had virtually no interest-bearing debt for the past 27 years.

The Company has historically funded its operations and capital expenditures primarily from cash flow from operations, and to a lesser extent, stock option exercises.   The Company’s net accounts receivables have ranged from 41 to 43 days of average sales for the fiscal years ended March 31, 2018, 2017 and 2016.  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 $431 million of its common stock during the past 21 fiscal years, on inception-to-date net earnings of $458 million. The Company repurchases shares during periods of excess liquidity, which has occurred in all 27 years that the Company has been public.  Should the Company have lower income or cash flows, it could reduce or eliminate repurchases under the stock repurchase program until earnings and cash flow improved.  Working capital increased to $65.3 million in fiscal 2018 from $38.8 million in fiscal 2017.  This is primarily due to an increase in net income and proceeds from stock options exercised, partially offset by cash used to repurchase shares of the Company’s common stock.

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The Company believes that cash from operations and funds from exercises of stock options granted to employees are adequate to fund existing obligations, repurchase shares of the Company’s common stock under its stock repurchase program, introduce new services, and continue to develop healthcare-related businesses for at least the next twelve months. The Company regularly evaluates cash requirements for current operations, commitments, and for capital acquisitions and other strategic transactions. The Company may elect to raise additional funds for these purposes, through equity or debt financings or otherwise, as appropriate. However, additional equity or debt financing may not be available when needed, on terms favorable to us or at all.

As of March 31, 2018, the Company had $55.8 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.

In September 2017, the Company renewed a line of credit agreement.  The line is with a financial institution to provide a revolving credit facility with borrowing capacity of up to $10 million. Borrowings under this agreement, as amended, bear interest, at the Company’s option, at a fixed LIBOR-based rate plus 1.50% or at a fluctuating rate determined by the financial institution to be 1.50% above the daily one-month LIBOR rate. The loan covenants require the Company to maintain a current assets to liabilities ratio of at least 1.25:1, debt to tangible net worth ratio not greater than 1.25:1 and to have positive net income.  There were no outstanding revolving loans as of March 31, 2018, but letters of credit in the aggregate amount of $4.5 million have been issued separate from the line of credit, and therefore do not reduce the amount of borrowings available under the revolving credit facility. In the event of default, the financial institution has a right of setoff against our cash balances on deposit with the financial institution to the extent there is unpaid principal and interest related to the line of credit. The credit agreement expires in September 2018.

The Company believes that the cash balance at March 31, 2018 along with anticipated internally-generated funds, and the credit facility will be sufficient to meet the Company’s expected cash requirements for at least the next twelve months.

Operating Cash Flows

Fiscal 2018 Compared to Fiscal 2017

Net cash provided by operating activities increased to $62.2 million in fiscal 2018 from $52.1 million in fiscal 2017, an increase of $10.1 million.  The improvement in cash from operating activities was primarily due to a $6 million increase in net income, coupled with the favorable cash impact from an increase in deferred revenue.

Fiscal 2017 Compared to Fiscal 2016

Net cash provided by operating activities increased to $52.1 million in fiscal 2017 from $51.3 million in fiscal 2016, an increase of $0.8 million.  This amount is relatively unchanged over prior year.

Investing Activities

Fiscal 2018 Compared to Fiscal 2017

Net cash flow used in investing activities decreased to $27.7 million in fiscal 2018 from $31.0 million in fiscal 2017, a decrease of $3.3 million.  The decrease in net cash flow used in investing activities was due to a decrease of $5 million in software licenses and $5 million in servers, which was offset by the $5.8 million purchase of a building in fiscal 2018.  

Fiscal 2017 Compared to Fiscal 2016

Net cash flow used in investing activities increased to $31.0 million in fiscal 2017 from $17.4 million in fiscal 2016, an increase of $13.74 million.   This increase was due to an increase in property additions during fiscal 2017.  The increase in net cash flow used in investing activities was also due to the above-mentioned purchase of $5 million of servers.  Additionally, the Company purchased $5 million in software licenses as part of a multiple-year purchase agreement.  

Financing Activities

Fiscal 2018 Compared to Fiscal 2017

Net cash flow used in financing activities decreased to $7.3 million in fiscal 2018 from $25 million in fiscal 2017, a decrease of $17.9 million.  During fiscal 2018, the Company spent $11 million to repurchase 249,245 shares of its common stock (at an average price of $44.88 per share).  During fiscal 2017, the Company spent $28 million to repurchase 745,575 shares of its common stock (at an average price of $37.56 per share).

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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, or seek to identify other businesses to acquire.  In February 2017, the Board of Directors increased the number of shares authorized to be repurchased over the life of the stock repurchase program by an additional 1,000,000 shares to 36,000,000 shares.  The Company has historically used cash provided by operating activities and from the exercise of stock options to repurchase stock.  The Company expects that it may use some of the cash on the balance sheet at March 31, 2018 to repurchase additional shares of its common stock in the future.

Fiscal 2017 Compared to Fiscal 2016

Net cash flow used in financing activities decreased to $25 million in fiscal 2017 from $27 million in fiscal 2016, a decrease of $2 million.  During fiscal 2017, the Company spent $28 million to repurchase 745,575 shares of its common stock (at an average price of $37.55 per share). During fiscal 2016, the Company spent $31.5 million to repurchase 893,771 shares of its common stock (at an average price of $35.27 per share).

Contractual Obligations

The following table sets forth our contractual obligations at March 31, 2018, which are primarily future minimum lease payments due under non-cancelable operating leases:

			For the Fiscal Years Ended March 31st, Within:
	Total		Less than one year		1-3 Years		3-5 Years		More than 5 Years
Operating leases	$	62,781,000	$	14,442,000	$	21,148,000	$	14,746,000	$	12,445,000
Uncertain tax positions		1,472,000		1,472,000		—		—		—
Software license		1,746,000		1,746,000		—		—		—
Total	$	65,999,000	$	17,660,000	$	21,148,000	$	14,746,000	$	12,445,000

Litigation. The Company is involved in litigation arising in the ordinary course of business. Management believes that resolution of these matters will not result in any payment that, in the aggregate, would be material to the financial position or results of operations of the Company.

Inflation. The Company experiences pricing pressures in the form of competitive prices. The Company is also impacted by rising costs for certain inflation-sensitive operating expenses such as labor, employee benefits, and facility leases.  However, the Company generally does not believe these impacts are material to its revenues or net income.

Off-Balance Sheet Arrangements

The Company is not a party to off-balance sheet arrangements as defined by the SEC. However, from time to time the Company enters into certain types of contracts that contingently require the Company to indemnify parties against third-party claims. The contracts primarily relate to: (i) certain contracts to perform services, under which the Company may provide customary indemnification for the purchases of such services, (ii) certain real estate leases, under which the Company may be required to indemnify property owners for environmental and other liabilities, and other claims arising from the Company’s use of the applicable premises, and (iii) certain agreements with the Company’s officers, directors and employees, under which the Company may be required to indemnify such persons for liabilities arising out of certain actions taken by such persons, acting in their respective capacities within the Company.

The terms of such customary obligations vary by contract and in most instances a specific or maximum dollar amount is not explicitly stated therein. Generally, amounts under these contracts cannot be reasonably estimated until a specific claim is asserted. Consequently, no liabilities have been recorded for these obligations on the Company’s balance sheets for any of the periods presented.

Critical Accounting Policies

The SEC defines critical accounting policies as those that require application of management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.

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The following is not intended to be a comprehensive list of our accounting policies. The Company’s significant accounting policies are more fully described in Note 1, “Basis of Presentation and Summary of Significant Accounting Policies” in the notes to our consolidated financial statements. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States of America (“GAAP”), with no need for management’s judgment in their application. There are also areas in which management’s judgment in selecting an available alternative would not produce a materially different result.

We have identified the following accounting policies as critical to us: (i) revenue recognition, (ii) allowance for uncollectible accounts, (iii) goodwill and long-lived assets, (iv) accrual for self-insured costs, (v) accounting for income taxes, (vi) legal and other contingencies, (vii) share-based compensation, and (viii) software development costs.

Revenue Recognition:  The Company recognizes revenue when (i) there is persuasive evidence of an arrangement, (ii) the services have been provided to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. For the Company’s services, the Company’s professional staff is contractually permitted to bill (i) for fees earned for time worked in fraction of an hour increments or (ii) by units of production. The Company recognizes revenue as fees are earned or as units of production are completed, which is when the revenue is earned and realized. Labor costs are recognized as the costs are incurred. The Company derives the majority of its revenue from the sale of network solutions and patient management services. Network solutions and patient management services may be sold individually or combined with any of the services the Company provides. When a sale combines multiple elements, the Company accounts for such multiple element arrangements in accordance with the guidance included in ASC 605-25.

Management evaluates agreements with customers in accordance with the provision of the revenue recognition topic that addresses multiple-deliverable revenue arrangements. The multiple elements arrangements consist of bundled managed care which included various units of accounting such as network solutions services and patient management services (which includes claims administration). Such elements are considered separate units of accounting as each element has value to the customer on a stand-alone basis. The selling price for each unit of accounting is determined using the contract price and management estimates. When the Company’s customers purchase several products, the pricing of the products sold is generally the same as if the products were sold on an individual basis. Revenue is recognized as the work is performed in accordance with the Company’s customer contracts. Based upon the nature of the Company’s products, bundled managed care elements are generally delivered in the same accounting period. Revenues for most of our products are generally recognized at the time of billing, however, the Company recognizes revenue for patient management claims administration services over the life of the claim. The Company estimates, based upon prior experience in managing claims, the deferral amount based on our estimate of the life of the claim or the term of the customer contract.

Allowance for Uncollectible Accounts:  The Company determines its allowance for uncollectible accounts by considering a number of factors, including the length of time trade accounts receivable are past due, the Company’s previous loss history, the customers’ current ability to pay its obligation to the Company, and the condition of the general economy and the industry as a whole. The Company writes off accounts receivable when they become uncollectible.

The Company must make significant judgments and estimates in determining contractual and bad debt allowances in any accounting period. One significant uncertainty inherent in the Company’s analysis is whether its past experience will be indicative of future periods. Although the Company considers future projections when estimating contractual and bad debt allowances, the Company ultimately makes its decisions based on the best information available to it at the time the decision is made. 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. No one customer accounted for 10% or more of accounts receivable at March 31, 2018 and 2017.

Goodwill and Long-Lived Assets:  Goodwill arising from business combinations represents the excess of the purchase price over the estimated fair value of the net assets of the acquired business. Pursuant to ASC 350-10 through ASC 350-30, “Goodwill and Other Intangible Assets,” goodwill is tested annually for impairment or more frequently if circumstances indicate the potential for impairment. Also, management tests for impairment of its amortizable intangible assets and long-lived assets annually and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The impairment test is conducted at the company level.  The measurement of fair value is based on an evaluation of market capitalization and is further tested using a multiple of earnings approach. In projecting the Company’s cash flows, management considers industry growth rates and trends and cost structure changes. Based on the Company’s tests and reviews, no impairment of its goodwill, intangible assets, or other long-lived assets existed at March 31, 2018 or March 31, 2017.  However, future events or changes in current circumstances could affect the recoverability of the carrying value of goodwill and long-lived assets. Should an asset be deemed impaired, an impairment loss would be recognized to the extent the carrying value of the asset exceeded its estimated fair market value.

39

Accrual for Self-insurance Costs: The Company accrues for the group medical costs and workers’ compensation costs of its employees based on claims filed and an estimate of claims incurred but not reported as of each balance sheet date. The Company determines its estimated self-insurance reserves based upon historical trends along with outstanding claims information provided by its claims paying agents.  However, it is possible that recorded accruals may not be adequate to cover the future payment of claims. Adjustments, if any, to estimated accruals resulting from ultimate claim payments will be reflected in earnings during the periods in which such adjustments are determined. The Company’s self-insured liabilities contain uncertainties because management is required to make assumptions and judgments to estimate the ultimate cost to settle reported claims and claims incurred but not reported at the balance sheet date.

The Company does not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions used to calculate its self-insured liabilities. However, if actual results are not consistent with these estimates or assumptions, the Company may be exposed to losses or gains that could be material.

Accounting for Income Taxes: The Company records a tax provision for the anticipated tax consequences of its reported results of operations. The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently-enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled. The Company records a valuation allowance, if necessary, to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

Management believes it is more likely than not that forecasted income, including income that may be generated as a result of certain tax planning strategies, together with future reversals of existing taxable temporary differences, will be sufficient to fully recover the deferred tax assets. In the event that the Company determines all or part of the net deferred tax assets are not realizable in the future, the Company will make an adjustment to the valuation allowance that would be charged to earnings in the period such determination is made. In addition, the calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of GAAP and complex tax laws. Resolution of these uncertainties in a manner inconsistent with management’s expectations could have a material impact on the Company’s financial condition and operating results. The significant assumptions and estimates described above are important contributors to our ultimate effective tax rate in each year.

Legal and Other Contingencies:  As discussed in Part I, Item 3 of this annual report, “Legal Proceedings” and in Note 9, “Contingencies and Legal Proceedings” in the notes to our consolidated financial statements, the Company is subject to various legal proceedings and claims that arise in the ordinary course of business. The Company records a liability when it is probable that a loss has been incurred and the amount is reasonably estimable. There is significant judgment required in both the probability determination and as to whether an exposure can be reasonably estimated.  The outcome of legal proceedings and claims brought against the Company is subject to significant uncertainty.

Share-Based Compensation: The Company accounts for share-based compensation in accordance with the provisions of ASC Topic 718 “Compensation – Stock Compensation”.  Under ASC 718, share-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity grant).   For the fiscal year ended March 31, 2018, the Company recorded share-based compensation expense of $3,164,000.  

40

The Company estimates the fair value of stock options using the Black-Scholes valuation model. Key input assumptions used to estimate the fair value of stock options include the exercise price of the award, the expected option term, the expected volatility of the Company’s stock over the option’s expected term, the risk-free interest rate over the option’s term, and the Company’s expected annual dividend yield. The Company issues performance-based stock options which vest only upon the Company’s achievement of certain earnings per share targets on a calendar year basis, as determined by the Company’s Board of Directors. These options were valued in the same manner as the time-based options. However, the Company only recognizes stock compensation expense to the extent that the targets are determined to be probable of being achieved, which triggers the vesting of the performance options. 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 2018.  Estimates of fair value are not intended to predict actual future events or the value ultimately realized by persons who receive equity awards.

We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to determine stock-based compensation expense. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to changes in stock-based compensation expense that could be material.

Software Development Costs: Development costs incurred in the research and development of new software products and enhancements to existing software products for internal use are expensed as incurred until technological feasibility has been established. After technological feasibility is established, any additional external software development costs are capitalized and amortized on a straight-line basis over the estimated economic life of the related product, which is typically five years.  The Company performs an annual review of the estimated economic life and the recoverability of such capitalized software costs. If a determination is made that capitalized amounts are not recoverable based on the estimated cash flows to be generated from the applicable software, any remaining capitalized amounts are written off.  Although the Company believes that its approach to estimates and judgments as described herein is reasonable, actual results could differ and the Company may be exposed to increases or decreases in revenue that could be material.

Recently Issued Accounting Standards

On May 28, 2014, the FASB issued ASU 2014-09 regarding ASC Topic 606, “Revenue from Contracts with Customers”. This standard provides principles for recognizing revenue for the transfer of promised goods or services to customers with the consideration to which the entity expects to be entitled in exchange for those goods or services. In July 2015, the FASB approved a one-year delay of the effective date of this new revenue recognition standard. The guidance will now be effective for our fiscal year beginning April 1, 2018. The Company has reviewed a sample of contracts with its customers that the Company believes is representative of its significant revenue streams identified to date, and is performing procedures to confirm the initial assessment as applied to all revenue streams. While the assessment of the impact on revenue and expenses and the Company’s results of operations, financial position and cash flows as a result of this guidance is ongoing, the Company expects that revenue for its primary revenue streams will be recognized in a manner which is similar to how revenue is recognized for these services today. Further, the Company does not expect any changes in accounting for costs to obtain or fulfill contracts with customers. As the Company completes its overall assessment, it is also identifying and preparing to implement changes to its accounting policies and disclosure requirements. For example, the new standard requires increased disclosure, which in turn is expected to require certain new processes and system changes. The Company's evaluation indicated that process and system changes were required to capture the amounts and expected timing of revenues to be recognized from the remaining performance obligations during and as of each reporting period and the Company has completed a majority of these process and system changes at this time. The Company adopted this new standard as of April 1, 2018 using the modified retrospective method that may result in a cumulative effect adjustment as of the date of adoption.

In January 2016, the FASB issued ASU 2016-01 regarding Subtopic 825-10, “Financials Instruments — Overall: Recognition and Measurements of Financial Assets and Financial Liabilities”. The standard addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. It requires that most equity investments be measured at fair value, with subsequent changes in fair value recognized in net income. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. We are currently evaluating the accounting, transition, and disclosure requirements of the standard and we do not expect it to have a material impact on our consolidated financial statements.

41

In February 2016, the FASB issued ASU 2016-02, “Leases”, which sets out the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for using an approach that is similar to the existing guidance for operating leases. The standard is effective April 1, 2019, with early adoption permitted. The standard is to be applied using a modified retrospective transition method. We are currently evaluating the impact of adoption on our consolidated financial position, results of operations, and cash flows.

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting”, which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification on the statement of cash flows. For public companies, the new guidance became effective for annual reporting periods, and interim periods within those periods, beginning after December 15, 2016. We have elected to early adopt this standard as of March 31, 2017.  As a result, during the fourth quarter of fiscal 2017, we reclassified the fiscal 2017 excess tax benefit of $0.5 million from additional paid in capital into the income tax provision line.  We have also reclassified the excess tax benefits from the stock-based compensation from financing activities into operating activities in the statement of cash flows for the year ended March 31, 2017.  We applied this change in presentation prospectively and prior years have not been adjusted.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows”, which reduces diversity in the practice of how certain transactions are classified in the statement of cash flows.  The new guidance is effective for annual reporting periods beginning after December 15, 2017, with early adoption permitted. The adoption of this guidance will not have a material impact on our consolidated financial statements.

42

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of CorVel Corporation

Opinions on the Consolidated Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of CorVel Corporation (the “Company”) as of March 31, 2018 and 2017, the related consolidated statements of income, stockholders’ equity, and cash flows for each of the years in the three-year period ended March 31, 2018, and the related notes and financial statement schedule (collectively referred to as the “consolidated financial statements”).  We also have audited the Company’s internal control over financial reporting as of March 31, 2018, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of March 31, 2018 and 2017, and the consolidated results of its operations and its cash flows for each of the years in the three-year period ended March 31, 2018, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2018, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

Basis for Opinion

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Continued)

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We have served as the Company’s auditor since 2006.

	/s/ HASKELL & WHITE LLP
Irvine, California
June 8, 2018

44

CORVEL CORPORATION

CONSOLIDATED BALANCE SHEETS

	March 31,
	2018			2017
ASSETS
Current Assets
Cash and cash equivalents	$	55,771,000		$	28,611,000
Customer deposits		35,496,000			32,471,000
Accounts receivable (less allowance for doubtful accounts of $4,551,000 at March 31,    2018 and $3,001,000 at March 31, 2017)		64,940,000			62,841,000
Prepaid expenses and income taxes		7,110,000			4,944,000
Total current assets		163,317,000			128,867,000
Property and equipment, net		69,356,000			63,042,000
Goodwill		36,814,000			36,814,000
Other intangible assets, net		3,415,000			3,851,000
Other assets		1,102,000			2,809,000
Total assets	$	274,004,000		$	235,383,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts and income taxes payable	$	13,453,000		$	16,583,000
Accrued liabilities		84,536,000			73,468,000
Total current liabilities		97,989,000			90,051,000
Deferred income taxes		4,839,000			6,686,000
Total liabilities		102,828,000			96,737,000
Commitments and contingencies (Notes 5, 6, 8, 9, 10 and 12)
Stockholders' Equity
Common stock, $.0001 par value: 120,000,000 shares authorized at March 31, 2018 and    2017; 53,793,986 shares issued (18,912,907 shares outstanding, net of treasury shares)    and 53,569,067 shares issued (18,937,233 shares outstanding, net of treasury shares) at    March 31, 2018 and March 31, 2017, respectively		3,000			3,000
Paid-in-capital		143,705,000			135,683,000
Treasury Stock, at cost (34,881,079 and 34,631,834 shares at March 31, 2018 and 2017,    respectively)		(430,989,000	)		(419,802,000	)
Retained earnings		458,457,000			422,762,000
Total stockholders' equity		171,176,000			138,646,000
	$	274,004,000		$	235,383,000

See accompanying notes to consolidated financial statements.

45

CORVEL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

	Fiscal Years Ended March 31,
	2018		2017		2016
Revenues	$	558,350,000	$	518,686,000	$	503,584,000
Cost of revenues		451,097,000		413,894,000		399,040,000
Gross profit		107,253,000		104,792,000		104,544,000
General and administrative		59,350,000		57,243,000		58,484,000
Income before income taxes		47,903,000		47,549,000		46,060,000
Income tax provision		12,208,000		18,070,000		17,535,000
Net income	$	35,695,000	$	29,479,000	$	28,525,000
Net income per share:
Basic	$	1.90	$	1.52		1.44
Diluted	$	1.87	$	1.51		1.43
Weighted average shares outstanding:
Basic		18,825,000		19,418,000		19,826,000
Diluted		19,042,000		19,570,000		20,004,000

See accompanying notes to consolidated financial statements.

46

CORVEL CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Fiscal Years Ended March 31, 2018, 2017 and 2016

	Common Shares		Stock Amount		Paid-in-Capital		TreasuryShares			Treasury Stock			RetainedEarnings		Total Stockholders' Equity
Balance – March 31, 2015		53,243,157	$	3,000	$	123,440,000		(32,992,488	)	$	(360,278,000	)	$	364,758,000	$	127,923,000
Stock issued under employee stock    purchase plan		10,975		—		371,000		—			—			—		371,000
Stock issued under stock option plan,    net of shares repurchased		194,540		—		3,749,000		—			—			—		3,749,000
Stock-based compensation expense		—		—		2,192,000		—			—			—		2,192,000
Income tax benefits from stock option    exercises		—		—		713,000		—			—			—		713,000
Purchase of treasury stock		—		—		—		(893,771	)		(31,525,000	)		—		(31,525,000	)
Net income		—		—		—		—			—			28,525,000		28,525,000
Balance – March 31, 2016		53,448,672		3,000		130,465,000		(33,886,259	)		(391,803,000	)		393,283,000		131,948,000
Stock issued under employee stock    purchase plan		10,596		—		419,000		—			—			—		419,000
Stock issued under stock option plan,    net of shares repurchased		109,799		—		2,367,000		—			—			—		2,367,000
Stock-based compensation expense		—		—		2,432,000		—			—			—		2,432,000
Purchase of treasury stock		—		—		—		(745,575	)		(27,999,000	)		—		(27,999,000	)
Net income		—		—		—		—			—			29,479,000		29,479,000
Balance – March 31, 2017		53,569,067		3,000		135,683,000		(34,631,834	)		(419,802,000	)		422,762,000		138,646,000
Stock issued under employee stock    purchase plan		8,976		—		458,000		—			—			—		458,000
Stock issued under stock option plan,    net of shares repurchased		215,943		—		3,426,000		—			—			—		3,426,000
Stock-based compensation expense		—		—		3,164,000		—			—			—		3,164,000
Purchase of treasury stock		—		—		—		(249,245	)		(11,187,000	)		—		(11,187,000	)
Adjustment to deferred income taxes for prior year's stock options		—		—		974,000		—			—			—		974,000
Net income		—		—		—		—			—			35,695,000		35,695,000
Balance – March 31, 2018		53,793,986	$	3,000	$	143,705,000		(34,881,079	)	$	(430,989,000	)	$	458,457,000	$	171,176,000

See accompanying notes to consolidated financial statements.

47

CORVEL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Fiscal Years Ended March 31,
	2018			2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	35,695,000		$	29,479,000		$	28,525,000
Adjustments to reconcile net income to net cash provided by operating    activities:
Depreciation and amortization		21,775,000			20,948,000			19,952,000
Loss on write down or disposal of assets		1,199,000			733,000			286,000
Stock-based compensation expense		3,164,000			2,432,000			2,192,000
Provision for doubtful accounts		2,559,000			2,335,000			1,357,000
Provision for deferred income taxes		(874,000	)		(1,220,000	)		(1,656,000	)
Changes in operating assets and liabilities:
Accounts receivable		(4,658,000	)		(5,429,000	)		(3,567,000	)
Customer deposits		(3,025,000	)		(6,822,000	)		(8,331,000	)
Prepaid expenses and income taxes		(2,166,000	)		(11,000	)		6,742,000
Other assets		545,000			(29,000	)		(516,000	)
Accounts and taxes payable		(3,130,000	)		3,350,000			(2,537,000	)
Accrued liabilities		11,068,000			6,286,000			8,864,000
Net cash provided by operating activities		62,152,000			52,052,000			51,311,000
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in private equity		—			34,000			(600,000	)
Purchases of property and equipment		(27,689,000	)		(31,041,000	)		(16,756,000	)
Net cash used in investing activities		(27,689,000	)		(31,007,000	)		(17,356,000	)
CASH FLOWS FROM FINANCING ACTIVITIES
Exercise of employee stock purchase options		458,000			419,000			371,000
Exercise of common stock options		3,426,000			2,367,000			3,749,000
Tax benefits from stock options		—			—			713,000
Purchase of treasury stock		(11,187,000	)		(27,999,000	)		(31,525,000	)
Net cash used in financing activities		(7,303,000	)		(25,213,000	)		(26,692,000	)
Net increase (decrease) in cash and cash equivalents		27,160,000			(4,168,000	)		7,263,000
Cash and cash equivalents at beginning of year		28,611,000			32,779,000			25,516,000
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	55,771,000		$	28,611,000		$	32,779,000
Supplemental cash flow information
Income taxes paid	$	16,229,000		$	18,321,000		$	13,589,000
Accrual of software license purchase	$	1,746,000		$	3,492,000		$	3,249,000
Tenant improvement allowance	$	—		$	1,224,000		$	—

See accompanying notes to consolidated financial statements.

48

CORVEL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended March 31, 2018, 2017 and 2016

Note 1 — Summary of Significant Accounting Policies

Organization:  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. 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.

Basis of Presentation:  The consolidated financial statements include the accounts of CorVel and its wholly-owned subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation.  Certain prior year amounts have been reclassified to conform to fiscal 2018 presentation.  These changes had no impact on previously-reported results of operations or shareholders’ equity.

The Company evaluated all subsequent events and transactions through the date of this filing.

Use of Estimates:  The preparation of financial statements in compliance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements. Actual results could differ from those estimates.  Significant estimates include the values assigned to intangible assets, capitalized software development, the allowance for doubtful accounts, accrual for income taxes, share-based payments related to performance-based awards, loss contingencies, estimated claims for claims administration revenue recognition, estimates used in stock options valuations, and accrual for self-insurance reserves.

Cash and Cash Equivalents:  Cash and cash equivalents consist of short-term, interest-bearing highly-liquid investment-grade securities with maturities of 90 days or less when purchased. The carrying amounts of the Company’s financial instruments approximate their fair values at March 31, 2018 and 2017 due to the short-term nature of those instruments.  Customer deposits represent cash that is expected to be returned or applied towards payment within one year through the Company’s provider reimbursement services.

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

Level 1 Quoted market prices in active markets for identical assets or liabilities;

Level 2 Observable inputs other than those included in Level 1 (for example, quoted prices for similar assets in active markets or quoted prices for identical assets in inactive markets); and

Level 3 Unobservable inputs reflecting management’s own assumptions about the inputs used in estimating the value of the asset.

The carrying amount of the Company’s financial instruments (i.e. cash, accounts receivable, accounts payable, etc.) are all Level 1, and the Company believes their respective carrying values approximates their fair values at March 31, 2018 and 2017 due to the short-term nature of those instruments.  The Company has no Level 2 or Level 3 assets.

Investment in Private Equity: The Company has made an investment of $2,250,000 into a private equity limited partnership that invests in start-up companies primarily in the data analytics industry.   The Company accounts for the investment using the cost method and will periodically review the investment for possible impairment.  The Company recorded a reduction to the investment of $1,169,000 for the year ended March 31, 2018.  The investment is recorded in other assets on the accompanying consolidated balance sheets.  In accordance with ASC 825-10-50-16 through 50-19, it is not practicable to estimate the fair value of the investment due to the fact that the investment is in a diversified portfolio of companies whose shares are not traded in public markets.

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Revenue Recognition: The Company recognizes revenue when (i) there is persuasive evidence of an arrangement, (ii) the services have been provided to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. For the Company’s services, the Company’s professional staff is contractually permitted to bill (i) for fees earned for time worked in fraction of an hour increments or (ii) by units of production. The Company recognizes revenue as fees are earned or as units of production are completed, which is when the revenue is earned and realized. Labor costs are recognized as the costs are incurred. The Company derives its revenue from the sale of network solutions and patient management services. Network solutions and patient management services may be sold individually or combined. When a sale combines multiple elements, the Company accounts for such multiple element arrangements in accordance with the guidance included in ASC 605-25.

Management evaluates agreements with customers in accordance with the provision of the revenue recognition topic that addresses multiple-deliverable revenue arrangements. The multiple element arrangements consist of bundled managed care services, which include various units of accounting such as network solutions and patient management services (which includes claims administration). Such elements are considered separate units of accounting due to each element having value to the customer on a stand-alone basis. The selling price for each unit of accounting is determined using the contract price and management estimates. When the Company’s customers purchase several products, the pricing of the products sold is generally the same as if the products were sold on an individual basis. Revenue is recognized as the work is performed in accordance with the Company’s customer contracts. Based upon the nature of the Company’s products, bundled managed care elements are generally delivered in the same accounting period. Revenues for most of our products are generally recognized at the time of billing, however, the Company recognizes revenue for patient management claims administration services over the life of the claim. The Company estimates, based upon prior experience in managing claims, the deferral amount based on our estimate of the life of the claim or the term of the customer contract.

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.   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 doubtful accounts. Those accounts outstanding longer than the contractual payment terms are considered past due. The Company determines its allowance by considering a number of factors, including the length of time trade accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to pay its obligation to the Company, and the condition of the general economy and the industry as a whole. The Company writes off accounts receivable against the reserve when they become uncollectible. Accounts receivable includes $15,131,000, and $14,579,000 of unbilled receivables at March 31, 2018 and 2017, respectively.  Unbilled receivables represent the revenue for work performed which has not yet been invoiced to the customer.  Unbilled receivables are generally invoiced within the following three months.

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.  Receivables are generally due within 30 days. Credit losses consistently have been within management’s expectations.  Virtually all of the Company’s cash is invested at financial institutions in amounts which exceed the FDIC insurance levels. No customer accounted for 10% or more of revenue for either fiscal 2018, 2017 or 2016.  No customer accounted for 10% or more of accounts receivable at either March 31, 2018 or 2017.

Property and Equipment:  Additions to property and equipment are recorded at cost.   The Company provides for depreciation on property and equipment using the straight-line method by charges to operations in amounts that allocate the cost of depreciable assets over their estimated lives as follows:

Asset Classification	Estimated Useful Life
Leasehold Improvements	Shorter of 5 years or the life of lease
Furniture and Equipment	5 to 7 years
Computer Hardware	2 to 5 years
Computer Software	3 to 5 years

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 $27,679,000 (net of $88,567,000 in accumulated amortization) and $25,721,000 (net of $78,952,000 in accumulated amortization), as of March 31, 2018 and 2017, 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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Long-Lived Assets:  The carrying amount of all long-lived assets is evaluated periodically to determine if adjustment to the depreciation and amortization period or to the unamortized balance is warranted. Such evaluation is based principally on the expected utilization of the long-lived assets and the projected, undiscounted cash flows of the operations in which the long-lived assets are deployed.

Goodwill and Long-Lived Assets:  The Company accounts for its business combinations in accordance with the ASC 805-10 through ASC 805-50, “Business Combinations,” which (i) requires that the purchase method of accounting be applied to all business combinations and (ii) addresses the criteria for initial recognition of intangible assets and goodwill. In accordance with ASC 350-10 through ASC 350-30, goodwill and other intangible assets with indefinite lives are not amortized but are tested for impairment annually, or more frequently if circumstances indicate the possibility of impairment. If the carrying value of goodwill or an intangible asset exceeds its fair value, an impairment loss will be recognized.  Based on the Company’s tests and reviews, no impairment of its goodwill, intangible assets or other long-lived assets existed at March 31, 2018.  However, future events or changes in current circumstances could affect the recoverability of the carrying value of goodwill and long-lived assets. Should an asset be deemed impaired, an impairment loss would be recognized to the extent the carrying value of the asset exceeded its estimated fair value.  Goodwill amounted to $36,814,000 (net of accumulated amortization of $2,069,000) at March 31, 2018 and at March 31, 2017.

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.

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. 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. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible. In making an assessment regarding the probability of realizing a benefit from these deductible differences, management considers the Company’s current and past performance, the market environment in which the Company operates, tax-planning strategies and the length of carry-forward periods for loss carry-forwards, if any. Valuation allowances are established when necessary to reduce deferred tax assets to amounts that are more likely than not to be realized. Further, the Company accrues for income tax issues not yet resolved with federal, state and local tax authorities, when it appears more likely than not that a tax liability has been incurred.

Share-Based Compensation: 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). The Company issues performance-based stock options which vest only upon the Company’s achievement of certain earnings per share targets on a calendar year basis, as determined by the Company’s Board of Directors. These options were valued in the same manner as the time-based options. However, the Company only recognizes stock compensation expense to the extent that the targets are determined to be probable of being achieved, which triggers the vesting of the performance options.

Accrual for Self-insurance Costs:  The Company self-insures for the group medical costs and workers’ compensation costs of its employees. Management believes that the self-insurance reserves are appropriate; however, actual claims costs may differ from the original estimates requiring adjustments to the reserves.  The Company determines its estimated self-insurance reserves based upon historical trends along with outstanding claims information provided by its claims paying agents.

Earnings per Share:  Earnings per common share-basic is based on the weighted average number of common shares outstanding during the period. Earnings per common shares-diluted is based on the weighted average number of common shares and common share equivalents outstanding during the period. In calculating earnings per share, earnings are the same for the basic and diluted calculations. Weighted average shares outstanding is greater for diluted earnings per share due to the effect of stock options.

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The difference between the basic shares and the diluted shares for each of the fiscal years ended March 31, 2018, 2017 and 2016 is as follows:

	Fiscal 2018		Fiscal 2017		Fiscal 2016
Basic weighted shares		18,825,000		19,418,000		19,826,000
Treasury stock impact of stock options		217,000		152,000		178,000
Diluted weighted  shares		19,042,000		19,570,000		20,004,000

Recently Issued Accounting Standards

On May 28, 2014, the FASB issued ASU 2014-09 regarding ASC Topic 606, “Revenue from Contracts with Customers”. This standard provides principles for recognizing revenue for the transfer of promised goods or services to customers with the consideration to which the entity expects to be entitled in exchange for those goods or services. In July 2015, the FASB approved a one-year delay of the effective date of this new revenue recognition standard. The guidance will now be effective for our fiscal year beginning April 1, 2018. The Company has reviewed a sample of contracts with its customers that the Company believes is representative of its significant revenue streams identified to date, and is performing procedures to confirm the initial assessment as applied to all revenue streams. While the assessment of the impact on revenue and expenses and the Company’s results of operations, financial position and cash flows as a result of this guidance is ongoing, the Company expects that revenue for its primary revenue streams will be recognized in a manner which is similar to how revenue is recognized for these services today. Further, the Company does not expect any changes in accounting for costs to obtain or fulfill contracts with customers. As the Company completes its overall assessment, it is also identifying and preparing to implement changes to its accounting policies and disclosure requirements. For example, the new standard requires increased disclosure, which in turn is expected to require certain new processes and system changes. The Company's evaluation indicated that process and system changes were required to capture the amounts and expected timing of revenues to be recognized from the remaining performance obligations during and as of each reporting period and the Company has completed a majority of these process and system changes at this time. The Company adopted this new standard as of April 1, 2018 using the modified retrospective method that may result in a cumulative effect adjustment as of the date of adoption.

In January 2016, the FASB issued ASU 2016-01 regarding Subtopic 825-10, “Financials Instruments — Overall: Recognition and Measurements of Financial Assets and Financial Liabilities”. The standard addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. It requires that most equity investments be measured at fair value, with subsequent changes in fair value recognized in net income. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. We are currently evaluating the accounting, transition, and disclosure requirements of the standard and cannot currently estimate the impact of adoption on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases”, which sets out the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for using an approach that is similar to the existing guidance for operating leases.  The standard is effective April 1, 2019, with early adoption permitted. The standard is to be applied using a modified retrospective transition method. We are currently evaluating the impact of adoption on our consolidated financial position, results of operations, and cash flows.

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting”, which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification on the statement of cash flows. For public companies, the new guidance became effective for annual reporting periods.  And interim periods within those periods, beginning after December 15, 2016. We have elected to early adopt this standard as of March 31, 2017.  As a result, during the fourth quarter of fiscal 2017, we reclassified the fiscal 2017 excess tax benefit of $0.5 million from additional paid in capital into the income tax provision line.  We have also reclassified the excess tax benefits from the stock-based compensation from financing activities into operating activities in the statement of cash flows for the year ended March 31, 2017.  We applied this change in presentation prospectively and prior years have not been adjusted.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows”, which reduces diversity in the practice of how certain transactions are classified in the statement of cash flows.  The new guidance is effective for annual reporting periods beginning after December 15, 2017, with early adoption permitted. The adoption of this guidance will not have a material impact on our consolidated financial statements.

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Note 2 — 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, 2018, options exercisable for up to 19,365,000 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 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 2018 and 2017 were granted with an exercise price equal to the fair value of the Company’s common stock on the grant date and are non-statutory stock options.

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. Upon adoption of ASU 2016-09, the Company accounts for forfeitures as they occur, rather than estimate expected forfeitures.  As a result, during the fourth quarter of fiscal 2017, we reclassified the fiscal 2017 excess tax benefit of $0.5 million from additional paid in capital into the income tax provision line.  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 fair value of each grant is estimated on the date of grant using the Black-Scholes option-pricing model. The following weighted average assumptions were used for the fiscal years ended March 31, 2018, 2017 and 2016:

	Fiscal 2018			Fiscal 2017			Fiscal 2016
Expected volatility		40	%		41	%		43	%
Risk free interest rate	1.88% to 2.56%			1.03% to 1.92%			1.25%to 1.65%
Dividend yield		0.0	%		0.0	%		0.0	%
Weighted average option life	4.4 to 4.5 years			4.4 to 4.5 years			4.4 to 4.5 years

For the fiscal years ended March 31, 2018, 2017 and 2016, the Company recorded share-based compensation expense of $3,164,000, $2,432,000, and $2,192,000, respectively. The table below shows the amounts recognized in the financial statements for the fiscal years ended March 31, 2018, 2017 and 2016.

	Fiscal 2018		Fiscal 2017		Fiscal 2016
Cost of revenue	$	1,749,000	$	1,507,000	$	1,288,000
General and administrative		1,415,000		925,000		904,000
Total cost of stock-based compensation    included in income before income taxes		3,164,000		2,432,000		2,192,000
Amount of income tax benefit recognized		1,105,000		946,000		852,000
Amount charged to net income	$	2,059,000	$	1,486,000	$	1,340,000
Effect on basic earnings per share	$	0.11	$	0.08	$	0.07
Effect on diluted earnings per share	$	0.11	$	0.08	$	0.07

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All options granted in the fiscal years ended March 31, 2018, 2017 and 2016 were granted at fair value and are non-statutory stock options.  The following table summarizes information for all stock options for the fiscal years ended March 31, 2018, 2017 and 2016:

	Fiscal 2018			Fiscal 2017			Fiscal 2016
Options outstanding – beginning of the year		1,143,928			1,115,465			1,163,179
Options granted		334,200			267,950			276,275
Options exercised		(314,846	)		(115,592	)		(200,753	)
Options cancelled/forfeited		(98,843	)		(123,895	)		(123,236	)
Options outstanding – end of year		1,064,439			1,143,928			1,115,465
During the year, weighted average exercise    price of:
Options granted	$	52.57		$	37.13		$	35.51
Options exercised	$	27.59		$	22.74		$	19.75
Options cancelled/forfeited	$	35.59		$	36.90		$	33.44
At the end of the year:
Price  range  of outstanding options	$12.71-$57.75			$12.71-$45.73			$9.05-$45.55
Weighted average exercise price per share	$	39.45		$	32.02		$	30.36
Options available for future  grants		260,961			505,493			650,345
Exercisable options		445,387			585,424			529,691

The following table summarizes the status of stock options outstanding and exercisable at March 31, 2018:

Range of Exercise Prices	Number of Outstanding Options		Weighted Average Remaining Contractual Life		Outstanding Options – Weighted Average Exercise Price		Exercisable Options – Number of Exercisable Options		Exercisable Options – Weighted Average Exercise Price
$12.71 to $32.10		292,156		2.84	$	24.96		195,387	$	21.42
$32.11 to $34.78		177,354		2.91		34.41		85,900		34.37
$34.79 to $44.86		186,408		3.19		41.20		106,502		41.22
$44.87 to $57.75		408,521		4.38		52.58		57,598		45.60
Total		1,064,439		3.40	$	39.45		445,387	$	31.78

The following table summarizes the status of all outstanding options at March 31, 2018, and changes during the fiscal year then ended:

	Number of Options			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value as of March 31, 2018
Options outstanding, March 31, 2017		1,143,928		$	32.02
Granted		334,200			52.57
Exercised		(314,846	)		27.59
Cancelled – forfeited		(81,586	)		36.22
Cancelled – expired		(17,257	)		27.57
Options outstanding, March 31, 2018		1,064,439		$	39.45		3.41	$	12,986,338
Options vested and expected to vest		959,664		$	39.76		3.43	$	10,249,240
Ending exercisable		445,387		$	31.78		2.45	$	8,360,918

The weighted average fair value of options granted during fiscal 2018, 2017 and 2016 was $19.24, $13.38, and $13.68, respectively.  The total intrinsic value of options exercised during fiscal years 2018, 2017 and 2016 was $7,780,000, $2,620,000, and $3,581,000 respectively.

