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Source: Fonar Corporation

FONAR Announces Fiscal 2017 3rd Quarter and Nine Months Financial Results

MELVILLE, N.Y., May 10, 2017 (GLOBE NEWSWIRE) -- FONAR Corporation (NASDAQ:FONR), The Inventor of MR Scanning™, reported today its financial results for Fiscal 2017 3rd Quarter and nine-month period ended March 31, 2017.

  • 96% Increase to $0.88 per share, for 3rd quarter Fiscal 2017, (versus prior year) of Diluted Net Income per Common Share available to Common Shareholders, including a $1.1 million impact of recorded income tax benefits.
  • 84% Increase to $7.1 million, for 3rd quarter Fiscal 2017, (versus same period prior year) of Net Income.
  • 46% Increase to $6.0 million, for 3rd quarter Fiscal 2017, (versus same period prior year) of Income from Operations.
  • 7% Increase to $20.0 million, for 3rd quarter Fiscal 2017, (versus same period prior year) of Total Revenues – Net.
  • Company adds additional MRI Center, during 3rd quarter, where it provides non-medical management services.
  • Timothy R. Damadian completes first year as President and CEO.

Most of FONAR’s recent activity is through its wholly-owned subsidiary, HMCA (Health Management Company of America, LLC). HMCA provides non-medical management services for 19 diagnostic imaging centers in New York and 7 in Florida. These 26 centers are collectively equipped with 33 MRI scanners.

FONAR birthed the MRI industry with its installation of the first commercial whole-body MRI (Magnetic Resonance Imaging) scanner in 1980.  Since then the Company has manufactured and installed hundreds of MRIs the world over.  FONAR’s premier MRI scanner, the UPRIGHT® Multi-Position™ MRI, aka Stand-Up® MRI, is the world’s only MRI scanner that is able to scan patients in normal, full-weight-bearing positions and to be licensed under FONAR’s extensive UPRIGHT® Multi-Position™ MRI patent portfolio.

In light of the fact that the majority of MRI exams are of the spine, FONAR’s UPRIGHT® MRI technology is of great importance. Diagnosticians are able to view human anatomy in its normal weight-bearing positions, including sitting, standing and bending. Certain anatomical regions are very sensitive to body-position and gravity. For example, patients with lower back problems are often most uncomfortable when in a particular weight-bearing position. If diagnosticians can evaluate the spine in those positions, they can minimize or completely avoid the risks of mischaracterizing or underestimating the patients’ problems. 

Financial Highlights

Income from Operations increased 46%, for the quarter ended March 31, 2017, to $6.0 million as compared to $4.1 million for the quarter ended March 31, 2016.  Income from Operations, for the nine month period ended March 31, 2017, increased 29% to $15.4 million as compared to $12.0 million for the nine-month period ended March 31, 2016.

Net Income increased 84%, for the quarter ended March 31, 2017, to $7.1 million as compared to $3.9 million for the quarter ended March 31, 2016.  Net Income, for the nine-month period ended March 31, 2017, increased 45% to $16.6 million as compared to $11.5 million for the nine-month period ended March 31, 2016.

Total Revenues – Net increased 7%, for the quarter ended March 31, 2017, to $20.0 million as compared to $18.6 million for the quarter ended March 31, 2016. Total Revenues – Net, for the nine-month period ended March 31, 2017, increased 5% to $57.1 million as compared to $54.6 million for the nine-month period ended March 31, 2016.

Net Income, Available to Common Stockholders, increased 97%, for the quarter ended March 31, 2017, to $5.5 million as compared to $2.8 million for the quarter ended March 31, 2016.  Net Income, Available to Common Stockholders, for the nine-month period ended March 31, 2017, increased 47% to $12.8 million as compared to $8.8 for the nine-month period ended March 31, 2016.

Diluted Net Income, per Common Share Available to Common Stockholders, increased 96%, for the quarter ended March 31, 2017, to $0.88 per share as compared to $0.45 per share for the quarter ended March 31, 2016. Diluted Net Income, per Common Share Available to Common Stockholders, for the nine-month period ended March 31, 2017, increased 44% to $2.05 per share as compared to $1.42 per share for the nine-month period ended March 31, 2016.

Basic Net Income, per Common Share Available to Common Stockholders, increased 96%, for the quarter ended March 31, 2017, to $0.90 per share as compared to $0.46 per share for the quarter ended March 31, 2016. Basic Net Income, per Common Share Available to Common Stockholders, for the nine-month period ended March 31, 2017, increased 44% to $2.09 per share as compared to $1.45 per share for the nine-month period ended March 31, 2016.

