CORVEL CORP

Fiscal Years Ended March 31, 2026, 2025 and 2024

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 of workers’ compensation, group health and auto insurance, and monitoring the quality of care provided to claimants.

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. 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 expected credit losses, work in process, accrual for income taxes, share-based payments related to performance-based awards, loss contingencies, estimated lives of 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, 2026 and 2025 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 Accounting Standard Codification (“ASC”) 820, “Fair Value Measurements and Disclosures,” which defines fair value, establishes a framework for measuring fair value, and provides for disclosures about fair value measurements, to measure and disclose fair value for (i) nonfinancial assets and liabilities that are recognized or disclosed at fair value in the Company’s consolidated financial statements on a recurring basis, at least annually, and (ii) all financial assets and liabilities. ASC 820 prioritizes the inputs used in measuring fair value into the following hierarchy:

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 and cash equivalents, accounts receivable, accounts payable, etc.) approximates their fair values at March 31, 2026 and 2025, due to the short-term nature of those instruments. The Company has no financial instruments that are measured at fair value on a recurring basis.

Revenue Recognition: Revenue is recognized when control of the promised services is transferred to the Company’s customers in an amount that reflects the consideration the Company expects to receive in exchange for those services. As the Company completes its performance obligations which are identified in Note 2, it has an unconditional right to consideration as outlined in the Company’s contracts. Generally, the Company’s billed accounts receivable are expected to be collected in 30 days in accordance with the underlying payment terms. For many of the Company’s services, the Company typically hasone performance obligation; however, it also provides the customer with an option to acquire additional services. The Company offers multiple services under its patient management and network solutions service lines. The Company typically provides a menu of offerings from which the customer may choose to purchase. Each service is priced separately and provides distinct value to the customer. Pricing is generally consistent for each service irrespective of the other services or quantities requested by the customer.

Accounts Receivable: The majority of the Company’s accounts receivable are due from companies in the property and casualty insurance industries, self-administered employers and governmental entities. Credit is extended based on evaluation of a customer’s financial condition and, generally, collateral is not required. Accounts receivable are typically due within 30 days and are stated at amounts due from customers net of an allowance for expected credit losses. Those accounts outstanding longer than the contractual payment terms are considered past due. 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 $37,847,000 and $46,493,000 of unbilled receivables at March 31, 2026 and 2025, respectively. Unbilled receivables represent the amounts expected to be collected for work performed which has not yet been invoiced to the customer. Unbilled receivables are generally invoiced within one year.

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, TPAs, self-administered employers and government entities. 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 fiscal 2026, 2025 or 2024. Two customers accounted for 10% or more of accounts receivable as of March 31, 2026 and 2025.

Segment Reporting: Based on the Company’s Chief Operating Decision Maker’s (“CODM”) review and assessment of the Company’s operations for purposes of performance monitoring and resource allocation, the Company determined that its operations and the decisions to allocate resources and deploy capital are organized and managed on a consolidated basis. Accordingly, management has identifiedone operating segment, which is its reportable segment, under this organizational and reporting structure.

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:

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

Leases: The Company determines if an arrangement includes a lease at inception. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term; and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date of the lease, renewal date of the lease or significant remodeling of the lease space based on the present value of the remaining future minimum lease payments. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets and short-term and long-term lease liabilities, as applicable.

Operating and financing lease liabilities and their corresponding right-of-use assets are initially recorded based on the present value of lease payments over the expected remaining lease term. The interest rate implicit in lease contracts is typically not readily determinable. As a result, we utilize our incremental borrowing rate to discount lease payments, which reflects the fixed rate at which we could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. The Company’s leases may include options to extend or terminate the lease which are included in the lease term when it is reasonably certain that we will exercise any such options. Operating lease expense for lease payments is recognized on a straight-line basis over the lease term.

Goodwill and Indefinite Lived 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, 2026 and 2025. However, future events or changes in current circumstances could affect the recoverability of the carrying value of goodwill and long-lived assets.

Cost of Revenues: Cost of revenues consists primarily of the compensation and fringe benefits of field personnel, including managers, medical bill analysts, field case managers, telephonic case managers, systems support, administrative support, account managers and account executives, and related facility costs including rent, telephone and office supplies. Historically, the costs associated with these additional personnel and facilities have been the most significant factor driving increases in the Company’s cost of revenues.