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Included in the above-noted stock option grants and stock compensation expense are performance-based stock options which vest only upon the Company’s achievement of certain earnings per share targets on a calendar year basis, as determined by the Company’s Board of Directors. These options were valued in the same manner as the time-based options. However, the Company only recognizes stock compensation expense to the extent that the targets are determined to be probable of being achieved, which triggers the vesting of the performance options.   During the fiscal years ended March 31, 2018, 2017 and 2016, the Company recognized stock compensation expense for performance-based options in the amount of $649,000, $49,000, and $28,000, respectively.

The Company received $3,426,000, $2,367,000, and $3,749,000 of cash receipts from the exercise of stock options during fiscal 2018, 2017 and 2016, respectively.  As of March 31, 2018, $5,496,000 of total unrecognized compensation costs related to stock options is expected to be recognized over a weighted average period of 3 years.

Note 3 — Property and Equipment

Property and equipment, net consisted of the following at March 31, 2018 and 2017:

	2018			2017
Computer software	$	142,754,000		$	130,641,000
Office equipment and computers		67,730,000			65,246,000
Land and building		5,843,000			—
Leasehold improvements		14,461,000			10,893,000
		230,788,000			206,780,000
Less: accumulated depreciation and amortization		(161,432,000	)		(143,738,000	)
	$	69,356,000		$	63,042,000

Depreciation expense totaled $21,338,000, $20,534,000 and $19,502,000 for the fiscal years ended March 31, 2018, 2017 and 2016, respectively.

Note 4 — Accounts and Income Taxes Payable and Accrued Liabilities

Accounts and income taxes payable consisted of the following at March 31, 2018 and 2017:

	2018		2017
Accounts payable	$	11,787,000	$	13,869,000
Uncertain tax positions		1,666,000		2,714,000
	$	13,453,000	$	16,583,000

Accrued liabilities consisted of the following at March 31, 2018 and 2017:

	2018		2017
Payroll, payroll taxes and employee benefits	$	15,100,000	$	14,465,000
Customer deposits		35,496,000		32,471,000
Accrued professional service fees		5,782,000		4,551,000
Self-insurance accruals		3,627,000		2,835,000
Deferred revenue		15,316,000		10,096,000
Accrued rent		6,147,000		5,774,000
Other		3,068,000		3,276,000
	$	84,536,000	$	73,468,000

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Note 5 — Income Taxes

The income tax provision consisted of the following for the fiscal years ended March 31, 2018, 2017 and 2016:

	2018			2017			2016
Current — Federal	$	11,177,000		$	16,456,000		$	16,600,000
Current — State		1,905,000			2,834,000			2,591,000
Subtotal		13,082,000			19,290,000			19,191,000
Deferred — Federal		(955,000	)		(1,508,000	)		(1,679,000	)
Deferred — State		81,000			288,000			23,000
Subtotal		(874,000	)		(1,220,000	)		(1,656,000	)
	$	12,208,000		$	18,070,000		$	17,535,000

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, 2018, 2017 and 2016:

	2018			2017			2016
Income taxes at federal statutory rate	$	15,112,000		$	16,643,000		$	16,121,000
State income taxes, net of federal benefit		1,645,000			1,973,000			1,704,000
Uncertain tax positions		(464,000	)		88,000			78,000
Permanent items and tax credits		(1,364,000	)		(705,000	)		(100,000	)
Adjustments to returns as filed		138,000			80,000			(232,000	)
Valuation allowance		236,000			—			—
Impact of tax reform		(3,095,000	)		—			—
Other		—			(9,000	)		(36,000	)
	$	12,208,000		$	18,070,000		$	17,535,000

Deferred tax assets and liabilities at March 31, 2018 and 2017 are:

	2018			2017
Deferred tax assets:
Accrued liabilities not currently deductible	$	5,703,000		$	9,409,000
Allowance for doubtful accounts		1,151,000			1,153,000
Stock-based compensation		1,631,000			1,755,000
Accrued rent		1,555,000			2,219,000
Other		896,000			740,000
Deferred tax assets		10,936,000			15,276,000
Deferred tax liabilities:
Excess of book over tax basis of fixed assets		(11,191,000	)		(15,666,000	)
Intangible assets		(4,169,000	)		(5,960,000	)
Other		(179,000	)		(336,000	)
Total deferred tax liabilities		(15,539,000	)		(21,962,000	)
Valuation allowance		(236,000	)		—
Deferred tax liabilities		(15,775,000	)		(21,962,000	)
Net deferred tax liability	$	(4,839,000	)	$	(6,686,000	)

Prepaid expenses and income taxes include $1,962,000 at March 31, 2018 and accounts and income taxes payable include $584,000 at March 31, 2017, for income taxes due in the first quarter of the following fiscal year.

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A reconciliation of the financial statement recognition and measurement of uncertain tax positions during the current fiscal year is as follows:

Balance as of March 31, 2017	$	1,884,000
Additions based on tax positions related to the current year		236,000
Additions for tax positions of prior years		8,000
Reductions for tax positions related to the current year		0
Reductions for tax positions of prior years		(656,000	)
Balance as of March 31, 2018	$	1,472,000

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.  During the years ended March 31, 2018, 2017 and 2016, the Company recognized approximately $(53,000), $35,000 and $72,000 in interest and penalties, respectively.  As of March 31, 2018, 2017 and 2016, accrued interest and penalties related to uncertain tax positions were $194,000, $247,000 and $212,000, respectively.

The tax fiscal years from 2014-2017 remain open to examination by the major taxing jurisdictions to which the Company is subject.

On December 22, 2017, the Tax Cuts and Jobs Act was enacted into law. 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. As a result of this federal income tax rate change, during the quarter ended December 31, 2017, we reported an effective tax rate of 5%. 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. During the quarter ended December 31, 2017, we applied the newly enacted corporate federal income tax rate to the remeasurement of U.S. deferred tax assets and liabilities resulting in a tax benefit of $3.0 million. The decrease in net deferred tax liabilities was reasonably estimated and based on the tax rates at which they are expected to reverse in the future. 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. Taking into account the change in the statutory federal rate as well as other permanent items, we expect our effective combined federal and state tax rate will be approximately 24% to 26% for the fiscal year beginning April 1, 2018. This expected effective rate assumes projected financial results consistent with recent trends and applies the new statutory rate and the impact of the Tax Cuts and Jobs Act relative to permanent differences between book and tax income. If our assumption that projected financial results will be consistent with recent trends turns out to be incorrect, our effective combined federal and state tax rate could be higher for the fiscal year beginning April 1, 2018. In the absence of guidance on various uncertainties and ambiguities in the application of certain provisions of the Tax Cuts and Jobs Act, we will use what we believe are reasonable interpretations and assumptions in applying the Tax Cuts and Jobs Act, but it is possible that the U.S. 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.

Note 6 — 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.  Employees are allowed to contribute up to 20% of their gross pay. A maximum of 2,850,000 shares has been authorized for issuance under the ESPP. As of March 31, 2018, 2,469,843 shares had been issued pursuant to the ESPP.  Summarized ESPP information is as follows:

	2018		2017		2016
Employee contributions	$	458,000	$	419,000	$	371,000
Shares acquired		8,976		10,596		10,975
Average purchase price	$	49.78	$	38.80	$	33.81

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Note 7 — Treasury Stock

During each of the fiscal years ended March 31, 2018, 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 1,000,000 share expansion authorized in February 2017, the total number of shares of common stock authorized to be repurchased over the life of the program is 36,000,000 shares of common stock.  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, 2018, 2017 and 2016 and cumulatively since inception of the authorization, are as follows:

	2018		2017		2016		Cumulative
Shares repurchased		249,245		745,575		893,771		34,881,079
Cost	$	11,187,000	$	27,999,000	$	31,525,000	$	430,989,000
Average price	$	44.88	$	37.56	$	35.27	$	12.36

During the period subsequent to March 31, 2018, through the date of filing this annual report, the Company had no repurchases of common stock.

Note 8 — Commitments

The Company leases office facilities under non-cancelable operating leases.  Some of these leases contain escalation clauses.  Future minimum rental commitments under operating leases at March 31, 2018 are $14,442,000 in fiscal 2019, $11,114,000 in fiscal 2020, $10,034,000 in fiscal 2021, $8,005,000 in fiscal 2022, $6,741,000 in fiscal 2023, $12,445,000 thereafter, and $62,781,000 in the aggregate.   Total rental expense of $14,077,000, $13,952,000, and $14,405,000 was charged to operations for the fiscal years ended March 31, 2018, 2017 and 2016, respectively.

Note 9 — Contingencies and Legal Proceedings

The Company is involved in litigation arising in the ordinary course of business. Management believes that resolution of these matters will not result in any payment that, in the aggregate, would be material to the consolidated financial position or results of operations of the Company.

Note 10 — Retirement Savings Plan

The Company maintains a retirement savings plan for its employees, which is a qualified plan under Section 401(k) of the Internal Revenue Code. Full-time employees that meet certain requirements are eligible to participate in the plan. Employer contributions are made annually, primarily at the discretion of the Company’s Board of Directors. Contributions of $557,000, $464,000 and $392,000 were charged to operations for the fiscal years ended March 31, 2018, 2017 and 2016, respectively.

Note 11 — Shareholder Rights Plan

During fiscal 1997, the Company’s Board of Directors approved the adoption of its Shareholder Rights Plan. The Shareholder Rights Plan provides for a dividend distribution to the Company’s  shareholders of one preferred stock purchase right for each outstanding share of the Company’s common stock held by such shareholder (as used in this Note 11, the “right” or the “rights”), only in the event of certain takeover-related events.  In April 2002, the Company’s Board of Directors approved an amendment to the Shareholder Rights Plan to extend the expiration date of the rights to February 10, 2012, set the exercise price of each right at $118, and enable Fidelity Management & Research Company and its affiliates to purchase up to 18% of the shares of common stock of the Company without triggering the rights, with the limitations under the Shareholder Rights Plan remaining in effect for all other stockholders of the Company. In November 2008, the Company’s Board of Directors approved an amendment to the Shareholder Rights Plan to extend the expiration date of the rights to February 10, 2022, remove the ability of Fidelity Management & Research Company and its affiliates to purchase up to 18% of the shares of common stock of the Company without triggering the rights, substitute Computershare Trust Company, N.A. as the rights agent and effect certain technical changes to the Shareholder Rights Plan.

Generally, the Shareholder Rights Plan provides that if a person or group acquires 15% or more of the Company’s common stock without the approval of the Company’s Board of Directors, subject to certain exceptions, the holders of the rights, other than the acquiring person or group, would, under certain circumstances, have the right to purchase additional shares of the Company’s common stock having a market value equal to two times the then-current exercise price of the right.  

58

In addition, if the Company is thereafter merged into another entity, or if 50% or more of the Company’s consolidated assets or earning power are sold, then the right would entitle its holder to buy common shares of the acquiring entity having a market value equal to two times the then-current exercise price of the right. The Company’s Board of Directors may exchange or redeem the rights under certain conditions.

Note 12 — Line of Credit

In September 2017, the Company renewed a line of credit agreement.  The line is with a financial institution to provide a revolving credit facility with borrowing capacity of up to $10 million. Borrowings under this agreement, as amended, bear interest, at the Company’s option, at a fixed LIBOR-based rate plus 1.50% or at a fluctuating rate determined by the financial institution to be 1.50% above the daily one-month LIBOR rate. The loan covenants require the Company to maintain a current assets to liabilities ratio of at least 1.25:1, debt to tangible net worth ratio not greater than 1.25:1 and to have positive net income.  There were no outstanding revolving loans as of March 31, 2018, but letters of credit in the aggregate amount of $4.5 million have been issued separate from the line of credit and therefore do not reduce the amount of borrowings available under the revolving credit facility. In the event of default, the financial institution has a right of setoff against our cash balances on deposit with the financial institution to the extent there is unpaid principal and interest related to the line of credit. The credit agreement expires in September 2018.

Note 13 — Segment Reporting

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. Patient management services include claims administration, utilization review, medical case management, and vocational rehabilitation. Network solutions services include fee schedule auditing, hospital bill auditing, coordination of independent medical examinations, diagnostic imaging review services and preferred provider referral services. The percentages of revenues attributable to patient management and network solutions services for the fiscal years ended March 31, 2018, 2017 and 2016 are listed below.

	2018			2017			2016
Patient management services		56.7	%		55.6	%		55.1	%
Network solutions services		43.3	%		44.4	%		44.9	%
		100.0	%		100.0	%		100.0	%

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.

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: (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 productions and similar methods to distribute their services.  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.

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Note 14 — Other Intangible Assets

Other intangible assets consisted of the following at March 31, 2018:

Item	Life	Cost		Fiscal 2018 Amortization Expense		Accumulated Amortization at March 31, 2018		Cost, Net of Accumulated Amortization at March 31, 2018
Covenant Not to Compete	5 years	$	775,000	$	—	$	775,000	$	—
Customer Relationships	18-20 years		7,922,000		423,000		4,566,000		3,356,000
Third Party Administrator  Licenses	15 years		204,000		14,000		145,000		59,000
Total		$	8,901,000	$	437,000	$	5,486,000	$	3,415,000

Other intangible assets consisted of the following at March 31, 2017:

Item	Life	Cost		Fiscal 2017 Amortization Expense		Accumulated Amortization at March 31, 2017		Cost, Net of Accumulated Amortization at March 31, 2017
Covenant Not to Compete	5 years	$	775,000	$	—	$	775,000	$	—
Customer Relationships	18-20 years		7,922,000		423,000		4,144,000		3,778,000
Third Party Administrator  Licenses	15 years		204,000		14,000		131,000		73,000
Total		$	8,901,000	$	437,000	$	5,050,000	$	3,851,000

Amortization expense is expected to be $437,000 in fiscal 2019, $437,000 in fiscal 2020, $437,000 in fiscal 2021, $436,000 in fiscal 2022, $427,000 in fiscal 2023, and $1,241,000 thereafter.

Note 15 — Quarterly Results (Unaudited)

The following is a summary of unaudited quarterly results of operations for each of the quarters in the fiscal years ended March 31, 2018 and 2017:

	Revenues		Gross Profit		Net Income		Net Income per Basic Common Share		Net Income per Diluted Common Share
Fiscal Year Ended March 31, 2018:
First Quarter	$	137,612,000	$	28,783,000	$	8,775,000	$	0.47	$	0.46
Second Quarter		136,431,000		25,752,000		8,393,000		0.45		0.44
Third Quarter		140,734,000		25,569,000		9,569,000		0.51		0.50
Fourth Quarter		143,573,000		27,149,000		8,958,000		0.47		0.47
Fiscal Year Ended March 31, 2017:
First Quarter	$	128,459,000	$	25,582,000	$	7,491,000	$	0.38	$	0.38
Second Quarter		128,219,000		25,912,000		6,952,000		0.36		0.35
Third Quarter		128,403,000		25,577,000		7,049,000		0.36		0.36
Fourth Quarter		133,605,000		27,721,000		7,987,000		0.42		0.42

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EX-10.33

Exhibit 10.33

Notice of Grant of Stock Options and Option Agreement CorVel Corporation ID: 33-0282651 2010 Main Street Suite 600 Irvine, California 92614

Richard Schweppe

ID:

Youhavebeen grantedan optiontoacquireCorVelCorporation(the“Corporation”)commonstock (the“CommonStock”)as follows:

Non-Qualified Stock Option Grant No.	005416
Date of Grant	11/10/2014
Stock Option Plan	1988
Option Price Per Share	$34.78
Total Number of Shares Granted	2,400.00
Total Price of Shares Granted	$83,472.00
Expiration Date	11/10/2019

ProvidedyoucontinuetobeaServiceProvider(asdefinedintheStockOption AgreementattachedheretoasExhibitA)throughoutthespecifiedperiod,the Optionwillbecome exercisablein accordance with ScheduleA.

Optionee(and Optionee’sspouse)herebyagree(s)thattheoptionisgranted pursuanttoandinaccordancewiththeexpresstermsand conditionsofthe Stock Option Agreement and the Corporation’s Restated OmnibusIncentive Plan.

/s/ Sharon O’ Connor	November 19, 2014
CorVel Corporation	Date
/s/ Richard Schweppe	November 19, 2014
Richard Schweppe	Date
Spouse	Date

Date:	11/19/2014
Time:	11:07:21AM

Section 16 Insiders Discretionary Option Grant Program

CorVel Corporation

Stock Option Agreement

A.The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board (or the board of directors of any Parent or Subsidiary) and consultants and advisors who provide services to the Company (or any Parent or Subsidiary).

B.Optionee is to render valuable services to the Company (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Company’s grant of an option toOptionee.

C.All capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix.

Now, therefore, it is hereby agreed as follows:

1.Grant of Option. Subject to and upon the terms and conditions set forth in this Agreement, Optionee is hereby granted, as of the Grant Date, an option to purchase the Option Shares. The Option Shares shall be purchasable from time to time during the option term at the Exercise Price.

2.Option Term. This option shall expire at the close of business on the Expiration Date, unless sooner terminated in accordance with thisAgreement.

3.LimitedTransferability.

(a)During Optionee’s lifetime, this option shall be exercisable only by Optionee and shall not be assignable or transferable other than by will, by the laws of descent and distribution following the Optionee’s death, or to any “Family Member” (as such term is defined in the General Instructions to Form S-8 (or any successor to such Instructions or such Form) under the Securities Act), provided that Optionee may not receive any consideration for such transfer, the Family Member may not make any subsequent transfers other than by will or by the laws of descent and distribution and the Company receives written notice of such transfer. This assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for this option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Company may deemappropriate.

(b)Should Optionee die while holding this option, then this option shall be transferred in accordance with Optionee’s will or the laws of inheritance. However, Optionee may designate one or more persons as the beneficiary or beneficiaries of this option, andthisoptionshall,inaccordancewithsuchdesignation,automaticallybetransferredtosuch beneficiary or beneficiaries upon Optionee’s death while holding this option. Such beneficiary or beneficiaries shall take the transferred option subject to all the terms and conditions of this Agreement, including (without limitation) the limited time period during which this option may, pursuant to Paragraph 5, be exercised following Optionee’s death.

4.Exercisability. This option shall become exercisable in one or more installments as specified in the Grant Notice. As the option becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the accumulated installments until the Expiration Date or sooner termination of the optionterm.

5.Effect of Cessation ofService.

(a)Should Optionee cease to be a Service Provider for any reason (other than death, Permanent Disability or Misconduct) while this option is outstanding, then this option shall remain exercisable until the earlier of (i) the expiration of the three month period commencing with the date of such cessation of Service Provider status or (ii) the Expiration Date.

(b)Should Optionee cease to be a Service Provider by reason of Permanent Disability or death while this option is outstanding, then the option shall remain exercisable until the earlier of (i) the expiration of the twelve month period commencing with the date of such cessation of Service Provider status or (ii) the ExpirationDate.

(c)Should Optionee cease to be a Service Provider due to termination for Misconduct, then this option shall terminateimmediately.

4852-9762-7137\2\389336\00005

(d)During the limited period of post-service exercisability, this option may not be exercised in the aggregate for more than the number of Option Shares for which the option is exercisable at the time Optionee ceased to be a Service Provider. This option shall, immediately when Optionee ceases to be a Service Provider for any reason, terminate with respect to any Option Shares for which this option is not otherwise at that time exercisable. Upon the expiration of the limited post-service exercise period or (if earlier) upon the Expiration Date, this option shall terminateentirely.

6.Effect of CorporateTransaction.

(a)This option, to the extent outstanding at the time of a Corporate Transaction but not otherwise fully exercisable, shall automatically accelerate so that this option shall, immediately prior to the effective date of such Corporate Transaction, become exercisable for all of the Option Shares at the time subject to this option. However, this option shall not become exercisable on such an accelerated basis, if and to the extent: (i) this option is, in connection with the Corporate Transaction, to be assumed by the successor corporation (or parent thereof) or to be replaced with a comparable option to purchase shares of the capital stock of the successor corporation (or parent thereof) or (ii) this option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing at the time of theCorporateTransactiononanyOptionSharesforwhichthisoptionisnototherwiseatthat time exercisable (the excess of the Fair Market Value of those Option Shares over the aggregate Exercise Price payable for such shares) and provides for subsequent payout in accordance with the same exercise schedule for those Option Shares set forth in the Grant Notice.

(b)Upon the consummation of the Corporate Transaction, this option shall terminate, except to the extent assumed by the successor corporation (or parent thereof) in connection with the CorporateTransaction.

(c)If this option is assumed in connection with a Corporate Transaction, then this option shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to Optionee as a result of the consummation of such Corporate Transaction had the option been exercised immediately prior to such Corporate Transaction, and appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain thesame.

(d)This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

7.Adjustment in Option Shares. Should any change be made to the Common Stock by reason of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, exchange of shares, reorganization, merger, consolidation, split-up, spin-off, or other change affecting the outstanding Common Stock as a class without the Company’s receipt of consideration, appropriate adjustments shall be made to (a) the total number and/or class of securities subject to this option and (b) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefitshereunder.

8.Stockholder Rights. The holder of this option shall not have any stockholder rights with respect to the Option Shares until such person shall have exercised the option in accordance with the provisions of Paragraph 9, paid the Exercise Price and become a holder of record of the purchasedshares.

9.Manner of ExercisingOption.

(a)In order to exercise this option with respect to all or any part of the Option Shares for which this option is at the time exercisable, Optionee (or any other person or persons exercising the option) must take the followingactions:

(i)Execute and deliver to the Company (A) a Notice of Exercise, in substantially the form attached hereto as Exhibit I, that specifies the number of Option Shares for which the option is being exercised and (B) any additional documents which the Committee may, in its discretion, deem advisable.

(ii)Pay the aggregate Exercise Price for the purchased shares in one or more of the followingforms:

(A)cash or check payable to theCompany’s order;

(B)shares of Common Stock held by Optioneefor the requisite period necessary to avoid a charge to the Company’s reported earnings and valued at Fair Market Value on the Exercise Date; or

4852-9762-7137\2\389336\00005 2

(C)through a special sale and remittance procedure pursuant to which Optionee is to provide irrevocable written instructions (1) to a brokerage firm to effect the immediate sale of the purchased shares and remit to the Company, out of the sale proceeds available on the settlement date, an amount sufficient to cover the aggregate Exercise Price payable for the purchased shares plus all applicable Federal and state income and employment taxes required to be withheld by the Company by reason of such purchase and (2) to the Company to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the saletransaction.

(iii)Furnish to the Company appropriate documentation that the person or persons exercising the option (if other than Optionee) have the right to exercise thisoption.

(iv)Make appropriate arrangements with the Company (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all Federal, state and local income and employment tax withholding requirements applicable to the optionexercise.

(b)If payment of the exercise price is made by means of the surrender of shares of Common Stock which are subject to certain restrictions, the number of shares of Common Stock issued upon the exercise of the option equal to the number of shares of restricted stock surrendered shall be subject to the same restrictions as the restricted stock that was surrendered.

(c)Except to the extent the sale and remittance procedure specified in Paragraph 9(a)(ii)(C) is utilized in connection with the option exercise, payment of the option price for the purchased shares must accompany the Notice ofExercise.

(d)Assuming Optionee does not sell the purchased shares of Common Stock on the Exercise Date, as soon as practical after the Exercise Date, the Company shalleither (i) issue to or on behalf of Optionee (or any other person or persons exercising this option) a certificate for the purchased Option Shares, with the appropriate legends affixed thereto, or (ii) instruct the Company’s transfer agent to make a book-entry reflecting the purchase on its stockholderledger.

(e)In no event may this option be exercised for any fractionalshares.

10.Tax Withholding. The Committee may, in its discretion and upon such terms and conditions as it may deem appropriate (including the applicable safe-harbor provisions of Securities and Exchange Commission Rule 16b-3 or any successor rule or regulation) provide Optionee (if Optionee is an Employee) with the election to surrender previously acquired shares of Common Stock or have shares withheld in satisfaction of the tax withholding obligations. To the extent necessary to avoid adverse accounting treatment, the number of shares that may be withheld for this purpose shall not exceed the minimum number needed to satisfy the applicable income and employment tax withholding rules. If Common Stock is used to satisfy the Company’s tax withholding obligations, the shares of Common Stock shall have been held by Optionee for the requisite period necessary to avoid a charge to the Company’s reported earnings and shall be valued at their Fair Market Value when the tax withholding is required to bemade.

11.Compliance with Laws andRegulations.

(a)The exercise of this option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Company and Optionee with all applicable requirements of law relating thereto and with all applicable regulations of any Stock Exchange (or the Nasdaq Stock Market, if applicable) on which the Common Stock may be listed for trading at the time of such exercise andissuance.

(b)The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance and sale of any Common Stock pursuant to this option shall relieve the Company of any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall not have been obtained. The Company, however, shall use reasonable efforts to obtain all such approvals.

4852-9762-7137\2\389336\00005 3

12.Successors and Assigns. Except to the extent otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and Optionee, Optionee’s assigns, the legal representatives, heirs and legatees of Optionee’s estate and any beneficiaries of this option designated byOptionee.

13.Notices. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Company at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated below Optionee’s signature line on the Grant Notice. All notices shall be deemed effective upon personal delivery or three days after deposit in the U.S. mail, postage prepaid and properly addressed to the party to benotified.

14.Construction. This Agreement and the option evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. In the event of a conflict between the terms and conditions of the Plan and the terms and conditionsofthisAgreement,thetermsandconditionsofthisAgreementshallprevail. All decisions of the Committee with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in this option.

15.Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Delaware without resort to its conflict-of-lawsrules.

16.No Employment/Service Contract. Nothing in this Agreement or in the Plan shall confer upon Optionee any right to continue to be a Service Provider of the Company (or any Parent or Subsidiary) for any period of specific duration or otherwise interfere with or restrict in any way the rights of the Company (or such Parent or Subsidiary) or Optionee, which rights are hereby expressly reserved by each, to terminate Optionee’s Service Provider status at any time and for any reason whatsoever, with or withoutcause.

4852-9762-7137\2\389336\00005 4

EXHIBIT I

NOTICE OF EXERCISE OF STOCK OPTION

I hereby notify CorVel Corporation (the “Company”)thatI,, electtopurchase  shares of Common Stock of the Corporation(the“Purchased Shares”) at an option priceof$  per share (the “Option Price”) pursuant totheoption(the “Option”) granted tomeon .

My option was granted as a non-qualified stock option. I will need to report taxable income at the time I exercise this Option and pay the corresponding withholding tax (the “Withholding Tax”) to the Corporation. The Withholding Tax is computed on the difference between the Option Price and the Fair Market Value of the stock on the date I exercise the Option.

Concurrently with the delivery of the Exercise Notice to the Chief Financial Officer of the Corporation, I shall hereby pay to the Corporation the Option Price and Withholding Tax for the Purchased Shares in accordance with the provisions of my agreement with the Corporation evidencing the Option and shall deliver whatever additional documents may be required by such agreement as a condition forexercise.

Date	Optionee’s Signature
If applicable, print name in exact manner it is to appear on the stock certificate:
Optionee’s Mailing Address:
Address to which certificate is to be sent, if different from address above:
Brokerage Account Information
(Broker Name, Contact Info., Account #)

4852-9762-7137\2\389336\00005 A-1

APPENDIX

The following definitions shall be in effect under this Agreement:

A.Agreementshall mean this Stock OptionAgreement.

B.Boardshall mean the Board of Directors of theCompany.

C.Common Stockshall mean shares of the Company’s common stock, $0.0001 parvalue.

D.Codeshall mean the Internal Revenue Code of 1986, asamended.

E.Committeeshall mean a committee designated by the Board to administer the Plan, which initially shall be the compensation committee of the Board. The Committee shall be comprised of at least two directors but not less than such number of directors as shall be required to permit awards granted under the Plan to qualify under Rule 16b-3 under the Securities Act and Section 162(m) of the Code, and each member of the Committee shall be a “Non-Employee Director “ within the meaning of Rule 16b-3 under the Securities Act and an “Outside Director” within the meaning of Section 162(m) of the Code.

F.Companyshall mean CorVel Corporation, a Delaware corporation, or any corporate successor which shall assume thePlan.

G.Corporate Transactionshall mean any of the following transactions for which the approval of the Company’s stockholders isobtained:

(i)a merger or acquisition in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state of the Company’sincorporation,

(ii)the sale, transfer or other disposition of all or substantially all of the assets of the Company to any entity other than a parent or subsidiary of the Company,or

(iii)any reverse merger in which the Company is the surviving entity but in which fifty percent (50%) or more of the Company’s outstanding voting stock is transferred to holders different from those who held such fifty percent (50%) or greater interest immediately prior to suchmerger.

H.Employeeshall mean an individual for whom the Company or one or more of its Parent or Subsidiaries reports his or her earnings on a FormW-2.

I.Exercise Dateshall mean the date on which the option shall have been exercised in accordance with Paragraph9.

J.ExercisePriceshallmeantheexercisepriceperOptionShareasspecifiedintheGrant Notice.

K.ExpirationDateshallmeanthedateonwhichtheoptionexpiresasspecifiedinthe Grant Notice.

L.Fair Market Valueper share of Common Stock on any relevant date shall be determined in accordance with the followingprovisions:

(i)If the Common Stock is at the time listed on the Nasdaq National Market or the Nasdaq Capital Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market or the Nasdaq Capital Market and published in The Wall StreetJournal.

4852-9762-7137\2\389336\00005 A-2

(ii)If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Committee to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall StreetJournal.

(iii)If the Common Stock is not listed on the Nasdaq National Market, Nasdaq Capital Market or a national securities exchange, the Fair Market Value shall be the average of the closing bid and ask prices of the Common Stock on that day as reported by the Nasdaq bulletin board or any comparable system on thatday.

(iv)If the Common Stock is not traded included in the Nasdaq bulletin board or any comparable system, the Fair Market Value shall be the average of the closing bid and ask prices on that day as furnished by any member of the National Association of Securities Dealers, Inc. selected from time to time by the Company for thatpurpose.

(v)If the date in question is not a trading day, then the Fair Market Value shall be determined based on prices for the trading day prior to the date inquestion.

M.Grant Date shall mean the date of grant of the option as specified in the GrantNotice.

N.Grant Noticeshall mean the Notice of Grant of Stock Option accompanying this Agreement, pursuant to which Optionee has been informed of the basic terms of the option evidenced hereby.

O.Misconductshall mean any of thefollowing:

(i)Optionee’s intentional misconduct or continuing gross neglect of duties which materially and adversely affects the business and operations of the Company or any Parent or Subsidiary employingOptionee;

(ii)Optionee’s unauthorized use or disclosure of (or attempt to use or disclose) confidential information or trade secrets of the Company or any Parent or Subsidiary;or

(iii)Optionee’s commission of an act involving embezzlement, theft, fraud, falsification of records, destruction of property or commission of a crime or other offense involving money or other property of the Company or any Parent or Subsidiary employingOptionee.

The reasons for termination of Optionee as a Service Provider set forth in this subparagraph are not intended to be an exclusive list of all acts or omissions which the Company (or any Parent or Subsidiary) may deem to constitute misconduct or other grounds for terminating Optionee (or any other individual).

P.Non-Statutory Optionshall mean an option not intended to satisfy the requirements of Code Section 422.

Q.Notice of Exerciseshall mean the notice of exercise in the form attached hereto as ExhibitI.

R.Option Sharesshall mean the number of shares of Common Stock subject to the option as specified in the GrantNotice.

S.OptioneeshallmeanthepersontowhomtheoptionisgrantedasspecifiedintheGrant Notice.

T.Parentshallmeananycorporation(otherthantheCompany)inanunbrokenchainof

corporations ending with the Company, provided each such corporation in the unbroken chain (other than the Company) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in suchchain.

U.Permanent Disabilityshall have the meaning assigned to “permanent and total disability” as set forth in Code Section22(e)(3).

V.Planshall mean the CorVel Corporation Restated Omnibus Incentive Plan (Formerly The Restated 1988 Executive Stock OptionPlan).

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W.Securities Actshall mean the Securities Act of 1933, asamended.

X.Service Providershall mean an individual who renders service on a periodic basis to the Company, its Parent and/or any of its Subsidiaries as an Employee, a non-Employee member of the board of directors or a consultant or independentadvisor.

Y.Stock Exchangeshall mean the American Stock Exchange or the New York Stock Exchange, or any other national stockexchange.

Z.Subsidiaryshall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, provided such corporation (other than the last corporation in the unbroken chain) owns, at the time of determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. For purposes of all Non-Statutory Option grants under the Plan and all Corporate Transaction provisions of the Plan, the term “Subsidiary” shall also include any partnership, joint venture or other business entity of which the Company owns, directly or indirectly through another entity, more than a fifty percent (50%) interest in voting power, capital orprofits.

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Schedule A: Performance Option

CORVEL CORPORATION

Percentage of shares earned by tranche

CY 2015, 2016, 2017

	CY 2015	CY 2016	CY 2017
EPS Target for each calendar year	$1.70	$1.87	$2.06
Percentage of option grant for tranche (totals 100%)	30%	30%	40%
To earn 100% of tranche (105% of EPS target)	$1.79	$1.96	$2.16
To earn 80% of tranche (100% of EPS target)	$1.70	$1.87	$2.06
To earn 30% of tranche (95% of EPS target)	$1.62	$1.78	$1.95
EPS at Zero (90% of EPS target)	$1.53	$1.68	$1.85

SCHEDULE A

CORVEL CORPORATION

Shares earned by EPS number by Tranche year

CY 2015, 2016, 2017

Option grant:	2400 Shares option grant
CY 2015 Tranche	720 30% of total grant
CY 2016 Tranche	720 30% of total grant
CY 2017 Tranche	960 40% of total grant

	CY 2015				CY 2016				CY 2017
	Percentage		Shares		Percentage		Shares		Percentage		Shares
$1.53	0.0	%	0	$1.68	0.0	%	0	$1.85	0.0	%	0
$1.54	3.3	%	24	$1.69	3.0	%	22	$1.86	3.0	%	29
$1.55	6.7	%	48	$1.70	6.0	%	43	$1.87	6.0	%	58
$1.56	10.0	%	72	$1.71	9.0	%	65	$1.88	9.0	%	86
$1.57	13.3	%	96	$1.72	12.0	%	86	$1.89	12.0	%	115
$1.58	16.7	%	120	$1.73	15.0	%	108	$1.90	15.0	%	144
$1.59	20.0	%	144	$1.74	18.0	%	130	$1.91	18.0	%	173
$1.60	23.3	%	168	$1.75	21.0	%	151	$1.92	21.0	%	202
$1.61	26.7	%	192	$1.76	24.0	%	173	$1.93	24.0	%	230
$1.62	30.0	%	216	$1.77	27.0	%	194	$1.94	27.0	%	259
$1.63	36.3	%	261	$1.78	30.0	%	216	$1.95	30.0	%	288
$1.64	42.5	%	306	$1.79	35.6	%	256	$1.96	34.5	%	332
$1.65	48.8	%	351	$1.80	41.1	%	296	$1.97	39.1	%	375
$1.66	55.0	%	396	$1.81	46.7	%	336	$1.98	43.6	%	419
$1.67	61.3	%	441	$1.82	52.2	%	376	$1.99	48.2	%	463
$1.68	67.5	%	486	$1.83	57.8	%	416	$2.00	52.7	%	506
$1.69	73.8	%	531	$1.84	63.3	%	456	$2.01	57.3	%	550
$1.70	80.0	%	576	$1.85	68.9	%	496	$2.02	61.8	%	593
$1.71	82.2	%	592	$1.86	74.4	%	536	$2.03	66.4	%	637
$1.72	84.4	%	608	$1.87	80.0	%	576	$2.04	70.9	%	681
$1.73	86.7	%	624	$1.88	82.2	%	592	$2.05	75.5	%	724
$1.74	88.9	%	640	$1.89	84.4	%	608	$2.06	80.0	%	768
$1.75	91.1	%	656	$1.90	86.7	%	624	$2.07	82.0	%	787
$1.76	93.3	%	672	$1.91	88.9	%	640	$2.08	84.0	%	806
$1.77	95.6	%	688	$1.92	91.1	%	656	$2.09	86.0	%	826
$1.78	97.8	%	704	$1.93	93.3	%	672	$2.10	88.0	%	845
$1.79	100.0	%	720	$1.94	95.6	%	688	$2.11	90.0	%	864
				$1.95	97.8	%	704	$2.12	92.0	%	883
				$1.96	100.0	%	720	$2.13	94.0	%	902
								$2.14	96.0	%	922
								$2.15	98.0	%	941
								$2.16	100.0	%	960

Notwithstanding anything to the contrary in this Schedule A or the Stock Option Agreement to which this Schedule A is attached, the Company shall have the right, in its sole discretion, with or without the consent of the Optionee, to amend this Schedule A to adjust any or all of the targets, dates and/or target EPS amounts as it deems equitable to recognize unusual or non-recurring events, including, but not limited to the Company’s acquisition of another business entity or assets, a corporate merger or other consolidation, or the sale or discontinuation of significant business operations or business units of the Company; changes in tax laws or accounting procedures; and any other extraordinary circumstances.

EX-10.34

Exhibit 10.34

Notice of Grant of Stock Options and Option Agreement CorVel Corporation ID: 33-0282651 2010 Main Street Suite 600 Irvine, California 92614

Diane J. Blaha

ID:

You have been granted an option to acquire CorVel Corporation (the "Corporation'') common stock (the "Common Stock") as follows:

Non-Qualified Stock Option Grant No.	005415
Date of Grant	11/10/2014
Stock Option Plan	1988
Option Price Per Share	$34.78
Total Number of Shares Granted	6,000.00
Total Price of Shares Granted	$208,680.00
Expiration Date	11/10/2019

Provided you continue to be a Service Provider (as defined in the Stock Option Agreement attached hereto as Exhibit A) throughout the specified period, the Option will become exercisable in accordance with Schedule A.

Optionee (and Optionee's spouse) hereby agree(s) that the option is granted pursuant to and in accordance with the express terms and conditions of the Stock Option Agreement and the Corporation's Restated Omnibus Incentive Plan.

/s/ Richard Schweppe	November 19, 2014
CorVel Corporation	Date
Diane J. Blaha	Date
Spouse	Date

Date:	11/19/2014
Time:	11:07:21AM

Section 16 Insiders Discretionary Option Grant Program

CorVel Corporation Stock

Option Agreement

A.The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board (or the board of directors of any  Parent or Subsidiary) and consultants and advisors who provide services to the Company (or any Parent or Subsidiary).

B.Optionee is to render valuable services to the Company (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out  the purposes of, the Plan in connection with the Company’s grant of an option to Optionee.

C.All capitalized terms in this Agreement shall have the meaning assigned to them  in the attached Appendix.

Now, therefore, it is hereby agreed as follows:

1.Grant of Option. Subject to and upon the terms and conditions set forth  in this Agreement, Optionee is hereby granted, as of the Grant Date, an option to purchase the Option Shares. The Option Shares shall be purchasable from time to time during the option term at the Exercise Price.

2.Option Term. This option shall expire at the close of business on the Expiration Date, unless sooner terminated in accordance with this Agreement.

3.Limited Transferability.

(a)During Optionee’s lifetime, this option shall be exercisable only by Optionee and shall not be assignable or transferable other than by will, by the laws of descent  and distribution following the Optionee’s death, or to any “Family Member” (as such term is defined in the General Instructions to Form S-8 (or any successor to such Instructions or such Form) under the Securities Act), provided that Optionee may not receive any consideration for such transfer, the Family Member may not make any subsequent transfers other than by will or by the laws of descent and distribution and the Company receives written notice of such transfer. This assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for this option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Company may deem appropriate.

(b)Should Optionee die while holding this option, then this option shall be transferred in accordance with Optionee’s will or the laws of inheritance. However, Optionee may designate one or more persons as the beneficiary or beneficiaries of this option, and this option shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon Optionee’s death while holding this option. Such beneficiary or beneficiaries shall take the transferred option subject to all the terms and conditions of this Agreement, including (without limitation) the limited time period during which this option may, pursuant to Paragraph 5, be exercised following Optionee’s death.

4.Exercisability. This option shall become exercisable in one or more installments as specified in the Grant Notice. As the option becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the accumulated installments until the Expiration Date or sooner termination of the option term.

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5.Effect of Cessation of Service.