Total Assets, at March 31, 2017, was $91.8 million, as compared to $84.9 million at June 30, 2016. Total Current Assets, at March 31, 2017, was $50.8 million, as compared to $45.6 million at June 30, 2016.

Total Liabilities, at March 31, 2017, was $16.4 million, as compared to $24.1 million at June 30, 2016. Total Current Liabilities, at March 31, 2017, was $14.5 million, as compared to $20.6 million at June 30, 2016.

Total Cash and Cash Equivalents, at March 31, 2017, was $7.8 million, as compared to $8.5 million at June 30, 2016.

Management Discussion

Reflecting upon his first year as President and CEO of FONAR Corporation, Timothy R. Damadian stated: “The transition has been seamless, we’re successfully executing our business plan, and earnings are growing steadily. Naturally our stockholders focus on Diluted Net Income per Common Share Available to Common Stockholders, which for the quarter ending March 31 was $0.88.  That’s a 96% increase as compared to the corresponding quarter a year ago. And for the nine-month period ending March 31, we’re at $2.05 per share, which is up 44% as compared to the corresponding period a year ago.”

“I am very pleased with Tim’s performance as President and CEO,” said Raymond V. Damadian, M.D., Chairman of FONAR Corporation. “We operate in a highly competitive and strictly regulated business environment. Nevertheless, FONAR revenues have been growing a brisk rate and, even more notable, our net profit margin has steadily climbed.  We’ve been profitable for 28 consecutive quarters.  That’s remarkable.” Table I below shows revenues and profit margins over the past seven years.

Table I

PROFIT MARGIN TABLENine Month Period ending March 31,
 2011 2012 2013 2014 2015 2016 2017
Net Income 
(x $ millions)		$  3.0$  5.1$  5.0$  8.8$  9.2$11.5$16.6
Total Revenues – Net 
(x $ millions)		$25.4$28.5$30.8$51.5$52.2$54.6$57.1
NET PROFIT MARGIN
[(Net Income / Total Revenues) x 100]		 12 18 16 17 18 21 29


“As the original MRI company, we are thoroughly familiar with all aspects of operating MRI centers. Combining that experience with the diagnostic and patient-friendliness of the FONAR UPRIGHT® Multi-Position™ MRI has contributed enormously to our successful management of 26 diagnostic imaging centers,” concluded Dr. Damadian.

Recent Event

On April 4, 2017, the Company reported it had purchased all interests and assets of an MRI diagnostic imaging center located in White Plains, New York, where the Company will provide non-medical management services. Mr. Tim Damadian commented, “This very synergistic acquisition provides the Company with an already up-and-running business strategically located nearby other HMCA-managed imaging centers. We are always looking for opportunities such as this one that will add to the success of our Company.”

About FONAR

FONAR, The Inventor of MR Scanning™, is located in Melville, NY.  Incorporated in 1978, FONAR is the first, oldest and most experienced MRI company in the industry. FONAR introduced the world’s first commercial MRI in 1980, and went public in 1981. FONAR’s signature product is the FONAR UPRIGHT® Multi-Position™ MRI (also known as the Stand-Up® MRI), the only whole-body MRI that performs Position™ Imaging (pMRI™) and scans patients in numerous weight-bearing positions, i.e. standing, sitting, in flexion and extension, as well as in the conventional lie-down position. The FONAR UPRIGHT® MRI often detects patient problems that other MRI scanners cannot because they are “lie-down, weightless-only” scanners. The patient-friendly UPRIGHT® MRI has a near-zero patient claustrophobic rejection rate. As one FONAR customer says, “If patients are claustrophobic in this scanner, they’ll be claustrophobic in my parking lot.” Approximately 85% of patients are scanned sitting while watching TV.

FONAR has new works-in-progress technology for visualizing and quantifying the cerebral hydraulics of the central nervous system, the flow of cerebrospinal fluid (CSF), which circulates throughout the brain and vertebral column at the rate of 32 quarts per day.  This imaging and quantifying of the dynamics of this vital life-sustaining physiology of the body’s neurologic system has been made possible first by FONAR’s introduction of the MRI and now by this latest works-in-progress method for quantifying CSF in all the normal positions of the body, particularly in its upright flow against gravity.  Patients with whiplash or other neck injuries are among those who will benefit from this new understanding.

FONAR’s substantial list of patents includes recent patents for its technology enabling full weight-bearing MRI imaging of all the gravity sensitive regions of the human anatomy, especially the brain, extremities and spine. It includes its newest technology for quantifying the Upright cerebral hydraulics of the central nervous system.  FONAR’s UPRIGHT® Multi-Position™ MRI is the only scanner licensed under these patents.

