CORVEL CORP Revenue Disclosure

Note 2 – Revenue Recognition

Revenue from Contracts with Customers

The Company operates in one 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 and fifteen 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

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.

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 within one 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.

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 within one 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 be one 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.