(a)Should Optionee cease to be a Service Provider for any reason (other than death, Permanent Disability or Misconduct) while this option is outstanding, then this option shall remain exercisable until the earlier of (i) the expiration of the three month period commencing with the date of such cessation of Service Provider status or (ii) the Expiration Date.

(b)Should Optionee cease to be a Service Provider by reason of Permanent Disability or death while this option is outstanding, then the option shall remain exercisable until the earlier of (i) the expiration of the twelve month period commencing with  the date of such cessation of Service Provider status or (ii) the Expiration Date.

(c)Should Optionee cease to be a Service Provider due to termination for Misconduct, then this option shall terminate immediately.

(d)During the limited period of post-service exercisability, this option may not be exercised in the aggregate for more than the number of Option Shares for which the option is exercisable at the time Optionee ceased to be a Service Provider. This option shall, immediately when Optionee ceases to be a Service Provider for any reason, terminate with respect to any Option Shares for which this option is not otherwise at that time exercisable.  Upon the expiration of the limited post-service exercise period or (if earlier) upon the Expiration Date, this option shall terminate entirely.

6.Effect of Corporate Transaction.

(a)This option, to the extent outstanding at the time of a Corporate Transaction but not otherwise fully exercisable, shall automatically accelerate so that this option shall, immediately prior to the effective date of such Corporate Transaction, become exercisable for all of the Option Shares at the time subject to this option. However, this option shall not become exercisable on such an accelerated basis, if and to the extent: (i) this option is, in connection with the Corporate Transaction, to be assumed by the successor corporation (or  parent thereof) or to be replaced with a comparable option to purchase shares of the capital stock of the successor corporation (or parent thereof) or (ii) this option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing at the time of the Corporate Transaction on any Option Shares for which this option is not otherwise at that time exercisable (the excess of the Fair Market Value of those Option Shares over the aggregate Exercise Price payable for such shares) and provides for subsequent payout in accordance with the same exercise schedule for those Option Shares set forth in the Grant Notice.

(b)Upon the consummation of the Corporate Transaction, this option shall terminate, except to the extent assumed by the successor corporation (or parent thereof) in connection with the Corporate Transaction.

(c)If this option is assumed in connection with a Corporate Transaction, then this option shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to Optionee as a result of the consummation of such Corporate Transaction had the option been exercised immediately prior to such Corporate Transaction, and appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the same.

(d)This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or  assets.

7.Adjustment in Option Shares. Should any change be made to the Common Stock by reason of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, exchange of shares, reorganization, merger, consolidation, split-up, spin-off, or other change affecting the outstanding Common Stock as a class without the Company’s receipt of consideration, appropriate adjustments shall be made to (a) the total number and/or class of securities subject to this option and (b) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder.

8.Stockholder Rights. The holder of this option shall not have any stockholder rights with respect to the Option Shares until such person shall have exercised the option in accordance with the provisions of Paragraph 9, paid the Exercise Price and become a holder of record of the purchased shares.

4852-9762-7137\2\389336\00005 2

9.Manner of Exercising Option.

(a)In order to exercise this option with respect to all or any part of the Option Shares for which this option is at the time exercisable, Optionee (or any other person or persons exercising the option) must take the following actions:

(i)Execute and deliver to the Company (A) a Notice of Exercise, in substantially the form attached hereto as Exhibit I, that specifies the number of Option Shares for which the option is being exercised and (B) any additional documents which the Committee may, in its discretion, deem  advisable.

(ii)Pay the aggregate Exercise Price for the purchased shares in one or more of the following forms:

(A)cash or check payable to the Company’s order;

(B)shares of Common Stock held by Optionee for the requisite period necessary to avoid a charge to the Company’s reported earnings and valued at Fair Market Value on the Exercise Date; or

(C)through a special sale and remittance procedure pursuant to which Optionee is to provide irrevocable written instructions (1) to a brokerage firm to effect the immediate sale of the purchased shares and remit to the Company, out of the sale proceeds available on the settlement date, an amount sufficient to cover the aggregate Exercise Price payable for the purchased shares plus all applicable Federal and state income and employment taxes required to be withheld by the Company by reason of such purchase and (2) to the Company to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale transaction.

(iii)Furnish to the Company appropriate documentation that the person or persons exercising the option (if other than Optionee) have the right to exercise this option.

(iv)Make appropriate arrangements with the Company (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all Federal, state and local income and employment tax withholding requirements applicable to the option exercise.

(b)If payment of the exercise price is made by means of the surrender of shares of Common Stock which are subject to certain restrictions, the number of shares of Common Stock issued upon the exercise of the option equal to the number of shares of restricted stock surrendered shall be subject to the same restrictions as the restricted stock that was surrendered.

(c)Except to the extent the sale and remittance procedure specified in Paragraph 9(a)(ii)(C) is utilized in connection with the option exercise, payment of the option price for the purchased shares must accompany the Notice of Exercise.

(d)Assuming Optionee does not sell the purchased shares of Common Stock on the Exercise Date, as soon as practical after the Exercise Date, the Company shall either

(i)issue to or on behalf of Optionee (or any other person or persons exercising this option) a certificate for the purchased Option Shares, with the appropriate legends affixed thereto, or (ii) instruct the Company’s transfer agent to make a book-entry reflecting the purchase on its stockholder ledger.

(e)In no event may this option be exercised for any fractional shares.

10.Tax Withholding. The Committee may, in its discretion and upon such terms and conditions as it may deem appropriate (including the applicable safe-harbor provisions of Securities and Exchange Commission Rule 16b-3 or any successor rule or regulation) provide Optionee (if Optionee is an Employee) with the election to surrender previously acquired shares of Common Stock or have shares withheld in satisfaction of the tax withholding obligations. To the extent necessary to avoid adverse accounting treatment, the number of shares that may be withheld for this purpose shall not exceed the minimum number needed to satisfy the applicable income and employment tax withholding rules. If Common Stock is used to satisfy the Company's tax withholding obligations, the shares of Common Stock shall have been held by Optionee for the requisite period necessary to avoid a charge to the Company’s reported earnings and shall be valued at their Fair Market Value when the tax withholding is required to be made.

4852-9762-7137\2\389336\00005 3

11.Compliance with Laws and Regulations.

(a)The exercise of this option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Company and Optionee with all applicable requirements of law relating thereto and with all applicable regulations of any Stock Exchange (or the Nasdaq Stock Market, if applicable) on which the Common Stock may be  listed for trading at the time of such exercise and issuance.

(b)The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance and sale of any Common Stock pursuant to this option shall relieve the Company of any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall  not have been obtained. The Company, however, shall use reasonable efforts to obtain all such approvals.

12.Successors and Assigns. Except to the extent otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and Optionee, Optionee’s assigns, the legal representatives, heirs and legatees of Optionee’s estate and any beneficiaries of this option designated by Optionee.

13.Notices. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Company at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated below Optionee’s signature line on  the Grant Notice. All notices shall be deemed effective upon personal delivery or three days  after deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

14.Construction. This Agreement and the option evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of this Agreement shall prevail.   All decisions of the Committee with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in this option.

15.Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Delaware without resort to its conflict-of-laws rules.

16.No Employment/Service Contract. Nothing in this Agreement or in the Plan shall confer upon Optionee any right to continue to be a Service Provider of the Company (or any Parent or Subsidiary) for any period of specific duration or otherwise interfere with or restrict in any way the rights of the Company (or such Parent or Subsidiary) or Optionee, which rights are hereby expressly reserved by each, to terminate Optionee’s Service Provider status at any time and for any reason whatsoever, with or without cause.

4852-9762-7137\2\389336\00005 4

EXHIBIT I

NOTICE OF EXERCISE OF STOCK OPTION

I hereby notify CorVel Corporation (the “Company”) that I,, elect to purchaseshares of Common Stock of the Corporation (the “Purchased Shares”) at an option price of $per share (the “Option Price”) pursuant to the option (the “Option”) granted to me on

My option was granted as a non-qualified stock option. I will need to report taxable income at the time I exercise this Option and pay the corresponding withholding tax (the “Withholding Tax”) to the Corporation. The Withholding Tax is computed on the difference between the Option Price and the Fair Market Value of the stock on the date I exercise the Option.

Concurrently with the delivery of the Exercise Notice to the Chief Financial Officer of  the Corporation, I shall hereby pay to the Corporation the Option Price and Withholding Tax for the Purchased Shares in accordance with the provisions of my agreement with the Corporation evidencing the Option and shall deliver whatever additional documents may be required by such agreement as a condition for exercise.

Date	Optionee’s Signature
If applicable, print name in exact manner it is to appear on the stock certificate:
Optionee’s Mailing Address:
Address to which certificate is to be sent, if different from address above:
Brokerage Account  Information
(Broker Name, Contact Info., Account #)

4852-9762-7137\2\389336\00005 A-1

APPENDIX

The following definitions shall be in effect under this Agreement:

A.Agreement shall mean this Stock Option Agreement.

B.Board shall mean the Board of Directors of the Company.

C.Common Stockshall mean shares of the Company’s common stock, $0.0001 par value.

D.Code shall mean the Internal Revenue Code of 1986, as amended.

E.Committeeshall mean a committee designated by the Board to administer the Plan, which initially shall be the compensation committee of the Board. The Committee shall be comprised of at least two directors but not less than such number of directors as shall be required to permit awards granted under the Plan to qualify under Rule 16b-3 under the Securities Act and Section 162(m) of the Code, and each member of the Committee shall be a “Non-Employee Director ” within the meaning of Rule 16b-3 under the Securities Act and an “Outside Director” within the meaning of Section 162(m) of the Code.

F.Companyshall mean CorVel Corporation, a Delaware corporation, or any corporate successor which shall assume the Plan.

G.Corporate Transactionshall mean any of the following transactions for which the approval of the Company’s stockholders is obtained:

(i)a merger or acquisition in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state of the Company’s incorporation,

(ii)the sale, transfer or other disposition of all or substantially all of the assets of the Company to any entity other than a parent or subsidiary of the Company, or

(iii)any reverse merger in which the Company is the surviving entity but in which fifty percent (50%) or more of the Company’s outstanding voting stock is transferred to holders different from those who held such fifty percent (50%) or greater interest immediately prior to such merger.

H.Employeeshall mean an individual for whom the Company or one or more of its Parent or Subsidiaries reports his or her earnings on a Form W-2.

I.Exercise Dateshall mean the date on which the option shall have been exercised in accordance with Paragraph 9.

J.Exercise Priceshall mean the exercise price per Option Share as specified in the Grant Notice.

K.Expiration Dateshall mean the date on which the option expires as specified in the

Grant Notice.

L.Fair Market Valueper share of Common Stock on any relevant date shall be determined in accordance with the following provisions:

(i)If the Common Stock is at the time listed on the Nasdaq National Market or the Nasdaq Capital Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market or the Nasdaq Capital Market and published in The Wall Street Journal.

(ii)If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Committee to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall Street Journal.

4852-9762-7137\2\389336\00005 A-2

(iii)If the Common Stock is not listed on the Nasdaq National Market, Nasdaq Capital Market or a national securities exchange, the Fair Market Value shall be the average of the closing bid and ask prices of the Common Stock on that day as reported by the Nasdaq bulletin board or any comparable system on that day.

(iv)If the Common Stock is not traded included in the Nasdaq bulletin board or any comparable system, the Fair Market Value shall be the average of the closing bid and ask prices on that day as furnished by any member of the National Association of Securities Dealers, Inc. selected from time to time by the Company for that purpose.

(v)If the date in question is not a trading day, then the Fair Market Value shall be determined based on prices for the trading day prior to the date in question.

M.Grant Dateshall mean the date of grant of the option as specified in the Grant Notice.

N.Grant Noticeshall mean the Notice of Grant of Stock Option accompanying this Agreement, pursuant to which Optionee has been informed of the basic terms of the option evidenced hereby.

O.Misconductshall mean any of the following:

(i)Optionee’s intentional misconduct or continuing gross neglect of duties which materially and adversely affects the business and operations of the Company or any Parent or Subsidiary employing Optionee;

(ii)Optionee’s unauthorized use or disclosure of (or attempt to use or disclose) confidential information or trade secrets of the Company or any Parent or Subsidiary; or

(iii)Optionee’s commission of an act involving embezzlement, theft, fraud, falsification of records, destruction of property or commission of a crime or other offense involving money or other property of the Company or any Parent or Subsidiary employing Optionee.

The reasons for termination of Optionee as a Service Provider set forth in this subparagraph are not intended to be an exclusive list of all acts or omissions which the Company (or any Parent or Subsidiary) may deem to constitute misconduct or other grounds for terminating Optionee (or any other individual).

P.Non-Statutory Optionshall mean an option not intended to satisfy the requirements of Code Section 422.

Q.Notice of Exerciseshall mean the notice of exercise in the form attached hereto as Exhibit I.

R.Option Sharesshall mean the number of shares of Common Stock subject to the option as specified in the Grant Notice.

S.Optionee shall mean the person to whom the option is granted as specified in the Grant

Notice.

T.Parent shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, provided each such corporation in the unbroken chain (other than the Company) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

U.Permanent Disability shall have the meaning assigned to “permanent and total disability” as set forth in Code Section 22(e)(3).

V.Plan shall mean the CorVel Corporation Restated Omnibus Incentive Plan (Formerly The Restated 1988 Executive Stock Option Plan).

4852-9762-7137\2\389336\00005 A-3

W.Securities Actshall mean the Securities Act of 1933, as amended.

X.Service Provider shall mean an individual who renders service on a periodic basis to the Company, its Parent and/or any of its Subsidiaries as an Employee, a non-Employee member of the board of directors or a consultant or independent advisor.

Y.Stock Exchange shall mean the American Stock Exchange or the New York Stock Exchange, or any other national stock exchange.

Z.Subsidiary shall mean any corporation (other than the Company) in an unbroken chain  of corporations beginning with the Company, provided such corporation (other than the last corporation in the unbroken chain) owns, at the time of determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. For purposes of all Non-Statutory Option grants under the Plan and all Corporate Transaction provisions of the Plan, the term “Subsidiary” shall also include any partnership, joint venture or other business entity of which the Company owns, directly or indirectly through another entity, more than a fifty percent (50%) interest in voting power, capital or profits.

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Schedule A: Performance Option

CORVEL CORPORATION

Percentage of shares earned by tranche

CY 2015, 2016, 2017

	CY 2015	CY 2016	CY 2017
EPS Target for each calendar year	$1.70	$1.87	$2.06
Percentage of option grant for tranche (totals 100%)	30%	30%	40%
To earn 100% of tranche (105% of EPS target)	$1.79	$1.96	$2.16
To earn 80% of tranche (100% of EPS target)	$1.70	$1.87	$2.06
To earn 30% of tranche (95% of EPS target)	$1.62	$1.78	$1.95
EPS at Zero (90% of EPS target)	$1.53	$1.68	$1.85

SCHEDULE A

CORVEL CORPORATION

Shares earned by EPS number by Tranche year

CY 2015, 2016, 2017

Option grant:	6000 Shares option grant
CY 2015 Tranche	1800 30% of total grant
CY 2016 Tranche	1800 30% of total grant
CY 2017 Tranche	2400 40% of total grant

	CY 2015			CY 2016			CY 2017
	Percentage	Shares		Percentage	Shares		Percentage	Shares
$1.53	0.0%	0	$1.68	0.0%	0	$1.85	0.0%	0
$1.54	3.3%	60	$1.69	3.0%	54	$1.86	3.0%	72
$1.55	6.7%	120	$1.70	6.0%	108	$1.87	6.0%	144
$1.56	10.0%	180	$1.71	9.0%	162	$1.88	9.0%	216
$1.57	13.3%	240	$1.72	12.0%	216	$1.89	12.0%	288
$1.58	16.7%	300	$1.73	15.0%	270	$1.90	15.0%	360
$1.59	20.0%	360	$1.74	18.0%	324	$1.91	18.0%	432
$1.60	23.3%	420	$1.75	21.0%	378	$1.92	21.0%	504
$1.61	26.7%	480	$1.76	24.0%	432	$1.93	24.0%	576
$1.62	30.0%	540	$1.77	27.0%	486	$1.94	27.0%	648
$1.63	36.3%	653	$1.78	30.0%	540	$1.95	30.0%	720
$1.64	42.5%	765	$1.79	35.6%	640	$1.96	34.5%	829
$1.65	48.8%	878	$1.80	41.1%	740	$1.97	39.1%	938
$1.66	55.0%	990	$1.81	46.7%	840	$1.98	43.6%	1,047
$1.67	61.3%	1,103	$1.82	52.2%	940	$1.99	48.2%	1,156
$1.68	67.5%	1,215	$1.83	57.8%	1,040	$2.00	52.7%	1,265
$1.69	73.8%	1,328	$1.84	63.3%	1,140	$2.01	57.3%	1,375
$1.70	80.0%	1,440	$1.85	68.9%	1,240	$2.02	61.8%	1,484
$1.71	82.2%	1,480	$1.86	74.4%	1,340	$2.03	66.4%	1,593
$1.72	84.4%	1,520	$1.87	80.0%	1,440	$2.04	70.9%	1,702
$1.73	86.7%	1,560	$1.88	82.2%	1,480	$2.05	75.5%	1,811
$1.74	88.9%	1,600	$1.89	84.4%	1,520	$2.06	80.0%	1,920
$1.75	91.1%	1,640	$1.90	86.7%	1,560	$2.07	82.0%	1,968
$1.76	93.3%	1,680	$1.91	88.9%	1,600	$2.08	84.0%	2,016
$1.77	95.6%	1,720	$1.92	91.1%	1,640	$2.09	86.0%	2,064
$1.78	97.8%	1,760	$1.93	93.3%	1,680	$2.10	88.0%	2,112
$1.79	100.0%	1,800	$1.94	95.6%	1,720	$2.11	90.0%	2,160
			$1.95	97.8%	1,760	$2.12	92.0%	2,208
			$1.96	100.0%	1,800	$2.13	94.0%	2,256
						$2.14	96.0%	2,304
						$2.15	98.0%	2,352
						$2.16	100.0%	2,400

Notwithstanding anything to the contrary in this Schedule A or the Stock Option Agreement to which this Schedule A is attached, the Company shall have the right, in its sole discretion, with or without the consent of the Optionee, to  amend this Schedule A to adjust any or all of the targets, dates and/or target EPS amounts as it deems equitable to recognize unusual or non-recurring events, including, but not limited to the Company’s acquisition of another business entity or assets, a corporate merger or other consolidation, or the sale or discontinuation of significant business operations or business units of the Company; changes in tax laws or accounting procedures; and any other extraordinary circumstances.

EX-10.37

Exhibit 10.37

CORVEL CORPORATION

ID: 33-0282651

2010 Main Street Suite 600

Irvine, California 92614

Notice of Grant of Stock Options and Option Agreement

Richard Schweppe	Option Number:	005893
	Plan:	1988

Effective 11/05/2015, you have been granted a(n) Non-Qualified Stock Option to buy 3,000.0000 shares of CORVEL CORPORATION (the Company) stock at $34.7800 per share.

The total option price of the shares granted is $104,340.00.

Shares in each period will become fully vested on the date shown.

Shares	Vest Type	Full Vest	Expiration
3,000.0000	On Vest Date	11/05/2020	11/05/2020

Provided you continue to be a Service Provider (as defined in the Stock Option Agreement attached hereto as Exhibit A) throughout the specified period, the Option will become exercisable in accordance with Schedule A.

Optionee (and Optionee's spouse) hereby agree(s) that the option is granted pursuant to and in accordance with the express terms and conditions of the Stock Option Agreement and the Corporation's Restated Omnibus Incentive Plan.

By your signature and the Company's signature below, you and the Company agree that these options are granted under and governed by the terms and conditions of the Company's Stock Option Plan as amended and the Option Agreement, all of which are attached and made a part of this document.

/s/ Sharon O' Connor	November 10, 2015
CORVEL CORPORATION	Date
/s/ Richard Schweppe	November 10, 2015
Richard Schweppe	Date

Date:	11/10/2015
Time:	09:50:18AM

Section 16 Insiders Discretionary Option Grant Program

CorVel Corporation

Stock Option Agreement

A.The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board (or the board of directors of any Parent or Subsidiary) and consultants and advisors who provide services to the Company (or any Parent or Subsidiary).

B.Optionee is to render valuable services to the Company (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out  the purposes of, the Plan in connection with the Company’s grant of an option to Optionee.

C.All capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix.

Now, therefore, it is hereby agreed as follows:

1.Grant of Option. Subject to and upon the terms and conditions set forth in this Agreement, Optionee is hereby granted, as of the Grant Date, an option to purchase the Option Shares. The Option Shares shall be purchasable from time to time during the option term at the Exercise Price.

2.Option Term. This option shall expire at the close of business on the Expiration Date, unless sooner terminated in accordance with this Agreement.

3.Limited Transferability.

(a)During Optionee’s lifetime, this option shall be exercisable only by Optionee and shall not be assignable or transferable other than by will, by the laws of descent  and distribution following the Optionee’s death, or to any “Family Member” (as such term is defined in the General Instructions to Form S-8 (or any successor to such Instructions or such Form) under the Securities Act), provided that Optionee may not receive any consideration for such transfer, the Family Member may not make any subsequent transfers other than by will or by the laws of descent and distribution and the Company receives written notice of such transfer. This assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for this option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Company may deem appropriate.

(b)Should Optionee die while holding this option, then this option shall be transferred in accordance with Optionee’s will or the laws of inheritance. However, Optionee may designate one or more persons as the beneficiary or beneficiaries of this option, and this option shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon Optionee’s death while holding this option. Such beneficiary or beneficiaries shall take the transferred option subject to all the terms and conditions of this Agreement, including (without limitation) the limited time period during which this option may, pursuant to Paragraph 5, be exercised following Optionee’s death.

4.Exercisability. This option shall become exercisable in one or more installments as specified in the Grant Notice. As the option becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the accumulated installments until the Expiration Date or sooner termination of the option term.

5.Effect of Cessation of Service.

(a)Should Optionee cease to be a Service Provider for any reason (other than death, Permanent Disability or Misconduct) while this option is outstanding, then this option shall remain exercisable until the earlier of (i) the expiration of the three month period commencing with the date of such cessation of Service Provider status or (ii) the Expiration Date.

(b)Should Optionee cease to be a Service Provider by reason of Permanent Disability or death while this option is outstanding, then the option shall remain exercisable until the earlier of (i) the expiration of the twelve month period commencing with  the date of such cessation of Service Provider status or (ii) the Expiration Date.

(c)Should Optionee cease to be a Service Provider due to termination for Misconduct, then this option shall terminate immediately.

4852-9762-7137\2\389336\00005

(d)During the limited period of post-service exercisability, this option may not be exercised in the aggregate for more than the number of Option Shares for which the option is exercisable at the time Optionee ceased to be a Service Provider. This option shall, immediately when Optionee ceases to be a Service Provider for any reason, terminate with respect to any Option Shares for which this option is not otherwise at that time exercisable.  Upon the expiration of the limited post-service exercise period or (if earlier) upon the Expiration Date, this option shall terminate entirely.

6.Effect of Corporate Transaction.

(a)This option, to the extent outstanding at the time of a Corporate Transaction but not otherwise fully exercisable, shall automatically accelerate so that this option shall, immediately prior to the effective date of such Corporate Transaction, become exercisable for all of the Option Shares at the time subject to this option. However, this option shall not become exercisable on such an accelerated basis, if and to the extent: (i) this option is, in connection with the Corporate Transaction, to be assumed by the successor corporation (or  parent thereof) or to be replaced with a comparable option to purchase shares of the capital stock of the successor corporation (or parent thereof) or (ii) this option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing at the time of the Corporate Transaction on any Option Shares for which this option is not otherwise at that time exercisable (the excess of the Fair Market Value of those Option Shares over the aggregate Exercise Price payable for such shares) and provides for subsequent payout in accordance with the same exercise schedule for those Option Shares set forth in the Grant Notice.

(b)Upon the consummation of the Corporate Transaction, this option shall terminate, except to the extent assumed by the successor corporation (or parent thereof) in connection with the Corporate Transaction.

(c)If this option is assumed in connection with a Corporate Transaction, then this option shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to Optionee as a result of the consummation of such Corporate Transaction had the option been exercised immediately prior to such Corporate Transaction, and appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the same.

(d)This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or  assets.

7.Adjustment in Option Shares. Should any change be made to the Common Stock by reason of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, exchange of shares, reorganization, merger, consolidation, split-up, spin-off, or other change affecting the outstanding Common Stock as a class without the Company’s receipt of consideration, appropriate adjustments shall be made to (a) the total number and/or class of securities subject to this option and (b) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder.

8.Stockholder Rights. The holder of this option shall not have any stockholder rights with respect to the Option Shares until such person shall have exercised the option in accordance with the provisions of Paragraph 9, paid the Exercise Price and become a holder of record of the purchased shares.

9.Manner of Exercising Option.

(a)In order to exercise this option with respect to all or any part of the Option Shares for which this option is at the time exercisable, Optionee (or any other person or persons exercising the option) must take the following actions:

(i)Execute and deliver to the Company (A) a Notice of Exercise, in substantially the form attached hereto as Exhibit I, that specifies the number of Option Shares for which the option is being exercised and (B) any additional documents which the Committee may, in its discretion, deem  advisable.

(ii)Pay the aggregate Exercise Price for the purchased shares in one or more of the following forms:

(A)cash or check payable to the Company’s order;

(B)shares of Common Stock held by Optionee for the requisite period necessary to avoid a charge to the Company’s reported earnings and valued at Fair Market Value on the Exercise Date; or

4852-9762-7137\2\389336\00005 2

(C)through a special sale and remittance procedure pursuant to which Optionee is to provide irrevocable written instructions (1) to a brokerage firm to effect the immediate sale of the purchased shares and remit to the Company, out of the sale proceeds available on the settlement date, an amount sufficient to cover the aggregate Exercise Price payable for the purchased shares plus all applicable Federal and state income and employment taxes required to be withheld by the Company by reason of such purchase and (2) to the Company to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale transaction.

(iii)Furnish to the Company appropriate documentation that the person or persons exercising the option (if other than Optionee) have the right to exercise this option.

(iv)Make appropriate arrangements with the Company (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all Federal, state and local income and employment tax withholding requirements applicable to the option exercise.

(b)If payment of the exercise price is made by means of the surrender of shares of Common Stock which are subject to certain restrictions, the number of shares of Common Stock issued upon the exercise of the option equal to the number of shares of restricted stock surrendered shall be subject to the same restrictions as the restricted stock that was surrendered.

(c)Except to the extent the sale and remittance procedure specified in Paragraph 9(a)(ii)(C) is utilized in connection with the option exercise, payment of the option price for the purchased shares must accompany the Notice of Exercise.

(d)Assuming Optionee does not sell the purchased shares of Common Stock on the Exercise Date, as soon as practical after the Exercise Date, the Company shall either (i) issue to or on behalf of Optionee (or any other person or persons exercising this option) a certificate for the purchased Option Shares, with the appropriate legends affixed thereto, or (ii) instruct the Company’s transfer agent to make a book-entry reflecting the purchase on its stockholder ledger.

(e)In no event may this option be exercised for any fractional shares.

10.Tax Withholding. The Committee may, in its discretion and upon such terms and conditions as it may deem appropriate (including the applicable safe-harbor provisions of Securities and Exchange Commission Rule 16b-3 or any successor rule or regulation) provide Optionee (if Optionee is an Employee) with the election to surrender previously acquired shares of Common Stock or have shares withheld in satisfaction of the tax withholding obligations. To the extent necessary to avoid adverse accounting treatment, the number of shares that may be withheld for this purpose shall not exceed the minimum number needed to satisfy the applicable income and employment tax withholding rules. If Common Stock is used to satisfy the Company's tax withholding obligations, the shares of Common Stock shall have been held by Optionee for the requisite period necessary to avoid a charge to the Company’s reported earnings and shall be valued at their Fair Market Value when the tax withholding is required to be made.

11.Compliance with Laws and Regulations.

(a)The exercise of this option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Company and Optionee with all applicable requirements of law relating thereto and with all applicable regulations of any Stock Exchange (or the Nasdaq Stock Market, if applicable) on which the Common Stock may be  listed for trading at the time of such exercise and issuance.

(b)The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance and sale of any Common Stock pursuant to this option shall relieve the Company of any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall  not have been obtained. The Company, however, shall use reasonable efforts to obtain all such approvals.

12.Successors and Assigns. Except to the extent otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and Optionee, Optionee’s assigns, the legal representatives, heirs and legatees of Optionee’s estate and any beneficiaries of this option designated by Optionee.

4852-9762-7137\2\389336\00005 3

13.Notices. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Company at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated below Optionee’s signature line on  the Grant Notice. All notices shall be deemed effective upon personal delivery or three days  after deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

14.Construction. This Agreement and the option evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of this Agreement shall prevail.   All decisions of the Committee with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in this option.

15.Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Delaware without resort to its conflict-of-laws rules.

16.No Employment/Service Contract. Nothing in this Agreement or in the Plan shall confer upon Optionee any right to continue to be a Service Provider of the Company (or any Parent or Subsidiary) for any period of specific duration or otherwise interfere with or restrict in any way the rights of the Company (or such Parent or Subsidiary) or Optionee, which rights are hereby expressly reserved by each, to terminate Optionee’s Service Provider status at any time and for any reason whatsoever, with or without cause.

4852-9762-7137\2\389336\00005 4

EXHIBIT I

NOTICE OF EXERCISE OF STOCK OPTION

I hereby notify CorVel Corporation (the “Company”) that I,, elect to purchaseshares of Common Stock of the Corporation (the “Purchased Shares”) at an option price of $per share (the “Option Price”) pursuant to the option (the “Option”) granted to me on.

My option was granted as a non-qualified stock option. I will need to report taxable income at the time I exercise this Option and pay the corresponding withholding tax (the “Withholding Tax”) to the Corporation. The Withholding Tax is computed on the difference between the Option Price and the Fair Market Value of the stock on the date I exercise the Option.

Concurrently with the delivery of the Exercise Notice to the Chief Financial Officer of  the Corporation, I shall hereby pay to the Corporation the Option Price and Withholding Tax for the Purchased Shares in accordance with the provisions of my agreement with the Corporation evidencing the Option and shall deliver whatever additional documents may be required by such agreement as a condition for exercise.

Date	Optionee’s Signature
If applicable, print name in exact manner it
is to appear on the stock certificate:
Optionee’s Mailing Address:
Address to which certificate is to be sent, if
different from address above:
Brokerage Account Information
(Broker Name, Contact Info., Account #)

4852-9762-7137\2\389336\00005 A-1

APPENDIX

The following definitions shall be in effect under this Agreement:

A.Agreement shall mean this Stock Option Agreement.

B.Board shall mean the Board of Directors of the Company.

C.Common Stock shall mean shares of the Company’s common stock, $0.0001 par value.

D.Code shall mean the Internal Revenue Code of 1986, as amended.

E.Committee shall mean a committee designated by the Board to administer the Plan, which initially shall be the compensation committee of the Board. The Committee shall be comprised of at least two directors but not less than such number of directors as shall be required to permit awards granted under the Plan to qualify under Rule 16b-3 under the Securities Act and Section 162(m) of the Code, and each member of the Committee shall be a “Non-Employee Director ” within the meaning of Rule 16b-3 under the Securities Act and an “Outside Director” within the meaning of Section 162(m) of the Code.

F.Company shall mean CorVel Corporation, a Delaware corporation, or any corporate successor which shall assume the Plan.

G.Corporate Transaction shall mean any of the following transactions for which the approval of the Company’s stockholders is obtained:

(i)a merger or acquisition in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state of the Company’s incorporation,

(ii)the sale, transfer or other disposition of all or substantially all of the assets of the Company to any entity other than a parent or subsidiary of the Company, or

(iii)any reverse merger in which the Company is the surviving entity but in which fifty percent (50%) or more of the Company’s outstanding voting stock is transferred to holders different from those who held such fifty percent (50%) or greater interest immediately prior to such merger.

H.Employee shall mean an individual for whom the Company or one or more of its Parent or Subsidiaries reports his or her earnings on a Form W-2.

I.Exercise Date shall mean the date on which the option shall have been exercised in accordance with Paragraph 9.

J.Exercise Price shall mean the exercise price per Option Share as specified in the Grant Notice.

K.Expiration Date shall mean the date on which the option expires as specified in the Grant Notice.

L.Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following provisions:

(i)If the Common Stock is at the time listed on the Nasdaq National Market or the Nasdaq Capital Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market or the Nasdaq Capital Market and published in The Wall Street Journal.

(ii)If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Committee to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall Street Journal.

4852-9762-7137\2\389336\00005 A-2

(iii)If the Common Stock is not listed on the Nasdaq National Market, Nasdaq Capital Market or a national securities exchange, the Fair Market Value shall be the average of the closing bid and ask prices of the Common Stock on that day as reported by the Nasdaq bulletin board or any comparable system on that day.

(iv)If the Common Stock is not traded included in the Nasdaq bulletin board or any comparable system, the Fair Market Value shall be the average of the closing bid and ask prices on that day as furnished by any member of the National Association of Securities Dealers, Inc. selected from time to time by the Company for that purpose.

(v)If the date in question is not a trading day, then the Fair Market Value shall be determined based on prices for the trading day prior to the date in question.

M.Grant Date shall mean the date of grant of the option as specified in the Grant Notice.

N.Grant Notice shall mean the Notice of Grant of Stock Option accompanying this Agreement, pursuant to which Optionee has been informed of the basic terms of the option evidenced hereby.

O.Misconduct shall mean any of the following:

(i)Optionee’s intentional misconduct or continuing gross neglect of duties which materially and adversely affects the business and operations of the Company or any Parent or Subsidiary employing Optionee;

(ii)Optionee’s unauthorized use or disclosure of (or attempt to use or disclose) confidential information or trade secrets of the Company or any Parent or Subsidiary; or

(iii)Optionee’s commission of an act involving embezzlement, theft, fraud, falsification of records, destruction of property or commission of a crime or other offense involving money or other property of the Company or any Parent or Subsidiary employing Optionee.

The reasons for termination of Optionee as a Service Provider set forth in this subparagraph are not intended to be an exclusive list of all acts or omissions which the Company (or any Parent or Subsidiary) may deem to constitute misconduct or other grounds for terminating Optionee (or any other individual).

P.Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.

Q.Notice of Exercise shall mean the notice of exercise in the form attached hereto as Exhibit I.

R.Option Shares shall mean the number of shares of Common Stock subject to the option as specified in the Grant Notice.

S.Optionee shall mean the person to whom the option is granted as specified in the Grant

Notice.

T.Parent shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, provided each such corporation in the unbroken chain (other than the Company) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

U.Permanent Disability shall have the meaning assigned to “permanent and total disability” as set forth in Code Section 22(e)(3).

V.Plan shall mean the CorVel Corporation Restated Omnibus Incentive Plan (Formerly The Restated 1988 Executive Stock Option Plan).

W.Securities Act shall mean the Securities Act of 1933, as amended.

4852-9762-7137\2\389336\00005 A-3

X.Service Provider shall mean an individual who renders service on a periodic basis to the Company, its Parent and/or any of its Subsidiaries as an Employee, a non-Employee member of the board of directors or a consultant or independent advisor.

Y.Stock Exchange shall mean the American Stock Exchange or the New York Stock Exchange, or any other national stock exchange.

Z.Subsidiary shall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, provided such corporation (other than the last corporation in the unbroken chain) owns, at the time of determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. For purposes of all Non-Statutory Option grants under the Plan and all Corporate Transaction provisions of the Plan, the term “Subsidiary” shall also include any partnership, joint venture or other business entity of which the Company owns, directly or indirectly through another entity, more than a fifty percent (50%) interest in voting power, capital or profits.

4852-9762-7137\2\389336\00005 A-4

CorVel Corporation	Schedule A: Performance Option
Performance Stock Options
Options granted in November, 2015

		CY 2016		CY 2017		CY 2018
EPS Target for each calendar year	$	1.750	$	1.925	$	***
Percentage of option grant for tranche (totals 100%)		30%		30%		***%
to earn 100% of tranche (105% of EPS target)	$	1.84	$	2.02	$	***
to earn 80% of tranche (100% of EPS target)	$	1.75	$	1.93	$	***
to earn 30% of tranche (95% of EPS target)	$	1.66	$	1.83	$	***
EPS at zero earned (90% of EPS target)	$	1.58	$	1.73	$	***

*** Confidential treatment requested pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.  In accordance with Rule 24b-2, these confidential portions have been omitted from this exhibit and filed separately with the Securities and Exchange Commission.

SCHEDULE A

CORVEL CORPORATION

Shares earned by EPS number by Tranche year

CY 2016, 2017, 2018

Option grant:	3,000 Shares option grant
CY 2016 Tranche	900 30% of total grant
CY 2017 Tranche	900 30% of total grant
CY 2018 Tranche	1200 40% of total grant

	CY 2016			CY 2017			CY 2018
	Percentage	Shares		Percentage	Shares		Percentage	Shares
$1.58	0.0%	0	$1.73	0.0%	0	$***	0.0%	0
$1.59	3.8%	34	$1.74	3.0%	27	$***	2.5%	30
$1.60	7.5%	68	$1.75	6.0%	54	$***	5.0%	60
$1.61	11.3%	101	$1.76	9.0%	81	$***	7.5%	90
$1.62	15.0%	135	$1.77	12.0%	108	$***	10.0%	120
$1.63	18.8%	169	$1.78	15.0%	135	$***	12.5%	150
$1.64	22.5%	203	$1.79	18.0%	162	$***	15.0%	180
$1.65	26.3%	236	$1.80	21.0%	189	$***	17.5%	210
$1.66	30.0%	270	$1.81	24.0%	216	$***	20.0%	240
$1.67	35.6%	320	$1.82	27.0%	243	$***	22.5%	270
$1.68	41.1%	370	$1.83	30.0%	270	$***	25.0%	300
$1.69	46.7%	420	$1.84	35.0%	315	$***	27.5%	330
$1.70	52.2%	470	$1.85	40.0%	360	$***	30.0%	360
$1.71	57.8%	520	$1.86	45.0%	405	$***	33.8%	406
$1.72	63.3%	570	$1.87	50.0%	450	$***	37.7%	452
$1.73	68.9%	620	$1.88	55.0%	495	$***	41.5%	498
$1.74	74.4%	670	$1.89	60.0%	540	$***	45.4%	545
$1.75	80.0%	720	$1.90	65.0%	585	$***	49.2%	591
$1.76	82.2%	740	$1.91	70.0%	630	$***	53.1%	637
$1.77	84.4%	760	$1.92	75.0%	675	$***	56.9%	683
$1.78	86.7%	780	$1.93	80.0%	720	$***	60.8%	729
$1.79	88.9%	800	$1.94	82.2%	740	$***	64.6%	775
$1.80	91.1%	820	$1.95	84.4%	760	$***	68.5%	822
$1.81	93.3%	840	$1.96	86.7%	780	$***	72.3%	868
$1.82	95.6%	860	$1.97	88.9%	800	$***	76.2%	914
$1.83	97.8%	880	$1.98	91.1%	820	$***	80.0%	960
$1.84	100.0%	900	$1.99	93.3%	840	$***	81.7%	980
			$2.00	95.5%	860	$***	83.3%	1,000
			$2.01	97.8%	880	$***	85.0%	1,020
			$2.02	100.0%	900	$***	86.7%	1,040
						$***	88.3%	1,060
						$***	90.0%	1,080
						$***	91.7%	1,100
						$***	93.3%	1,120
						$***	95.0%	1,140
						$***	96.7%	1,160
						$***	98.3%	1,180
						$***	100.0%	1,200

*** Confidential treatment requested pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.  In accordance with Rule 24b-2, these confidential portions have been omitted from this exhibit and filed separately with the Securities and Exchange Commission.

Notwithstanding anything to the contrary in this Schedule A or the Stock Option Agreement to which this Schedule A is attached, the Company shall have the right, in its sole discretion, with or without the consent of the Optionee, to amend this Schedule A to adjust any or all of the targets, dates and/or target EPS amounts as it deems equitable to recognize unusual or non-recurring events, including, but not limited to the Company’s acquisition of another business entity or assets, a corporate merger or other consolidation, or the sale or discontinuation of significant business operations or business units of the Company; changes in tax laws or accounting procedures; and any other extraordinary circumstances.

EX-10.38

Exhibit 10.38

CORVEL CORPORATION

ID: 33-0282651

2010 Main Street Suite 600

Irvine, California 92614

a

Notice of Grant of Stock Options and Option Agreement

Michael G. Combs	Option Number:	005891
	Plan:	1988

Effective 11/05/2015, you have been granted a(n) Non-Qualified Stock Option to buy 12,000.0000 shares of CORVEL CORPORATION (the Company) stock at $34.7800 per share.

The total option price of the shares granted is $417,360.00.

Shares in each period will become fully vested on the date shown.

Shares	Vest Type	Full Vest	Expiration
12,000.0000	On Vest Date	11/05/2020	11/05/2020

Provided you continue to be a Service Provider (as defined in the Stock Option Agreement attachedheretoasExhibitA)throughoutthespecifiedperiod,theOptionwillbecomeexercisable inaccordancewithScheduleA.