UPRIGHT® and STAND-UP® are registered trademarks and The Inventor of MR Scanning™, Full Range of Motion™, Multi-Position™, Upright Radiology™, The Proof is in the Picture™, True Flow™, pMRI™, Spondylography™, Dynamic™, Spondylometry™, CSP™, and Landscape™, are trademarks of FONAR Corporation.

This release may include forward-looking statements from the company that may or may not materialize. Additional information on factors that could potentially affect the company's financial results may be found in the company's filings with the Securities and Exchange Commission.

 
FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts and shares in thousands, except per share amounts)
(UNAUDITED)
 
ASSETS
 
 March 31,
2017		 June 30,
2016 *
Cash and cash equivalents$  7,750 $  8,528
Accounts receivable – net  3,614   4,370
Accounts receivable - related party   30   -
Medical receivable – net 11,332  10,127
Management and other fees receivable – net 18,480   15,638
Management and other fees receivable – related medical practices – net  5,255   4,064
Costs and estimated earnings in excess of billing on uncompleted contracts 649  -
Inventories   2,670   2,074
Prepaid expenses and other current assets   1,059    759
Total Current Assets  50,839    45,560
Deferred income tax asset 14,942  13,042
Property and equipment – net   15,292    14,513
Goodwill  3,322   3,322
Other intangible assets – net  6,920   7,719
Other assets   509   732
Total Assets$  91,824 $  84,888

* condensed from audited financial statements

 
FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts and shares in thousands, except per share amounts)
(UNAUDITED)
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 March 31,
2017		 June 30,
2016 *
Current Liabilities:   
Current portion of long-term debt and capital leases$  727 $  2,448
Accounts payable   1,183    1,254
Other current liabilities   7,483    10,827
Unearned revenue on service contracts   3,987    4,679
Unearned revenue on service contracts - related party   28    -
Customer advances   1,018    1,199
Billings in excess of costs and estimated earnings on uncompleted contracts   25  207
Total Current Liabilities   14,451    20,614
Long-Term Liabilities:   
Deferred income tax liability 482  482
Due to related medical practices 228  245
Long-term debt and capital leases, less current portion 348  2,059
Other liabilities   890    712
Total Long-Term Liabilities   1,948    3,498
Total Liabilities   16,399    24,112

* condensed from audited financial statements

 
FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts and shares in thousands, except per share amounts)
(UNAUDITED)
 
LIABILITIES AND STOCKHOLDERS' EQUITY (Continued)
 
 March 31, 2017 June 30, 2016 *
STOCKHOLDERS' EQUITY:   
Class A non-voting preferred stock $.0001 par value; 453 shares authorized at March 31, 2017 and June 30, 2016, 313 issued and outstanding at March 31, 2017 and June 30, 2016$  -  $  - 
Preferred stock $.001 par value; 567 shares authorized at March 31, 2017 and June 30, 2016, issued and outstanding – none -   - 
Common Stock $.0001 par value; 8,500 shares authorized at March 31, 2017 and June 30, 2016, 6,214 and 6,062 issued at March 31, 2017 and June 30, 2016; 6,202 and 6,051 outstanding at March 31, 2017 and June 30, 2016 1   1 
Class B Common Stock (10 votes per share) $ .0001 par value; 227 shares authorized at March 31, 2017 and June 30, 2016, 146 issued and outstanding at March 31, 2017 and June 30, 2016 -   - 
Class C Common Stock (25 votes per share) $.0001 par value; 567 shares authorized at March 31, 2017 and June 30, 2016, 383 issued and outstanding at March 31, 2017 and June 30, 2016 -   - 
Paid-in capital in excess of par value  176,761    173,702 
Accumulated deficit (106,911)  (120,624)
Notes receivable from employee stockholders  (19)    (24)
Treasury stock, at cost - 12 shares of common stock at March 31, 2017 and June 30, 2016 (675)  (675)
Total Fonar Corporation Stockholder Equity  69,157   52,380 
Noncontrolling interests  6,268     8,396 
Total Stockholders' Equity  75,425    60,776 
Total Liabilities and Stockholders' Equity$  91,824  $  84,888 

* condensed from audited financial statements

 
FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts and shares in thousands, except per share amounts)
(UNAUDITED)
 