Income Taxes: The Company provides for income taxes in accordance with provisions specified in ASC 740, “Accounting for Income Taxes.” Accordingly, deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities. 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 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 weighted average shares and the diluted weighted average shares for each of the fiscal years ended March 31, 2026, 2025 and 2024 is as follows:

During fiscal year 2025, the Company effected a three-for-one forward stock split of its common stock. All prior period share, equity award and per share amounts and calculations in these consolidated financial statements and elsewhere in this Annual Report have been retroactively adjusted to reflect the stock split.

Recently Issued Accounting Standards

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which replaces the existing stage-based rules for internal-use software with a principles-based framework. Under the new guidance, entities may capitalize eligible costs once management has authorized funding the software, the entity has committed to using the software, and it is probable the project will be completed. Entities may elect to apply the guidance retrospectively, prospectively to software costs incurred after the adoption date or on a modified prospective basis. The update is effective for fiscal years beginning after December 15, 2027, including interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures, to require disaggregated disclosure of certain income statement expense line items, such as purchases of inventory, employee compensation, and depreciation and amortization. The new standard is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments should be applied prospectively, but retrospective application is permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, enhances the transparency and decision usefulness of income tax disclosures. The standard is effective for fiscal years beginning after December 15, 2024, and is required to be applied prospectively, with retrospective application permitted. The Company adopted this standard prospectively in the fiscal year 2026 and provided the required disclosures in Note 6 - Income Taxes, to the consolidated financial statements.

Note 2 – Revenue Recognition

Revenue from Contracts with Customers

The Company operates inone reportable operating segment: managed care. The Company generates revenue through its patient management and network solutions service lines. Revenue generated from the patient management service line is recognized over time as services are provided and performance obligations are satisfied. Revenue generated from the network solutions service line is recognized when control of the promised services is transferred to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. As the Company completes its performance obligations, which are described in greater detail below, it has an unconditional right to consideration pursuant to the Company’s contracts. Generally, the Company’s accounts receivable are expected to be collected within 30 days, in accordance with the underlying payment terms.

Patient Management Service Line

The patient management service line provides services primarily related to workers’ compensation claims management and case management, as well as additional services such as accident and health claims programs. Each claim referred by the customer is considered an optional purchase of additional claims management services under the customer agreement. The transaction price is fixed for each service and readily determinable from the contract. The Company recognizes revenue over time as services are provided and performance obligations are satisfied. These performance obligations are satisfied as the Company researches, investigates, evaluates, documents, and reports on each claim, and control of the services transfers to the customer. The Company recognizes revenue using a portfolio approach based on historical claim closure rates, claim type, and the passage of time, which claims generally remaining open between three andfifteen months. The Company believes this approach reasonably reflects the transfer of the claims management services to its customers.

The Company’s obligation to manage claims and cases under patient management service line contracts range from less than one year to multiple years. These contracts typically have one year terms; however, many include auto-renewal provisions leading the Company’s customer relationships to span multiple years. Under certain claims management agreements, the Company receives consideration from a customer at contract inception before services are transferred to the customer, however, the Company begins performing services immediately. The period between the customer’s payment of consideration and the completion of the promised services is generally less than one year. The amount of promised consideration is no different than the cash selling price of the promised services. The fee is billed upfront by the Company in order to provide customers with simplified and predictable ways of purchasing the Company’s services.

The patient management service line also offers the services of case managers who provide administration services by proactively managing medical treatment for claimants while also facilitating an understanding of, and participation in, their rehabilitation process. Revenue for case management services is recognized over time as the performance obligations are satisfied through the effort expended to manage the medical treatment for claimants and control of these services is transferred to the customer. Case management services are generally billed based on time incurred, are considered variable consideration, and revenue is recognized for the amount in which the Company has the right to invoice for services performed. The Company believes this approach reasonably reflects the transfer of the case management service to the customer.

Network Solutions Service Line

The network solutions service line consists primarily of medical bill review and third-party services. Medical bill review services analyze medical charges for customers’ claims to identify potential savings opportunities. The Company recognizes revenue from medical bill review services at the point in time when control of the service transfers to the customer, which occurs when the results of the medical bill review service are delivered to the customer. Medical bill review revenue is variable and is generally based on performance metrics set forth in the underlying contracts. Each period, the Company bases its revenue estimates on a contract-by-contract basis. The Company makes its best estimate using amounts the Company has earned and expects to be collected using historical averages and other factors to project such revenues. Variable consideration is recognized when the Company concludes it is probable that a significant revenue reversal will not occur in future periods.