Optionee (and Optionee's spouse) hereby agree(s) that the option is granted pursuant to and in accordance with the express terms and conditions of the Stock Option Agreement and the Corporation's Restated Omnibus Incentive Plan.

By your signature and the Company's signature below, you and the Company agree that these options are granted under and governed by the terms and conditions of the Company's Stock Option Plan as amended and the Option Agreement, all of which are attached and made a part of this document.

/s/ Richard Schweppe	November 10, 2015
CORVEL CORPORATION	Date
/s/ Michael G. Combs	November 10, 2015
Michael G. Combs	Date
	Date:         11/10/2015
	Time:        09:50:18AM

Section 16 Insiders Discretionary Option Grant Program

CorVel Corporation

Stock Option Agreement

A.The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board (or the board of directors of any Parent or Subsidiary) and consultants and advisors who provide services to the Company (or any Parent or Subsidiary).

B.Optionee is to render valuable services to the Company (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out  the purposes of, the Plan in connection with the Company’s grant of an option toOptionee.

C.All capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix.

Now, therefore, it is hereby agreed as follows:

1.Grant of Option. Subject to and upon the terms and conditions set forth in this Agreement, Optionee is hereby granted, as of the Grant Date, an option to purchase the Option Shares. The Option Shares shall be purchasable from time to time during the option term at the Exercise Price.

2.Option Term. This option shall expire at the close of business on the Expiration Date, unless sooner terminated in accordance with this Agreement.

3.LimitedTransferability.

(a)During Optionee’s lifetime, this option shall be exercisable only by Optionee and shall not be assignable or transferable other than by will, by the laws of descent  and distribution following the Optionee’s death, or to any “Family Member” (as such term is defined in the General Instructions to Form S-8 (or any successor to such Instructions or such Form) under the Securities Act), provided that Optionee may not receive any consideration for such transfer, the Family Member may not make any subsequent transfers other than by will or by the laws of descent and distribution and the Company receives written notice of such transfer. This assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for this option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Company may deem appropriate.

(b)Should Optionee die while holding this option, then this option shall be transferred in accordance with Optionee’s will or the laws of inheritance. However, Optionee may designate one or more persons as the beneficiary or beneficiaries of this option, and this option shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon Optionee’s death while holding this option. Such beneficiary or beneficiaries shall take the transferred option subject to all the terms and conditions of this Agreement, including (without limitation) the limited time period during which this option may, pursuant to Paragraph 5, be exercised following Optionee’s death.

4.Exercisability. This option shall become exercisable in one or more installments as specified in the Grant Notice. As the option becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the accumulated installments until the Expiration Date or sooner termination of the optionterm.

5.Effect of Cessation ofService.

(a)Should Optionee cease to be a Service Provider for any reason (other than death, Permanent Disability or Misconduct) while this option is outstanding, then this option shall remain exercisable until the earlier of (i) the expiration of the three month period commencing with the date of such cessation of Service Provider status or (ii) the Expiration Date.

(b)Should Optionee cease to be a Service Provider by reason of Permanent Disability or death while this option is outstanding, then the option shall remain exercisable until the earlier of (i) the expiration of the twelve month period commencing with  the date of such cessation of Service Provider status or (ii) the ExpirationDate.

4852-9762-7137\2\389336\00005

(c)Should Optionee cease to be a Service Provider due to termination for Misconduct, then this option shall terminateimmediately.

(d)During the limited period of post-service exercisability, this option may not be exercised in the aggregate for more than the number of Option Shares for which the option is exercisable at the time Optionee ceased to be a Service Provider. This option shall, immediately when Optionee ceases to be a Service Provider for any reason, terminate with respect to any Option Shares for which this option is not otherwise at that time exercisable.  Upon the expiration of the limited post-service exercise period or (if earlier) upon the Expiration Date, this option shall terminateentirely.

6.Effect of CorporateTransaction.

(a)This option, to the extent outstanding at the time of a Corporate Transaction but not otherwise fully exercisable, shall automatically accelerate so that this option shall, immediately prior to the effective date of such Corporate Transaction, become exercisable for all of the Option Shares at the time subject to this option. However, this option shall not become exercisable on such an accelerated basis, if and to the extent: (i) this option is, in connection with the Corporate Transaction, to be assumed by the successor corporation (or  parent thereof) or to be replaced with a comparable option to purchase shares of the capital stock of the successor corporation (or parent thereof) or (ii) this option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing at the time of theCorporateTransactiononanyOptionSharesforwhichthisoptionisnototherwiseatthat time exercisable (the excess of the Fair Market Value of those Option Shares over the aggregate Exercise Price payable for such shares) and provides for subsequent payout in accordance with the same exercise schedule for those Option Shares set forth in the Grant Notice.

(b)Upon the consummation of the Corporate Transaction, this option shall terminate, except to the extent assumed by the successor corporation (or parent thereof) in connection with the CorporateTransaction.

(c)If this option is assumed in connection with a Corporate Transaction, then this option shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to Optionee as a result of the consummation of such Corporate Transaction had the option been exercised immediately prior to such Corporate Transaction, and appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain thesame.

(d)This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or  assets.

7.Adjustment in Option Shares. Should any change be made to the Common Stock by reason of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, exchange of shares, reorganization, merger, consolidation, split-up, spin-off, or other change affecting the outstanding Common Stock as a class without the Company’s receipt of consideration, appropriate adjustments shall be made to (a) the total number and/or class of securities subject to this option and (b) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefitshereunder.

8.Stockholder Rights. The holder of this option shall not have any stockholder rights with respect to the Option Shares until such person shall have exercised the option in accordance with the provisions of Paragraph 9, paid the Exercise Price and become a holder of record of the purchasedshares.

9.Manner of ExercisingOption.

(a)In order to exercise this option with respect to all or any part of the Option Shares for which this option is at the time exercisable, Optionee (or any other person or persons exercising the option) must take the followingactions:

(i)Execute and deliver to the Company (A) a Notice of Exercise, in substantially the form attached hereto as Exhibit I, that specifies the number of Option Shares for which the option is being exercised and (B) any additional documents which the Committee may, in its discretion, deem  advisable.

4852-9762-7137\2\389336\00005 2

(ii)Pay the aggregate Exercise Price for the purchased shares in one or more of the followingforms:

(A)cash or check payable   to theCompany’s order;

(B)shares of Common Stock held by Optioneefor the requisite period necessary to avoid a charge to the Company’s reported earnings and valued at Fair Market Value on the Exercise Date; or

(C)through a special sale and remittance procedure pursuant to which Optionee is to provide irrevocable written instructions (1) to a brokerage firm to effect the immediate sale of the purchased shares and remit to the Company, out of the sale proceeds available on the settlement date, an amount sufficient to cover the aggregate Exercise Price payable for the purchased shares plus all applicable Federal and state income and employment taxes required to be withheld by the Company by reason of such purchase and (2) to the Company to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the saletransaction.

(iii)Furnish to the Company appropriate documentation that the person or persons exercising the option (if other than Optionee) have the right to exercise this option.

(iv)Make appropriate arrangements with the Company (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all Federal, state and local income and employment tax withholding requirements applicable to the optionexercise.

(b)If payment of the exercise price is made by means of the surrender of shares of Common Stock which are subject to certain restrictions, the number of shares of Common Stock issued upon the exercise of the option equal to the number of shares of restricted stock surrendered shall be subject to the same restrictions as the restricted stock that was surrendered.

(c)Except to the extent the sale and remittance procedure specified in Paragraph 9(a)(ii)(C) is utilized in connection with the option exercise, payment of the option price for the purchased shares must accompany the Notice ofExercise.

(d)Assuming Optionee does not sell the purchased shares of Common Stock on the Exercise Date, as soon as practical after the Exercise Date, the Company shalleither (i) issue to or on behalf of Optionee (or any other person or persons exercising this option) a certificate for the purchased Option Shares, with the appropriate legends affixed thereto, or (ii) instruct the Company’s transfer agent to make a book-entry reflecting the purchase on its stockholderledger.

(e)In no event may this option be exercised for any fractionalshares.

10.Tax Withholding. The Committee may, in its discretion and upon such terms and conditions as it may deem appropriate (including the applicable safe-harbor provisions of Securities and Exchange Commission Rule 16b-3 or any successor rule or regulation) provide Optionee (if Optionee is an Employee) with the election to surrender previously acquired shares of Common Stock or have shares withheld in satisfaction of the tax withholding obligations. To the extent necessary to avoid adverse accounting treatment, the number of shares that may be withheld for this purpose shall not exceed the minimum number needed to satisfy the applicable income and employment tax withholding rules. If Common Stock is used to satisfy the Company's tax withholding obligations, the shares of Common Stock shall have been held by Optionee for the requisite period necessary to avoid a charge to the Company’s reported earnings and shall be valued at their Fair Market Value when the tax withholding is required to bemade.

11.Compliance with Laws andRegulations.

(a)The exercise of this option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Company and Optionee with all applicable requirements of law relating thereto and with all applicable regulations of any Stock Exchange (or the Nasdaq Stock Market, if applicable) on which the Common Stock may be  listed for trading at the time of such exercise andissuance.

(b)The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance and sale of any Common Stock pursuant to this option shall relieve the Company of any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall  not have been obtained. The Company, however, shall use reasonable efforts to obtain all such approvals.

4852-9762-7137\2\389336\00005 3

12.Successors and Assigns. Except to the extent otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and Optionee, Optionee’s assigns, the legal representatives, heirs and legatees of Optionee’s estate and any beneficiaries of this option designated byOptionee.

13.Notices. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Company at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated below Optionee’s signature line on  the Grant Notice. All notices shall be deemed effective upon personal delivery or three days  after deposit in the U.S. mail, postage prepaid and properly addressed to the party to benotified.

14.Construction. This Agreement and the option evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. In the event of a conflict between the terms and conditions of the Plan and the terms and conditionsofthisAgreement,thetermsandconditionsofthisAgreementshallprevail.  All decisions of the Committee with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in this option.

15.Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Delaware without resort to its conflict-of-lawsrules.

16.No Employment/Service Contract. Nothing in this Agreement or in the Plan shall confer upon Optionee any right to continue to be a Service Provider of the Company (or any Parent or Subsidiary) for any period of specific duration or otherwise interfere with or restrict in any way the rights of the Company (or such Parent or Subsidiary) or Optionee, which rights are hereby expressly reserved by each, to terminate Optionee’s Service Provider status at any time and for any reason whatsoever, with or withoutcause.

4852-9762-7137\2\389336\00005 4

EXHIBIT I

NOTICE OF EXERCISE OF STOCK OPTION

I hereby notify CorVel Corporation (the “Company”)thatI, ,electtopurchase  shares of Common Stock of the Corporation(the“Purchased Shares”) at an option priceof$  per share (the “Option Price”) pursuant totheoption(the “Option”) granted tomeon .

My option was granted as a non-qualified stock option. I will need to report taxable income at the time I exercise this Option and pay the corresponding withholding tax (the “Withholding Tax”) to the Corporation. The Withholding Tax is computed on the difference between the Option Price and the Fair Market Value of the stock on the date I exercise the Option.

Concurrently with the delivery of the Exercise Notice to the Chief Financial Officer of  the Corporation, I shall hereby pay to the Corporation the Option Price and Withholding Tax for the Purchased Shares in accordance with the provisions of my agreement with the Corporation evidencing the Option and shall deliver whatever additional documents may be required by such agreement as a condition forexercise.

Date	Optionee’s Signature
If applicable, print name in exact manner it is to appear on the stock certificate:
Optionee’s Mailing Address:
Address to which certificate is to be sent, if different from address above:
Brokerage Account  Information
(Broker Name, Contact Info., Account #)

4852-9762-7137\2\389336\00005 A-1

APPENDIX

The following definitions shall be in effect under this Agreement:

A.Agreementshall mean this Stock OptionAgreement.

B.Boardshall mean the Board of Directors of theCompany.

C.Common Stockshall mean shares of the Company’s common stock, $0.0001 parvalue.

D.Codeshall mean the Internal Revenue Code of 1986, asamended.

E.Committeeshall mean a committee designated by the Board to administer the Plan, which initially shall be the compensation committee of the Board. The Committee shall be comprised of at least two directors but not less than such number of directors as shall be required to permit awards granted under the Plan to qualify under Rule 16b-3 under the Securities Act and Section 162(m) of the Code, and each member of the Committee shall be a “Non-Employee Director ” within the meaning of Rule 16b-3 under the Securities Act and an “Outside Director” within the meaning of Section 162(m) of the Code.

F.Companyshall mean CorVel Corporation, a Delaware corporation, or any corporate successor which shall assume thePlan.

G.Corporate Transactionshall mean any of the following transactions for which the approval of the Company’s stockholders isobtained:

(i)a merger or acquisition in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state of the Company’sincorporation,

(ii)the sale, transfer or other disposition of all or substantially all of the assets of the Company to any entity other than a parent or subsidiary of the Company,or

(iii)any reverse merger in which the Company is the surviving entity but in which fifty percent (50%) or more of the Company’s outstanding voting stock is transferred to holders different from those who held such fifty percent (50%) or greater interest immediately prior to suchmerger.

H.Employeeshall mean an individual for whom the Company or one or more of its Parent or Subsidiaries reports his or her earnings on a FormW-2.

I.Exercise Dateshall mean the date on which the option shall have been exercised in accordance with Paragraph9.

J.ExercisePriceshallmeantheexercisepriceperOptionShareasspecifiedintheGrant Notice.

K.ExpirationDateshallmeanthedateonwhichtheoptionexpiresasspecifiedinthe Grant Notice.

L.Fair Market Valueper share of Common Stock on any relevant date shall be determined in accordance with the followingprovisions:

(i)If the Common Stock is at the time listed on the Nasdaq National Market or the Nasdaq Capital Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market or the Nasdaq Capital Market and published in The Wall StreetJournal.

4852-9762-7137\2\389336\00005 A-2

(ii)If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Committee to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall StreetJournal.

(iii)If the Common Stock is not listed on the Nasdaq National Market, Nasdaq Capital Market or a national securities exchange, the Fair Market Value shall be the average of the closing bid and ask prices of the Common Stock on that day as reported by the Nasdaq bulletin board or any comparable system on thatday.

(iv)If the Common Stock is not traded included in the Nasdaq bulletin board or any comparable system, the Fair Market Value shall be the average of the closing bid and ask prices on that day as furnished by any member of the National Association of Securities Dealers, Inc. selected from time to time by the Company for thatpurpose.

(v)If the date in question is not a trading day, then the Fair Market Value shall be determined based on prices for the trading day prior to the date inquestion.

M.Grant Dateshall mean the date of grant of the option as specified in the GrantNotice.

N.Grant Noticeshall mean the Notice of Grant of Stock Option accompanying this Agreement, pursuant to which Optionee has been informed of the basic terms of the option evidenced hereby.

O.Misconductshall mean any of thefollowing:

(i)Optionee’s intentional misconduct or continuing gross neglect of duties which materially and adversely affects the business and operations of the Company or any Parent or Subsidiary employingOptionee;

(ii)Optionee’s unauthorized use or disclosure of (or attempt to use or disclose) confidential information or trade secrets of the Company or any Parent or Subsidiary;or

(iii)Optionee’s commission of an act involving embezzlement, theft, fraud, falsification of records, destruction of property or commission of a crime or other offense involving money or other property of the Company or any Parent or Subsidiary employingOptionee. The reasons for termination of Optionee as a Service Provider set forth in this subparagraph are not intended to be an exclusive list of all acts or omissions which the Company (or any Parent or Subsidiary) may deem to constitute misconduct or other grounds for terminating Optionee (or any other individual).

P.Non-Statutory Optionshall mean an option not intended to satisfy the requirements of Code Section 422.

Q.Notice of Exerciseshall mean the notice of exercise in the form attached hereto as ExhibitI.

R.Option Sharesshall mean the number of shares of Common Stock subject to the option as specified in the GrantNotice.

S.OptioneeshallmeanthepersontowhomtheoptionisgrantedasspecifiedintheGrant Notice.

T.Parentshallmeananycorporation(otherthantheCompany)inanunbrokenchainof corporations ending with the Company, provided each such corporation in the unbroken chain (other than the Company) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in suchchain.

U.Permanent Disabilityshall have the meaning assigned to “permanent and total disability” as set forth in Code Section22(e)(3).

V.Planshall mean the CorVel Corporation Restated Omnibus Incentive Plan (Formerly The Restated 1988 Executive Stock OptionPlan).

W.Securities Act shall mean the Securities Act of 1933, asamended.

4852-9762-7137\2\389336\00005 A-3

X.Service Providershall mean an individual who renders service on a periodic basis to the Company, its Parent and/or any of its Subsidiaries as an Employee, a non-Employee member of the board of directors or a consultant or independentadvisor.

Y.Stock Exchangeshall mean the American Stock Exchange or the New York Stock Exchange, or any other national stockexchange.

Z.Subsidiaryshall mean any corporation (other than the Company) in an unbroken chain  of corporations beginning with the Company, provided such corporation (other than the last corporation in the unbroken chain) owns, at the time of determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. For purposes of all Non-Statutory Option grants under the Plan and all Corporate Transaction provisions of the Plan, the term “Subsidiary” shall also include any partnership, joint venture or other business entity of which the Company owns, directly or indirectly through another entity, more than a fifty percent (50%) interest in voting power, capital orprofits.

4852-9762-7137\2\389336\00005 A-4

Schedule A: Performance Option

CorVel Corporation

Performance Stock Options

Options granted in November, 2015

	CY 2016		CY 2017	CY 2018
EPS Target for each calendar year	$	1.750	$       1.925	$***
Percentage of option grant for tranche (totals 100%)	30%		30%	***%
to earn 100% of tranche (105% of EPS target)	$	1.84	$2.02	$***
to earn 80% of tranche (100% of EPS target)	$	1.75	$1.93	$***
to earn 30% of tranche (95% of EPS target)	$	1.66	$1.83	$***
EPS at zero earned (90% of EPS target)	$	1.58	$1.73	$***

*** Confidential treatment requested pursuantto Rule 24b-2 under the Securities Exchange Act of 1934.  In accordance with Rule 24b-2, these confidential portions have been omitted from this exhibit and filed separately with the Securities and Exchange Commission.

SCHEDULE A

CORVEL CORPORATION

Shares earned by EPS number by Tranche year

CY 2016, 2017, 2018

Option grant:	12,000	Shares option grant
CY 2016 Tranche	3600	30% of total grant
CY 2017 Tranche	3600	30% of total grant
CY 2018 Tranche	4800	40% of total grant

	CY 2016			CY 2017			CY 2018
	Percentage	Shares		Percentage	Shares		Percentage	Shares
$1.58	0.0%	0	$1.73	0.0%	0	$***	0.0%	0
$1.59	3.8%	135	$1.74	3.0%	108	$***	2.5%	120
$1.60	7.5%	270	$1.75	6.0%	216	$***	5.0%	240
$1.61	11.3%	405	$1.76	9.0%	324	$***	7.5%	360
$1.62	15.0%	540	$1.77	12.0%	432	$***	10.0%	480
$1.63	18.8%	675	$1.78	15.0%	540	$***	12.5%	600
$1.64	22.5%	810	$1.79	18.0%	648	$***	15.0%	720
$1.65	26.3%	945	$1.80	21.0%	756	$***	17.5%	840
$1.66	30.0%	1,080	$1.81	24.0%	864	$***	20.0%	960
$1.67	35.6%	1,280	$1.82	27.0%	972	$***	22.5%	1,080
$1.68	41.1%	1,480	$1.83	30.0%	1,080	$***	25.0%	1,200
$1.69	46.7%	1,680	$1.84	35.0%	1,260	$***	27.5%	1,320
$1.70	52.2%	1,880	$1.85	40.0%	1,440	$***	30.0%	1,440
$1.71	57.8%	2,080	$1.86	45.0%	1,620	$***	33.8%	1,625
$1.72	63.3%	2,280	$1.87	50.0%	1,800	$***	37.7%	1,809
$1.73	68.9%	2,480	$1.88	55.0%	1,980	$***	41.5%	1,994
$1.74	74.4%	2,680	$1.89	60.0%	2,160	$***	45.4%	2,178
$1.75	80.0%	2,880	$1.90	65.0%	2,340	$***	49.2%	2,363
$1.76	82.2%	2,960	$1.91	70.0%	2,520	$***	53.1%	2,548
$1.77	84.4%	3,040	$1.92	75.0%	2,700	$***	56.9%	2,732
$1.78	86.7%	3,120	$1.93	80.0%	2,880	$***	60.8%	2,917
$1.79	88.9%	3,200	$1.94	82.2%	2,960	$***	64.6%	3,102
$1.80	91.1%	3,280	$1.95	84.4%	3,040	$***	68.5%	3,286
$1.81	93.3%	3,360	$1.96	86.7%	3,120	$***	72.3%	3,471
$1.82	95.6%	3,440	$1.97	88.9%	3,200	$***	76.2%	3,655
$1.83	97.8%	3,520	$1.98	91.1%	3,280	$***	80.0%	3,840
$1.84	100.0%	3,600	$1.99	93.3%	3,360	$***	81.7%	3,920
			$2.00	95.5%	3,439	$***	83.3%	4,000
			$2.01	97.8%	3,519	$***	85.0%	4,080
			$2.02	100.0%	3,600	$***	86.7%	4,160
						$***	88.3%	4,240
						$***	90.0%	4,320
						$***	91.7%	4,400
						$***	93.3%	4,480
						$***	95.0%	4,560
						$***	96.7%	4,640
						$***	98.3%	4,720
						$***	100.0%	4,800

***Confidential treatment requested pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. In accordance with Rule 24b-2, these confidential portions have been omitted from this exhibit and filed separately with the Securities and Exchange Commission.

Notwithstanding anything to the contrary in this Schedule A or the Stock Option Agreement to which this Schedule A is attached, the Company shall have the right, in its sole discretion, with or without the consent of the Optionee, to amend this Schedule A to adjust any or all of the targets, dates and/or target EPS amounts as it deems equitable to recognize unusual or non-recurring events, including, but not limited to the Company’s acquisition of another business entity or assets, a corporate merger or other consolidation, or the sale or discontinuation of significant business operations or business units of the Company; changes in tax laws or accounting procedures; and any other extraordinary circumstances.

EX-10.39

Exhibit 10.39

CORVEL CORPORATION

ID: 33-0282651

2010 Main Street Suite 600

Irvine, California  92614

Notice of Grant of Stock Options and Option Agreement

Diane J. Blaha	Option Number:	005892
	Plan:	1988

Effective 11/05/2015, you have been granted a(n) Non-Qualified Stock Option to buy 7,500.0000 shares of CORVEL CORPORATION (the Company) stock at $34.7800 per share.

The total option price of the shares granted is $260,850.00.

Shares in each period will become fully vested on the date shown.

Shares	Vest Type	Full Vest	Expiration
7,500.0000	On Vest Date	11/05/2020	11/05/2020

Provided you continue to be a Service Provider (as defined in the Stock Option Agreement attached hereto as Exhibit A) throughout the specified period, the Option will become exercisable in accordance with Schedule A.

Optionee (and Optionee's spouse) hereby agree(s) that the option is granted pursuant to and in accordance with the express terms and conditions of the Stock Option Agreement and the Corporation's Restated Omnibus Incentive Plan.

By your signature and the Company's signature below, you and the Company agree that these options are granted under and governed by the terms and conditions of the Company's Stock Option Plan as amended and the Option Agreement, all of which are attached and made a part of this document.

/s/ Richard Schweppe	November 10, 2015
CORVEL CORPORATION	Date
/s/ Diane J. Blaha	November 10, 2015
Diane J. Blaha	Date

Date: 11/10/2015

Time: 09:50:18AM

Section 16 Insiders Discretionary Option Grant Program

CorVel Corporation

Stock Option Agreement

A.The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board (or the board of directors of any Parent or Subsidiary) and consultants and advisors who provide services to the Company (or any Parent or Subsidiary).

B.Optionee is to render valuable services to the Company (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out  the purposes of, the Plan in connection with the Company’s grant of an option to Optionee.

C.All capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix.

Now, therefore, it is hereby agreed as follows:

1.Grant of Option. Subject to and upon the terms and conditions set forth in this Agreement, Optionee is hereby granted, as of the Grant Date, an option to purchase the Option Shares. The Option Shares shall be purchasable from time to time during the option term at the Exercise Price.

2.Option Term. This option shall expire at the close of business on the Expiration Date, unless sooner terminated in accordance with this Agreement.

3.Limited Transferability.

(a)During Optionee’s lifetime, this option shall be exercisable only by Optionee and shall not be assignable or transferable other than by will, by the laws of descent  and distribution following the Optionee’s death, or to any “Family Member” (as such term is defined in the General Instructions to Form S-8 (or any successor to such Instructions or such Form) under the Securities Act), provided that Optionee may not receive any consideration for such transfer, the Family Member may not make any subsequent transfers other than by will or by the laws of descent and distribution and the Company receives written notice of such transfer. This assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for this option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Company may deem appropriate.

(b)Should Optionee die while holding this option, then this option shall be transferred in accordance with Optionee’s will or the laws of inheritance. However, Optionee may designate one or more persons as the beneficiary or beneficiaries of this option, and this option shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon Optionee’s death while holding this option. Such beneficiary or beneficiaries shall take the transferred option subject to all the terms and conditions of this Agreement, including (without limitation) the limited time period during which this option may, pursuant to Paragraph 5, be exercised following Optionee’s death.

4.Exercisability. This option shall become exercisable in one or more installments as specified in the Grant Notice. As the option becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the accumulated installments until the Expiration Date or sooner termination of the option term.

5.Effect of Cessation of Service.

(a)Should Optionee cease to be a Service Provider for any reason (other than death, Permanent Disability or Misconduct) while this option is outstanding, then this option shall remain exercisable until the earlier of (i) the expiration of the three month period commencing with the date of such cessation of Service Provider status or (ii) the Expiration Date.

(b)Should Optionee cease to be a Service Provider by reason of Permanent Disability or death while this option is outstanding, then the option shall remain exercisable until the earlier of (i) the expiration of the twelve month period commencing with the date of such cessation of Service Provider status or (ii) the Expiration Date.

4852-9762-7137\2\389336\00005

(c)Should Optionee cease to be a Service Provider due to termination for Misconduct, then this option shall terminate immediately.

(d)During the limited period of post-service exercisability, this option may not be exercised in the aggregate for more than the number of Option Shares for which the option is exercisable at the time Optionee ceased to be a Service Provider. This option shall, immediately when Optionee ceases to be a Service Provider for any reason, terminate with respect to any Option Shares for which this option is not otherwise at that time exercisable.  Upon the expiration of the limited post-service exercise period or (if earlier) upon the Expiration Date, this option shall terminate entirely.

6.Effect of Corporate Transaction.

(a)This option, to the extent outstanding at the time of a Corporate Transaction but not otherwise fully exercisable, shall automatically accelerate so that this option shall, immediately prior to the effective date of such Corporate Transaction, become exercisable for all of the Option Shares at the time subject to this option. However, this option shall not become exercisable on such an accelerated basis, if and to the extent: (i) this option is, in connection with the Corporate Transaction, to be assumed by the successor corporation (or  parent thereof) or to be replaced with a comparable option to purchase shares of the capital stock of the successor corporation (or parent thereof) or (ii) this option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing at the time of the Corporate Transaction on any Option Shares for which this option is not otherwise at that time exercisable (the excess of the Fair Market Value of those Option Shares over the aggregate Exercise Price payable for such shares) and provides for subsequent payout in accordance with the same exercise schedule for those Option Shares set forth in the Grant Notice.

(b)Upon the consummation of the Corporate Transaction, this option shall terminate, except to the extent assumed by the successor corporation (or parent thereof) in connection with the Corporate Transaction.

(c)If this option is assumed in connection with a Corporate Transaction, then this option shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to Optionee as a result of the consummation of such Corporate Transaction had the option been exercised immediately prior to such Corporate Transaction, and appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the same.

(d)This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or  assets.

7.Adjustment in Option Shares. Should any change be made to the Common Stock by reason of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, exchange of shares, reorganization, merger, consolidation, split-up, spin-off, or other change affecting the outstanding Common Stock as a class without the Company’s receipt of consideration, appropriate adjustments shall be made to (a) the total number and/or class of securities subject to this option and (b) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder.

8.Stockholder Rights. The holder of this option shall not have any stockholder rights with respect to the Option Shares until such person shall have exercised the option in accordance with the provisions of Paragraph 9, paid the Exercise Price and become a holder of record of the purchased shares.

9.Manner of Exercising Option.

(a)In order to exercise this option with respect to all or any part of the Option Shares for which this option is at the time exercisable, Optionee (or any other person or persons exercising the option) must take the following actions:

(i)Execute and deliver to the Company (A) a Notice of Exercise, in substantially the form attached hereto as Exhibit I, that specifies the number of Option Shares for which the option is being exercised and (B) any additional documents which the Committee may, in its discretion, deem advisable.

(ii)Pay the aggregate Exercise Price for the purchased shares in one or more of the following forms:

(A)cash or check payable to the Company’s order;

4852-9762-7137\2\389336\00005 2

(B)shares of Common Stock held by Optionee forthe requisite period necessary to avoid a charge to the Company’s reported earnings and valued at Fair Market Value on the Exercise Date; or

(C)through a special sale and remittance procedure pursuant to which Optionee is to provide irrevocable written instructions (1) to a brokerage firm to effect the immediate sale of the purchased shares and remit to the Company, out of the sale proceeds available on the settlement date, an amount sufficient to cover the aggregate Exercise Price payable for the purchased shares plus all applicable Federal and state income and employment taxes required to be withheld by the Company by reason of such purchase and (2) to the Company to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale transaction.

(iii)Furnish to the Company appropriate documentation that the person or persons exercising the option (if other than Optionee) have the right to exercise this option.

(iv)Make appropriate arrangements with the Company (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all Federal, state and local income and employment tax withholding requirements applicable to the option exercise.

(b)If payment of the exercise price is made by means of the surrender of shares of Common Stock which are subject to certain restrictions, the number of shares of Common Stock issued upon the exercise of the option equal to the number of shares of restricted stock surrendered shall be subject to the same restrictions as the restricted stock that was surrendered.

(c)Except to the extent the sale and remittance procedure specified in Paragraph 9(a)(ii)(C) is utilized in connection with the option exercise, payment of the option price for the purchased shares must accompany the Notice of Exercise.

(d)Assuming Optionee does not sell the purchased shares of Common Stock on the Exercise Date, as soon as practical after the Exercise Date, the Company shall either (i) issue to or on behalf of Optionee (or any other person or persons exercising this option) a certificate for the purchased Option Shares, with the appropriate legends affixed thereto, or (ii) instruct the Company’s transfer agent to make a book-entry reflecting the purchase on its stockholder ledger.

(e)In no event may this option be exercised for any fractional shares.

10.Tax Withholding. The Committee may, in its discretion and upon such terms and conditions as it may deem appropriate (including the applicable safe-harbor provisions of Securities and Exchange Commission Rule 16b-3 or any successor rule or regulation) provide Optionee (if Optionee is an Employee) with the election to surrender previously acquired shares of Common Stock or have shares withheld in satisfaction of the tax withholding obligations. To the extent necessary to avoid adverse accounting treatment, the number of shares that may be withheld for this purpose shall not exceed the minimum number needed to satisfy the applicable income and employment tax withholding rules. If Common Stock is used to satisfy the Company's tax withholding obligations, the shares of Common Stock shall have been held by Optionee for the requisite period necessary to avoid a charge to the Company’s reported earnings and shall be valued at their Fair Market Value when the tax withholding is required to be made.

11.Compliance with Laws and Regulations.

(a)The exercise of this option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Company and Optionee with all applicable requirements of law relating thereto and with all applicable regulations of any Stock Exchange (or the Nasdaq Stock Market, if applicable) on which the Common Stock may be listed for trading at the time of such exercise and issuance.

(b)The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance and sale of any Common Stock pursuant to this option shall relieve the Company of any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall not have been obtained. The Company, however, shall use reasonable efforts to obtain all such approvals.

12.Successors and Assigns. Except to the extent otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and Optionee, Optionee’s assigns, the legal representatives, heirs and legatees of Optionee’s estate and any beneficiaries of this option designated by Optionee.

4852-9762-7137\2\389336\00005 3

13.Notices. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Company at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated below Optionee’s signature line on the Grant Notice. All notices shall be deemed effective upon personal delivery or three days after deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

14.Construction. This Agreement and the option evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of this Agreement shall prevail.   All decisions of the Committee with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in this option.

15.Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Delaware without resort to its conflict-of-laws rules.

16.No Employment/Service Contract. Nothing in this Agreement or in the Plan shall confer upon Optionee any right to continue to be a Service Provider of the Company (or any Parent or Subsidiary) for any period of specific duration or otherwise interfere with or restrict in any way the rights of the Company (or such Parent or Subsidiary) or Optionee, which rights are hereby expressly reserved by each, to terminate Optionee’s Service Provider status at any time and for any reason whatsoever, with or without cause.

4852-9762-7137\2\389336\00005 4

EXHIBIT I

NOTICE OF EXERCISE OF STOCK OPTION

I hereby notify CorVel Corporation (the “Company”) that I, , elect to purchase shares of Common Stock of the Corporation (the “Purchased Shares”) at an option price of $ per share (the “Option Price”) pursuant to the option (the “Option”) granted to me on .

My option was granted as a non-qualified stock option. I will need to report taxable income at the time I exercise this Option and pay the corresponding withholding tax (the “Withholding Tax”) to the Corporation. The Withholding Tax is computed on the difference between the Option Price and the Fair Market Value of the stock on the date I exercise the Option.

Concurrently with the delivery of the Exercise Notice to the Chief Financial Officer of the Corporation, I shall hereby pay to the Corporation the Option Price and Withholding Tax for the Purchased Shares in accordance with the provisions of my agreement with the Corporation evidencing the Option and shall deliver whatever additional documents may be required by such agreement as a condition for exercise.

Date	Optionee’s Signature
If applicable, print name in exact manner it is to appear on the stock certificate:
Optionee’s Mailing Address:
Address to which certificate is to be sent, if different from address above:
Brokerage Account  Information
(Broker Name, Contact Info., Account #)

4852-9762-7137\2\389336\00005 A-1

APPENDIX

The following definitions shall be in effect under this Agreement:

A.Agreementshall mean this Stock Option Agreement.

B.Boardshall mean the Board of Directors of the Company.

C.Common Stockshall mean shares of the Company’s common stock, $0.0001 par value.

D.Codeshall mean the Internal Revenue Code of 1986, as amended.

E.Committeeshall mean a committee designated by the Board to administer the Plan, which initially shall be the compensation committee of the Board. The Committee shall be comprised of at least two directors but not less than such number of directors as shall be required to permit awards granted under the Plan to qualify under Rule 16b-3 under the Securities Act and Section 162(m) of the Code, and each member of the Committee shall be a “Non-Employee Director” within the meaning of Rule 16b-3 under the Securities Act and an “Outside Director” within the meaning of Section 162(m) of the Code.

F.Companyshall mean CorVel Corporation, a Delaware corporation, or any corporate successor which shall assume the Plan.

G.Corporate Transactionshall mean any of the following transactions for which the approval of the Company’s stockholders is obtained:

(i)a merger or acquisition in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state of the Company’s incorporation,

(ii)the sale, transfer or other disposition of all or substantially all of the assets of the Company to any entity other than a parent or subsidiary of the Company, or

(iii)any reverse merger in which the Company is the surviving entity but in which fifty percent (50%) or more of the Company’s outstanding voting stock is transferred to holders different from those who held such fifty percent (50%) or greater interest immediately prior to such merger.

H.Employeeshall mean an individual for whom the Company or one or more of its Parent or Subsidiaries reports his or her earnings on a Form W-2.

I.Exercise Dateshall mean the date on which the option shall have been exercised in accordance with Paragraph 9.

J.Exercise Priceshall mean the exercise price per Option Share as specified in the Grant Notice.

K.Expiration Dateshall mean the date on which the option expires as specified in the Grant Notice.

L.Fair Market Valueper share of Common Stock on any relevant date shall be determined in accordance with the following provisions:

(i)If the Common Stock is at the time listed on the Nasdaq National Market or the Nasdaq Capital Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market or the Nasdaq Capital Market and published in The Wall Street Journal.

(ii)If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Committee to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall Street Journal.

(iii)If the Common Stock is not listed on the Nasdaq National Market, Nasdaq Capital Market or a national securities exchange, the Fair Market Value shall be the average of the closing bid and ask prices of the Common Stock on that day as reported by the Nasdaq bulletin board or any comparable system on that day.

4852-9762-7137\2\389336\00005 A-2

(iv)If the Common Stock is not traded included in the Nasdaq bulletin board or any comparable system, the Fair Market Value shall be the average of the closing bid and ask prices on that day as furnished by any member of the National Association of Securities Dealers, Inc. selected from time to time by the Company for that purpose.

(v)If the date in question is not a trading day, then the Fair Market Value shall be determined based on prices for the trading day prior to the date in question.

M.Grant Dateshall mean the date of grant of the option as specified in the Grant Notice.

N.Grant Noticeshall mean the Notice of Grant of Stock Option accompanying this Agreement, pursuant to which Optionee has been informed of the basic terms of the option evidenced hereby.

O.Misconductshall mean any of the following:

(i)Optionee’s intentional misconduct or continuing gross neglect of duties which materially and adversely affects the business and operations of the Company or any Parent or Subsidiary employing Optionee;

(ii)Optionee’s unauthorized use or disclosure of (or attempt to use or disclose) confidential information or trade secrets of the Company or any Parent or Subsidiary; or

(iii)Optionee’s commission of an act involving embezzlement, theft, fraud, falsification of records, destruction of property or commission of a crime or other offense involving money or other property of the Company or any Parent or Subsidiary employing Optionee.

The reasons for termination of Optionee as a Service Provider set forth in this subparagraph are not intended to be an exclusive list of all acts or omissions which the Company (or any Parent or Subsidiary) may deem to constitute misconduct or other grounds for terminating Optionee (or any other individual).

P.Non-Statutory Optionshall mean an option not intended to satisfy the requirements of Code Section 422.

Q.Notice of Exerciseshall mean the notice of exercise in the form attached hereto as Exhibit I.

R.Option Sharesshall mean the number of shares of Common Stock subject to the option as specified in the Grant Notice.

S.Optioneeshall mean the person to whom the option is granted as specified in the Grant Notice.

T.Parentshall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, provided each such corporation in the unbroken chain (other than the Company) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

U.Permanent Disabilityshall have the meaning assigned to “permanent and total disability” as set forth in Code Section 22(e)(3).

V.Planshall mean the CorVel Corporation Restated Omnibus Incentive Plan (Formerly The Restated 1988 Executive Stock Option Plan).

W.Securities Actshall mean the Securities Act of 1933, as amended.

X.Service Providershall mean an individual who renders service on a periodic basis to the Company, its Parent and/or any of its Subsidiaries as an Employee, a non-Employee member of the board of directors or a consultant or independent advisor.

Y.Stock Exchangeshall mean the American Stock Exchange or the New York Stock Exchange, or any other national stock exchange.

4852-9762-7137\2\389336\00005 A-3

Z.Subsidiaryshall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, provided such corporation (other than the last corporation in the unbroken chain) owns, at the time of determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. For purposes of all Non-Statutory Option grants under the Plan and all Corporate Transaction provisions of the Plan, the term “Subsidiary” shall also include any partnership, joint venture or other business entity of which the Company owns, directly or indirectly through another entity, more than a fifty percent (50%) interest in voting power, capital or profits.

4852-9762-7137\2\389336\00005 A-4

CorVel Corporation	Schedule A: Performance Option
Performance Stock Options
Options granted in November, 2015

		CY 2016	CY 2017	CY 2018
EPS Target for each calendar year	$	1.750	$     1.925	$***
Percentage of option grant for tranche (totals 100%)		30%	30%	***%
to earn 100% of tranche (105% of EPS target)	$	1.84	$2.02	$***
to earn 80% of tranche (100% of EPS target)	$	1.75	$1.93	$***
to earn 30% of tranche (95% of EPS target)	$	1.66	$1.83	$***
EPS at zero earned (90% of EPS target)	$	1.58	$1.73	$***

*** Confidential treatment requested pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.  In accordance with Rule 24b-2, these confidential portions have been omitted from this exhibit and filed separately with the Securities and Exchange Commission.