 FOR THE THREE MONTHS
ENDED MARCH 31
REVENUES 2017   2016 
Product sales – net$  768   $  20 
Service and repair fees – net   2,366     2,406 
Service and repair fees – related parties - net   27     27 
Patient fee revenue, net of contractual allowances and discounts 9,028    8,695  
Provision for bad debts for patient fee (3,979 )  (3,830)
Management and other fees – net 9,592   9,394 
Management and other fees – related medical practices – net   2,206     1,907 
Total Revenues – Net   20,008     18,619 
COSTS AND EXPENSES   
Costs related to product sales   364     263 
Costs related to service and repair fees   829     552 
Costs related to service and repair fees – related parties   10     6 
Costs related to patient fee revenue   1,744     2,549 
Costs related to management and other fees   5,122     5,649 
Costs related to management and other fees – related medical practices   1,122    1,045 
Research and development   332     395 
Selling, general and administrative   4,483     4,063 
Total Costs and Expenses   14,006     14,522 
Income From Operations   6,002    4,097 
Interest Expense   (69)   (127)
Investment Income 47   56 
Other Income 2     - 
Income Before Benefit (Provision) for Income Taxes and Non Controlling Interests 5,982      4,026 
Benefit (Provision) for Income Taxes 1,140   (145)
Net Income 7,122   3,881 
Net Income – Non Controlling Interests   (1,222)    (876)
Net Income – Controlling Interests$  5,900  $  3,005 
Net Income Available to Common Stockholders$  5,526  $  2,810 
Net Income Available to Class A Non-Voting Preferred Stockholders$  279  $  145 
Net Income Available to Class C Common Stockholders$  95  $  50 
Basic Net Income Per Common Share Available to Common Stockholders$  0.90  $  0.46 
Diluted Net Income Per Common Share Available to Common Stockholders$  0.88  $  0.45 
Basic and Diluted Income Per Share-Class C Common$  0.25  $  0.13 
Weighted Average Basic Shares Outstanding-Common Stockholders   6,166     6,050 
Weighted Average Diluted Shares Outstanding – Common Stockholders   6,294     6,178 
Weighted Average Basic Shares Outstanding – Class C Common 383   383 
Weighted Average Diluted Shares Outstanding – Class C Common 383   383 


 
FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts and shares in thousands, except per share amounts)
 (UNAUDITED)
 
 FOR THE NINE MONTHS
ENDED MARCH 31,
REVENUES 2017   2016  
Product sales – net$  1,103  $  780  
Service and repair fees – net   7,074     6,970  
Service and repair fees – related parties - net   83     83  
Patient fee revenue, net of contractual allowances and discounts   26,509      24,596  
Provision for bad debts for patient fee (11,859)    (10,608) 
Management and other fees – net   28,216     27,180  
Management and other fees – related medical practices – net   6,020     5,598  
Total Revenues – Net   57,146     54,599  
COSTS AND EXPENSES    
Costs related to product sales  543     939  
Costs related to service and repair fees   2,168    1,542  
Costs related to service and repair fees – related parties  25    18  
Costs related to patient fee revenue  6,481     7,015   
Costs related to management and other fees  15,641      16,664  
Costs related to management and other fees –  related medical practices   3,202     3,116  
Research and development   1,105     1,243  
Selling, general and administrative 12,617     12,125  
Total Costs and Expenses   41,782     42,662  
Income From Operations  15,364     11,937  
Interest Expense  (244)    (416) 
Investment Income   145     164  
Other (Expense) Income   (1)  1   
Income Before Benefit (Provision) for Income Taxes and Non Controlling Interests 15,264     11,686  
Benefit (Provision) for Income Taxes  1,293     (235) 
Net Income   16,557     11,451  
Net Income – Non Controlling Interests   (2,844)    (2,091) 
Net Income – Controlling Interests$  13,713  $  9,360  
Net Income Available to Common Stockholders$  12,842  $  8,752  
Net Income Available to Class A Non-Voting Preferred Stockholders$  649  $  453  
Net Income Available to Class C Common Stockholders$  222  $  155  
Basic Net Income Per Common Share Available to Common Stockholders$   2.09  $  1.45  
Diluted Net Income Per Common Share Available to Common Stockholders$  2.05  $  1.42  
Basic and Diluted Income Per Share – Class C Common$  0.58  $  0.40  
Weighted Average Basic Shares Outstanding – Common Stockholders   6,143     6,050  
Weighted Average Diluted Shares Outstanding – Common Stockholders   6,271     6,178  
Weighted Average Basic Shares Outstanding – Class C Common 383   383  
Weighted Average Diluted Shares Outstanding – Class C Common 383   383  


   
  The Inventor of MR Scanning™
Contact: Daniel Culver An ISO 9001 Company
Director of Communications Melville, New York 11747
E-mail: investor@fonar.com Phone: (631) 694-2929
www.fonar.com Fax: (631) 390-1772