CorVel finds steady though unspectacular growth in the workers’ comp niche

Irvine-based CorVel Corp. is one company that isn’t fretting over higher healthcare and other insurance costs.

Officials at CorVel, a provider of services to help insurers and businesses rein in costs, say they see rising healthcare costs as an opportunity.

“When there’s higher inflation, there’s more interest in our services,” said Gordon Clemons, CorVel’s chief executive and founder.

CorVel provides a range of healthcare management and cost-control offerings. Its primary lines of business include managing injured workers’ medical treatment, reviewing bills to find either inappropriate or excessive charges, and a preferred-provider organization for workers’ compensation-related healthcare.

Its customers mostly are insurance companies, third-party administration companies and a few large employers that take on their own insurance risks. Some of CorVel’s better-known clients include Mattel Inc., Wal-Mart Stores Inc. and Domino’s Pizza LLC.

CorVel doesn’t get a lot of attention from Wall Street, but the company has posted a rather consistent record of growth in the 10 years it has been publicly traded. CorVel’s annual revenue has risen 47.4% in the past three years to $217 million in the 12 months ended in June.

Most recently, CorVel just reported earnings of $3.6 million on revenue of $58.4 million in its fiscal second quarter ended Sept. 30. For the year-ago quarter, CorVel reported earnings of $3.3 million on revenue of $51.7 million.

CorVel’s share price has risen in tandem, steadily but not spectacularly, from the 13 range in mid-1998 to around 30 last week, giving it a market capitalization of about $333 million. Still, CorVel doesn’t attract a great deal of investor attention. Clemons said that is because it is “small and thinly traded” and doesn’t make a lot of acquisitions.

But CorVel is on the radar screen of Bear Stearns