CORVEL CORP Leases Disclosure
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 between and seven 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:
|
|
March 31, 2026 |
|
|
March 31, 2025 |
|
|
March 31, 2024 |
|
|||
Operating lease expense |
|
$ |
8,185,000 |
|
|
$ |
9,070,000 |
|
|
$ |
9,989,000 |
|
Finance lease expense |
|
|
19,000 |
|
|
|
80,000 |
|
|
|
86,000 |
|
Short-term lease expense |
|
|
— |
|
|
|
114,000 |
|
|
|
114,000 |
|
Variable lease expense |
|
|
628,000 |
|
|
|
665,000 |
|
|
|
559,000 |
|
Total lease expenses |
|
$ |
8,832,000 |
|
|
$ |
9,929,000 |
|
|
$ |
10,748,000 |
|
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:
|
|
March 31, 2026 |
|
|
March 31, 2025 |
|
||
Right-of-use asset, net |
|
$ |
21,164,000 |
|
|
$ |
20,825,000 |
|
|
$ |
7,420,000 |
|
|
$ |
8,126,000 |
|
|
Long-term lease liability |
|
|
20,687,000 |
|
|
|
19,953,000 |
|
Total lease liabilities |
|
$ |
28,107,000 |
|
|
$ |
28,079,000 |
|
Weighted average remaining lease term |
|
4.23 years |
|
|
4.01 years |
|
||
Weighted average finance lease term |
|
|
— |
|
|
0.25 years |
|
|
Weighted average discount rate |
|
|
5.3 |
% |
|
|
4.5 |
% |
Supplemental cash flow information related to operating leases for fiscal years ended March 31, 2026 and 2025 were as follows:
|
|
March 31, 2026 |
|
|
March 31, 2025 |
|
||
Cash paid for amounts included in the measurement |
|
$ |
8,457,000 |
|
|
$ |
9,151,000 |
|
Operating lease liabilities arising from obtaining ROU assets |
|
$ |
41,582,000 |
|
|
$ |
46,954,000 |
|
Finance lease liabilities arising from obtaining ROU assets |
|
$ |
— |
|
|
$ |
358,000 |
|
Additions to ROU assets resulting from additions to |
|
$ |
3,300,000 |
|
|
$ |
4,555,000 |
|
As of March 31, 2026, maturities of operating lease liabilities for each of the next five years and thereafter are as follows:
2027 |
|
$ |
8,700,000 |
|
2028 |
|
|
8,213,000 |
|
2029 |
|
|
5,949,000 |
|
2030 |
|
|
3,968,000 |
|
2031 |
|
|
2,455,000 |
|
Thereafter |
|
|
2,345,000 |
|
Total lease payments |
|
|
31,630,000 |
|
Less interest |
|
|
(3,523,000 |
) |
Total lease liabilities |
|
$ |
28,107,000 |
|
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.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | May 22, 2026 | Showing above |
| 2025 | May 23, 2025 | |
| 2024 | May 24, 2024 | |
| 2023 | May 26, 2023 | |
| 2022 | May 27, 2022 | |
| 2021 | May 28, 2021 | |
| 2020 | Jun 10, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.