SCHEDULE A
CORVEL CORPORATION
Shares earned by EPS number by Tranche year
CY 2016, 2017, 2018
Option grant:		7,500		Shares option grant
CY 2016 Tranche		2250		30% of total grant
CY 2017 Tranche		2250		30% of total grant
CY 2018 Tranche		3000		40% of total grant
		CY 2016						CY 2017					CY 2018
		Percentage			Shares			Percentage		Shares			Percentage		Shares
	$1.58		0.0%		0		$1.73		0.0%	0		$***		0.0%	0
	$1.59		3.8%		84		$1.74		3.0%	68		$***		2.5%	75
	$1.60		7.5%		169		$1.75		6.0%	135		$***		5.0%	150
	$1.61		11.3%		253		$1.76		9.0%	203		$***		7.5%	225
	$1.62		15.0%		338		$1.77		12.0%	270		$***		10.0%	300
	$1.63		18.8%		422		$1.78		15.0%	338		$***		12.5%	375
	$1.64		22.5%		506		$1.79		18.0%	405		$***		15.0%	450
	$1.65		26.3%		591		$1.80		21.0%	473		$***		17.5%	525
	$1.66		30.0%		675		$1.81		24.0%	540		$***		20.0%	600
	$1.67		35.6%		800		$1.82		27.0%	608		$***		22.5%	675
	$1.68		41.1%		925		$1.83		30.0%	675		$***		25.0%	750
	$1.69		46.7%			1,050	$1.84		35.0%	788		$***		27.5%	825
	$1.70		52.2%			1,175	$1.85		40.0%	900		$***		30.0%	900
	$1.71		57.8%			1,300	$1.86		45.0%		1,013	$***		33.8%		1,015
	$1.72		63.3%			1,425	$1.87		50.0%		1,125	$***		37.7%		1,131
	$1.73		68.9%			1,550	$1.88		55.0%		1,238	$***		41.5%		1,246
	$1.74		74.4%			1,675	$1.89		60.0%		1,350	$***		45.4%		1,362
	$1.75		80.0%			1,800	$1.90		65.0%		1,463	$***		49.2%		1,477
	$1.76		82.2%			1,850	$1.91		70.0%		1,575	$***		53.1%		1,592
	$1.77		84.4%			1,900	$1.92		75.0%		1,688	$***		56.9%		1,708
	$1.78		86.7%			1,950	$1.93		80.0%		1,800	$***		60.8%		1,823
	$1.79		88.9%			2,000	$1.94		82.2%		1,850	$***		64.6%		1,938
	$1.80		91.1%			2,050	$1.95		84.4%		1,900	$***		68.5%		2,054
	$1.81		93.3%			2,100	$1.96		86.7%		1,950	$***		72.3%		2,169
	$1.82		95.6%			2,150	$1.97		88.9%		2,000	$***		76.2%		2,285
	$1.83		97.8%			2,200	$1.98		91.1%		2,050	$***		80.0%		2,400
	$1.84		100.0%			2,250	$1.99		93.3%		2,100	$***		81.7%		2,450
							$2.00		95.5%		2,150	$***		83.3%		2,500
							$2.01		97.8%		2,200	$***		85.0%		2,550
							$2.02		100.0%		2,250	$***		86.7%		2,600
												$***		88.3%		2,650
												$***		90.0%		2,700
												$***		91.7%		2,750
												$***		93.3%		2,800
												$***		95.0%		2,850
												$***		96.7%		2,900
												$***		98.3%		2,950
												$***		100.0%		3,000

*** Confidential treatment requested pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. In accordance with Rule 24b-2, these confidential portions have been omitted from this exhibit and filed separately with the Securities and Exchange Commission.

Notwithstanding anything to the contrary in this Schedule A or the Stock Option Agreement to which this Schedule A is attached, the Company shall have the right, in its sole discretion, with or without the consent of the Optionee, to amend this Schedule A to adjust any or all of the targets, dates and/or target EPS amounts as it deems equitable to recognize unusual or non-recurring events, including, but not limited to the Company’s acquisition of another business entity or assets, a corporate merger or other consolidation, or the sale or discontinuation of significant business operations or business units of the Company; changes in tax laws or accounting procedures; and any other extraordinary circumstances.

EX-10.42

Exhibit 10.42

CORVEL CORPORATION

ID: 33-0282651

2010 Main Street Suite 600

Irvine, California  92614

Notice of Grant of Stock Options and Option Agreement

Michael G. Combs	Option Number:	006417
	Plan:	1988

Effective 11/03/2016, you have been granted a(n) Non-Qualified Stock Option to buy 20,000.0000 shares of CORVEL CORPORATION (the Company) stock at $32.1000 per share.

The total option price of the shares granted is $642,000.00.

Shares in each period will become fully vested on the date shown.

Shares	Vest Type	Full Vest	Expiration
20,000.0000	On Vest Date	11/03/2021	11/03/2021

Provided you continue to be a Service Provider (as defined in the Stock Option Agreement attached hereto as Exhibit A) throughout the specified period, this option will vest based on the achievement of certain performance criteria relating to the Company's earnings per share ("EPS") growth. The specific EPS Targets for calendar years 2017, 2018, and 2019, are listed on Schedule A of the Stock Option Agreement.

Optionee hereby agrees that the option is granted pursuant to and in accordance with the express terms and conditions of the Stock Option Agreement and the Corporation's Restated Omnibus Incentive Plan.

By your signature and the Company's signature below, you and the Company agree that these options are granted under and governed by the terms and conditions of the Company's Stock Option Plan as amended and the Option Agreement, all of which are attached and made a part of this document.

/s/ Richard Schweppe	November 18, 2016
CORVEL CORPORATION	Date
/s/ Michael G Combs	November 18, 2016
Michael G. Combs	Date

Section 16 Insiders Discretionary Option Grant Program

CorVel Corporation

Stock Option Agreement

A.The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board (or the board of directors of any  Parent or Subsidiary) and consultants and advisors who provide services to the Company (or any Parent or Subsidiary).

B.Optionee is to render valuable services to the Company (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out  the purposes of, the Plan in connection with the Company’s grant of an option to Optionee.

C.All capitalized terms in this Agreement shall have the meaning assigned to them  in the attached Appendix.

Now, therefore, it is hereby agreed as follows:

1.Grant of Option. Subject to and upon the terms and conditions set forth  in this Agreement, Optionee is hereby granted, as of the Grant Date, an option to purchase the Option Shares. The Option Shares shall be purchasable from time to time during the option term at the Exercise Price.

2.Option Term. This option shall expire at the close of business on the Expiration Date, unless sooner terminated in accordance with this Agreement.

3.Limited Transferability.

(a)During Optionee’s lifetime, this option shall be exercisable only by Optionee and shall not be assignable or transferable other than by will, by the laws of descent  and distribution following the Optionee’s death, or to any “Family Member” (as such term is defined in the General Instructions to Form S-8 (or any successor to such Instructions or such Form) under the Securities Act), provided that Optionee may not receive any consideration for such transfer, the Family Member may not make any subsequent transfers other than by will or by the laws of descent and distribution and the Company receives written notice of such transfer. This assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for this option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Company may deem appropriate.

(b)Should Optionee die while holding this option, then this option shall be transferred in accordance with Optionee’s will or the laws of inheritance. However, Optionee may designate one or more persons as the beneficiary or beneficiaries of this option, and this option shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon Optionee’s death while holding this option. Such beneficiary or beneficiaries shall take the transferred option subject to all the terms and conditions of this Agreement, including (without limitation) the limited time period during which this option may, pursuant to Paragraph 5, be exercised following Optionee’s death.

4.Exercisability. This option shall become exercisable in one or more installments as specified in the Grant Notice. As the option becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the accumulated installments until the Expiration Date or sooner termination of the option term.

4852-9762-7137\2\389336\00005

5.Effect of Cessation of Service.

(a)Should Optionee cease to be a Service Provider for any reason (other than death, Permanent Disability or Misconduct) while this option is outstanding, then this option shall remain exercisable until the earlier of (i) the expiration of the three month period commencing with the date of such cessation of Service Provider status or (ii) the Expiration Date.

(b)Should Optionee cease to be a Service Provider by reason of Permanent Disability or death while this option is outstanding, then the option shall remain exercisable until the earlier of (i) the expiration of the twelve month period commencing with  the date of such cessation of Service Provider status or (ii) the Expiration Date.

(c)Should Optionee cease to be a Service Provider due to termination for Misconduct, then this option shall terminate immediately.

(d)During the limited period of post-service exercisability, this option may not be exercised in the aggregate for more than the number of Option Shares for which the option is exercisable at the time Optionee ceased to be a Service Provider. This option shall, immediately when Optionee ceases to be a Service Provider for any reason, terminate with respect to any Option Shares for which this option is not otherwise at that time exercisable.  Upon the expiration of the limited post-service exercise period or (if earlier) upon the Expiration Date, this option shall terminate entirely.

6.Effect of Corporate Transaction.

(a)This option, to the extent outstanding at the time of a Corporate Transaction but not otherwise fully exercisable, shall automatically accelerate so that this option shall, immediately prior to the effective date of such Corporate Transaction, become exercisable for all of the Option Shares at the time subject to this option. However, this option shall not become exercisable on such an accelerated basis, if and to the extent: (i) this option is, in connection with the Corporate Transaction, to be assumed by the successor corporation (or  parent thereof) or to be replaced with a comparable option to purchase shares of the capital stock of the successor corporation (or parent thereof) or (ii) this option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing at the time of the Corporate Transaction on any Option Shares for which this option is not otherwise at that time exercisable (the excess of the Fair Market Value of those Option Shares over the aggregate Exercise Price payable for such shares) and provides for subsequent payout in accordance with the same exercise schedule for those Option Shares set forth in the Grant Notice.

(b)Upon the consummation of the Corporate Transaction, this option shall terminate, except to the extent assumed by the successor corporation (or parent thereof) in connection with the Corporate Transaction.

(c)If this option is assumed in connection with a Corporate Transaction, then this option shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to Optionee as a result of the consummation of such Corporate Transaction had the option been exercised immediately prior to such Corporate Transaction, and appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the same.

(d)This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or  assets.

7.Adjustment in Option Shares. Should any change be made to the Common Stock by reason of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, exchange of shares, reorganization, merger, consolidation, split-up, spin-off, or other change affecting the outstanding Common Stock as a class without the Company’s receipt of consideration, appropriate adjustments shall be made to (a) the total number and/or class of securities subject to this option and (b) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder.

4852-9762-7137\2\389336\00005 2

8.Stockholder Rights. The holder of this option shall not have any stockholder rights with respect to the Option Shares until such person shall have exercised the option in accordance with the provisions of Paragraph 9, paid the Exercise Price and become a holder of record of the purchased shares.

9.Manner of Exercising Option.

(a)In order to exercise this option with respect to all or any part of the Option Shares for which this option is at the time exercisable, Optionee (or any other person or persons exercising the option) must take the following actions:

(i)Execute and deliver to the Company (A) a Notice of Exercise, in substantially the form attached hereto as Exhibit I, that specifies the number of Option Shares for which the option is being exercised and (B) any additional documents which the Committee may, in its discretion, deem  advisable.

(ii)Pay the aggregate Exercise Price for the purchased shares in one or more of the following forms:

(A)cash   or   check   payable   to   the Company’s order;

(B)shares of Common Stock held by Optionee for

the requisite period necessary to avoid a charge to the Company’s reported earnings and valued at Fair Market Value on the Exercise Date; or

(C)through a special sale and remittance procedure pursuant to which Optionee is to provide irrevocable written instructions (1) to a brokerage firm to effect the immediate sale of the purchased shares and remit to the Company, out of the sale proceeds available on the settlement date, an amount sufficient to cover the aggregate Exercise Price payable for the purchased shares plus all applicable Federal and state income and employment taxes required to be withheld by the Company by reason of such purchase and (2) to the Company to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale transaction.

(iii)Furnish to the Company appropriate documentation that the person or persons exercising the option (if other than Optionee) have the right to exercise this option.

(iv)Make appropriate arrangements with the Company (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all Federal, state and local income and employment tax withholding requirements applicable to the option exercise.

(b)If payment of the exercise price is made by means of the surrender of shares of Common Stock which are subject to certain restrictions, the number of shares of Common Stock issued upon the exercise of the option equal to the number of shares of restricted stock surrendered shall be subject to the same restrictions as the restricted stock that was surrendered.

(c)Except to the extent the sale and remittance procedure specified in Paragraph 9(a)(ii)(C) is utilized in connection with the option exercise, payment of the option price for the purchased shares must accompany the Notice of Exercise.

(d)Assuming Optionee does not sell the purchased shares of Common Stock on the Exercise Date, as soon as practical after the Exercise Date, the Company shall either

(i)issue to or on behalf of Optionee (or any other person or persons exercising this option) a certificate for the purchased Option Shares, with the appropriate legends affixed thereto, or (ii) instruct the Company’s transfer agent to make a book-entry reflecting the purchase on its stockholder ledger.

(e)In no event may this option be exercised for any fractional shares.

4852-9762-7137\2\389336\00005 3

10.Tax Withholding. The Committee may, in its discretion and upon such terms and conditions as it may deem appropriate (including the applicable safe-harbor provisions of Securities and Exchange Commission Rule 16b-3 or any successor rule or regulation) provide Optionee (if Optionee is an Employee) with the election to surrender previously acquired shares of Common Stock or have shares withheld in satisfaction of the tax withholding obligations. To the extent necessary to avoid adverse accounting treatment, the number of shares that may be withheld for this purpose shall not exceed the minimum number needed to satisfy the applicable income and employment tax withholding rules. If Common Stock is used to satisfy the Company's tax withholding obligations, the shares of Common Stock shall have been held by Optionee for the requisite period necessary to avoid a charge to the Company’s reported earnings and shall be valued at their Fair Market Value when the tax withholding is required to be made.

11.Compliance with Laws and Regulations.

(a)The exercise of this option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Company and Optionee with all applicable requirements of law relating thereto and with all applicable regulations of any Stock Exchange (or the Nasdaq Stock Market, if applicable) on which the Common Stock may be  listed for trading at the time of such exercise and issuance.

(b)The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance and sale of any Common Stock pursuant to this option shall relieve the Company of any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall  not have been obtained. The Company, however, shall use reasonable efforts to obtain all such approvals.

12.Successors and Assigns. Except to the extent otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and Optionee, Optionee’s assigns, the legal representatives, heirs and legatees of Optionee’s estate and any beneficiaries of this option designated by Optionee.

13.Notices. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Company at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated below Optionee’s signature line on  the Grant Notice.  All notices shall be deemed effective upon personal delivery or three days  after deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

14.Construction. This Agreement and the option evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of this Agreement shall prevail.   All decisions of the Committee with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in this option.

15.Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Delaware without resort to its conflict-of-laws rules.

16.No Employment/Service Contract. Nothing in this Agreement or in the Plan shall confer upon Optionee any right to continue to be a Service Provider of the Company (or any Parent or Subsidiary) for any period of specific duration or otherwise interfere with or restrict in any way the rights of the Company (or such Parent or Subsidiary) or Optionee, which rights are hereby expressly reserved by each, to terminate Optionee’s Service Provider status at any time and for any reason whatsoever, with or without cause.

4852-9762-7137\2\389336\00005 4

EXHIBIT I

NOTICE OF EXERCISE OF STOCK OPTION

I hereby notify CorVel Corporation (the “Company”) that I,, elect to purchaseshares of Common Stock of the Corporation (the “Purchased Shares”) at an option price of $per share (the “Option Price”) pursuant to the option (the “Option”) granted to me on

My option was granted as a non-qualified stock option. I will need to report taxable income at the time I exercise this Option and pay the corresponding withholding tax (the “Withholding Tax”) to the Corporation. The Withholding Tax is computed on the difference between the Option Price and the Fair Market Value of the stock on the date I exercise the Option.

Concurrently with the delivery of the Exercise Notice to the Chief Financial Officer of  the Corporation, I shall hereby pay to the Corporation the Option Price and Withholding Tax for the Purchased Shares in accordance with the provisions of my agreement with the Corporation evidencing the Option and shall deliver whatever additional documents may be required by such agreement as a condition for exercise.

Date	Optionee’s Signature
If applicable, print name in exact manner it is to appear on the stock certificate:
Optionee’s Mailing Address:
Address to which certificate is to be sent, if different from address above:
Brokerage Account Information
(Broker Name, Contact Info., Account #)

4852-9762-7137\2\389336\00005 A-1

APPENDIX

The following definitions shall be in effect under this Agreement:

A.Agreement shall mean this Stock Option Agreement.

B.Board shall mean the Board of Directors of the Company.

C.Common Stock shall mean shares of the Company’s common stock, $0.0001 par value.

D.Code shall mean the Internal Revenue Code of 1986, as amended.

E.Committee shall mean a committee designated by the Board to administer the Plan, which initially shall be the compensation committee of the Board. The Committee shall be comprised of at least two directors but not less than such number of directors as shall be required to permit awards granted under the Plan to qualify under Rule 16b-3 under the Securities Act and Section 162(m) of the Code, and each member of the Committee shall be a “Non-Employee Director ” within the meaning of Rule 16b-3 under the Securities Act and an “Outside Director” within the meaning of Section 162(m) of the Code.

F.Company shall mean CorVel Corporation, a Delaware corporation, or any corporate successor which shall assume the Plan.

G.Corporate Transaction shall mean any of the following transactions for which the approval of the Company’s stockholders is obtained:

(i)a merger or acquisition in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state of the Company’s incorporation,

(ii)the sale, transfer or other disposition of all or substantially all of the assets of the Company to any entity other than a parent or subsidiary of the Company, or

(iii)any reverse merger in which the Company is the surviving entity but in which fifty percent (50%) or more of the Company’s outstanding voting stock is transferred to holders different from those who held such fifty percent (50%) or greater interest immediately prior to such merger.

H.Employee shall mean an individual for whom the Company or one or more of its Parent or Subsidiaries reports his or her earnings on a Form W-2.

I.Exercise Date shall mean the date on which the option shall have been exercised in accordance with Paragraph 9.

J.Exercise Price shall mean the exercise price per Option Share as specified in the Grant Notice.

K.Expiration Date shall mean the date on which the option expires as specified in the Grant Notice.

L.Fair Market Valueper share of Common Stock on any relevant date shall be determined in accordance with the following provisions:

(i)If the Common Stock is at the time listed on the Nasdaq National Market or the Nasdaq Capital Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market or the Nasdaq Capital Market and published in The Wall Street Journal.

4852-9762-7137\2\389336\00005 A-2

(ii)If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Committee to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall Street Journal.

(iii)If the Common Stock is not listed on the Nasdaq National Market, Nasdaq Capital Market or a national securities exchange, the Fair Market Value shall be the average of the closing bid and ask prices of the Common Stock on that day as reported by the Nasdaq bulletin board or any comparable system on that day.

(iv)If the Common Stock is not traded included in the Nasdaq bulletin board or any comparable system, the Fair Market Value shall be the average of the closing bid and ask prices on that day as furnished by any member of the National Association of Securities Dealers, Inc. selected from time to time by the Company for that purpose.

(v)If the date in question is not a trading day, then the Fair Market Value shall be determined based on prices for the trading day prior to the date in question.

M.Grant Date shall mean the date of grant of the option as specified in the Grant Notice.

N.Grant Notice shall mean the Notice of Grant of Stock Option accompanying this Agreement, pursuant to which Optionee has been informed of the basic terms of the option evidenced hereby.

O.Misconduct shall mean any of the following:

(i)Optionee’s intentional misconduct or continuing gross neglect of duties which materially and adversely affects the business and operations of the Company or any Parent or Subsidiary employing Optionee;

(ii)Optionee’s unauthorized use or disclosure of (or attempt to use or disclose) confidential information or trade secrets of the Company or any Parent or Subsidiary; or

(iii)Optionee’s commission of an act involving embezzlement, theft, fraud, falsification of records, destruction of property or commission of a crime or other offense involving money or other property of the Company or any Parent or Subsidiary employing Optionee.

The reasons for termination of Optionee as a Service Provider set forth in this subparagraph are not intended to be an exclusive list of all acts or omissions which the Company (or any Parent or Subsidiary) may deem to constitute misconduct or other grounds for terminating Optionee (or any other individual).

P.Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.

Q.Notice of Exercise shall mean the notice of exercise in the form attached hereto as Exhibit I.

R.Option Shares shall mean the number of shares of Common Stock subject to the option as specified in the Grant Notice.

S.Optionee shall mean the person to whom the option is granted as specified in the Grant Notice.

T.Parent shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, provided each such corporation in the unbroken chain (other than the Company) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

U.Permanent Disability shall have the meaning assigned to “permanent and total disability” as set forth in Code Section 22(e)(3).

V.Plan shall mean the CorVel Corporation Restated Omnibus Incentive Plan (Formerly The Restated 1988 Executive Stock Option Plan).

4852-9762-7137\2\389336\00005 A-3

W.Securities Act shall mean the Securities Act of 1933, as amended.

X.Service Provider shall mean an individual who renders service on a periodic basis to the Company, its Parent and/or any of its Subsidiaries as an Employee, a non-Employee member of the board of directors or a consultant or independent advisor.

Y.Stock Exchange shall mean the American Stock Exchange or the New York Stock Exchange, or any other national stock exchange.

Z.Subsidiary shall mean any corporation (other than the Company) in an unbroken chain  of corporations beginning with the Company, provided such corporation (other than the last corporation in the unbroken chain) owns, at the time of determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. For purposes of all Non-Statutory Option grants under the Plan and all Corporate Transaction provisions of the Plan, the term “Subsidiary” shall also include any partnership, joint venture or other business entity of which the Company owns, directly or indirectly through another entity, more than a fifty percent (50%) interest in voting power, capital or profits.

4852-9762-7137\2\389336\00005 A-4

	Schedule A: Performance Option
CorVel Corporation
Performance Stock Options
Options granted in November, 2016
	CY 2017			CY 2018	CY 2019
EPS Target for each calendar year	$	1.71		$***	$***
Percentage of option grant for tranche (totals 100%)		30	%	***%	***%
to earn 100% of tranche (105% of EPS target)	$	1.80		$***	$***
to earn 80% of tranche (100% of EPS target)	$	1.71		$***	$***
to earn 30% of tranche (95% of EPS target)	$	1.62		$***	$***
EPS at zero earned (90% of EPS target)	$	1.54		$***	$***

***  Confidential treatment requested pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. In accordance with Rule 24b-2, these confidential portions have been omitted from this exhibit and filed separately with the Securities and Exchange Commission.

SCHEDULE A

CORVEL CORPORATION

Shares earned by EPS number by Tranche year

CY 2017, 2018, 2019

Option grant:	20,000 Shares option grant
CY 2017 Tranche	6000 30% of total grant
CY 2018 Tranche	6000 30% of total grant
CY 2019 Tranche	8000 40% of total grant

	CY 2017						CY 2018						CY 2019
	Percentage			Shares			Percentage			Shares			Percentage			Shares
$1.54		0.0	%	0		$***		0.0	%	0		$***		0.0	%	0
$1.55		3.8	%	225		$***		3.0	%	180		$***		2.5	%	200
$1.56		7.5	%	450		$***		6.0	%	360		$***		5.0	%	400
$1.57		11.3	%	675		$***		9.0	%	540		$***		7.5	%	600
$1.58		15.0	%	900		$***		12.0	%	720		$***		10.0	%	800
$1.59		18.8	%		1,125	$***		15.0	%	900		$***		12.5	%		1,000
$1.60		22.5	%		1,350	$***		18.0	%		1,080	$***		15.0	%		1,200
$1.61		26.3	%		1,575	$***		21.0	%		1,260	$***		17.5	%		1,400
$1.62		30.0	%		1,800	$***		24.0	%		1,440	$***		20.0	%		1,600
$1.63		35.6	%		2,133	$***		27.0	%		1,620	$***		22.5	%		1,800
$1.64		41.1	%		2,467	$***		30.0	%		1,800	$***		25.0	%		2,000
$1.65		46.7	%		2,800	$***		34.5	%		2,073	$***		27.5	%		2,200
$1.66		52.2	%		3,133	$***		39.1	%		2,345	$***		30.0	%		2,400
$1.67		57.8	%		3,467	$***		43.6	%		2,618	$***		34.2	%		2,733
$1.68		63.3	%		3,800	$***		48.2	%		2,891	$***		38.3	%		3,067
$1.69		68.9	%		4,133	$***		52.7	%		3,164	$***		42.5	%		3,400
$1.70		74.4	%		4,467	$***		57.3	%		3,436	$***		46.7	%		3,733
$1.71		80.0	%		4,800	$***		61.8	%		3,709	$***		50.8	%		4,067
$1.72		82.2	%		4,933	$***		66.4	%		3,982	$***		55.0	%		4,400
$1.73		84.4	%		5,067	$***		70.9	%		4,255	$***		59.2	%		4,733
$1.74		86.7	%		5,200	$***		75.5	%		4,527	$***		63.3	%		5,067
$1.75		88.9	%		5,333	$***		80.0	%		4,800	$***		67.5	%		5,400
$1.76		91.1	%		5,467	$***		81.8	%		4,909	$***		71.7	%		5,733
$1.77		93.3	%		5,600	$***		83.6	%		5,018	$***		75.8	%		6,067
$1.78		95.6	%		5,733	$***		85.5	%		5,127	$***		80.0	%		6,400
$1.79		97.8	%		5,867	$***		87.3	%		5,236	$***		81.7	%		6,533
$1.80		100.0	%		6,000	$***		89.1	%		5,345	$***		83.3	%		6,667
						$***		90.9	%		5,455	$***		85.0	%		6,800
						$***		92.7	%		5,564	$***		86.7	%		6,933
						$***		94.5	%		5,673	$***		88.3	%		7,067
						$***		96.4	%		5,782	$***		90.0	%		7,200
						$***		98.2	%		5,891	$***		91.7	%		7,333
						$***		100.0	%		6,000	$***		93.3	%		7,467
												$***		95.0	%		7,600
												$***		96.7	%		7,733
												$***		98.3	%		7,867
												$***		100.0	%		8,000

***  Confidential treatment requested pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. In accordance with Rule 24b-2, these confidential portions have been omitted from this exhibit and filed separately with the Securities and Exchange Commission.

Notwithstanding anything to the contrary in this Schedule A or the Stock Option Agreement to which this Schedule A is attached, the Company shall have the right, in its sole discretion, with or without the consent of the Optionee, to amend this Schedule A to adjust any or all of the targets, dates and/or target EPS amounts as it deems equitable to recognize unusual or non-recurring events, including, but not limited to the Company’s acquisition of another business entity or assets, a corporate merger or other consolidation, or the sale or discontinuation of significant business operations or business units of the Company; changes in tax laws or accounting procedures; and any other extraordinary circumstances.

EX-10.43

Exhibit 10.43

CORVEL CORPORATION

ID: 33-0282651

2010 Main Street Suite 600

Irvine, California 92614

Notice of Grant of Stock Options and Option Agreement

Diane J. Blaha	Option Number:	006418
	Plan:	1988

Effective 11/03/2016, you have been granted a(n) Non-Qualified Stock Option to buy 10,000.0000 shares of CORVEL CORPORATION (the Company) stock at $32.1000 per share.

The total option price of the shares granted is $321,000.00.

Shares in each period will become fully vested on the date shown.

Shares	Vest Type	Full Vest	Expiration
10,000.0000	On Vest Date	11/03/2021	11/03/2021

Provided you continue to be a Service Provider (as defined in the Stock Option Agreement attached hereto as Exhibit A) throughout the specified period, this option will vest based on the achievement of certain performance criteria relating to the Company's earnings per share ("EPS") growth. The specific EPS Targets for calendar years 2017, 2018, and 2019, are listed on Schedule A of the Stock Option Agreement.

Optionee hereby agrees that the option is granted pursuant to and in accordance with the express terms and conditions of the Stock Option Agreement and the Corporation 's Restated Omnibus Incentive Plan.

By your signature and the Company's signature below, you and the Company agree that these options are granted under and governed by the terms and conditions of the Company's Stock Option Plan as amended and the Option Agreement, all of which are attached and made a part of this document.

/s/ Richard Schweppe	November 18, 2016
CORVEL CORPORATION	Date
/s/ Diane J. Blaha	November 18, 2016
Diane J. Blaha	Date

Section 16 Insiders Discretionary Option Grant Program

CorVel Corporation

Stock Option Agreement

A.The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board (or the board of directors of any  Parent or Subsidiary) and consultants and advisors who provide services to the Company (or any Parent or Subsidiary).

B.Optionee is to render valuable services to the Company (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out  the purposes of, the Plan in connection with the Company’s grant of an option to Optionee.

C.All capitalized terms in this Agreement shall have the meaning assigned to them  in the attached Appendix.

Now, therefore, it is hereby agreed as follows:

1.Grant of Option. Subject to and upon the terms and conditions set forth  in this Agreement, Optionee is hereby granted, as of the Grant Date, an option to purchase the Option Shares. The Option Shares shall be purchasable from time to time during the option term at the Exercise Price.

2.Option Term. This option shall expire at the close of business on the Expiration Date, unless sooner terminated in accordance with this Agreement.

3.Limited Transferability.

(a)During Optionee’s lifetime, this option shall be exercisable only by Optionee and shall not be assignable or transferable other than by will, by the laws of descent  and distribution following the Optionee’s death, or to any “Family Member” (as such term is defined in the General Instructions to Form S-8 (or any successor to such Instructions or such Form) under the Securities Act), provided that Optionee may not receive any consideration for such transfer, the Family Member may not make any subsequent transfers other than by will or by the laws of descent and distribution and the Company receives written notice of such transfer. This assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for this option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Company may deem appropriate.

(b)Should Optionee die while holding this option, then this option shall be transferred in accordance with Optionee’s will or the laws of inheritance. However, Optionee may designate one or more persons as the beneficiary or beneficiaries of this option, and this option shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon Optionee’s death while holding this option. Such beneficiary or beneficiaries shall take the transferred option subject to all the terms and conditions of this Agreement, including (without limitation) the limited time period during which this option may, pursuant to Paragraph 5, be exercised following Optionee’s death.

4.Exercisability. This option shall become exercisable in one or more installments as specified in the Grant Notice. As the option becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the accumulated installments until the Expiration Date or sooner termination of the option term.

5.Effect of Cessation of Service.

(a)Should Optionee cease to be a Service Provider for any reason (other than death, Permanent Disability or Misconduct) while this option is outstanding, then this option shall remain exercisable until the earlier of (i) the expiration of the three month period commencing with the date of such cessation of Service Provider status or (ii) the Expiration Date.

(b)Should Optionee cease to be a Service Provider by reason of Permanent Disability or death while this option is outstanding, then the option shall remain exercisable until the earlier of (i) the expiration of the twelve month period commencing with  the date of such cessation of Service Provider status or (ii) the Expiration Date.

(c)Should Optionee cease to be a Service Provider due to termination for Misconduct, then this option shall terminate immediately.

4852-9762-7137\2\389336\00005

(d)During the limited period of post-service exercisability, this option may not be exercised in the aggregate for more than the number of Option Shares for which the option is exercisable at the time Optionee ceased to be a Service Provider. This option shall, immediately when Optionee ceases to be a Service Provider for any reason, terminate with respect to any Option Shares for which this option is not otherwise at that time exercisable.  Upon the expiration of the limited post-service exercise period or (if earlier) upon the Expiration Date, this option shall terminate entirely.

6.Effect of Corporate Transaction.

(a)This option, to the extent outstanding at the time of a Corporate Transaction but not otherwise fully exercisable, shall automatically accelerate so that this option shall, immediately prior to the effective date of such Corporate Transaction, become exercisable for all of the Option Shares at the time subject to this option. However, this option shall not become exercisable on such an accelerated basis, if and to the extent: (i) this option is, in connection with the Corporate Transaction, to be assumed by the successor corporation (or  parent thereof) or to be replaced with a comparable option to purchase shares of the capital stock of the successor corporation (or parent thereof) or (ii) this option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing at the time of the Corporate Transaction on any Option Shares for which this option is not otherwise at that time exercisable (the excess of the Fair Market Value of those Option Shares over the aggregate Exercise Price payable for such shares) and provides for subsequent payout in accordance with the same exercise schedule for those Option Shares set forth in the Grant Notice.

(b)Upon the consummation of the Corporate Transaction, this option shall terminate, except to the extent assumed by the successor corporation (or parent thereof) in connection with the Corporate Transaction.

(c)If this option is assumed in connection with a Corporate Transaction, then this option shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to Optionee as a result of the consummation of such Corporate Transaction had the option been exercised immediately prior to such Corporate Transaction, and appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the same.

(d)This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or  assets.

7.Adjustment in Option Shares. Should any change be made to the Common Stock by reason of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, exchange of shares, reorganization, merger, consolidation, split-up, spin-off, or other change affecting the outstanding Common Stock as a class without the Company’s receipt of consideration, appropriate adjustments shall be made to (a) the total number and/or class of securities subject to this option and (b) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder.

8.Stockholder Rights. The holder of this option shall not have any stockholder rights with respect to the Option Shares until such person shall have exercised the option in accordance with the provisions of Paragraph 9, paid the Exercise Price and become a holder of record of the purchased shares.

9.Manner of Exercising Option.

(a)In order to exercise this option with respect to all or any part of the Option Shares for which this option is at the time exercisable, Optionee (or any other person or persons exercising the option) must take the following actions:

(i)Execute and deliver to the Company (A) a Notice of Exercise, in substantially the form attached hereto as Exhibit I, that specifies the number of Option Shares for which the option is being exercised and (B) any additional documents which the Committee may, in its discretion, deem  advisable.

(ii)Pay the aggregate Exercise Price for the purchased shares in one or more of the following forms:

(A)cash or check payable to the Company’s order;

(B)shares of Common Stock held by Optionee for the requisite period necessary to avoid a charge to the Company’s reported earnings and valued at Fair Market Value on the Exercise Date; or

4852-9762-7137\2\389336\00005 2

(C)through a special sale and remittance procedure pursuant to which Optionee is to provide irrevocable written instructions (1) to a brokerage firm to effect the immediate sale of the purchased shares and remit to the Company, out of the sale proceeds available on the settlement date, an amount sufficient to cover the aggregate Exercise Price payable for the purchased shares plus all applicable Federal and state income and employment taxes required to be withheld by the Company by reason of such purchase and (2) to the Company to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale transaction.

(iii)Furnish to the Company appropriate documentation that the person or persons exercising the option (if other than Optionee) have the right to exercise this option.

(iv)Make appropriate arrangements with the Company (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all Federal, state and local income and employment tax withholding requirements applicable to the option exercise.

(b)If payment of the exercise price is made by means of the surrender of shares of Common Stock which are subject to certain restrictions, the number of shares of Common Stock issued upon the exercise of the option equal to the number of shares of restricted stock surrendered shall be subject to the same restrictions as the restricted stock that was surrendered.

(c)Except to the extent the sale and remittance procedure specified in Paragraph 9(a)(ii)(C) is utilized in connection with the option exercise, payment of the option price for the purchased shares must accompany the Notice of Exercise.

(d)Assuming Optionee does not sell the purchased shares of Common Stock on the Exercise Date, as soon as practical after the Exercise Date, the Company shall either (i) issue to or on behalf of Optionee (or any other person or persons exercising this option) a certificate for the purchased Option Shares, with the appropriate legends affixed thereto, or (ii) instruct the Company’s transfer agent to make a book-entry reflecting the purchase on its stockholder ledger.

(e)In no event may this option be exercised for any fractional shares.

10.Tax Withholding. The Committee may, in its discretion and upon such terms and conditions as it may deem appropriate (including the applicable safe-harbor provisions of Securities and Exchange Commission Rule 16b-3 or any successor rule or regulation) provide Optionee (if Optionee is an Employee) with the election to surrender previously acquired shares of Common Stock or have shares withheld in satisfaction of the tax withholding obligations. To the extent necessary to avoid adverse accounting treatment, the number of shares that may be withheld for this purpose shall not exceed the minimum number needed to satisfy the applicable income and employment tax withholding rules. If Common Stock is used to satisfy the Company's tax withholding obligations, the shares of Common Stock shall have been held by Optionee for the requisite period necessary to avoid a charge to the Company’s reported earnings and shall be valued at their Fair Market Value when the tax withholding is required to be made.

11.Compliance with Laws and Regulations.

(a)The exercise of this option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Company and Optionee with all applicable requirements of law relating thereto and with all applicable regulations of any Stock Exchange (or the Nasdaq Stock Market, if applicable) on which the Common Stock may be  listed for trading at the time of such exercise and issuance.

(b)The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance and sale of any Common Stock pursuant to this option shall relieve the Company of any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall  not have been obtained. The Company, however, shall use reasonable efforts to obtain all such approvals.

12.Successors and Assigns. Except to the extent otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and Optionee, Optionee’s assigns, the legal representatives, heirs and legatees of Optionee’s estate and any beneficiaries of this option designated by Optionee.

13.Notices. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Company at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated below Optionee’s signature line on  the Grant Notice.  All notices shall be deemed effective upon personal delivery or three days  after deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

4852-9762-7137\2\389336\00005 3

14.Construction. This Agreement and the option evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of this Agreement shall prevail.   Alldecisions of the Committee with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in this option.

15.Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Delaware without resort to its conflict-of-laws rules.

16.No Employment/Service Contract. Nothing in this Agreement or in the Plan shall confer upon Optionee any right to continue to be a Service Provider of the Company (or any Parent or Subsidiary) for any period of specific duration or otherwise interfere with or restrict in any way the rights of the Company (or such Parent or Subsidiary) or Optionee, which rights are hereby expressly reserved by each, to terminate Optionee’s Service Provider status at any time and for any reason whatsoever, with or without cause.

4852-9762-7137\2\389336\00005 4

EXHIBIT I

NOTICE OF EXERCISE OF STOCK OPTION

I hereby notify CorVel Corporation (the “Company”) that I,                      , elect to purchase shares of Common Stock of the Corporation (the “Purchased Shares”) at an option price of $ per share (the “Option Price”) pursuant to the option (the “Option”) granted to me on .

My option was granted as a non-qualified stock option. I will need to report taxable income at the time I exercise this Option and pay the corresponding withholding tax (the “Withholding Tax”) to the Corporation. The Withholding Tax is computed on the difference between the Option Price and the Fair Market Value of the stock on the date I exercise the Option.

Concurrently with the delivery of the Exercise Notice to the Chief Financial Officer of  the Corporation, I shall hereby pay to the Corporation the Option Price and Withholding Tax for the Purchased Shares in accordance with the provisions of my agreement with the Corporation evidencing the Option and shall deliver whatever additional documents may be required by such agreement as a condition for exercise.

Date	Optionee’s Signature
If applicable, print name in exact manner it is to appear on the stock certificate:
Optionee’s Mailing Address:
Address to which certificate is to be sent, if different from address above:
Brokerage Account Information
(Broker Name, Contact Info., Account #)

4852-9762-7137\2\389336\00005 A-1

APPENDIX

The following definitions shall be in effect under this Agreement:

A.Agreement shall mean this Stock Option Agreement.

B.Board shall mean the Board of Directors of the Company.

C.Common Stock shall mean shares of the Company’s common stock, $0.0001 par value.

D.Code shall mean the Internal Revenue Code of 1986, as amended.

E.Committee shall mean a committee designated by the Board to administer the Plan, which initially shall be the compensation committee of the Board. The Committee shall be comprised of at least two directors but not less than such number of directors as shall be required to permit awards granted under the Plan to qualify under Rule 16b-3 under the Securities Act and Section 162(m) of the Code, and each member of the Committee shall be a “Non-Employee Director ” within the meaning of Rule 16b-3 under the Securities Act and an “Outside Director” within the meaning of Section 162(m) of the Code.

F.Companyshall mean CorVel Corporation, a Delaware corporation, or any corporate successor which shall assume the Plan.

G.Corporate Transaction shall mean any of the following transactions for which the approval of the Company’s stockholders is obtained:

(i)a merger or acquisition in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state of the Company’s incorporation,

(ii)the sale, transfer or other disposition of all or substantially all of the assets of the Company to any entity other than a parent or subsidiary of the Company, or

(iii)any reverse merger in which the Company is the surviving entity but in which fifty percent (50%) or more of the Company’s outstanding voting stock is transferred to holders different from those who held such fifty percent (50%) or greater interest immediately prior to such merger.

H.Employee shall mean an individual for whom the Company or one or more of its Parent or Subsidiaries reports his or her earnings on a Form W-2.

I.Exercise Date shall mean the date on which the option shall have been exercised in accordance with Paragraph 9.

J.Exercise Price shall mean the exercise price per Option Share as specified in the Grant Notice.

K.Expiration Date shall mean the date on which the option expires as specified in the

Grant Notice.

L.Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following provisions:

(i)If the Common Stock is at the time listed on the Nasdaq National Market or the Nasdaq Capital Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market or the Nasdaq Capital Market and published in The Wall Street Journal.

(ii)If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Committee to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall Street Journal.

(iii)If the Common Stock is not listed on the Nasdaq National Market, Nasdaq Capital Market or a national securities exchange, the Fair Market Value shall be the average of the closing bid and ask prices of the Common Stock on that day as reported by the Nasdaq bulletin board or any comparable system on that day.

(iv)If the Common Stock is not traded included in the Nasdaq bulletin board or any comparable system, the Fair Market Value shall be the average of the closing bid and ask prices on that day as furnished by any member of the National Association of Securities Dealers, Inc. selected from time to time by the Company for that purpose.

4852-9762-7137\2\389336\00005 A-2

(v)If the date in question is not a trading day, then the Fair Market Value shall be determined based on prices for the trading day prior to the date in question.

M.Grant Date shall mean the date of grant of the option as specified in the Grant Notice.

N.Grant Notice shall mean the Notice of Grant of Stock Option accompanying this Agreement, pursuant to which Optionee has been informed of the basic terms of the option evidenced hereby.

O.Misconduct shall mean any of the following:

(i)Optionee’s intentional misconduct or continuing gross neglect of duties which materially and adversely affects the business and operations of the Company or any Parent or Subsidiary employing Optionee;

(ii)Optionee’s unauthorized use or disclosure of (or attempt to use or disclose) confidential information or trade secrets of the Company or any Parent or Subsidiary; or

(iii)Optionee’s commission of an act involving embezzlement, theft, fraud, falsification of records, destruction of property or commission of a crime or other offense involving money or other property of the Company or any Parent or Subsidiary employing Optionee.