Third-party services revenue includes revenue from pharmacy, directed care services and other services, including amounts received from customers to reimburse the Company for certain third-party costs incurred in providing its integrated network solutions services. The Company is considered the principal in these transactions as it directs the third-party, controls the specified service and pricing, performs program utilization review, directs payment to the provider, assumes the financial risk of loss associated with services rendered, and combines the services provided into an integrated solution, as specified within its customer contracts. The Company has the ability to influence contractual fees with customers and assumes the financial risk of loss in certain contractual obligations. These factors indicate that the Company is the principal and therefore required to recognize gross revenue and operating expense from service-partner fees within its consolidated statements of income.

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

Arrangements with Multiple Performance Obligations

The Company offers a suite of services under its patient management and network solutions service lines. Although customers can select from a variety of services, the Company typically has one performance obligation per customer. The Company always provides its customers with an option to contract additional services. The price of each service is separate and distinct to each customer. Pricing is generally consistent for each service irrespective of the other services or quantities requested by the customer.

Contract Balances

Due to the timing of revenue recognition, billings and cash collections, the Company’s consolidated balance sheets include billed accounts receivables, unbilled receivables, and contract liabilities (reported as deferred revenues). Unbilled receivables represent amounts due are due for services that have been performed but not yet billed, except for physical invoicing and the passage of time. Invoicing requirements vary by customer contract, but substantially all unbilled revenues are billed withinone year.

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

Certain services, such as claims management, are provided under fixed-fee service agreements and require the Company to manage claims over a contract period, typically for one year with the option for auto renewal, with the fixed fee renewing on the anniversary date of such contract. The Company recognizes deferred revenues as revenues when it performs services and transfers control of the services to the customer and satisfies the performance obligation, which it determines utilizing a portfolio approach. For all fixed fee service agreements, revenues are straight-lined and recognized over the expected service periods by type of claim.

The table below presents the deferred revenues balance and the significant activity affecting deferred revenues during the fiscal year ended March 31, 2026:

Remaining Performance Obligations

Remaining performance obligations consist of deferred revenues. As of March 31, 2026, the Company had approximately $32.2 million of remaining performance obligations related to claims and non-claims services for which the price is fixed. The Company expects to recognize approximately 98% of its remaining performance obligations as revenues withinone year and expects to recognize the remaining balance as revenues thereafter. See the discussion below regarding the practical expedients elected for the disclosure of remaining performance obligations.

Costs to Obtain a Contract

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

Practical Expedients Elected

As a practical expedient, the Company does not adjust the consideration in a contract for the effects of a significant financing component. It expects, at contract inception, that the period between a customer’s payment of consideration and the transfer of promised services to the customer will beone year or less.

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

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

Note 3 — Stock Options and Stock-Based Compensation

As of March 31, 2025,1,185,727 stock options were outstanding and 1,775,459 shares were available for issuance under the Company’s Restated Omnibus Incentive Plan (formerly the Restated 1988 Executive Stock Option Plan) (the “Omnibus Plan”). Under the Omnibus Plan, the Company granted shares of common stock to key employees, non-employee directors, and consultants at exercise prices equal to or greater than the fair market value of the common stock on the grant date. Options granted under the Omnibus Plan generally vested as to 25% of the underlying sharesone year after the grant date, with the remaining 75% vesting ratably each month over the following 36 months. Options granted to employees expire five years from the grant date, and options granted to directors expire ten years from the date of grant. All options granted in fiscal year 2026 and 2025 had an exercise price equal to the fair value of the Company’s common stock on the grant date and are non-statutory stock options. After August 7, 2025, the Company will not grant any further equity awards under the Omnibus Plan. Outstanding awards under the Omnibus Plan will remain outstanding, unchanged and subject to the terms of the Omnibus Plan and their respective award agreements.

On August 7, 2025, the Company’s stockholders approved the 2025 Stock Incentive Plan (the “2025 SIP”) replacing the Omnibus Plan, which expires on June 30, 2026. Consistent with the Omnibus Plan, the primary purpose of the 2025 SIP is to attract and retain qualified personnel. The 2025 SIP has 1,775,459 shares of common stock reserved for issuance to employees, directors, consultants, independent contractors and advisors. The 2025 SIP permits the issuance of stock options, restricted stock, stock appreciation rights, restricted stock units and performance awards.

Shares subject to awards that are forfeited, expire or are otherwise terminated without shares being issued, or shares withheld to pay the exercise price of an award or to satisfy tax withholding obligations, including shares subject to awards granted under the Omnibus Plan that are outstanding after June 30, 2026, will be returned to the pool of shares available for grant and issuance under the 2025 SIP. As of March 31, 2026,1,447,857 shares of common stock remained available for future issuance under the 2025 SIP, subject to adjustment for future stock splits, stock dividends, and similar changes in capitalization.

