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OK, this is just a little outside the usual focus here.
I’ve been fascinated by CorVel’s stock price lately. For a company that does not appear to have much in the way of growth prospects, with a record of declining revenues over the last three years, in an industry whose lifeblood (lost time claims) is dropping, it is awfully pricey.

Yesterday the company announced it bought a California workers comp medical management firm, evidently as part of CorVel’s California strategy.
Now that’s really confusing. Managed care firms that focus on California are hurting – premiums are down, claims are down, and employers are a lot less concerned about their claims costs then they were a year ago. No pain means less interest in looking at or paying for claims management programs.
Despite the realities of the market, CorVel is enjoying a stock price that has jumped almost four times its low earlier this year.
Your guess is as good as mine.
And thanks to a friend for passing on the tip about CorVel’s acquisition.

2 thoughts on “Mystified”

  1. Joe,
    I am also mystified by Corvel’s stock price. I am also wondering if the SEC hasn’t become mystified as well? Why does their stock keep going up? Their stock was just bearly in the in the low teens in February and March of 2006. Now it rose more than 200% from that point in March of 2006, and just recently split 3 to 2!

  2. Can’t figure these moves out either. HRMS is a CA tpa with med mgt capabilities. deal is for $12m, any idea on HRMS revenue, ebit or ebitda and valuation on this deal? Has to be further positioning to enter claims space?

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Joe Paduda is the principal of Health Strategy Associates




A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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