The reasons for termination of Optionee as a Service Provider set forth in this subparagraph are not intended to be an exclusive list of all acts or omissions which the Company (or any Parent or Subsidiary) may deem to constitute misconduct or other grounds for terminating Optionee (or any other individual).

P.Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.

Q.Notice of Exercise shall mean the notice of exercise in the form attached hereto as Exhibit I.

R.Option Shares shall mean the number of shares of Common Stock subject to the option as specified in the Grant Notice.

S.Optionee shall mean the person to whom the option is granted as specified in the Grant Notice.

T.Parent shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, provided each such corporation in the unbroken chain (other than the Company) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

U.Permanent Disability shall have the meaning assigned to “permanent and total disability” as set forth in Code Section 22(e)(3).

V.Plan shall mean the CorVel Corporation Restated Omnibus Incentive Plan (Formerly The Restated 1988 Executive Stock Option Plan).

W.Securities Act shall mean the Securities Act of 1933, as amended.

X.Service Provider shall mean an individual who renders service on a periodic basis to the Company, its Parent and/or any of its Subsidiaries as an Employee, a non-Employee member of the board of directors or a consultant or independent advisor.

Y.Stock Exchange shall mean the American Stock Exchange or the New York Stock Exchange, or any other national stock exchange.

Z.Subsidiary shall mean any corporation (other than the Company) in an unbroken chain  of corporations beginning with the Company, provided such corporation (other than the last corporation in the unbroken chain) owns, at the time of determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. For purposes of all Non-Statutory Option grants under the Plan and all Corporate Transaction provisions of the Plan, the term “Subsidiary” shall also include any partnership, joint venture or other business entity of which the Company owns, directly or indirectly through another entity, more than a fifty percent (50%) interest in voting power, capital or profits.

4852-9762-7137\2\389336\00005 A-3

CorVel Corporation		Schedule A: Performance Option
Performance Stock Options
Options granted in November, 2016
		CY 2017	CY 2018	CY 2019
EPS Target for each calendar year	$	1.71	$***	$***
Percentage of option grant for tranche (totals 100%)		30%	***%	***%
to earn 100% of tranche (105% of EPS target)	$	1.80	$***	$***
to earn 80% of tranche (100% of EPS target)	$	1.71	$***	$***
to earn 30% of tranche (95% of EPS target)	$	1.62	$***	$***
EPS at zero earned (90% of EPS target)	$	1.54	$***	$***

*** Confidential treatment requested pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. In accordance with Rule 24b-2, these confidential portions have been omitted from this exhibit and filed separately with the Securities and Exchange Commission.

SCHEDULE A
CORVEL CORPORATION
Shares earned by EPS number by Tranche year
CY 2017, 2018, 2019
Option grant:		10,000		Shares option grant
CY 2017 Tranche		3000		30% of total grant
CY 2018 Tranche		3000		30% of total grant
CY 2019 Tranche		4000		40% of total grant
		CY 2017						CY 2018						CY 2019
		Percentage			Shares			Percentage			Shares			Percentage			Shares
	$1.54		0.0	%	0		$***		0.0	%	0		$***		0.0	%	0
	$1.55		3.8	%	113		$***		3.0	%	90		$***		2.5	%	100
	$1.56		7.5	%	225		$***		6.0	%	180		$***		5.0	%	200
	$1.57		11.3	%	338		$***		9.0	%	270		$***		7.5	%	300
	$1.58		15.0	%	450		$***		12.0	%	360		$***		10.0	%	400
	$1.59		18.8	%	563		$***		15.0	%	450		$***		12.5	%	500
	$1.60		22.5	%	675		$***		18.0	%	540		$***		15.0	%	600
	$1.61		26.3	%	788		$***		21.0	%	630		$***		17.5	%	700
	$1.62		30.0	%	900		$***		24.0	%	720		$***		20.0	%	800
	$1.63		35.6	%		1,067	$***		27.0	%	810		$***		22.5	%	900
	$1.64		41.1	%		1,233	$***		30.0	%	900		$***		25.0	%		1,000
	$1.65		46.7	%		1,400	$***		34.5	%		1,036	$***		27.5	%		1,100
	$1.66		52.2	%		1,567	$***		39.1	%		1,173	$***		30.0	%		1,200
	$1.67		57.8	%		1,733	$***		43.6	%		1,309	$***		34.2	%		1,367
	$1.68		63.3	%		1,900	$***		48.2	%		1,445	$***		38.3	%		1,533
	$1.69		68.9	%		2,067	$***		52.7	%		1,582	$***		42.5	%		1,700
	$1.70		74.4	%		2,233	$***		57.3	%		1,718	$***		46.7	%		1,867
	$1.71		80.0	%		2,400	$***		61.8	%		1,855	$***		50.8	%		2,033
	$1.72		82.2	%		2,467	$***		66.4	%		1,991	$***		55.0	%		2,200
	$1.73		84.4	%		2,533	$***		70.9	%		2,127	$***		59.2	%		2,367
	$1.74		86.7	%		2,600	$***		75.5	%		2,264	$***		63.3	%		2,533
	$1.75		88.9	%		2,667	$***		80.0	%		2,400	$***		67.5	%		2,700
	$1.76		91.1	%		2,733	$***		81.8	%		2,455	$***		71.7	%		2,867
	$1.77		93.3	%		2,800	$***		83.6	%		2,509	$***		75.8	%		3,033
	$1.78		95.6	%		2,867	$***		85.5	%		2,564	$***		80.0	%		3,200
	$1.79		97.8	%		2,933	$***		87.3	%		2,618	$***		81.7	%		3,267
	$1.80		100.0	%		3,000	$***		89.1	%		2,673	$***		83.3	%		3,333
							$***		90.9	%		2,727	$***		85.0	%		3,400
							$***		92.7	%		2,782	$***		86.7	%		3,467
							$***		94.5	%		2,836	$***		88.3	%		3,533
							$***		96.4	%		2,891	$***		90.0	%		3,600
							$***		98.2	%		2,945	$***		91.7	%		3,667
							$***		100.0	%		3,000	$***		93.3	%		3,733
													$***		95.0	%		3,800
													$***		96.7	%		3,867
													$***		98.3	%		3,933
													$***		100.0	%		4,000

***Confidential treatment requested pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. In accordance with Rule 24b-2, these confidential portions have been omitted from this exhibit and filed separately with the Securities and Exchange Commission.

Notwithstanding anything to the contrary in this Schedule A or the Stock Option Agreement to which this Schedule A is attached, the Company shall have the right, in its sole discretion, with or without the consent of the Optionee, to amend this Schedule A to adjust any or all of the targets, dates and/or target EPS amounts as it deems equitable to recognize unusual or non-recurring events, including, but not limited to the Company’s acquisition of another business entity or assets, a corporate merger or other consolidation, or the sale or discontinuation of significant business operations or business units of the Company; changes in tax laws or accounting procedures; and any other extraordinary circumstances.

EX-10.44

Exhibit 10.44

CORVEL CORPORATION

ID: 33-0282651

2010 Main Street Suite 600

Irvine, California 92614

Notice of Grant of Stock Options and Option Agreement

Richard Schweppe	Option Number:	006419
	Plan:	1988

Effective 11/03/2016, you have been granted a(n) Non-Qualified Stock Option to buy 3,000.0000 shares of CORVEL CORPORATION (the Company) stock at $32.1000 per share.

The total option price of the shares granted is $96,300.00.

Shares in each period will become fully vested on the date shown.

Shares	Vest Type	Full Vest	Expiration
3,000.0000	On Vest Date	11/03/2021	11/03/2021

Provided you continue to be a Service Provider (as defined in the Stock Option Agreement attached hereto as Exhibit A) throughout the specified period, this option will vest based on the achievement of certain performance criteria relating to the Company's earnings per share (“EPS”) growth . The specific EPS Targets for calendar years 2017, 2018, and 2019, are listed on Schedule A of the Stock Option Agreement.

Optionee hereby agrees that the option is granted pursuant to and in accordance with the express terms and conditions of the Stock Option Agreement and the Corporation’s Restated Omnibus Incentive Plan.

By your signature and the Company’s signature below, you and the Company agree that these options are granted under and governed by the terms and conditions of the Company’s Stock Option Plan as amended and the Option Agreement, all of which are attached and made a part of this document.

/s/ Sharon O’ Connor	November 18, 2016
CORVEL CORPORATION	Date
/s/ Richard Schweppe	November 18, 2016
Richard Schweppe	Date

Section 16 Insiders Discretionary Option Grant Program

CorVel Corporation

Stock Option Agreement

A.The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board (or the board of directors of any Parent or Subsidiary) and consultants and advisors who provide services to the Company (or any Parent or Subsidiary).

B.Optionee is to render valuable services to the Company (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out  the purposes of, the Plan in connection with the Company’s grant of an option to Optionee.

C.All capitalized terms in this Agreement shall have the meaning assigned to them  in the attached Appendix.

Now, therefore, it is hereby agreed as follows:

1.Grant of Option. Subject to and upon the terms and conditions set forth  in this Agreement, Optionee is hereby granted, as of the Grant Date, an option to purchase the Option Shares. The Option Shares shall be purchasable from time to time during the option term at the Exercise Price.

2.Option Term. This option shall expire at the close of business on the Expiration Date, unless sooner terminated in accordance with this Agreement.

3.Limited Transferability.

(a)During Optionee’s lifetime, this option shall be exercisable only by Optionee and shall not be assignable or transferable other than by will, by the laws of descent  and distribution following the Optionee’s death, or to any “Family Member” (as such term is defined in the General Instructions to Form S-8 (or any successor to such Instructions or such Form) under the Securities Act), provided that Optionee may not receive any consideration for such transfer, the Family Member may not make any subsequent transfers other than by will or by the laws of descent and distribution and the Company receives written notice of such transfer. This assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for this option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Company may deem appropriate.

(b)Should Optionee die while holding this option, then this option shall be transferred in accordance with Optionee’s will or the laws of inheritance. However, Optionee may designate one or more persons as the beneficiary or beneficiaries of this option, and this option shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon Optionee’s death while holding this option. Such beneficiary or beneficiaries shall take the transferred option subject to all the terms and conditions of this Agreement, including (without limitation) the limited time period during which this option may, pursuant to Paragraph 5, be exercised following Optionee’s death.

4.Exercisability. This option shall become exercisable in one or more installments as specified in the Grant Notice. As the option becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the accumulated installments until the Expiration Date or sooner termination of the option term.

5.Effect of Cessation of Service.

(a)Should Optionee cease to be a Service Provider for any reason (other than death, Permanent Disability or Misconduct) while this option is outstanding, then this option shall remain exercisable until the earlier of (i) the expiration of the three month period commencing with the date of such cessation of Service Provider status or (ii) the Expiration Date.

(b)Should Optionee cease to be a Service Provider by reason of Permanent Disability or death while this option is outstanding, then the option shall remain exercisable until the earlier of (i) the expiration of the twelve month period commencing with  the date of such cessation of Service Provider status or (ii) the Expiration Date.

(c)Should Optionee cease to be a Service Provider due to termination for Misconduct, then this option shall terminate immediately.

4852-9762-7137\2\389336\00005

(d)During the limited period of post-service exercisability, this option may not be exercised in the aggregate for more than the number of Option Shares for which the option is exercisable at the time Optionee ceased to be a Service Provider. This option shall, immediately when Optionee ceases to be a Service Provider for any reason, terminate with respect to any Option Shares for which this option is not otherwise at that time exercisable.  Upon the expiration of the limited post-service exercise period or (if earlier) upon the Expiration Date, this option shall terminate entirely.

6.Effect of Corporate Transaction.

(a)This option, to the extent outstanding at the time of a Corporate Transaction but not otherwise fully exercisable, shall automatically accelerate so that this option shall, immediately prior to the effective date of such Corporate Transaction, become exercisable for all of the Option Shares at the time subject to this option. However, this option shall not become exercisable on such an accelerated basis, if and to the extent: (i) this option is, in connection with the Corporate Transaction, to be assumed by the successor corporation (or  parent thereof) or to be replaced with a comparable option to purchase shares of the capital stock of the successor corporation (or parent thereof) or (ii) this option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing at the time of the Corporate Transaction on any Option Shares for which this option is not otherwise at that time exercisable (the excess of the Fair Market Value of those Option Shares over the aggregate Exercise Price payable for such shares) and provides for subsequent payout in accordance with the same exercise schedule for those Option Shares set forth in the Grant Notice.

(b)Upon the consummation of the Corporate Transaction, this option shall terminate, except to the extent assumed by the successor corporation (or parent thereof) in connection with the Corporate Transaction.

(c)If this option is assumed in connection with a Corporate Transaction, then this option shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to Optionee as a result of the consummation of such Corporate Transaction had the option been exercised immediately prior to such Corporate Transaction, and appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the same.

(d)This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or  assets.

7.Adjustment in Option Shares. Should any change be made to the Common Stock by reason of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, exchange of shares, reorganization, merger, consolidation, split-up, spin-off, or other change affecting the outstanding Common Stock as a class without the Company’s receipt of consideration, appropriate adjustments shall be made to (a) the total number and/or class of securities subject to this option and (b) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder.

8.Stockholder Rights. The holder of this option shall not have any stockholder rights with respect to the Option Shares until such person shall have exercised the option in accordance with the provisions of Paragraph 9, paid the Exercise Price and become a holder of record of the purchased shares.

9.Manner of Exercising Option.

(a)In order to exercise this option with respect to all or any part of the Option Shares for which this option is at the time exercisable, Optionee (or any other person or persons exercising the option) must take the following actions:

(i)Execute and deliver to the Company (A) a Notice of Exercise, in substantially the form attached hereto as Exhibit I, that specifies the number of Option Shares for which the option is being exercised and (B) any additional documents which the Committee may, in its discretion, deem  advisable.

(ii)Pay the aggregate Exercise Price for the purchased shares in one or more of the following forms:

(A)cash   or   check   payable   to   the Company’s order;

(B)shares of Common Stock held by Optionee for

the requisite period necessary to avoid a charge to the Company’s reported earnings and valued at Fair Market Value on the Exercise Date; or

4852-9762-7137\2\389336\00005 2

(C)through a special sale and remittance procedure pursuant to which Optionee is to provide irrevocable written instructions (1) to a brokerage firm to effect the immediate sale of the purchased shares and remit to the Company, out of the sale proceeds available on the settlement date, an amount sufficient to cover the aggregate Exercise Price payable for the purchased shares plus all applicable Federal and state income and employment taxes required to be withheld by the Company by reason of such purchase and (2) to the Company to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale transaction.

(iii)Furnish to the Company appropriate documentation that the person or persons exercising the option (if other than Optionee) have the right to exercise this option.

(iv)Make appropriate arrangements with the Company (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all Federal, state and local income and employment tax withholding requirements applicable to the option exercise.

(b)If payment of the exercise price is made by means of the surrender of shares of Common Stock which are subject to certain restrictions, the number of shares of Common Stock issued upon the exercise of the option equal to the number of shares of restricted stock surrendered shall be subject to the same restrictions as the restricted stock that was surrendered.

(c)Except to the extent the sale and remittance procedure specified in Paragraph 9(a)(ii)(C) is utilized in connection with the option exercise, payment of the option price for the purchased shares must accompany the Notice of Exercise.

(d)Assuming Optionee does not sell the purchased shares of Common Stock on the Exercise Date, as soon as practical after the Exercise Date, the Company shall either (i) issue to or on behalf of Optionee (or any other person or persons exercising this option) a certificate for the purchased Option Shares, with the appropriate legends affixed thereto, or (ii) instruct the Company’s transfer agent to make a book-entry reflecting the purchase on its stockholder ledger.

(e)In no event may this option be exercised for any fractional shares.

10.Tax Withholding. The Committee may, in its discretion and upon such terms and conditions as it may deem appropriate (including the applicable safe-harbor provisions of Securities and Exchange Commission Rule 16b-3 or any successor rule or regulation) provide Optionee (if Optionee is an Employee) with the election to surrender previously acquired shares of Common Stock or have shares withheld in satisfaction of the tax withholding obligations. To the extent necessary to avoid adverse accounting treatment, the number of shares that may be withheld for this purpose shall not exceed the minimum number needed to satisfy the applicable income and employment tax withholding rules. If Common Stock is used to satisfy the Company's tax withholding obligations, the shares of Common Stock shall have been held by Optionee for the requisite period necessary to avoid a charge to the Company’s reported earnings and shall be valued at their Fair Market Value when the tax withholding is required to be made.

11.Compliance with Laws and Regulations.

(a)The exercise of this option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Company and Optionee with all applicable requirements of law relating thereto and with all applicable regulations of any Stock Exchange (or the Nasdaq Stock Market, if applicable) on which the Common Stock may be  listed for trading at the time of such exercise and issuance.

(b)The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance and sale of any Common Stock pursuant to this option shall relieve the Company of any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall  not have been obtained. The Company, however, shall use reasonable efforts to obtain all such approvals.

12.Successors and Assigns. Except to the extent otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and Optionee, Optionee’s assigns, the legal representatives, heirs and legatees of Optionee’s estate and any beneficiaries of this option designated by Optionee.

13.Notices. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Company at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated below Optionee’s signature line on  the Grant Notice.  All notices shall be deemed effective upon personal delivery or three days after deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

4852-9762-7137\2\389336\00005 3

14.Construction. This Agreement and the option evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of this Agreement shall prevail.   All decisions of the Committee with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in this option.

15.Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Delaware without resort to its conflict-of-laws rules.

16.No Employment/Service Contract. Nothing in this Agreement or in the Plan shall confer upon Optionee any right to continue to be a Service Provider of the Company (or any Parent or Subsidiary) for any period of specific duration or otherwise interfere with or restrict in any way the rights of the Company (or such Parent or Subsidiary) or Optionee, which rights are hereby expressly reserved by each, to terminate Optionee’s Service Provider status at any time and for any reason whatsoever, with or without cause.

4852-9762-7137\2\389336\00005 4

EXHIBIT I

NOTICE OF EXERCISE OF STOCK OPTION

I hereby notify CorVel Corporation (the “Company”) that I, , elect to purchase shares of Common Stock of the Corporation (the “Purchased Shares”) at an option price of $ per share (the “Option Price”) pursuant to the option (the “Option”) granted to me on .

My option was granted as a non-qualified stock option. I will need to report taxable income at the time I exercise this Option and pay the corresponding withholding tax (the “Withholding Tax”) to the Corporation. The Withholding Tax is computed on the difference between the Option Price and the Fair Market Value of the stock on the date I exercise the Option.

Concurrently with the delivery of the Exercise Notice to the Chief Financial Officer of  the Corporation, I shall hereby pay to the Corporation the Option Price and Withholding Tax for the Purchased Shares in accordance with the provisions of my agreement with the Corporation evidencing the Option and shall deliver whatever additional documents may be required by such agreement as a condition for exercise.

Date	Optionee’s Signature
If applicable, print name in exact manner it is to appear on the stock certificate:
Optionee’s Mailing Address:
Address to which certificate is to be sent, if different from address above:
Brokerage Account Information
(Broker Name, Contact Info., Account #)

4852-9762-7137\2\389336\00005 A-1

APPENDIX

The following definitions shall be in effect under this Agreement:

A.Agreement shall mean this Stock Option Agreement.

B.Board shall mean the Board of Directors of the Company.

C.Common Stock shall mean shares of the Company’s common stock, $0.0001 par value.

D.Code shall mean the Internal Revenue Code of 1986, as amended.

E.Committee shall mean a committee designated by the Board to administer the Plan, which initially shall be the compensation committee of the Board. The Committee shall be comprised of at least two directors but not less than such number of directors as shall be required to permit awards granted under the Plan to qualify under Rule 16b-3 under the Securities Act and Section 162(m) of the Code, and each member of the Committee shall be a “Non-Employee Director ” within the meaning of Rule 16b-3 under the Securities Act and an “Outside Director” within the meaning of Section 162(m) of the Code.

F.Company shall mean CorVel Corporation, a Delaware corporation, or any corporate successor which shall assume the Plan.

G.Corporate Transaction shall mean any of the following transactions for which the approval of the Company’s stockholders is obtained:

(i)a merger or acquisition in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state of the Company’s incorporation,

(ii)the sale, transfer or other disposition of all or substantially all of the assets of the Company to any entity other than a parent or subsidiary of the Company, or

(iii)any reverse merger in which the Company is the surviving entity but in which fifty percent (50%) or more of the Company’s outstanding voting stock is transferred to holders different from those who held such fifty percent (50%) or greater interest immediately prior to such merger.

H.Employee shall mean an individual for whom the Company or one or more of its Parent or Subsidiaries reports his or her earnings on a Form W-2.

I.Exercise Date shall mean the date on which the option shall have been exercised in accordance with Paragraph 9.

J.Exercise Price shall mean the exercise price per Option Share as specified in the Grant Notice.

K.Expiration Date shall mean the date on which the option expires as specified in the Grant Notice.

L.Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following provisions:

(i)If the Common Stock is at the time listed on the Nasdaq National Market or the Nasdaq Capital Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market or the Nasdaq Capital Market and published in The Wall Street Journal.

(ii)If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Committee to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall Street Journal.

(iii)If the Common Stock is not listed on the Nasdaq National Market, Nasdaq Capital Market or a national securities exchange, the Fair Market Value shall be the average of the closing bid and ask prices of the Common Stock on that day as reported by the Nasdaq bulletin board or any comparable system on that day.

(iv)If the Common Stock is not traded included in the Nasdaq bulletin board or any comparable system, the Fair Market Value shall be the average of the closing bid and ask prices on that day as furnished by any member of the National Association of Securities Dealers, Inc. selected from time to time by the Company for that purpose.

4852-9762-7137\2\389336\00005 A-2

(v)If the date in question is not a trading day, then the Fair Market Value shall be determined based on prices for the trading day prior to the date in question.

M.Grant Date shall mean the date of grant of the option as specified in the Grant Notice.

N.Grant Noticeshall mean the Notice of Grant of Stock Option accompanying this Agreement, pursuant to which Optionee has been informed of the basic terms of the option evidenced hereby.

O.Misconduct shall mean any of the following:

(i)Optionee’s intentional misconduct or continuing gross neglect of duties which materially and adversely affects the business and operations of the Company or any Parent or Subsidiary employing Optionee;

(ii)Optionee’s unauthorized use or disclosure of (or attempt to use or disclose) confidential information or trade secrets of the Company or any Parent or Subsidiary; or

(iii)Optionee’s commission of an act involving embezzlement, theft, fraud, falsification of records, destruction of property or commission of a crime or other offense involving money or other property of the Company or any Parent or Subsidiary employing Optionee.

The reasons for termination of Optionee as a Service Provider set forth in this subparagraph are not intended to be an exclusive list of all acts or omissions which the Company (or any Parent or Subsidiary) may deem to constitute misconduct or other grounds for terminating Optionee (or any other individual).

P.Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.

Q.Notice of Exercise shall mean the notice of exercise in the form attached hereto as Exhibit I.

R.Option Shares shall mean the number of shares of Common Stock subject to the option as specified in the Grant Notice.

S.Optionee shall mean the person to whom the option is granted as specified in the Grant Notice.

T.Parent shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, provided each such corporation in the unbroken chain (other than the Company) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

U.Permanent Disability shall have the meaning assigned to “permanent and total disability” as set forth in Code Section 22(e)(3).

V.Plan shall mean the CorVel Corporation Restated Omnibus Incentive Plan (Formerly The Restated 1988 Executive Stock Option Plan).

W.Securities Act shall mean the Securities Act of 1933, as amended.

X.Service Provider shall mean an individual who renders service on a periodic basis to the Company, its Parent and/or any of its Subsidiaries as an Employee, a non-Employee member of the board of directors or a consultant or independent advisor.

Y.Stock Exchange shall mean the American Stock Exchange or the New York Stock Exchange, or any other national stock exchange.

Z.Subsidiary shall mean any corporation (other than the Company) in an unbroken chain  of corporations beginning with the Company, provided such corporation (other than the last corporation in the unbroken chain) owns, at the time of determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. For purposes of all Non-Statutory Option grants under the Plan and all Corporate Transaction provisions of the Plan, the term “Subsidiary” shall also include any partnership, joint venture or other business entity of which the Company owns, directly or indirectly through another entity, more than a fifty percent (50%) interest in voting power, capital or profits.

4852-9762-7137\2\389336\00005 A-3

CorVel Corporation		Schedule A: Performance Option
Performance Stock Options
Options granted in November, 2016
		CY 2017	CY 2018	CY 2019
EPS Target for each calendar year	$	1.71	$***	$***
Percentage of option grant for tranche (totals 100%)		30%	***%	***%
to earn 100% of tranche (105% of EPS target)	$	1.80	$***	$***
to earn 80% of tranche (100% of EPS target)	$	1.71	$***	$***
to earn 30% of tranche (95% of EPS target)	$	1.62	$***	$***
EPS at zero earned (90% of EPS target)	$	1.54	$***	$***

*** Confidential treatment requested pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. In accordance with Rule 24b-2, these confidential portions have been omitted from this exhibit and filed separately with the Securities and Exchange Commission.

SCHEDULE A
CORVEL CORPORATION
Shares earned by EPS number by Tranche year
CY 2017, 2018, 2019
Option grant:		3,000		Shares option grant
CY 2017 Tranche		900		30% of total grant
CY 2018 Tranche		900		30% of total grant
CY 2019 Tranche		1200		40% of total grant
		CY 2017						CY 2018						CY 2019
		Percentage			Shares			Percentage			Shares			Percentage			Shares
	$1.54		0.0	%	0		$***		0.0	%	0		$***		0.0	%	0
	$1.55		3.8	%	34		$***		3.0	%	27		$***		2.5	%	30
	$1.56		7.5	%	68		$***		6.0	%	54		$***		5.0	%	60
	$1.57		11.3	%	101		$***		9.0	%	81		$***		7.5	%	90
	$1.58		15.0	%	135		$***		12.0	%	108		$***		10.0	%	120
	$1.59		18.8	%	169		$***		15.0	%	135		$***		12.5	%	150
	$1.60		22.5	%	203		$***		18.0	%	162		$***		15.0	%	180
	$1.61		26.3	%	236		$***		21.0	%	189		$***		17.5	%	210
	$1.62		30.0	%	270		$***		24.0	%	216		$***		20.0	%	240
	$1.63		35.6	%		320	$***		27.0	%	243		$***		22.5	%	270
	$1.64		41.1	%		370	$***		30.0	%	270		$***		25.0	%		300
	$1.65		46.7	%		420	$***		34.5	%		311	$***		27.5	%		330
	$1.66		52.2	%		470	$***		39.1	%		352	$***		30.0	%		360
	$1.67		57.8	%		520	$***		43.6	%		393	$***		34.2	%		410
	$1.68		63.3	%		570	$***		48.2	%		434	$***		38.3	%		460
	$1.69		68.9	%		620	$***		52.7	%		475	$***		42.5	%		510
	$1.70		74.4	%		670	$***		57.3	%		515	$***		46.7	%		560
	$1.71		80.0	%		720	$***		61.8	%		556	$***		50.8	%		610
	$1.72		82.2	%		740	$***		66.4	%		597	$***		55.0	%		660
	$1.73		84.4	%		760	$***		70.9	%		638	$***		59.2	%		710
	$1.74		86.7	%		780	$***		75.5	%		679	$***		63.3	%		760
	$1.75		88.9	%		800	$***		80.0	%		720	$***		67.5	%		810
	$1.76		91.1	%		820	$***		81.8	%		736	$***		71.7	%		860
	$1.77		93.3	%		840	$***		83.6	%		753	$***		75.8	%		910
	$1.78		95.6	%		860	$***		85.5	%		769	$***		80.0	%		960
	$1.79		97.8	%		880	$***		87.3	%		785	$***		81.7	%		980
	$1.80		100.0	%		900	$***		89.1	%		802	$***		83.3	%		1,000
							$***		90.9	%		818	$***		85.0	%		1,020
							$***		92.7	%		835	$***		86.7	%		1,040
							$***		94.5	%		851	$***		88.3	%		1,060
							$***		96.4	%		867	$***		90.0	%		1,080
							$***		98.2	%		884	$***		91.7	%		1,100
							$***		100.0	%		900	$***		93.3	%		1,120
													$***		95.0	%		1,140
													$***		96.7	%		1,160
													$***		98.3	%		1,180
													$***		100.0	%		1,200

***Confidential treatment requested pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. In accordance with Rule 24b-2, these confidential portions have been omitted from this exhibit and filed separately with the Securities and Exchange Commission.

Notwithstanding anything to the contrary in this Schedule A or the Stock Option Agreement to which this Schedule A is attached, the Company shall have the right, in its sole discretion, with or without the consent of the Optionee, to amend this Schedule A to adjust any or all of the targets, dates and/or target EPS amounts as it deems equitable to recognize unusual or non-recurring events, including, but not limited to the Company’s acquisition of another business entity or assets, a corporate merger or other consolidation, or the sale or discontinuation of significant business operations or business units of the Company; changes in tax laws or accounting procedures; and any other extraordinary circumstances.

EX-21.1

EXHIBIT 21.1 - - SUBSIDIARIES OF THE REGISTRANT

Name of Subsidiary	State of Incorporation	Relationship to Registrant
CorVel Health Care Organization	California	wholly-owned subsidiary
CorVel Health Care Corporation	California	wholly-owned subsidiary
CorVel Enterprise Comp, Inc. of New York	New York	wholly-owned subsidiary
CorVel Enterprise Comp, Inc.	Delaware	wholly-owned subsidiary
CorVel IME Corporation	New York	wholly-owned subsidiary
CareIQ, Inc.	Minnesota	wholly-owned subsidiary
Enterprise Comp, Inc.	Delaware	wholly-owned subsidiary
CorVel Ohio MCO, Inc.	Ohio	wholly-owned subsidiary
Eagle Claims Services, Inc.	New York	wholly-owned subsidiary
CorVel NY IPA, Inc.	New York	wholly-owned subsidiary
CorVel Rehabilitation Services, Inc.	Minnesota	wholly-owned subsidiary

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements on Form S-8 (File Nos. 333-144402, 333-58455, 333-16379, 333-107428, 333-128739, 333-94440, 333-53684, 333-48186, 333-42554, and 333-42424) and in the Registration Statement on Form S-3 (File No. 333-209388) of CorVel Corporation (the “Company”) of our report dated June 8, 2018, relating to the Company’s consolidated financial statements, financial statement schedule and internal controls included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018.

/s/ HASKELL & WHITE LLP

Irvine, California

June 8, 2018

EX-31.1

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, V. Gordon Clemons, certify that:

1. I have reviewed this annual report on Form 10-K of CorVel Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 8, 2018

/s/ V. Gordon Clemons

V. Gordon Clemons

Chairman of the Board and Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Kenneth S. Cragun, certify that:

1. I have reviewed this annual report on Form 10-K of CorVel Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 8, 2018

/s/ Kenneth S. Cragun

Kenneth S. Cragun

Chief Financial Officer (Principal Financial

and Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of CorVel Corporation (the “Registrant”) on Form 10-K for the fiscal year ended March 31, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Annual Report”), I, V. Gordon Clemons, Chief Executive Officer of the Registrant, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) the Annual Report fully complies with the requirements of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ V. Gordon Clemons

V. Gordon Clemons

Chairman of the Board and Chief Executive Officer

(Principal Executive Officer)

June 8, 2018

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to CorVel Corporation and will be retained by CorVel Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies this Annual Report and is being furnished pursuant to Item 601(b)(32) of Regulation S-K promulgated under the Securities Act of 1933, as amended (the “Securities Act”) and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This certification shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, or incorporated by reference into any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific incorporation by reference in such a filing.

EX-32.2

Exhibit 32.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of CorVel Corporation (the “Registrant”) on Form 10-K for the fiscal year ended March 31, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Annual Report”), I, Kenneth S. Cragun, Chief Financial Officer of the Registrant, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) the Annual Report fully complies with the requirements of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ Kenneth S. Cragun

Kenneth S. Cragun

Chief Financial Officer (Principal Financial

and Principal Accounting Officer)

June 8, 2018

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to CorVel Corporation and will be retained by CorVel Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies this Annual Report and is being furnished pursuant to Item 601(b)(32) of Regulation S-K promulgated under the Securities Act of 1933, as amended (the “Securities Act”) and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This certification shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, or incorporated by reference into any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific incorporation by reference in such a filing.

XML

Document and Entity Information - USD ($)	12 Months Ended
	Mar. 31, 2018	Jun. 05, 2018	Sep. 30, 2017
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY
Trading Symbol	CRVL
Entity Registrant Name	CORVEL CORP
Entity Central Index Key	0000874866
Current Fiscal Year End Date	--03-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		18,945,318
Entity Public Float			$ 513,053,000

XML

Consolidated Balance Sheets - USD ($)	Mar. 31, 2018	Mar. 31, 2017
Current Assets
Cash and cash equivalents	$ 55,771,000	$ 28,611,000
Customer deposits	35,496,000	32,471,000
Accounts receivable (less allowance for doubtful accounts of $4,551,000 at March 31, 2018 and $3,001,000 at March 31, 2017)	64,940,000	62,841,000
Prepaid expenses and income taxes	7,110,000	4,944,000
Total current assets	163,317,000	128,867,000
Property and equipment, net	69,356,000	63,042,000
Goodwill	36,814,000	36,814,000
Other intangible assets, net	3,415,000	3,851,000
Other assets	1,102,000	2,809,000
Total assets	274,004,000	235,383,000
Current Liabilities
Accounts and income taxes payable	13,453,000	16,583,000
Accrued liabilities	84,536,000	73,468,000
Total current liabilities	97,989,000	90,051,000
Deferred income taxes	4,839,000	6,686,000
Total liabilities	102,828,000	96,737,000
Commitments and contingencies (Notes 5, 6, 8, 9, 10 and 12)	0	0
Stockholders' Equity
Common stock, $.0001 par value: 120,000,000 shares authorized at March 31, 2018 and 2017; 53,793,986 shares issued (18,912,907 shares outstanding, net of treasury shares) and 53,569,067 shares issued (18,937,233 shares outstanding, net of treasury shares) at March 31, 2018 and March 31, 2017, respectively	3,000	3,000
Paid-in-capital	143,705,000	135,683,000
Treasury Stock, at cost (34,881,079 and 34,631,834 shares at March 31, 2018 and 2017, respectively)	(430,989,000)	(419,802,000)
Retained earnings	458,457,000	422,762,000
Total stockholders' equity	171,176,000	138,646,000
Total liabilities and stockholders' equity	$ 274,004,000	$ 235,383,000

XML

Consolidated Balance Sheets (Parenthetical) - USD ($)	Mar. 31, 2018	Mar. 31, 2017
Statement Of Financial Position [Abstract]
Allowance for doubtful debts, accounts receivable	$ 4,551,000	$ 3,001,000
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	120,000,000	120,000,000
Common stock, shares issued	53,793,986	53,569,067
Common stock, shares outstanding	18,912,907	18,937,233
Treasury stock, shares	34,881,079	34,631,834

XML

Consolidated Statements of Income - USD ($)	12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016
Income Statement [Abstract]
Revenues	$ 558,350,000	$ 518,686,000	$ 503,584,000
Cost of revenues	451,097,000	413,894,000	399,040,000
Gross profit	107,253,000	104,792,000	104,544,000
General and administrative	59,350,000	57,243,000	58,484,000
Income before income taxes	47,903,000	47,549,000	46,060,000
Income tax provision	12,208,000	18,070,000	17,535,000
Net income	$ 35,695,000	$ 29,479,000	$ 28,525,000
Net income per share:
Basic	$ 1.90	$ 1.52	$ 1.44
Diluted	$ 1.87	$ 1.51	$ 1.43
Weighted average shares outstanding:
Basic	18,825,000	19,418,000	19,826,000
Diluted	19,042,000	19,570,000	20,004,000

XML

Consolidated Statements of Stockholders' Equity - USD ($)	Total	Common Stock [Member]	Paid-in Capital [Member]	Treasury Stock [Member]	Retained Earnings [Member]
Beginning balance at Mar. 31, 2015	$ 127,923,000	$ 3,000	$ 123,440,000	$ (360,278,000)	$ 364,758,000
Beginning balance, shares at Mar. 31, 2015		53,243,157		(32,992,488)
Stock issued under employee stock purchase plan	371,000		371,000
Stock issued under employee stock purchase plan, shares		10,975
Stock issued under stock option plan, net of shares repurchased	3,749,000		3,749,000
Stock issued under stock option plan, net of shares repurchased, shares		194,540
Stock-based compensation expense	2,192,000		2,192,000
Income tax benefits from stock option exercises	713,000		713,000
Purchase of treasury stock	$ (31,525,000)			$ (31,525,000)
Purchase of treasury stock, shares	(893,771)			(893,771)
Net income	$ 28,525,000				28,525,000
Ending balance at Mar. 31, 2016	131,948,000	$ 3,000	130,465,000	$ (391,803,000)	393,283,000
Ending balance, shares at Mar. 31, 2016		53,448,672		(33,886,259)
Stock issued under employee stock purchase plan	419,000		419,000
Stock issued under employee stock purchase plan, shares		10,596
Stock issued under stock option plan, net of shares repurchased	2,367,000		2,367,000
Stock issued under stock option plan, net of shares repurchased, shares		109,799
Stock-based compensation expense	2,432,000		2,432,000
Purchase of treasury stock	$ (27,999,000)			$ (27,999,000)
Purchase of treasury stock, shares	(745,575)			(745,575)
Net income	$ 29,479,000				29,479,000
Ending balance at Mar. 31, 2017	138,646,000	$ 3,000	135,683,000	$ (419,802,000)	422,762,000
Ending balance, shares at Mar. 31, 2017		53,569,067		(34,631,834)
Stock issued under employee stock purchase plan	$ 458,000		458,000
Stock issued under employee stock purchase plan, shares	2,469,843	8,976
Stock issued under stock option plan, net of shares repurchased	$ 3,426,000		3,426,000
Stock issued under stock option plan, net of shares repurchased, shares		215,943
Stock-based compensation expense	3,164,000		3,164,000
Purchase of treasury stock	$ (11,187,000)			$ (11,187,000)
Purchase of treasury stock, shares	(249,245)			(249,245)
Adjustment to deferred income taxes for prior year's stock options	$ 974,000		974,000
Net income	35,695,000				35,695,000
Ending balance at Mar. 31, 2018	$ 171,176,000	$ 3,000	$ 143,705,000	$ (430,989,000)	$ 458,457,000
Ending balance, shares at Mar. 31, 2018		53,793,986		(34,881,079)

XML

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 35,695,000	$ 29,479,000	$ 28,525,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	21,775,000	20,948,000	19,952,000
Loss on write down or disposal of assets	1,199,000	733,000	286,000
Stock-based compensation expense	3,164,000	2,432,000	2,192,000
Provision for doubtful accounts	2,559,000	2,335,000	1,357,000
Provision for deferred income taxes	(874,000)	(1,220,000)	(1,656,000)
Changes in operating assets and liabilities:
Accounts receivable	(4,658,000)	(5,429,000)	(3,567,000)
Customer deposits	(3,025,000)	(6,822,000)	(8,331,000)
Prepaid expenses and income taxes	(2,166,000)	(11,000)	6,742,000
Other assets	545,000	(29,000)	(516,000)
Accounts and taxes payable	(3,130,000)	3,350,000	(2,537,000)
Accrued liabilities	11,068,000	6,286,000	8,864,000
Net cash provided by operating activities	62,152,000	52,052,000	51,311,000
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in private equity	0	34,000	(600,000)
Purchases of property and equipment	(27,689,000)	(31,041,000)	(16,756,000)
Net cash used in investing activities	(27,689,000)	(31,007,000)	(17,356,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Exercise of employee stock purchase options	458,000	419,000	371,000
Exercise of common stock options	3,426,000	2,367,000	3,749,000
Tax benefits from stock options	0	0	713,000
Purchase of treasury stock	(11,187,000)	(27,999,000)	(31,525,000)
Net cash used in financing activities	(7,303,000)	(25,213,000)	(26,692,000)
Net increase (decrease) in cash and cash equivalents	27,160,000	(4,168,000)	7,263,000
Cash and cash equivalents at beginning of year	28,611,000	32,779,000	25,516,000
CASH AND CASH EQUIVALENTS AT END OF YEAR	55,771,000	28,611,000	32,779,000
Supplemental cash flow information
Income taxes paid	16,229,000	18,321,000	13,589,000
Accrual of software license purchase	1,746,000	3,492,000	3,249,000
Tenant improvement allowance	$ 0	$ 1,224,000	$ 0

XML

Schedule II - Valuation and Qualifying Accounts

12 Months Ended

Mar. 31, 2018

Valuation And Qualifying Accounts [Abstract]

Schedule II - Valuation and Qualifying Accounts

Schedule II — Valuation and Qualifying Accounts

	Balance at Beginning of Year		Additions Charged to Cost and Expenses		Deductions			Balance at End of Year
Allowance for doubtful accounts:
Fiscal Year Ended March 31, 2018:	$	3,001,000	$	2,559,000	$	(1,009,000	)	$	4,551,000
Fiscal Year Ended March 31, 2017:		1,821,000		2,335,000		(1,155,000	)		3,001,000
Fiscal Year Ended March 31, 2016:		1,645,000		1,357,000		(1,181,000	)		1,821,000

XML

Summary of Significant Accounting Policies

12 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 1 — Summary of Significant Accounting Policies

Organization:  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. 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.