The 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 based on the assumptions included in the table below. The risk-free rate is based on the interest rate paid on a U.S. Treasury issue with a term similar to the estimated life of the option. The Company uses historical data, among other factors, to estimate the expected volatility, dividend yield and option life. The Company accounts for forfeitures as they occur, rather than estimating expected forfeitures.

The fair value of each grant is estimated on the date of grant using the Black-Scholes option-pricing model. The following weighted average assumptions were used for the fiscal years ended March 31, 2026, 2025 and 2024:

For the fiscal years ended March 31, 2026, 2025 and 2024, the Company recorded share-based compensation expense of $5,411,000, $5,714,000, and $4,982,000, respectively. The table below shows the amounts recognized in the financial statements for the fiscal years ended March 31, 2026, 2025 and 2024.

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

The following table summarizes the status of all outstanding options at March 31, 2026, and changes during the fiscal year then ended:

The weighted average fair value of options granted during fiscal 2026, 2025 and 2024 was $20.89, $33.64, and $25.16, respectively. The total intrinsic value of options exercised during fiscal years 2026, 2025 and 2024 was $15,963,000, $24,182,000, and $29,230,000 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, 2026, 2025 and 2024, the Company recognized stock compensation expense for performance-based options in the amount of $1,564,000, $1,715,000, and $1,199,000, respectively.

The Company received $7,562,000, $10,317,000, and $9,266,000 of cash receipts from the exercise of stock options during fiscal 2026, 2025 and 2024, respectively. As of March 31, 2026, $9,009,000 of total unrecognized compensation costs related to stock options is expected to be recognized over a weighted average period of 3 years.

Note 4 — Property and Equipment

Property and equipment, net consisted of the following at March 31, 2026 and 2025:

Depreciation expense totaled $31,589,000, $29,152,000 and $25,829,000 for the fiscal years ended March 31, 2026, 2025 and 2024, respectively.

Note 5 — Accounts and Income Taxes Payable and Accrued Liabilities

Accounts and income taxes payable consisted of the following at March 31, 2026 and 2025:

Accrued liabilities consisted of the following at March 31, 2026 and 2025:

Note 6 — Income Taxes

The income tax provision consisted of the following for the fiscal years ended March 31, 2026, 2025 and 2024:

The Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, on a prospective basis. As a result, disclosures for fiscal year 2026 reflect the requirements of ASU 2023-09, including the reconciliation of the statutory federal income tax rate and disaggregated tax payment information. The disclosures for fiscal years 2025 and 2024 are presented under the prior disclosure requirements.

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

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

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

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

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

Prepaid income taxes are $1,287,000 at March 31, 2026, and $0 at March 31, 2025.

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

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. During the fiscal years ended March 31, 2026, 2025 and 2024, the Company recognized approximately $(8,000), $(9,000) and $(14,000) ininterest and penalties, respectively. As of March 31, 2026, 2025 and 2024, accrued interest and penalties related to uncertain tax positions were $23,000, $31,000 and $40,000, respectively.

The tax fiscal years from 2023-2025 remain open to examination by the major taxing jurisdictions to which the Company is subject.

Note 7 — Employee Stock Purchase Plan

The Company maintains an Employee Stock Purchase Plan, as amended (the “ESPP”) which allows employees of the Company and its subsidiaries to purchase shares of common stock on the last day of two six-month purchase periods (i.e. March 31 and September 30) at a purchase price that is 95% of the closing sale price of shares as quoted on NASDAQ on the last day of such purchase period. Employees are allowed to contribute up to 20% of their gross pay. A maximum of 8,550,000 shares have been authorized for issuance under the ESPP. As of March 31, 2026,7,531,826 shares had been issued pursuant to the ESPP. Summarized ESPP information is as follows:

Note 8 — Treasury Stock

During each of the three fiscal years ended March 31, 2026, 2025 and 2024, the Company continued to repurchase shares of its common stock under a program originally approved by the Company’s Board of Directors in 1996. Including a 3,000,000 share expansion authorized in November 2022 by the Company’s Board of Directors, the total number of shares of common stock authorized to be repurchased over the life of the program is 117,000,000 shares of common stock. During the fiscal year 2025, the Company effected a three-for-one forward stock split. All prior period share, equity award and per share amounts and calculations in these consolidated financial statements and elsewhere in this Annual Report have been retroactively adjusted to reflect the stock split. Purchases may be made from time to time depending on market conditions and other relevant factors. The share repurchases for the fiscal years ended March 31, 2026, 2025 and 2024 and cumulatively since inception of the authorization, are as follows:

During the period subsequent to March 31, 2026, through the date of filing this Annual Report, the Company repurchased 240,933 shares for $13.6 million, or an average of $56.44 per share. The repurchased shares were recorded as treasury stock, at cost, and are available for general corporate purposes. The repurchases were primarily financed from cash generated from operations and from cash proceeds from the exercise of stock options.

