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Fonar Press Releases

For Immediate Release

The Inventor of MR Scanning™

An ISO 9001 Company

Contact: Daniel Culver

110 Marcus Drive

Director of Communications

Melville, NY 11747-4292

Web site: www.fonar.com

Phone: (631) 694-2929

Email: investor @ fonar. com

Fax: (631) 390-1709

FONAR Announces Fiscal 2018 2nd Quarter and Six Months Financial Results

  • 26% Increase in Income from Operations, to $5.8 million, for the quarter ended December 31, 2017, versus same quarter during prior year.

  • 10% Increase in Total Revenues – Net, to $20.2 million, for the quarter ended December 31, 2017, versus same quarter during prior year.

  • 3% Decrease in Diluted Net Income per Common Share available to Common Shareholders to $0.61, for the quarter ended December 31, 2017, versus same quarter during prior year.

  • 6% Increase in Net Income, to $5.2 million, for the quarter ended December 31, 2017, versus same quarter during prior year.

MELVILLE, NEW YORK, February 12, 2018 - FONAR Corporation (NASDAQ-FONR), The Inventor of MR Scanning™, reported today its financial results for the 2nd Fiscal Quarter of 2018 and the six month period ended December 31, 2017. The Company’s two industry segments are: development, manufacturing and servicing of the FONAR UPRIGHT® Multi-Position™ MRI, aka Stand-Up® MRI, and management of 26 MRI centers through its subsidiary, Health Management Company of America (HMCA).

The FONAR UPRIGHT® Multi-Position™ MRI scanner is the world’s only MRI scanner licensed under FONAR’s multiple UPRIGHT® MRI patents to scan all the patient’s body parts in their normal full weight-bearing UPRIGHT® position. FONAR’s substantial list of patents includes recent patents for its technology enabling full weight-bearing MRI imaging on all the gravity sensitive regions of the human anatomy, especially the brain, extremities, spine and cerebrospinal fluid (CSF) flow.

Financial Highlights

Total Revenues – Net, for the quarter ended December 31, 2017 increased 10% to $20.2 million as compared to the quarter ended December 31, 2016, of $18.4 million.

Total Revenues – Net, for the six month period ended December 31, 2017, increased 6% to $39.5 million as compared to the six month period ended December 31, 2016, of $37.1 million.

Income from Operations, for the quarter ended December 31, 2017, increased 26% to $5.8 million, as compared to the quarter ended December 31, 2016, of $4.6 million.

Income from Operations, for the six month period ended December 31, 2017, increased 13% to $10.6 million as compared to the six month period ended December 31, 2016, of $9.4 million.

Net Income, for the quarter ended December 31, 2017, increased 6% to $5.2 million, as compared to the quarter ended December 31, 2016, of $4.9 million.

Net Income, for the six month period ended December 31, 2017, increased 4% to $9.8 million, as compared to the six month period ended December 31, 2016, of $9.4 million.

Net Income Available to Common Stockholders, for the quarter ended December 31, 2017, decreased 1% to $3.9 million as compared to the quarter ended December 31, 2016, of $4.0 million.

Net Income Available to Common Stockholders, for the six month period ended December 31, 2017, increased 1% to $7.4 million, as compared to the six month period ended December 31, 2016, of $7.3 million.

Basic Net Income per Common Share Available to Common Stockholders, for the quarter ended December 31, 2017, decreased 3% to $0.62 per share, as compared to the quarter ended December 31, 2016, of $0.64 per share.

Basic Net Income per Common Share Available to Common Stockholders, for the six month period ended December 31, 2017, decreased 1% to $1.18 per share, as compared to the quarter ended December 31, 2016, of $1.19 per share.

Diluted Net Income per Common Share Available to Common Stockholders, for the quarter ended December 31, 2017, decreased 3% to $0.61 per share, as compared to the quarter ended December 31, 2016, of $0.63 per share.

Diluted Net Income per Common Share Available to Common Stockholders, for the six month period ended December 31, 2017, decreased 1% to $1.16 per share, as compared to the quarter ended December 31, 2016, of $1.17 per share.

Total Assets, at December 31, 2017, was $105.2 million, as compared to $98.8 million at June 30, 2017.

Total Current Assets, at December 31, 2017, was $60.2 million, as compared to $53.4 million at June 30, 2016.

Total Cash and Cash Equivalents, at December 31, 2017, was $14.2 million, as compared to $10.1 million at June 30, 2017.

Total Liabilities, at December 31, 2017, was $15.2 million, as compared to $15.9 million at June 30, 2017.

Total Current Liabilities, at December 31, 2017, was $13.6 million, as compared to $14.2 million at June 30, 2017.