Basis of Presentation:  The consolidated financial statements include the accounts of CorVel and its wholly-owned subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation.  Certain prior year amounts have been reclassified to conform to fiscal 2018 presentation.  These changes had no impact on previously-reported results of operations or shareholders’ equity.

The Company evaluated all subsequent events and transactions through the date of this filing.

Use of Estimates:  The preparation of financial statements in compliance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements. Actual results could differ from those estimates.  Significant estimates include the values assigned to intangible assets, capitalized software development, the allowance for doubtful accounts, accrual for income taxes, share-based payments related to performance-based awards, loss contingencies, estimated claims for claims administration revenue recognition, estimates used in stock options valuations, and accrual for self-insurance reserves.

Cash and Cash Equivalents:  Cash and cash equivalents consist of short-term, interest-bearing highly-liquid investment-grade securities with maturities of 90 days or less when purchased. The carrying amounts of the Company’s financial instruments approximate their fair values at March 31, 2018 and 2017 due to the short-term nature of those instruments.  Customer deposits represent cash that is expected to be returned or applied towards payment within one year through the Company’s provider reimbursement services.

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

Level 1 Quoted market prices in active markets for identical assets or liabilities;

Level 2 Observable inputs other than those included in Level 1 (for example, quoted prices for similar assets in active markets or quoted prices for identical assets in inactive markets); and

Level 3 Unobservable inputs reflecting management’s own assumptions about the inputs used in estimating the value of the asset.

The carrying amount of the Company’s financial instruments (i.e. cash, accounts receivable, accounts payable, etc.) are all Level 1, and the Company believes their respective carrying values approximates their fair values at March 31, 2018 and 2017 due to the short-term nature of those instruments.  The Company has no Level 2 or Level 3 assets.

Investment in Private Equity: The Company has made an investment of $2,250,000 into a private equity limited partnership that invests in start-up companies primarily in the data analytics industry.   The Company accounts for the investment using the cost method and will periodically review the investment for possible impairment.  The Company recorded a reduction to the investment of $1,169,000 for the year ended March 31, 2018.  The investment is recorded in other assets on the accompanying consolidated balance sheets.  In accordance with ASC 825-10-50-16 through 50-19, it is not practicable to estimate the fair value of the investment due to the fact that the investment is in a diversified portfolio of companies whose shares are not traded in public markets.

Revenue Recognition: The Company recognizes revenue when (i) there is persuasive evidence of an arrangement, (ii) the services have been provided to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. For the Company’s services, the Company’s professional staff is contractually permitted to bill (i) for fees earned for time worked in fraction of an hour increments or (ii) by units of production. The Company recognizes revenue as fees are earned or as units of production are completed, which is when the revenue is earned and realized. Labor costs are recognized as the costs are incurred. The Company derives its revenue from the sale of network solutions and patient management services. Network solutions and patient management services may be sold individually or combined. When a sale combines multiple elements, the Company accounts for such multiple element arrangements in accordance with the guidance included in ASC 605-25.

Management evaluates agreements with customers in accordance with the provision of the revenue recognition topic that addresses multiple-deliverable revenue arrangements. The multiple element arrangements consist of bundled managed care services, which include various units of accounting such as network solutions and patient management services (which includes claims administration). Such elements are considered separate units of accounting due to each element having value to the customer on a stand-alone basis. The selling price for each unit of accounting is determined using the contract price and management estimates. When the Company’s customers purchase several products, the pricing of the products sold is generally the same as if the products were sold on an individual basis. Revenue is recognized as the work is performed in accordance with the Company’s customer contracts. Based upon the nature of the Company’s products, bundled managed care elements are generally delivered in the same accounting period. Revenues for most of our products are generally recognized at the time of billing, however, the Company recognizes revenue for patient management claims administration services over the life of the claim. The Company estimates, based upon prior experience in managing claims, the deferral amount based on our estimate of the life of the claim or the term of the customer contract.

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.   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 doubtful accounts. Those accounts outstanding longer than the contractual payment terms are considered past due. The Company determines its allowance by considering a number of factors, including the length of time trade accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to pay its obligation to the Company, and the condition of the general economy and the industry as a whole. The Company writes off accounts receivable against the reserve when they become uncollectible. Accounts receivable includes $15,131,000, and $14,579,000 of unbilled receivables at March 31, 2018 and 2017, respectively.  Unbilled receivables represent the revenue for work performed which has not yet been invoiced to the customer.  Unbilled receivables are generally invoiced within the following three months.

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.  Receivables are generally due within 30 days. Credit losses consistently have been within management’s expectations.  Virtually all of the Company’s cash is invested at financial institutions in amounts which exceed the FDIC insurance levels. No customer accounted for 10% or more of revenue for either fiscal 2018, 2017 or 2016.  No customer accounted for 10% or more of accounts receivable at either March 31, 2018 or 2017.

Property and Equipment:  Additions to property and equipment are recorded at cost.   The Company provides for depreciation on property and equipment using the straight-line method by charges to operations in amounts that allocate the cost of depreciable assets over their estimated lives as follows:

Asset Classification	Estimated Useful Life
Leasehold Improvements	Shorter of 5 years or the life of lease
Furniture and Equipment	5 to 7 years
Computer Hardware	2 to 5 years
Computer Software	3 to 5 years

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 $27,679,000 (net of $88,567,000 in accumulated amortization) and $25,721,000 (net of $78,952,000 in accumulated amortization), as of March 31, 2018 and 2017, respectively. These costs are included in computer software in property and equipment and are amortized over a period of five years.

Long-Lived Assets:  The carrying amount of all long-lived assets is evaluated periodically to determine if adjustment to the depreciation and amortization period or to the unamortized balance is warranted. Such evaluation is based principally on the expected utilization of the long-lived assets and the projected, undiscounted cash flows of the operations in which the long-lived assets are deployed.

Goodwill and Long-Lived Assets:  The Company accounts for its business combinations in accordance with the ASC 805-10 through ASC 805-50, “Business Combinations,” which (i) requires that the purchase method of accounting be applied to all business combinations and (ii) addresses the criteria for initial recognition of intangible assets and goodwill. In accordance with ASC 350-10 through ASC 350-30, goodwill and other intangible assets with indefinite lives are not amortized but are tested for impairment annually, or more frequently if circumstances indicate the possibility of impairment. If the carrying value of goodwill or an intangible asset exceeds its fair value, an impairment loss will be recognized.  Based on the Company’s tests and reviews, no impairment of its goodwill, intangible assets or other long-lived assets existed at March 31, 2018.  However, future events or changes in current circumstances could affect the recoverability of the carrying value of goodwill and long-lived assets. Should an asset be deemed impaired, an impairment loss would be recognized to the extent the carrying value of the asset exceeded its estimated fair value.  Goodwill amounted to $36,814,000 (net of accumulated amortization of $2,069,000) at March 31, 2018 and at March 31, 2017.

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.

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. 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. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible. In making an assessment regarding the probability of realizing a benefit from these deductible differences, management considers the Company’s current and past performance, the market environment in which the Company operates, tax-planning strategies and the length of carry-forward periods for loss carry-forwards, if any. Valuation allowances are established when necessary to reduce deferred tax assets to amounts that are more likely than not to be realized. Further, the Company accrues for income tax issues not yet resolved with federal, state and local tax authorities, when it appears more likely than not that a tax liability has been incurred.

Share-Based Compensation: 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). The Company issues performance-based stock options which vest only upon the Company’s achievement of certain earnings per share targets on a calendar year basis, as determined by the Company’s Board of Directors. These options were valued in the same manner as the time-based options. However, the Company only recognizes stock compensation expense to the extent that the targets are determined to be probable of being achieved, which triggers the vesting of the performance options.

Accrual for Self-insurance Costs:  The Company self-insures for the group medical costs and workers’ compensation costs of its employees. Management believes that the self-insurance reserves are appropriate; however, actual claims costs may differ from the original estimates requiring adjustments to the reserves.  The Company determines its estimated self-insurance reserves based upon historical trends along with outstanding claims information provided by its claims paying agents.

Earnings per Share:  Earnings per common share-basic is based on the weighted average number of common shares outstanding during the period. Earnings per common shares-diluted is based on the weighted average number of common shares and common share equivalents outstanding during the period. In calculating earnings per share, earnings are the same for the basic and diluted calculations. Weighted average shares outstanding is greater for diluted earnings per share due to the effect of stock options.

The difference between the basic shares and the diluted shares for each of the fiscal years ended March 31, 2018, 2017 and 2016 is as follows:

	Fiscal 2018		Fiscal 2017		Fiscal 2016
Basic weighted shares		18,825,000		19,418,000		19,826,000
Treasury stock impact of stock options		217,000		152,000		178,000
Diluted weighted  shares		19,042,000		19,570,000		20,004,000

Recently Issued Accounting Standards

On May 28, 2014, the FASB issued ASU 2014-09 regarding ASC Topic 606, “Revenue from Contracts with Customers”. This standard provides principles for recognizing revenue for the transfer of promised goods or services to customers with the consideration to which the entity expects to be entitled in exchange for those goods or services. In July 2015, the FASB approved a one-year delay of the effective date of this new revenue recognition standard. The guidance will now be effective for our fiscal year beginning April 1, 2018. The Company has reviewed a sample of contracts with its customers that the Company believes is representative of its significant revenue streams identified to date, and is performing procedures to confirm the initial assessment as applied to all revenue streams. While the assessment of the impact on revenue and expenses and the Company’s results of operations, financial position and cash flows as a result of this guidance is ongoing, the Company expects that revenue for its primary revenue streams will be recognized in a manner which is similar to how revenue is recognized for these services today. Further, the Company does not expect any changes in accounting for costs to obtain or fulfill contracts with customers. As the Company completes its overall assessment, it is also identifying and preparing to implement changes to its accounting policies and disclosure requirements. For example, the new standard requires increased disclosure, which in turn is expected to require certain new processes and system changes. The Company's evaluation indicated that process and system changes were required to capture the amounts and expected timing of revenues to be recognized from the remaining performance obligations during and as of each reporting period and the Company has completed a majority of these process and system changes at this time. The Company adopted this new standard as of April 1, 2018 using the modified retrospective method that may result in a cumulative effect adjustment as of the date of adoption.

In January 2016, the FASB issued ASU 2016-01 regarding Subtopic 825-10, “Financials Instruments — Overall: Recognition and Measurements of Financial Assets and Financial Liabilities”. The standard addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. It requires that most equity investments be measured at fair value, with subsequent changes in fair value recognized in net income. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. We are currently evaluating the accounting, transition, and disclosure requirements of the standard and cannot currently estimate the impact of adoption on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases”, which sets out the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for using an approach that is similar to the existing guidance for operating leases.  The standard is effective April 1, 2019, with early adoption permitted. The standard is to be applied using a modified retrospective transition method. We are currently evaluating the impact of adoption on our consolidated financial position, results of operations, and cash flows.

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting”, which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification on the statement of cash flows. For public companies, the new guidance became effective for annual reporting periods.  And interim periods within those periods, beginning after December 15, 2016. We have elected to early adopt this standard as of March 31, 2017.  As a result, during the fourth quarter of fiscal 2017, we reclassified the fiscal 2017 excess tax benefit of $0.5 million from additional paid in capital into the income tax provision line.  We have also reclassified the excess tax benefits from the stock-based compensation from financing activities into operating activities in the statement of cash flows for the year ended March 31, 2017.  We applied this change in presentation prospectively and prior years have not been adjusted.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows”, which reduces diversity in the practice of how certain transactions are classified in the statement of cash flows.  The new guidance is effective for annual reporting periods beginning after December 15, 2017, with early adoption permitted. The adoption of this guidance will not have a material impact on our consolidated financial statements.

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Stock Options and Stock-Based Compensation

12 Months Ended

Mar. 31, 2018

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock Options and Stock-Based Compensation

Note 2 — 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, 2018, options exercisable for up to 19,365,000 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 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 2018 and 2017 were granted with an exercise price equal to the fair value of the Company’s common stock on the grant date and are non-statutory stock options.

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. Upon adoption of ASU 2016-09, the Company accounts for forfeitures as they occur, rather than estimate expected forfeitures.  As a result, during the fourth quarter of fiscal 2017, we reclassified the fiscal 2017 excess tax benefit of $0.5 million from additional paid in capital into the income tax provision line.  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 fair value of each grant is estimated on the date of grant using the Black-Scholes option-pricing model. The following weighted average assumptions were used for the fiscal years ended March 31, 2018, 2017 and 2016:

	Fiscal 2018			Fiscal 2017			Fiscal 2016
Expected volatility		40	%		41	%		43	%
Risk free interest rate	1.88% to 2.56%			1.03% to 1.92%			1.25%to 1.65%
Dividend yield		0.0	%		0.0	%		0.0	%
Weighted average option life	4.4 to 4.5 years			4.4 to 4.5 years			4.4 to 4.5 years

For the fiscal years ended March 31, 2018, 2017 and 2016, the Company recorded share-based compensation expense of $3,164,000, $2,432,000, and $2,192,000, respectively. The table below shows the amounts recognized in the financial statements for the fiscal years ended March 31, 2018, 2017 and 2016.

	Fiscal 2018		Fiscal 2017		Fiscal 2016
Cost of revenue	$	1,749,000	$	1,507,000	$	1,288,000
General and administrative		1,415,000		925,000		904,000
Total cost of stock-based compensation    included in income before income taxes		3,164,000		2,432,000		2,192,000
Amount of income tax benefit recognized		1,105,000		946,000		852,000
Amount charged to net income	$	2,059,000	$	1,486,000	$	1,340,000
Effect on basic earnings per share	$	0.11	$	0.08	$	0.07
Effect on diluted earnings per share	$	0.11	$	0.08	$	0.07

All options granted in the fiscal years ended March 31, 2018, 2017 and 2016 were granted at fair value and are non-statutory stock options.  The following table summarizes information for all stock options for the fiscal years ended March 31, 2018, 2017 and 2016:

	Fiscal 2018			Fiscal 2017			Fiscal 2016
Options outstanding – beginning of the year		1,143,928			1,115,465			1,163,179
Options granted		334,200			267,950			276,275
Options exercised		(314,846	)		(115,592	)		(200,753	)
Options cancelled/forfeited		(98,843	)		(123,895	)		(123,236	)
Options outstanding – end of year		1,064,439			1,143,928			1,115,465
During the year, weighted average exercise    price of:
Options granted	$	52.57		$	37.13		$	35.51
Options exercised	$	27.59		$	22.74		$	19.75
Options cancelled/forfeited	$	35.59		$	36.90		$	33.44
At the end of the year:
Price  range  of outstanding options	$12.71-$57.75			$12.71-$45.73			$9.05-$45.55
Weighted average exercise price per share	$	39.45		$	32.02		$	30.36
Options available for future  grants		260,961			505,493			650,345
Exercisable options		445,387			585,424			529,691

The following table summarizes the status of stock options outstanding and exercisable at March 31, 2018:

Range of Exercise Prices	Number of Outstanding Options		Weighted Average Remaining Contractual Life		Outstanding Options – Weighted Average Exercise Price		Exercisable Options – Number of Exercisable Options		Exercisable Options – Weighted Average Exercise Price
$12.71 to $32.10		292,156		2.84	$	24.96		195,387	$	21.42
$32.11 to $34.78		177,354		2.91		34.41		85,900		34.37
$34.79 to $44.86		186,408		3.19		41.20		106,502		41.22
$44.87 to $57.75		408,521		4.38		52.58		57,598		45.60
Total		1,064,439		3.40	$	39.45		445,387	$	31.78

The following table summarizes the status of all outstanding options at March 31, 2018, and changes during the fiscal year then ended:

	Number of Options			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value as of March 31, 2018
Options outstanding, March 31, 2017		1,143,928		$	32.02
Granted		334,200			52.57
Exercised		(314,846	)		27.59
Cancelled – forfeited		(81,586	)		36.22
Cancelled – expired		(17,257	)		27.57
Options outstanding, March 31, 2018		1,064,439		$	39.45		3.41	$	12,986,338
Options vested and expected to vest		959,664		$	39.76		3.43	$	10,249,240
Ending exercisable		445,387		$	31.78		2.45	$	8,360,918

The weighted average fair value of options granted during fiscal 2018, 2017 and 2016 was $19.24, $13.38, and $13.68, respectively.  The total intrinsic value of options exercised during fiscal years 2018, 2017 and 2016 was $7,780,000, $2,620,000, and $3,581,000 respectively.

Included in the above-noted stock option grants and stock compensation expense are performance-based stock options which vest only upon the Company’s achievement of certain earnings per share targets on a calendar year basis, as determined by the Company’s Board of Directors. These options were valued in the same manner as the time-based options. However, the Company only recognizes stock compensation expense to the extent that the targets are determined to be probable of being achieved, which triggers the vesting of the performance options.   During the fiscal years ended March 31, 2018, 2017 and 2016, the Company recognized stock compensation expense for performance-based options in the amount of $649,000, $49,000, and $28,000, respectively.

The Company received $3,426,000, $2,367,000, and $3,749,000 of cash receipts from the exercise of stock options during fiscal 2018, 2017 and 2016, respectively.  As of March 31, 2018, $5,496,000 of total unrecognized compensation costs related to stock options is expected to be recognized over a weighted average period of 3 years.

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Property and Equipment

12 Months Ended

Mar. 31, 2018

Property Plant And Equipment [Abstract]

Property and Equipment

Note 3 — Property and Equipment

Property and equipment, net consisted of the following at March 31, 2018 and 2017:

	2018			2017
Computer software	$	142,754,000		$	130,641,000
Office equipment and computers		67,730,000			65,246,000
Land and building		5,843,000			—
Leasehold improvements		14,461,000			10,893,000
		230,788,000			206,780,000
Less: accumulated depreciation and amortization		(161,432,000	)		(143,738,000	)
	$	69,356,000		$	63,042,000

Depreciation expense totaled $21,338,000, $20,534,000 and $19,502,000 for the fiscal years ended March 31, 2018, 2017 and 2016, respectively.

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Accounts and Income Taxes Payable and Accrued Liabilities

12 Months Ended

Mar. 31, 2018

Payables And Accruals [Abstract]

Accounts and Income Taxes Payable and Accrued Liabilities

Note 4 — Accounts and Income Taxes Payable and Accrued Liabilities

Accounts and income taxes payable consisted of the following at March 31, 2018 and 2017:

	2018		2017
Accounts payable	$	11,787,000	$	13,869,000
Uncertain tax positions		1,666,000		2,714,000
	$	13,453,000	$	16,583,000

Accrued liabilities consisted of the following at March 31, 2018 and 2017:

	2018		2017
Payroll, payroll taxes and employee benefits	$	15,100,000	$	14,465,000
Customer deposits		35,496,000		32,471,000
Accrued professional service fees		5,782,000		4,551,000
Self-insurance accruals		3,627,000		2,835,000
Deferred revenue		15,316,000		10,096,000
Accrued rent		6,147,000		5,774,000
Other		3,068,000		3,276,000
	$	84,536,000	$	73,468,000

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Income Taxes

12 Months Ended

Mar. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Note 5 — Income Taxes

The income tax provision consisted of the following for the fiscal years ended March 31, 2018, 2017 and 2016:

	2018			2017			2016
Current — Federal	$	11,177,000		$	16,456,000		$	16,600,000
Current — State		1,905,000			2,834,000			2,591,000
Subtotal		13,082,000			19,290,000			19,191,000
Deferred — Federal		(955,000	)		(1,508,000	)		(1,679,000	)
Deferred — State		81,000			288,000			23,000
Subtotal		(874,000	)		(1,220,000	)		(1,656,000	)
	$	12,208,000		$	18,070,000		$	17,535,000

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, 2018, 2017 and 2016:

	2018			2017			2016
Income taxes at federal statutory rate	$	15,112,000		$	16,643,000		$	16,121,000
State income taxes, net of federal benefit		1,645,000			1,973,000			1,704,000
Uncertain tax positions		(464,000	)		88,000			78,000
Permanent items and tax credits		(1,364,000	)		(705,000	)		(100,000	)
Adjustments to returns as filed		138,000			80,000			(232,000	)
Valuation allowance		236,000			—			—
Impact of tax reform		(3,095,000	)		—			—
Other		—			(9,000	)		(36,000	)
	$	12,208,000		$	18,070,000		$	17,535,000

Deferred tax assets and liabilities at March 31, 2018 and 2017 are:

	2018			2017
Deferred tax assets:
Accrued liabilities not currently deductible	$	5,703,000		$	9,409,000
Allowance for doubtful accounts		1,151,000			1,153,000
Stock-based compensation		1,631,000			1,755,000
Accrued rent		1,555,000			2,219,000
Other		896,000			740,000
Deferred tax assets		10,936,000			15,276,000
Deferred tax liabilities:
Excess of book over tax basis of fixed assets		(11,191,000	)		(15,666,000	)
Intangible assets		(4,169,000	)		(5,960,000	)
Other		(179,000	)		(336,000	)
Total deferred tax liabilities		(15,539,000	)		(21,962,000	)
Valuation allowance		(236,000	)		—
Deferred tax liabilities		(15,775,000	)		(21,962,000	)
Net deferred tax liability	$	(4,839,000	)	$	(6,686,000	)

Prepaid expenses and income taxes include $1,962,000 at March 31, 2018 and accounts and income taxes payable include $584,000 at March 31, 2017, for income taxes due in the first quarter of the following fiscal year.

A reconciliation of the financial statement recognition and measurement of uncertain tax positions during the current fiscal year is as follows:

Balance as of March 31, 2017	$	1,884,000
Additions based on tax positions related to the current year		236,000
Additions for tax positions of prior years		8,000
Reductions for tax positions related to the current year		0
Reductions for tax positions of prior years		(656,000	)
Balance as of March 31, 2018	$	1,472,000

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.  During the years ended March 31, 2018, 2017 and 2016, the Company recognized approximately $(53,000), $35,000 and $72,000 in interest and penalties, respectively.  As of March 31, 2018, 2017 and 2016, accrued interest and penalties related to uncertain tax positions were $194,000, $247,000 and $212,000, respectively.

The tax fiscal years from 2014-2017 remain open to examination by the major taxing jurisdictions to which the Company is subject.

On December 22, 2017, the Tax Cuts and Jobs Act was enacted into law. 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. As a result of this federal income tax rate change, during the quarter ended December 31, 2017, we reported an effective tax rate of 5%. 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. During the quarter ended December 31, 2017, we applied the newly enacted corporate federal income tax rate to the remeasurement of U.S. deferred tax assets and liabilities resulting in a tax benefit of $3.0 million. The decrease in net deferred tax liabilities was reasonably estimated and based on the tax rates at which they are expected to reverse in the future. 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. Taking into account the change in the statutory federal rate as well as other permanent items, we expect our effective combined federal and state tax rate will be approximately 24% to 26% for the fiscal year beginning April 1, 2018. This expected effective rate assumes projected financial results consistent with recent trends and applies the new statutory rate and the impact of the Tax Cuts and Jobs Act relative to permanent differences between book and tax income. If our assumption that projected financial results will be consistent with recent trends turns out to be incorrect, our effective combined federal and state tax rate could be higher for the fiscal year beginning April 1, 2018. In the absence of guidance on various uncertainties and ambiguities in the application of certain provisions of the Tax Cuts and Jobs Act, we will use what we believe are reasonable interpretations and assumptions in applying the Tax Cuts and Jobs Act, but it is possible that the U.S. 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.

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Employee Stock Purchase Plan

12 Months Ended

Mar. 31, 2018

Text Block [Abstract]

Employee Stock Purchase Plan

Note 6 — 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.  Employees are allowed to contribute up to 20% of their gross pay. A maximum of 2,850,000 shares has been authorized for issuance under the ESPP. As of March 31, 2018, 2,469,843 shares had been issued pursuant to the ESPP.  Summarized ESPP information is as follows:

	2018		2017		2016
Employee contributions	$	458,000	$	419,000	$	371,000
Shares acquired		8,976		10,596		10,975
Average purchase price	$	49.78	$	38.80	$	33.81

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Treasury Stock

12 Months Ended

Mar. 31, 2018

Equity [Abstract]

Treasury Stock

Note 7 — Treasury Stock

During each of the fiscal years ended March 31, 2018, 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 1,000,000 share expansion authorized in February 2017, the total number of shares of common stock authorized to be repurchased over the life of the program is 36,000,000 shares of common stock.  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, 2018, 2017 and 2016 and cumulatively since inception of the authorization, are as follows:

	2018		2017		2016		Cumulative
Shares repurchased		249,245		745,575		893,771		34,881,079
Cost	$	11,187,000	$	27,999,000	$	31,525,000	$	430,989,000
Average price	$	44.88	$	37.56	$	35.27	$	12.36

During the period subsequent to March 31, 2018, through the date of filing this annual report, the Company had no repurchases of common stock.

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Commitments

12 Months Ended

Mar. 31, 2018

Commitments And Contingencies Disclosure [Abstract]

Commitments

Note 8 — Commitments

The Company leases office facilities under non-cancelable operating leases.  Some of these leases contain escalation clauses.  Future minimum rental commitments under operating leases at March 31, 2018 are $14,442,000 in fiscal 2019, $11,114,000 in fiscal 2020, $10,034,000 in fiscal 2021, $8,005,000 in fiscal 2022, $6,741,000 in fiscal 2023, $12,445,000 thereafter, and $62,781,000 in the aggregate.   Total rental expense of $14,077,000, $13,952,000, and $14,405,000 was charged to operations for the fiscal years ended March 31, 2018, 2017 and 2016, respectively.

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Contingencies and Legal Proceedings

12 Months Ended

Mar. 31, 2018

Commitments And Contingencies Disclosure [Abstract]

Contingencies and Legal Proceedings

Note 9 — Contingencies and Legal Proceedings

The Company is involved in litigation arising in the ordinary course of business. Management believes that resolution of these matters will not result in any payment that, in the aggregate, would be material to the consolidated financial position or results of operations of the Company.

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Retirement Savings Plan

12 Months Ended

Mar. 31, 2018

Compensation And Retirement Disclosure [Abstract]

Retirement Savings Plan

Note 10 — Retirement Savings Plan

The Company maintains a retirement savings plan for its employees, which is a qualified plan under Section 401(k) of the Internal Revenue Code. Full-time employees that meet certain requirements are eligible to participate in the plan. Employer contributions are made annually, primarily at the discretion of the Company’s Board of Directors. Contributions of $557,000, $464,000 and $392,000 were charged to operations for the fiscal years ended March 31, 2018, 2017 and 2016, respectively.

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Shareholder Rights Plan

12 Months Ended

Mar. 31, 2018

Text Block [Abstract]

Shareholder Rights Plan

Note 11 — Shareholder Rights Plan

During fiscal 1997, the Company’s Board of Directors approved the adoption of its Shareholder Rights Plan. The Shareholder Rights Plan provides for a dividend distribution to the Company’s  shareholders of one preferred stock purchase right for each outstanding share of the Company’s common stock held by such shareholder (as used in this Note 11, the “right” or the “rights”), only in the event of certain takeover-related events.  In April 2002, the Company’s Board of Directors approved an amendment to the Shareholder Rights Plan to extend the expiration date of the rights to February 10, 2012, set the exercise price of each right at $118, and enable Fidelity Management & Research Company and its affiliates to purchase up to 18% of the shares of common stock of the Company without triggering the rights, with the limitations under the Shareholder Rights Plan remaining in effect for all other stockholders of the Company. In November 2008, the Company’s Board of Directors approved an amendment to the Shareholder Rights Plan to extend the expiration date of the rights to February 10, 2022, remove the ability of Fidelity Management & Research Company and its affiliates to purchase up to 18% of the shares of common stock of the Company without triggering the rights, substitute Computershare Trust Company, N.A. as the rights agent and effect certain technical changes to the Shareholder Rights Plan.

Generally, the Shareholder Rights Plan provides that if a person or group acquires 15% or more of the Company’s common stock without the approval of the Company’s Board of Directors, subject to certain exceptions, the holders of the rights, other than the acquiring person or group, would, under certain circumstances, have the right to purchase additional shares of the Company’s common stock having a market value equal to two times the then-current exercise price of the right.  

In addition, if the Company is thereafter merged into another entity, or if 50% or more of the Company’s consolidated assets or earning power are sold, then the right would entitle its holder to buy common shares of the acquiring entity having a market value equal to two times the then-current exercise price of the right. The Company’s Board of Directors may exchange or redeem the rights under certain conditions.

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Line of Credit

12 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Line of Credit

Note 12 — Line of Credit

In September 2017, the Company renewed a line of credit agreement.  The line is with a financial institution to provide a revolving credit facility with borrowing capacity of up to $10 million. Borrowings under this agreement, as amended, bear interest, at the Company’s option, at a fixed LIBOR-based rate plus 1.50% or at a fluctuating rate determined by the financial institution to be 1.50% above the daily one-month LIBOR rate. The loan covenants require the Company to maintain a current assets to liabilities ratio of at least 1.25:1, debt to tangible net worth ratio not greater than 1.25:1 and to have positive net income.  There were no outstanding revolving loans as of March 31, 2018, but letters of credit in the aggregate amount of $4.5 million have been issued separate from the line of credit and therefore do not reduce the amount of borrowings available under the revolving credit facility. In the event of default, the financial institution has a right of setoff against our cash balances on deposit with the financial institution to the extent there is unpaid principal and interest related to the line of credit. The credit agreement expires in September 2018.

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Segment Reporting

12 Months Ended

Mar. 31, 2018

Segment Reporting [Abstract]

Segment Reporting

Note 13 — Segment Reporting

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. Patient management services include claims administration, utilization review, medical case management, and vocational rehabilitation. Network solutions services include fee schedule auditing, hospital bill auditing, coordination of independent medical examinations, diagnostic imaging review services and preferred provider referral services. The percentages of revenues attributable to patient management and network solutions services for the fiscal years ended March 31, 2018, 2017 and 2016 are listed below.

	2018			2017			2016
Patient management services		56.7	%		55.6	%		55.1	%
Network solutions services		43.3	%		44.4	%		44.9	%
		100.0	%		100.0	%		100.0	%

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.

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: (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 productions and similar methods to distribute their services.  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.

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Other Intangible Assets

12 Months Ended

Mar. 31, 2018

Goodwill And Intangible Assets Disclosure [Abstract]

Other Intangible Assets

Note 14 — Other Intangible Assets

Other intangible assets consisted of the following at March 31, 2018:

Item	Life	Cost		Fiscal 2018 Amortization Expense		Accumulated Amortization at March 31, 2018		Cost, Net of Accumulated Amortization at March 31, 2018
Covenant Not to Compete	5 years	$	775,000	$	—	$	775,000	$	—
Customer Relationships	18-20 years		7,922,000		423,000		4,566,000		3,356,000
Third Party Administrator  Licenses	15 years		204,000		14,000		145,000		59,000
Total		$	8,901,000	$	437,000	$	5,486,000	$	3,415,000

Other intangible assets consisted of the following at March 31, 2017:

Item	Life	Cost		Fiscal 2017 Amortization Expense		Accumulated Amortization at March 31, 2017		Cost, Net of Accumulated Amortization at March 31, 2017
Covenant Not to Compete	5 years	$	775,000	$	—	$	775,000	$	—
Customer Relationships	18-20 years		7,922,000		423,000		4,144,000		3,778,000
Third Party Administrator  Licenses	15 years		204,000		14,000		131,000		73,000
Total		$	8,901,000	$	437,000	$	5,050,000	$	3,851,000

Amortization expense is expected to be $437,000 in fiscal 2019, $437,000 in fiscal 2020, $437,000 in fiscal 2021, $436,000 in fiscal 2022, $427,000 in fiscal 2023, and $1,241,000 thereafter.

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Quarterly Results (Unaudited)

12 Months Ended

Mar. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

Quarterly Results (Unaudited)

Note 15 — Quarterly Results (Unaudited)

The following is a summary of unaudited quarterly results of operations for each of the quarters in the fiscal years ended March 31, 2018 and 2017:

	Revenues		Gross Profit		Net Income		Net Income per Basic Common Share		Net Income per Diluted Common Share
Fiscal Year Ended March 31, 2018:
First Quarter	$	137,612,000	$	28,783,000	$	8,775,000	$	0.47	$	0.46
Second Quarter		136,431,000		25,752,000		8,393,000		0.45		0.44
Third Quarter		140,734,000		25,569,000		9,569,000		0.51		0.50
Fourth Quarter		143,573,000		27,149,000		8,958,000		0.47		0.47
Fiscal Year Ended March 31, 2017:
First Quarter	$	128,459,000	$	25,582,000	$	7,491,000	$	0.38	$	0.38
Second Quarter		128,219,000		25,912,000		6,952,000		0.36		0.35
Third Quarter		128,403,000		25,577,000		7,049,000		0.36		0.36
Fourth Quarter		133,605,000		27,721,000		7,987,000		0.42		0.42

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Organization

Organization:  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. 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.

Basis of Presentation

Basis of Presentation:  The consolidated financial statements include the accounts of CorVel and its wholly-owned subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation.  Certain prior year amounts have been reclassified to conform to fiscal 2018 presentation.  These changes had no impact on previously-reported results of operations or shareholders’ equity.

The Company evaluated all subsequent events and transactions through the date of this filing.

Use of Estimates

Use of Estimates:  The preparation of financial statements in compliance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements. Actual results could differ from those estimates.  Significant estimates include the values assigned to intangible assets, capitalized software development, the allowance for doubtful accounts, accrual for income taxes, share-based payments related to performance-based awards, loss contingencies, estimated claims for claims administration revenue recognition, estimates used in stock options valuations, and accrual for self-insurance reserves.

Cash and Cash Equivalents

Cash and Cash Equivalents:  Cash and cash equivalents consist of short-term, interest-bearing highly-liquid investment-grade securities with maturities of 90 days or less when purchased. The carrying amounts of the Company’s financial instruments approximate their fair values at March 31, 2018 and 2017 due to the short-term nature of those instruments.  Customer deposits represent cash that is expected to be returned or applied towards payment within one year through the Company’s provider reimbursement services.

Fair Value of Financial Instruments

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

Level 1 Quoted market prices in active markets for identical assets or liabilities;

Level 2 Observable inputs other than those included in Level 1 (for example, quoted prices for similar assets in active markets or quoted prices for identical assets in inactive markets); and

Level 3 Unobservable inputs reflecting management’s own assumptions about the inputs used in estimating the value of the asset.

The carrying amount of the Company’s financial instruments (i.e. cash, accounts receivable, accounts payable, etc.) are all Level 1, and the Company believes their respective carrying values approximates their fair values at March 31, 2018 and 2017 due to the short-term nature of those instruments.  The Company has no Level 2 or Level 3 assets.

Investment in Private Equity

Investment in Private Equity: The Company has made an investment of $2,250,000 into a private equity limited partnership that invests in start-up companies primarily in the data analytics industry.   The Company accounts for the investment using the cost method and will periodically review the investment for possible impairment.  The Company recorded a reduction to the investment of $1,169,000 for the year ended March 31, 2018.  The investment is recorded in other assets on the accompanying consolidated balance sheets.  In accordance with ASC 825-10-50-16 through 50-19, it is not practicable to estimate the fair value of the investment due to the fact that the investment is in a diversified portfolio of companies whose shares are not traded in public markets.

Revenue Recognition

Revenue Recognition: The Company recognizes revenue when (i) there is persuasive evidence of an arrangement, (ii) the services have been provided to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. For the Company’s services, the Company’s professional staff is contractually permitted to bill (i) for fees earned for time worked in fraction of an hour increments or (ii) by units of production. The Company recognizes revenue as fees are earned or as units of production are completed, which is when the revenue is earned and realized. Labor costs are recognized as the costs are incurred. The Company derives its revenue from the sale of network solutions and patient management services. Network solutions and patient management services may be sold individually or combined. When a sale combines multiple elements, the Company accounts for such multiple element arrangements in accordance with the guidance included in ASC 605-25.

Management evaluates agreements with customers in accordance with the provision of the revenue recognition topic that addresses multiple-deliverable revenue arrangements. The multiple element arrangements consist of bundled managed care services, which include various units of accounting such as network solutions and patient management services (which includes claims administration). Such elements are considered separate units of accounting due to each element having value to the customer on a stand-alone basis. The selling price for each unit of accounting is determined using the contract price and management estimates. When the Company’s customers purchase several products, the pricing of the products sold is generally the same as if the products were sold on an individual basis. Revenue is recognized as the work is performed in accordance with the Company’s customer contracts. Based upon the nature of the Company’s products, bundled managed care elements are generally delivered in the same accounting period. Revenues for most of our products are generally recognized at the time of billing, however, the Company recognizes revenue for patient management claims administration services over the life of the claim. The Company estimates, based upon prior experience in managing claims, the deferral amount based on our estimate of the life of the claim or the term of the customer contract.

Accounts Receivable

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.   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 doubtful accounts. Those accounts outstanding longer than the contractual payment terms are considered past due. The Company determines its allowance by considering a number of factors, including the length of time trade accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to pay its obligation to the Company, and the condition of the general economy and the industry as a whole. The Company writes off accounts receivable against the reserve when they become uncollectible. Accounts receivable includes $15,131,000, and $14,579,000 of unbilled receivables at March 31, 2018 and 2017, respectively.  Unbilled receivables represent the revenue for work performed which has not yet been invoiced to the customer.  Unbilled receivables are generally invoiced within the following three months.

Concentrations of Credit Risk

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.  Receivables are generally due within 30 days. Credit losses consistently have been within management’s expectations.  Virtually all of the Company’s cash is invested at financial institutions in amounts which exceed the FDIC insurance levels. No customer accounted for 10% or more of revenue for either fiscal 2018, 2017 or 2016.  No customer accounted for 10% or more of accounts receivable at either March 31, 2018 or 2017.

Property and Equipment

Property and Equipment:  Additions to property and equipment are recorded at cost.   The Company provides for depreciation on property and equipment using the straight-line method by charges to operations in amounts that allocate the cost of depreciable assets over their estimated lives as follows:

Asset Classification	Estimated Useful Life
Leasehold Improvements	Shorter of 5 years or the life of lease
Furniture and Equipment	5 to 7 years
Computer Hardware	2 to 5 years
Computer Software	3 to 5 years

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 $27,679,000 (net of $88,567,000 in accumulated amortization) and $25,721,000 (net of $78,952,000 in accumulated amortization), as of March 31, 2018 and 2017, respectively. These costs are included in computer software in property and equipment and are amortized over a period of five years.

Long-Lived Assets

Long-Lived Assets:  The carrying amount of all long-lived assets is evaluated periodically to determine if adjustment to the depreciation and amortization period or to the unamortized balance is warranted. Such evaluation is based principally on the expected utilization of the long-lived assets and the projected, undiscounted cash flows of the operations in which the long-lived assets are deployed.

Goodwill and Long-Lived Assets

Goodwill and Long-Lived Assets:  The Company accounts for its business combinations in accordance with the ASC 805-10 through ASC 805-50, “Business Combinations,” which (i) requires that the purchase method of accounting be applied to all business combinations and (ii) addresses the criteria for initial recognition of intangible assets and goodwill. In accordance with ASC 350-10 through ASC 350-30, goodwill and other intangible assets with indefinite lives are not amortized but are tested for impairment annually, or more frequently if circumstances indicate the possibility of impairment. If the carrying value of goodwill or an intangible asset exceeds its fair value, an impairment loss will be recognized.  Based on the Company’s tests and reviews, no impairment of its goodwill, intangible assets or other long-lived assets existed at March 31, 2018.  However, future events or changes in current circumstances could affect the recoverability of the carrying value of goodwill and long-lived assets. Should an asset be deemed impaired, an impairment loss would be recognized to the extent the carrying value of the asset exceeded its estimated fair value.  Goodwill amounted to $36,814,000 (net of accumulated amortization of $2,069,000) at March 31, 2018 and at March 31, 2017.

Cost of Revenues

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.

Income Taxes

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. 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. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible. In making an assessment regarding the probability of realizing a benefit from these deductible differences, management considers the Company’s current and past performance, the market environment in which the Company operates, tax-planning strategies and the length of carry-forward periods for loss carry-forwards, if any. Valuation allowances are established when necessary to reduce deferred tax assets to amounts that are more likely than not to be realized. Further, the Company accrues for income tax issues not yet resolved with federal, state and local tax authorities, when it appears more likely than not that a tax liability has been incurred.

Share-Based Compensation

Share-Based Compensation: 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). The Company issues performance-based stock options which vest only upon the Company’s achievement of certain earnings per share targets on a calendar year basis, as determined by the Company’s Board of Directors. These options were valued in the same manner as the time-based options. However, the Company only recognizes stock compensation expense to the extent that the targets are determined to be probable of being achieved, which triggers the vesting of the performance options.

Accrual for Self-insurance Costs

Accrual for Self-insurance Costs:  The Company self-insures for the group medical costs and workers’ compensation costs of its employees. Management believes that the self-insurance reserves are appropriate; however, actual claims costs may differ from the original estimates requiring adjustments to the reserves.  The Company determines its estimated self-insurance reserves based upon historical trends along with outstanding claims information provided by its claims paying agents.