Note 9 – Leases

The Company determines if an arrangement contains a lease at contract inception. The Company’s current lease agreements have remaining lease terms betweenone andseven years. The Company recognizes a right-of-use (“ROU”) asset and a lease liability at the lease commencement date. The lease liability is initially measured based on the present value of the unpaid lease payments as of the lease commencement date. Key estimates and judgments used in determining the liability include the (1) discount rate the Company uses to discount the unpaid lease payments to present value, (2) lease term, and (3) lease payments.

ASC 842, “Leases,” requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. Generally, the Company cannot determine the interest rate implicit in the lease because it does not have access to the lessor’s estimated residual value or the amount of the lessor’s deferred initial direct costs. Therefore, the Company generally uses its incremental borrowing rate as the discount rate for the lease. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. Because the Company does not generally borrow on a collateralized basis, it uses quoted interest rates obtained from financial institutions as an input to derive an appropriate incremental borrowing rate, adjusted for the amount of the lease payments, the lease term, and the effect on that rate of designating specific collateral with a value equal to the unpaid lease payments for that lease.

Some of the Company’s lease agreements include options to extend the lease following the initial term. The Company elected the practical expedient of hindsight in determining the option to renew. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

For lease agreements entered into or reassessed after the adoption of ASC 842, “Leases,” the Company has elected the practical expedient to account for the lease and non-lease components as a single lease component. Therefore, for those leases, the lease payments used to measure the lease liability include all of the fixed consideration in the contract.

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

Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

The components of lease expenses are as follows:

The following table presents the lease related assets and liabilities recorded on the Company’s consolidated balance sheets related to its operating leases at March 31, 2026 and March 31, 2025:

Supplemental cash flow information related to operating leases for fiscal years ended March 31, 2026 and 2025 were as follows:

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

As of March 31, 2026, the Company has approximately $1.5 million of additional operating lease commitments that have not yet commenced. This lease will commence in 2026 and has lease terms of 10 years.

Note 10 — Contingencies and Legal Proceedings

From time to time, the Company is involved in litigation arising in the ordinary course of business. Although the results of these ordinary course matters cannot be predicted with certainty, we believe that the resolution of these matters will not, individually or in the aggregate, have a material adverse effect on our financial position or results of operations.

Note 11 — Retirement Savings Plan

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 $3,294,000, $1,696,000 and $1,505,000 were charged to operations for the fiscal years ended March 31, 2026, 2025 and 2024, respectively.

Note 12 — Segment Reporting

The Company operates withinone operating segment. The Company’s Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer. The CODM reviews segment financial information presented on a consolidated basis, including revenue, gross profit and operating expenses, and considers budget-to-actual variances for the purposes of making operating decisions, assessing financial performance and allocating resources.

The Company derives its revenues from providing patient management and network solutions services. 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, 2026, 2025 and 2024 are listed below.

The Company’s management is structured geographically with regional vice presidents who are responsible for all services provided by the Company and the operating results of the Company within their respective regions. Area and district managers support the regional vice presidents by overseeing all services provided by the Company within their given areas and districts. All revenues are derived from customers within the United States, and all long-lived assets are located in the United States.

Under ASC 280-10, two or more operating segments may be aggregated into a single operating segment for financial reporting purposes if aggregation is consistent with the objective and basic principles of the accounting guidance, if the segments have similar economic characteristics, and if the segments are similar in each of the following areas: (i) the nature of products and services, (ii) the nature of the production processes, (iii) the type or class of customer for their products and services, and (iv) the methods used to distribute their products or provide their services. The Company believes its patient management and network solutions services meet these criteria as they provide similar managed care services to similar customers using similar methods of production and distribution. All of the Company’s regions perform both patient management and network solutions services.

The following table presents the financial information for the Company’sone reportable and operating segment for fiscal years ended March 31, 2026, 2025 and 2024:

Note 13 — Other Intangible Assets

Other intangible assets consisted of the following at March 31, 2026:

Other intangible assets consisted of the following at March 31, 2025:

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