Earnings per Share

Earnings per Share:  Earnings per common share-basic is based on the weighted average number of common shares outstanding during the period. Earnings per common shares-diluted is based on the weighted average number of common shares and common share equivalents outstanding during the period. In calculating earnings per share, earnings are the same for the basic and diluted calculations. Weighted average shares outstanding is greater for diluted earnings per share due to the effect of stock options.

The difference between the basic shares and the diluted shares for each of the fiscal years ended March 31, 2018, 2017 and 2016 is as follows:

	Fiscal 2018		Fiscal 2017		Fiscal 2016
Basic weighted shares		18,825,000		19,418,000		19,826,000
Treasury stock impact of stock options		217,000		152,000		178,000
Diluted weighted  shares		19,042,000		19,570,000		20,004,000

Recently Issued Accounting Standards

Recently Issued Accounting Standards

On May 28, 2014, the FASB issued ASU 2014-09 regarding ASC Topic 606, “Revenue from Contracts with Customers”. This standard provides principles for recognizing revenue for the transfer of promised goods or services to customers with the consideration to which the entity expects to be entitled in exchange for those goods or services. In July 2015, the FASB approved a one-year delay of the effective date of this new revenue recognition standard. The guidance will now be effective for our fiscal year beginning April 1, 2018. The Company has reviewed a sample of contracts with its customers that the Company believes is representative of its significant revenue streams identified to date, and is performing procedures to confirm the initial assessment as applied to all revenue streams. While the assessment of the impact on revenue and expenses and the Company’s results of operations, financial position and cash flows as a result of this guidance is ongoing, the Company expects that revenue for its primary revenue streams will be recognized in a manner which is similar to how revenue is recognized for these services today. Further, the Company does not expect any changes in accounting for costs to obtain or fulfill contracts with customers. As the Company completes its overall assessment, it is also identifying and preparing to implement changes to its accounting policies and disclosure requirements. For example, the new standard requires increased disclosure, which in turn is expected to require certain new processes and system changes. The Company's evaluation indicated that process and system changes were required to capture the amounts and expected timing of revenues to be recognized from the remaining performance obligations during and as of each reporting period and the Company has completed a majority of these process and system changes at this time. The Company adopted this new standard as of April 1, 2018 using the modified retrospective method that may result in a cumulative effect adjustment as of the date of adoption.

In January 2016, the FASB issued ASU 2016-01 regarding Subtopic 825-10, “Financials Instruments — Overall: Recognition and Measurements of Financial Assets and Financial Liabilities”. The standard addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. It requires that most equity investments be measured at fair value, with subsequent changes in fair value recognized in net income. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. We are currently evaluating the accounting, transition, and disclosure requirements of the standard and cannot currently estimate the impact of adoption on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases”, which sets out the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for using an approach that is similar to the existing guidance for operating leases.  The standard is effective April 1, 2019, with early adoption permitted. The standard is to be applied using a modified retrospective transition method. We are currently evaluating the impact of adoption on our consolidated financial position, results of operations, and cash flows.

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting”, which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification on the statement of cash flows. For public companies, the new guidance became effective for annual reporting periods.  And interim periods within those periods, beginning after December 15, 2016. We have elected to early adopt this standard as of March 31, 2017.  As a result, during the fourth quarter of fiscal 2017, we reclassified the fiscal 2017 excess tax benefit of $0.5 million from additional paid in capital into the income tax provision line.  We have also reclassified the excess tax benefits from the stock-based compensation from financing activities into operating activities in the statement of cash flows for the year ended March 31, 2017.  We applied this change in presentation prospectively and prior years have not been adjusted.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows”, which reduces diversity in the practice of how certain transactions are classified in the statement of cash flows.  The new guidance is effective for annual reporting periods beginning after December 15, 2017, with early adoption permitted. The adoption of this guidance will not have a material impact on our consolidated financial statements.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Schedule of Estimated Economic Useful Lives of Property and Equipment

The Company provides for depreciation on property and equipment using the straight-line method by charges to operations in amounts that allocate the cost of depreciable assets over their estimated lives as follows:

Asset Classification	Estimated Useful Life
Leasehold Improvements	Shorter of 5 years or the life of lease
Furniture and Equipment	5 to 7 years
Computer Hardware	2 to 5 years
Computer Software	3 to 5 years

Schedule of Earnings Per Share Basic and Diluted

The difference between the basic shares and the diluted shares for each of the fiscal years ended March 31, 2018, 2017 and 2016 is as follows:

	Fiscal 2018		Fiscal 2017		Fiscal 2016
Basic weighted shares		18,825,000		19,418,000		19,826,000
Treasury stock impact of stock options		217,000		152,000		178,000
Diluted weighted  shares		19,042,000		19,570,000		20,004,000

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Stock Options and Stock-Based Compensation (Tables)

12 Months Ended

Mar. 31, 2018

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Weighted Average Assumptions

The following weighted average assumptions were used for the fiscal years ended March 31, 2018, 2017 and 2016:

	Fiscal 2018			Fiscal 2017			Fiscal 2016
Expected volatility		40	%		41	%		43	%
Risk free interest rate	1.88% to 2.56%			1.03% to 1.92%			1.25%to 1.65%
Dividend yield		0.0	%		0.0	%		0.0	%
Weighted average option life	4.4 to 4.5 years			4.4 to 4.5 years			4.4 to 4.5 years

Stock Compensation Expense for Time Based Options and Performance Based Options

The table below shows the amounts recognized in the financial statements for the fiscal years ended March 31, 2018, 2017 and 2016.

	Fiscal 2018		Fiscal 2017		Fiscal 2016
Cost of revenue	$	1,749,000	$	1,507,000	$	1,288,000
General and administrative		1,415,000		925,000		904,000
Total cost of stock-based compensation    included in income before income taxes		3,164,000		2,432,000		2,192,000
Amount of income tax benefit recognized		1,105,000		946,000		852,000
Amount charged to net income	$	2,059,000	$	1,486,000	$	1,340,000
Effect on basic earnings per share	$	0.11	$	0.08	$	0.07
Effect on diluted earnings per share	$	0.11	$	0.08	$	0.07

Stock Options

The following table summarizes information for all stock options for the fiscal years ended March 31, 2018, 2017 and 2016:

	Fiscal 2018			Fiscal 2017			Fiscal 2016
Options outstanding – beginning of the year		1,143,928			1,115,465			1,163,179
Options granted		334,200			267,950			276,275
Options exercised		(314,846	)		(115,592	)		(200,753	)
Options cancelled/forfeited		(98,843	)		(123,895	)		(123,236	)
Options outstanding – end of year		1,064,439			1,143,928			1,115,465
During the year, weighted average exercise    price of:
Options granted	$	52.57		$	37.13		$	35.51
Options exercised	$	27.59		$	22.74		$	19.75
Options cancelled/forfeited	$	35.59		$	36.90		$	33.44
At the end of the year:
Price  range  of outstanding options	$12.71-$57.75			$12.71-$45.73			$9.05-$45.55
Weighted average exercise price per share	$	39.45		$	32.02		$	30.36
Options available for future  grants		260,961			505,493			650,345
Exercisable options		445,387			585,424			529,691

Stock Options Outstanding and Exercisable

The following table summarizes the status of stock options outstanding and exercisable at March 31, 2018:

Range of Exercise Prices	Number of Outstanding Options		Weighted Average Remaining Contractual Life		Outstanding Options – Weighted Average Exercise Price		Exercisable Options – Number of Exercisable Options		Exercisable Options – Weighted Average Exercise Price
$12.71 to $32.10		292,156		2.84	$	24.96		195,387	$	21.42
$32.11 to $34.78		177,354		2.91		34.41		85,900		34.37
$34.79 to $44.86		186,408		3.19		41.20		106,502		41.22
$44.87 to $57.75		408,521		4.38		52.58		57,598		45.60
Total		1,064,439		3.40	$	39.45		445,387	$	31.78

Outstanding Options

The following table summarizes the status of all outstanding options at March 31, 2018, and changes during the fiscal year then ended:

	Number of Options			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value as of March 31, 2018
Options outstanding, March 31, 2017		1,143,928		$	32.02
Granted		334,200			52.57
Exercised		(314,846	)		27.59
Cancelled – forfeited		(81,586	)		36.22
Cancelled – expired		(17,257	)		27.57
Options outstanding, March 31, 2018		1,064,439		$	39.45		3.41	$	12,986,338
Options vested and expected to vest		959,664		$	39.76		3.43	$	10,249,240
Ending exercisable		445,387		$	31.78		2.45	$	8,360,918

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Property and Equipment (Tables)

12 Months Ended

Mar. 31, 2018

Property Plant And Equipment [Abstract]

Property and Equipment, Net

Property and equipment, net consisted of the following at March 31, 2018 and 2017:

	2018			2017
Computer software	$	142,754,000		$	130,641,000
Office equipment and computers		67,730,000			65,246,000
Land and building		5,843,000			—
Leasehold improvements		14,461,000			10,893,000
		230,788,000			206,780,000
Less: accumulated depreciation and amortization		(161,432,000	)		(143,738,000	)
	$	69,356,000		$	63,042,000

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Accounts and Income Taxes Payable and Accrued Liabilities (Tables)

12 Months Ended

Mar. 31, 2018

Payables And Accruals [Abstract]

Accounts and Income Taxes Payable, Accrued Liabilities

Accounts and income taxes payable consisted of the following at March 31, 2018 and 2017:

	2018		2017
Accounts payable	$	11,787,000	$	13,869,000
Uncertain tax positions		1,666,000		2,714,000
	$	13,453,000	$	16,583,000

Accrued liabilities consisted of the following at March 31, 2018 and 2017:

	2018		2017
Payroll, payroll taxes and employee benefits	$	15,100,000	$	14,465,000
Customer deposits		35,496,000		32,471,000
Accrued professional service fees		5,782,000		4,551,000
Self-insurance accruals		3,627,000		2,835,000
Deferred revenue		15,316,000		10,096,000
Accrued rent		6,147,000		5,774,000
Other		3,068,000		3,276,000
	$	84,536,000	$	73,468,000

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Income Taxes (Tables)

12 Months Ended

Mar. 31, 2018

Income Tax Disclosure [Abstract]

Summary of Income Tax Provision

The income tax provision consisted of the following for the fiscal years ended March 31, 2018, 2017 and 2016:

	2018			2017			2016
Current — Federal	$	11,177,000		$	16,456,000		$	16,600,000
Current — State		1,905,000			2,834,000			2,591,000
Subtotal		13,082,000			19,290,000			19,191,000
Deferred — Federal		(955,000	)		(1,508,000	)		(1,679,000	)
Deferred — State		81,000			288,000			23,000
Subtotal		(874,000	)		(1,220,000	)		(1,656,000	)
	$	12,208,000		$	18,070,000		$	17,535,000

Summary of Reconciliation Income Tax Provision from the Statutory Federal Income Tax Rate

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, 2018, 2017 and 2016:

	2018			2017			2016
Income taxes at federal statutory rate	$	15,112,000		$	16,643,000		$	16,121,000
State income taxes, net of federal benefit		1,645,000			1,973,000			1,704,000
Uncertain tax positions		(464,000	)		88,000			78,000
Permanent items and tax credits		(1,364,000	)		(705,000	)		(100,000	)
Adjustments to returns as filed		138,000			80,000			(232,000	)
Valuation allowance		236,000			—			—
Impact of tax reform		(3,095,000	)		—			—
Other		—			(9,000	)		(36,000	)
	$	12,208,000		$	18,070,000		$	17,535,000

Summary of Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities at March 31, 2018 and 2017 are:

	2018			2017
Deferred tax assets:
Accrued liabilities not currently deductible	$	5,703,000		$	9,409,000
Allowance for doubtful accounts		1,151,000			1,153,000
Stock-based compensation		1,631,000			1,755,000
Accrued rent		1,555,000			2,219,000
Other		896,000			740,000
Deferred tax assets		10,936,000			15,276,000
Deferred tax liabilities:
Excess of book over tax basis of fixed assets		(11,191,000	)		(15,666,000	)
Intangible assets		(4,169,000	)		(5,960,000	)
Other		(179,000	)		(336,000	)
Total deferred tax liabilities		(15,539,000	)		(21,962,000	)
Valuation allowance		(236,000	)		—
Deferred tax liabilities		(15,775,000	)		(21,962,000	)
Net deferred tax liability	$	(4,839,000	)	$	(6,686,000	)

Reconciliation of the Financial Statement Recognition and Measurement of Uncertain Tax Positions During the Current Fiscal Year

A reconciliation of the financial statement recognition and measurement of uncertain tax positions during the current fiscal year is as follows:

Balance as of March 31, 2017	$	1,884,000
Additions based on tax positions related to the current year		236,000
Additions for tax positions of prior years		8,000
Reductions for tax positions related to the current year		0
Reductions for tax positions of prior years		(656,000	)
Balance as of March 31, 2018	$	1,472,000

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Employee Stock Purchase Plan (Tables)

12 Months Ended

Mar. 31, 2018

Text Block [Abstract]

Summary of Employee Stock Purchase Plan

Summarized ESPP information is as follows:

	2018		2017		2016
Employee contributions	$	458,000	$	419,000	$	371,000
Shares acquired		8,976		10,596		10,975
Average purchase price	$	49.78	$	38.80	$	33.81

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Treasury Stock (Tables)

12 Months Ended

Mar. 31, 2018

Equity [Abstract]

Summary of Share Repurchases and Cumulatively Since Inception of Authorization

The share repurchases for the fiscal years ended March 31, 2018, 2017 and 2016 and cumulatively since inception of the authorization, are as follows:

	2018		2017		2016		Cumulative
Shares repurchased		249,245		745,575		893,771		34,881,079
Cost	$	11,187,000	$	27,999,000	$	31,525,000	$	430,989,000
Average price	$	44.88	$	37.56	$	35.27	$	12.36

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Segment Reporting (Tables)

12 Months Ended

Mar. 31, 2018

Segment Reporting [Abstract]

Schedule of Percentages of Revenues Attributable to Patient Management and Network Solutions Services

The percentages of revenues attributable to patient management and network solutions services for the fiscal years ended March 31, 2018, 2017 and 2016 are listed below.

	2018			2017			2016
Patient management services		56.7	%		55.6	%		55.1	%
Network solutions services		43.3	%		44.4	%		44.9	%
		100.0	%		100.0	%		100.0	%

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Other Intangible Assets (Tables)

12 Months Ended

Mar. 31, 2018

Goodwill And Intangible Assets Disclosure [Abstract]

Other Intangible Assets

Other intangible assets consisted of the following at March 31, 2018:

Item	Life	Cost		Fiscal 2018 Amortization Expense		Accumulated Amortization at March 31, 2018		Cost, Net of Accumulated Amortization at March 31, 2018
Covenant Not to Compete	5 years	$	775,000	$	—	$	775,000	$	—
Customer Relationships	18-20 years		7,922,000		423,000		4,566,000		3,356,000
Third Party Administrator  Licenses	15 years		204,000		14,000		145,000		59,000
Total		$	8,901,000	$	437,000	$	5,486,000	$	3,415,000

Other intangible assets consisted of the following at March 31, 2017:

Item	Life	Cost		Fiscal 2017 Amortization Expense		Accumulated Amortization at March 31, 2017		Cost, Net of Accumulated Amortization at March 31, 2017
Covenant Not to Compete	5 years	$	775,000	$	—	$	775,000	$	—
Customer Relationships	18-20 years		7,922,000		423,000		4,144,000		3,778,000
Third Party Administrator  Licenses	15 years		204,000		14,000		131,000		73,000
Total		$	8,901,000	$	437,000	$	5,050,000	$	3,851,000

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Quarterly Results (Unaudited) (Tables)

12 Months Ended

Mar. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

Summary of Unaudited Quarterly Results of Operations

The following is a summary of unaudited quarterly results of operations for each of the quarters in the fiscal years ended March 31, 2018 and 2017:

	Revenues		Gross Profit		Net Income		Net Income per Basic Common Share		Net Income per Diluted Common Share
Fiscal Year Ended March 31, 2018:
First Quarter	$	137,612,000	$	28,783,000	$	8,775,000	$	0.47	$	0.46
Second Quarter		136,431,000		25,752,000		8,393,000		0.45		0.44
Third Quarter		140,734,000		25,569,000		9,569,000		0.51		0.50
Fourth Quarter		143,573,000		27,149,000		8,958,000		0.47		0.47
Fiscal Year Ended March 31, 2017:
First Quarter	$	128,459,000	$	25,582,000	$	7,491,000	$	0.38	$	0.38
Second Quarter		128,219,000		25,912,000		6,952,000		0.36		0.35
Third Quarter		128,403,000		25,577,000		7,049,000		0.36		0.36
Fourth Quarter		133,605,000		27,721,000		7,987,000		0.42		0.42

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Schedule II - Valuation and Qualifying Accounts (Detail) - Allowance for Doubtful Accounts [Member] - USD ($)	12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016
Valuation And Qualifying Accounts Disclosure [Line Items]
Balance at Beginning of Year	$ 3,001,000	$ 1,821,000	$ 1,645,000
Additions Charged to Cost and Expenses	2,559,000	2,335,000	1,357,000
Deductions	(1,009,000)	(1,155,000)	(1,181,000)
Balance at End of Year	$ 4,551,000	$ 3,001,000	$ 1,821,000

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Summary of Significant Accounting Policies - Additional Information (Detail)	12 Months Ended
	Mar. 31, 2018 USD ($) Customer	Mar. 31, 2017 USD ($) Customer	Mar. 31, 2016 Customer
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Maturities of short term investment interest-bearing securities	90 days
Accounts receivable due period	30 days
Unbilled account receivables	$ 15,131,000	$ 14,579,000
Capitalized software development costs	27,679,000	25,721,000
Accumulated amortization of software development costs	88,567,000	78,952,000
Impairment of goodwill, intangible assets or other long-lived assets	0
Goodwill	36,814,000	36,814,000
Accumulated amortization of goodwill	$ 2,069,000	$ 2,069,000
Computer Software Property and Equipment [Member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Amortization period of computer software	5 years
Customer Concentration Risk [Member] | Sales Revenue, Net [Member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Maximum customer risk percentage	10.00%	10.00%	10.00%
Number of customer | Customer	0	0	0
Credit Concentration Risk [Member] | Accounts Receivable [Member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Maximum customer risk percentage	10.00%	10.00%
Number of customer | Customer	0	0
Private Equity Funds [Member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Investment	$ 2,250,000
Reduction to investments	1,169,000
Fair Value, Inputs, Level 2 [Member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Transfer of assets	0
Fair Value, Inputs, Level 3 [Member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Transfer of assets	$ 0

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Summary of Significant Accounting Policies - Schedule of Estimated Economic Useful Lives of Property and Equipment (Detail)	12 Months Ended
	Mar. 31, 2018
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives of property and equipment	Shorter of 5 years or the life of lease
Furniture and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment	5 years
Furniture and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment	7 years
Computer Hardware [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment	2 years
Computer Hardware [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment	5 years
Computer Software Property and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment	3 years
Computer Software Property and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment	5 years

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Summary of Significant Accounting Policies - Schedule of Earnings Per Share Basic and Diluted (Detail) - shares	12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016
Earnings Per Share [Abstract]
Basic weighted shares	18,825,000	19,418,000	19,826,000
Treasury stock impact of stock options	217,000	152,000	178,000
Diluted weighted shares	19,042,000	19,570,000	20,004,000

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Stock Options and Stock-Based Compensation - Additional Information (Detail) - USD ($)	12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-statutory stock options expiration period	5 years
Weighted-average grant-date fair value of options granted	$ 19.24	$ 13.38	$ 13.68
Total intrinsic value of options exercised	$ 7,780,000	$ 2,620,000	$ 3,581,000
Cash received from exercise of stock options	3,426,000	2,367,000	3,749,000
Unrecognized compensation costs related to stock options	$ 5,496,000
Weighted average period to recognized compensation cost	3 years
Time Based Options and Performance Based Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 3,164,000	2,432,000	2,192,000
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 649,000	49,000	$ 28,000
ASU No. 2016-09 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Excess tax benefit		$ 500,000
Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-statutory stock options expiration period	10 years
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock grants	19,365,000
Non-statutory stock options vesting period	36 months
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-statutory stock options vesting period	1 year
Share-based Compensation Award, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting Percentage	25.00%
Share-based Compensation Award, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting Percentage	75.00%

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Stock Options and Stock-Based Compensation - Weighted Average Assumptions (Detail)	12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	40.00%	41.00%	43.00%
Risk free interest rate, Minimum	1.88%	1.03%	1.25%
Risk free interest rate, Maximum	2.56%	1.92%	1.65%
Dividend yield	0.00%	0.00%	0.00%
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average option life	4 years 4 months 24 days	4 years 4 months 24 days	4 years 4 months 24 days
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average option life	4 years 6 months	4 years 6 months	4 years 6 months

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Stock Options and Stock-Based Compensation - Stock Compensation Expense for Time Based Options and Performance Based Options (Detail) - USD ($)	3 Months Ended								12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Effect on basic earnings per share	$ 0.47	$ 0.51	$ 0.45	$ 0.47	$ 0.42	$ 0.36	$ 0.36	$ 0.38	$ 1.90	$ 1.52	$ 1.44
Effect on diluted earnings per share	$ 0.47	$ 0.50	$ 0.44	$ 0.46	$ 0.42	$ 0.36	$ 0.35	$ 0.38	$ 1.87	$ 1.51	$ 1.43
Time Based Options and Performance Based Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total cost of stock-based compensation included in income before income taxes									$ 3,164,000	$ 2,432,000	$ 2,192,000
Amount of income tax benefit recognized									1,105,000	946,000	852,000
Amount charged to net income									$ 2,059,000	$ 1,486,000	$ 1,340,000
Effect on basic earnings per share									$ 0.11	$ 0.08	$ 0.07
Effect on diluted earnings per share									$ 0.11	$ 0.08	$ 0.07
Time Based Options and Performance Based Options [Member] | Cost of Revenue [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total cost of stock-based compensation included in income before income taxes									$ 1,749,000	$ 1,507,000	$ 1,288,000
Time Based Options and Performance Based Options [Member] | General and Administrative [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total cost of stock-based compensation included in income before income taxes									$ 1,415,000	$ 925,000	$ 904,000

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Stock Options and Stock-Based Compensation - Stock Options (Detail) - $ / shares	12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding, beginning balance, Shares	1,143,928	1,115,465	1,163,179
Options granted, Shares	334,200	267,950	276,275
Options exercised, Shares	(314,846)	(115,592)	(200,753)
Options cancelled/forfeited, Shares	(98,843)	(123,895)	(123,236)
Options outstanding, ending balance, Shares	1,064,439	1,143,928	1,115,465
Options granted, weighted average exercise price	$ 52.57	$ 37.13	$ 35.51
Options exercised, weighted average exercise price	27.59	22.74	19.75
Options cancelled/forfeited, weighted average exercise price	35.59	36.90	33.44
Weighted average exercise price per share	$ 39.45	$ 32.02	$ 30.36
Options available for future grants	260,961	505,493	650,345
Exercisable options	445,387	585,424	529,691
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Price range of outstanding options	$ 12.71	$ 12.71	$ 9.05
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Price range of outstanding options	$ 57.75	$ 45.73	$ 45.55

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Stock Options and Stock-Based Compensation - Stock Options Outstanding and Exercisable (Detail) - $ / shares	12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2015
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Number of Outstanding Options	1,064,439	1,143,928	1,115,465	1,163,179
Weighted Average Remaining Contractual Life	3 years 4 months 24 days
Outstanding Options – Weighted Average Exercise Price	$ 39.45	$ 32.02	$ 30.36
Exercisable Options – Number of Exercisable Options	445,387
Exercisable Options – Weighted Average Exercise Price	$ 31.78
Range of Exercise Price, $12.71 to $32.10 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Price, lower limit	12.71
Range of Exercise Price, upper limit	$ 32.10
Number of Outstanding Options	292,156
Weighted Average Remaining Contractual Life	2 years 10 months 2 days
Outstanding Options – Weighted Average Exercise Price	$ 24.96
Exercisable Options – Number of Exercisable Options	195,387
Exercisable Options – Weighted Average Exercise Price	$ 21.42
Range of Exercise Price, $32.11 to $34.78 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Price, lower limit	32.11
Range of Exercise Price, upper limit	$ 34.78
Number of Outstanding Options	177,354
Weighted Average Remaining Contractual Life	2 years 10 months 28 days
Outstanding Options – Weighted Average Exercise Price	$ 34.41
Exercisable Options – Number of Exercisable Options	85,900
Exercisable Options – Weighted Average Exercise Price	$ 34.37
Range of Exercise Price, $34.79 to $44.86 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Price, lower limit	34.79
Range of Exercise Price, upper limit	$ 44.86
Number of Outstanding Options	186,408
Weighted Average Remaining Contractual Life	3 years 2 months 8 days
Outstanding Options – Weighted Average Exercise Price	$ 41.20
Exercisable Options – Number of Exercisable Options	106,502
Exercisable Options – Weighted Average Exercise Price	$ 41.22
Range of Exercise Price, $44.87 to $57.75 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Price, lower limit	44.87
Range of Exercise Price, upper limit	$ 57.75
Number of Outstanding Options	408,521
Weighted Average Remaining Contractual Life	4 years 4 months 17 days
Outstanding Options – Weighted Average Exercise Price	$ 52.58
Exercisable Options – Number of Exercisable Options	57,598
Exercisable Options – Weighted Average Exercise Price	$ 45.60

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Stock Options and Stock-Based Compensation - Outstanding Options (Detail) - USD ($)	12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Options outstanding, beginning balance, Shares	1,143,928	1,115,465	1,163,179
Granted, Number of Options	334,200	267,950	276,275
Exercised, Number of Options	(314,846)	(115,592)	(200,753)
Cancelled - forfeited, Number of Options	(81,586)
Cancelled - expired, Number of Options	(17,257)
Options outstanding, ending balance, Shares	1,064,439	1,143,928	1,115,465
Options vested and expected to vest, Number of Options	959,664
Ending exercisable, Number of Options	445,387
Options outstanding, beginning balance, Weighted Average Exercise Price	$ 32.02	$ 30.36
Granted, Weighted Average Exercise Price per Share	52.57	37.13	$ 35.51
Exercised, Weighted Average Exercise Price per Share	27.59	22.74	19.75
Cancelled - forfeited, Weighted Average Exercise Price per Share	36.22
Cancelled - expired, Weighted Average Exercise Price per Share	27.57
Options outstanding, ending balance, Weighted Average Exercise Price	39.45	$ 32.02	$ 30.36
Options vested and expected to vest, Weighted Average Exercise Price per Share	39.76
Ending exercisable, Weighted Average Exercise Price per Share	$ 31.78
Option outstanding, Weighted Average Remaining Contractual Life (Years)	3 years 4 months 28 days
Options vested and expected to vest, Weighted Average Remaining Contractual Life (Years)	3 years 5 months 4 days
Ending exercisable, Weighted Average Remaining Contractual Life (Years)	2 years 5 months 12 days
Option outstanding, Aggregate Intrinsic Value	$ 12,986,338
Options vested and expected to vest, Aggregate Intrinsic Value	10,249,240
Ending exercisable, Aggregate Intrinsic Value	$ 8,360,918

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Property and Equipment - Property and Equipment, Net (Detail) - USD ($)	Mar. 31, 2018	Mar. 31, 2017
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 230,788,000	$ 206,780,000
Less: accumulated depreciation and amortization	(161,432,000)	(143,738,000)
Property and equipment, net	69,356,000	63,042,000
Computer Software [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	142,754,000	130,641,000
Office Equipment And Computers [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	67,730,000	65,246,000
Land and Building [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	5,843,000	0
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 14,461,000	$ 10,893,000

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Property and Equipment - Additional Information (Detail) - USD ($)	12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016
Property Plant And Equipment [Abstract]
Depreciation expense	$ 21,338,000	$ 20,534,000	$ 19,502,000

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Accounts and Income Taxes Payable and Accrued Liabilities - Accounts and Income Taxes Payable (Detail) - USD ($)	Mar. 31, 2018	Mar. 31, 2017
Payables And Accruals [Abstract]
Accounts payable	$ 11,787,000	$ 13,869,000
Uncertain tax positions	1,666,000	2,714,000
Total accounts and taxes payable	$ 13,453,000	$ 16,583,000

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Accounts and Income Taxes Payable and Accrued Liabilities - Accrued Liabilities (Detail) - USD ($)	Mar. 31, 2018	Mar. 31, 2017
Payables And Accruals [Abstract]
Payroll, payroll taxes and employee benefits	$ 15,100,000	$ 14,465,000
Customer deposits	35,496,000	32,471,000
Accrued professional service fees	5,782,000	4,551,000
Self-insurance accruals	3,627,000	2,835,000
Deferred revenue	15,316,000	10,096,000
Accrued rent	6,147,000	5,774,000
Other	3,068,000	3,276,000
Total accrued liabilities	$ 84,536,000	$ 73,468,000

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Income Taxes - Summary of Income Tax Provision (Detail) - USD ($)	12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016
Income Tax Disclosure [Abstract]
Current — Federal	$ 11,177,000	$ 16,456,000	$ 16,600,000
Current — State	1,905,000	2,834,000	2,591,000
Subtotal	13,082,000	19,290,000	19,191,000
Deferred — Federal	(955,000)	(1,508,000)	(1,679,000)
Deferred — State	81,000	288,000	23,000
Subtotal	(874,000)	(1,220,000)	(1,656,000)
Total	$ 12,208,000	$ 18,070,000	$ 17,535,000

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Income Taxes - Summary of Reconciliation Income Tax Provision from the Statutory Federal Income Tax Rate (Detail) - USD ($)	12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016
Income Tax Disclosure [Abstract]
Income taxes at federal statutory rate	$ 15,112,000	$ 16,643,000	$ 16,121,000
State income taxes, net of federal benefit	1,645,000	1,973,000	1,704,000
Uncertain tax positions	(464,000)	88,000	78,000
Permanent items and tax credits	(1,364,000)	(705,000)	(100,000)
Adjustments to returns as filed	138,000	80,000	(232,000)
Valuation allowance	236,000	0	0
Impact of tax reform	(3,095,000)	0	0
Other	0	(9,000)	(36,000)
Total	$ 12,208,000	$ 18,070,000	$ 17,535,000

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Income Taxes - Summary of Deferred Tax Assets and Liabilities (Detail) - USD ($)	Mar. 31, 2018	Mar. 31, 2017
Deferred tax assets:
Accrued liabilities not currently deductible	$ 5,703,000	$ 9,409,000
Allowance for doubtful accounts	1,151,000	1,153,000
Stock-based compensation	1,631,000	1,755,000
Accrued rent	1,555,000	2,219,000
Other	896,000	740,000
Deferred tax assets	10,936,000	15,276,000
Deferred tax liabilities:
Excess of book over tax basis of fixed assets	(11,191,000)	(15,666,000)
Intangible assets	(4,169,000)	(5,960,000)
Other	(179,000)	(336,000)
Total deferred tax liabilities	(15,539,000)	(21,962,000)
Valuation allowance	(236,000)	0
Deferred tax liabilities	(15,775,000)	(21,962,000)
Net deferred tax liability	$ (4,839,000)	$ (6,686,000)

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Income Taxes - Additional Information (Detail) - USD ($)		3 Months Ended		9 Months Ended	12 Months Ended
	Apr. 01, 2018	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2017	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016
Income Tax Disclosure [Line Items]
Prepaid expenses and income taxes		$ 1,962,000			$ 1,962,000
Income taxes due included in accounts and income taxes payable						$ 584,000
Recognizes interest and penalties related to uncertain tax positions					(53,000)	35,000	$ 72,000
Accrued interest and penalties related to uncertain tax positions		$ 194,000			$ 194,000	$ 247,000	$ 212,000
Reduction of corporate federal income tax rate		21.00%		35.00%
Newly enacted corporate federal income tax rate			21.00%
Effective tax rate as a percentage			5.00%
Liability for unrecognized tax benefits			$ 3,000,000	$ 3,000,000
Minimum [Member] | Subsequent Event [Member]
Income Tax Disclosure [Line Items]
Effective combined federal and state tax rate	24.00%
Maximum [Member] | Subsequent Event [Member]
Income Tax Disclosure [Line Items]
Effective combined federal and state tax rate	26.00%
Earliest Tax Year [Member]
Income Tax Disclosure [Line Items]
Tax fiscal years open to examination					2014
Latest Tax Year [Member]
Income Tax Disclosure [Line Items]
Tax fiscal years open to examination					2017

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Income Taxes - Reconciliation of the Financial Statement Recognition and Measurement of Uncertain Tax Positions During the Current Fiscal Year (Detail)	12 Months Ended
	Mar. 31, 2018 USD ($)
Income Tax Disclosure [Abstract]
Balance as of March 31, 2017	$ 1,884,000
Additions based on tax positions related to the current year	236,000
Additions for tax positions of prior years	8,000
Reductions for tax positions related to the current year	0
Reductions for tax positions of prior years	(656,000)
Balance as of March 31, 2018	$ 1,472,000

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Employee Stock Purchase Plan - Additional Information (Detail) - shares	12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016
Employee Stock Purchase Plan [Line Items]
Percentage of employees contribution of their gross pay	20.00%
Stock issued under employee stock purchase plan, shares	2,469,843
Employee Stock Purchase Plan [Member]
Employee Stock Purchase Plan [Line Items]
Percentage as purchase price of closing sale price of shares	95.00%
Maximum shares authorized for issuance under the ESPP	2,850,000
Stock issued under employee stock purchase plan, shares	8,976	10,596	10,975

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Employee Stock Purchase Plan - Summary of Employee Stock Purchase Plan (Detail) - USD ($)	12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016
Employee Stock Purchase Plan [Line Items]
Employee contributions	$ 458,000	$ 419,000	$ 371,000
Shares acquired	2,469,843
Employee Stock Purchase Plan [Member]
Employee Stock Purchase Plan [Line Items]
Shares acquired	8,976	10,596	10,975
Average purchase price	$ 49.78	$ 38.80	$ 33.81

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Treasury Stock - Additional Information (Detail) - shares	2 Months Ended	12 Months Ended
	Jun. 08, 2018	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016	Feb. 28, 2017
Class of Stock [Line Items]
Number of shares of common stock authorized to repurchase		36,000,000			1,000,000
Number of shares repurchases of common stock		249,245	745,575	893,771
Subsequent Event [Member]
Class of Stock [Line Items]
Number of shares repurchases of common stock	0

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Treasury Stock - Summary of Share Repurchases and Cumulatively Since Inception of Authorization (Detail) - USD ($)	12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016
Equity [Abstract]
Shares repurchased	249,245	745,575	893,771
Cost	$ 11,187,000	$ 27,999,000	$ 31,525,000
Average price	$ 44.88	$ 37.56	$ 35.27
Shares repurchased, Cumulative	34,881,079	34,631,834
Cost, Cumulative	$ 430,989,000	$ 419,802,000
Average price, Cumulative	$ 12.36

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Commitments - Additional Information (Detail) - USD ($)	12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016
Commitments And Contingencies Disclosure [Abstract]
2019	$ 14,442,000
2020	11,114,000
2021	10,034,000
2022	8,005,000
2023	6,741,000
Thereafter	12,445,000
Aggregate	62,781,000
Total rental expense	$ 14,077,000	$ 13,952,000	$ 14,405,000

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Retirement Savings Plan - Additional Information (Detail) - USD ($)	12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016
Compensation And Retirement Disclosure [Abstract]
Employer contribution	$ 557,000	$ 464,000	$ 392,000

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Shareholder Rights Plan - Additional Information (Detail) - $ / shares	1 Months Ended	12 Months Ended
	Nov. 30, 2008	Mar. 31, 2018
Equity [Abstract]
Dividend distribution ratio of preferred share purchase right for outstanding share of common stock		100.00%
Shareholder rights exercise price		$ 118
Shareholder rights expiration date	Feb. 10, 2022
Shareholder Rights Plan, description of acquired entity		Shareholder Rights Plan provides that if a person or group acquires 15% or more of the Company’s common stock
Shareholder Rights Plan, percentage of acquired entity		15.00%
Shareholder Rights Plan, description of merged entity		Company is thereafter merged into another entity, or if 50% or more of the Company’s consolidated assets or earning power are sold, then the right would entitle its holder to buy common shares of the acquiring entity having a market value equal to two times the then-current exercise price of the right.
Shareholder Rights Plan, percentage of merged entity		50.00%

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Line of Credit - Additional Information (Detail) - Revolving Credit Facility [Member] - USD ($)	1 Months Ended	12 Months Ended
	Sep. 30, 2017	Mar. 31, 2018
Line Of Credit Facility [Line Items]
Credit facility with borrowing capacity	$ 10,000,000
Line of credit, interest rate description		interest, at the Company’s option, at a fixed LIBOR-based rate plus 1.50% or at a fluctuating rate determined by the financial institution to be 1.50% above the daily one-month LIBOR rate.
Loan covenants requirements		The loan covenants require the Company to maintain a current assets to liabilities ratio of at least 1.25:1, debt to tangible net worth ratio not greater than 1.25:1 and to have positive net income.
Current assets to liabilities ratio	125.00%
Current debt to tangible net worth ratio	125.00%
Outstanding revolving loans		$ 0
Letters of credit in aggregate amount		$ 4,500,000
Renewed credit agreement expiration period	2018-09
London Interbank Offered Rate (LIBOR) [Member]
Line Of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate	1.50%
One Month London Interbank Offered Rate [Member]
Line Of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate	1.50%

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Segment Reporting - Schedule of Percentages of Revenues Attributable to Patient Management and Network Solutions Services (Detail) - Product Concentration Risk [Member] - Sales Revenue, Services, Net [Member]	12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016
Revenue, Major Customer [Line Items]
Percentage of revenues	100.00%	100.00%	100.00%
Patient Management Services [Member]
Revenue, Major Customer [Line Items]
Percentage of revenues	56.70%	55.60%	55.10%
Network Solutions Services [Member]
Revenue, Major Customer [Line Items]
Percentage of revenues	43.30%	44.40%	44.90%

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Segment Reporting - Additional Information (Detail)	12 Months Ended
	Mar. 31, 2018 Segment
Segment Reporting [Abstract]
Number of reportable segments	1

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Other Intangible Assets - Other Intangible Assets (Detail) - USD ($)	12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Finite Lived Intangible Assets [Line Items]
Cost	$ 8,901,000	$ 8,901,000
Amortization Expense	437,000	437,000
Accumulated Amortization	5,486,000	5,050,000
Cost, Net of Accumulated Amortization	$ 3,415,000	$ 3,851,000
Covenant Not to Compete [Member]
Finite Lived Intangible Assets [Line Items]
Life	5 years	5 years
Cost	$ 775,000	$ 775,000
Amortization Expense	0	0
Accumulated Amortization	775,000	775,000
Cost, Net of Accumulated Amortization	0	0
Customer Relationships [Member]
Finite Lived Intangible Assets [Line Items]
Cost	7,922,000	7,922,000
Amortization Expense	423,000	423,000
Accumulated Amortization	4,566,000	4,144,000
Cost, Net of Accumulated Amortization	$ 3,356,000	$ 3,778,000
Customer Relationships [Member] | Minimum [Member]
Finite Lived Intangible Assets [Line Items]
Life	18 years	18 years
Customer Relationships [Member] | Maximum [Member]
Finite Lived Intangible Assets [Line Items]
Life	20 years	20 years
Third Party Administrator Licenses [Member]
Finite Lived Intangible Assets [Line Items]
Life	15 years	15 years
Cost	$ 204,000	$ 204,000
Amortization Expense	14,000	14,000
Accumulated Amortization	145,000	131,000
Cost, Net of Accumulated Amortization	$ 59,000	$ 73,000

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Other Intangible Assets - Additional Information (Detail)	Mar. 31, 2018 USD ($)
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2019	$ 437,000
2020	437,000
2021	437,000
2022	436,000
2023	427,000
Thereafter	$ 1,241,000

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Quarterly Results (Unaudited) - Summary of Unaudited Quarterly Results of Operations (Detail) - USD ($)	3 Months Ended								12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016
Quarterly Financial Information Disclosure [Abstract]
Revenues	$ 143,573,000	$ 140,734,000	$ 136,431,000	$ 137,612,000	$ 133,605,000	$ 128,403,000	$ 128,219,000	$ 128,459,000	$ 558,350,000	$ 518,686,000	$ 503,584,000
Gross Profit	27,149,000	25,569,000	25,752,000	28,783,000	27,721,000	25,577,000	25,912,000	25,582,000	107,253,000	104,792,000	104,544,000
Net income	$ 8,958,000	$ 9,569,000	$ 8,393,000	$ 8,775,000	$ 7,987,000	$ 7,049,000	$ 6,952,000	$ 7,491,000	$ 35,695,000	$ 29,479,000	$ 28,525,000
Net Income per Basic Common Share	$ 0.47	$ 0.51	$ 0.45	$ 0.47	$ 0.42	$ 0.36	$ 0.36	$ 0.38	$ 1.90	$ 1.52	$ 1.44
Net Income per Diluted Common Share	$ 0.47	$ 0.50	$ 0.44	$ 0.46	$ 0.42	$ 0.36	$ 0.35	$ 0.38	$ 1.87	$ 1.51	$ 1.43