Management Discussion

The Tax Cuts and Jobs Act was signed into law on December 22, 2017 and makes numerous changes to the Internal Revenue Code. Among other changes, the Act reduces the US corporate income tax rate to 21% effective January 1, 2018. Because the Act became effective mid-way through the Company’s tax year, the Company will have a US statutory income tax rate of 27.7% for the fiscal 2018 and will have a 21% statutory income tax rate for fiscal years thereafter.

Under ASC Topic 740, Accounting for Income Taxes, the enactment of the Tax Act also requires companies to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation in enacted. The Company’s gross deferred tax assets and liabilities will be revalued from 35% to 21% with a corresponding offset to the valuation allowance and any potential other taxes arising due to the Tax Act will result in reductions to its net operating loss carryforward and valuation allowance. The Company will continue to analyze the Tax Act to assess the full effects on its financial results, including disclosures, for our fiscal year ending June 30, 2018.

President and CEO, Timothy R. Damadian said, “We are very pleased with the Company’s second-quarter results. In fact, our income from operations was close to the highest that we have ever achieved. Also, without the reduction in the deferred tax asset, we would have had a year-over-year increase of 11% to $0.70 in Diluted Net Income per Common Share.

“We are already seeing the positive effects the recent federal tax cuts are having on the economy,” Mr. Damadian continued. “Higher wages and more jobs mean more Americans will be able to afford high-quality healthcare, which translates to increased patient volume at HMCA-managed MRI scanning centers.”

"It's rewarding to me," said Raymond V. Damadian, M.D., Chairman of the Board of Directors of FONAR Corporation, "how consistently profitable we are. Our UPRIGHT® Multi-Position™ (aka Stand-Up®) MRI scanner, for example, is unique. Its ability to medically visualize the spine of a patient with back pain (which condition is responsible for a very significant percentage of all MRI scans performed by all MRI scanners worldwide each year) in its normal upright position is unique. Its power to visualize the spine supporting the full weight load that it normally has to sustain each day and to position the patient in the exact position (that he/she specifies to the MRI technologist who is positioning him/her in the FONAR UPRIGHT® Multi-Position™ MRI) that generates his/her pain (which the conventional recumbent MRI cannot do) is unparalleled."

"This power of the FONAR UPRIGHT® Multi-Position™ MRI to completely visualize ALL the anatomy components under their full weight load that are giving rise to the patient's pain, which the conventional recumbent MRI cannot do, assures that the surgical procedure chosen for his/her treatment will achieve the optimum outcome for the patient."

"In addition," continued Dr. Damadian, "I am very proud of the fact that it has been 7 years since FONAR has had a quarterly loss. This is something we have all worked very hard to achieve."

About FONAR

FONAR, The Inventor of MR Scanning™, located in Melville, NY, was incorporated in 1978 and 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 and "weightless-only" scanners. The patient-friendly UPRIGHT® MRI has a near-zero claustrophobic rejection rate by patients. Regarding patient comfort, as one FONAR customer stated, "If the patient is 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 measuring 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

 
December 31,
2017
June 30,
2017
Cash and cash equivalents      
$ 14,194
$ 10,140
Accounts receivable – net
4,222
4,322
Accounts receivable - related party
60
Medical receivable – net
12,480
11,745
Management and other fees receivable - net
20,268
18,594
Management and other fees receivable – related medical practices – net
5,222
4,959
Inventories
1,696
1,624
Costs and estimated earnings in excess of billings on uncompleted contracts
736
736
Prepaid expenses and other current assets
1,368
1,294
Total Current Assets

60,246

53,414

Deferred income tax asset
17,287
17,862
Property and equipment – net
16,986
16,462
Goodwill
3,985
3,927
Other intangible assets – net
6,076
6,645
Other Assets
603
453
Total Assets
$ 105,183
================
$ 98,763
================

 

FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts and shares in thousands, except per share amounts)
(UNAUDITED)

LIABILITIES AND STOCKHOLDERS' EQUITY

 
December 31,
2017
June 30,
2017

Current Liabilities:

Current portion of long-term debt and capital leases
$ 95
$ 180
Accounts payable
1,365
1,423
Other current liabilities
6,662
7,203
Unearned revenue on service contracts
4,520
4,642
Unearned revenue on service contracts – related party
55
Customer advances
898
788
Total Current Liabilities
13,595
14,236
     

Long-Term Liabilities:

Deferred income tax liability
332
332
Due to related medical practices
227
227
Long-term debt and capital leases, less current portion
323
337
Other liabilities
711
721
Total Long-Term Liabilities
1,593
1,617
Total Liabilities
15,188
15,853

FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts and shares in thousands, except per share amounts)
(UNAUDITED)

LIABILITIES AND STOCKHOLDERS' EQUITY (Continued)

 
December 31,
2017
June 30,
2017

STOCKHOLDERS' EQUITY:

Class A non-voting preferred stock $.0001 par value; 453 shares authorized at December 31, 2017 and June 30, 2017, 313 issued and outstanding at December 31, 2017 and June 30, 2017
$ —
$ —
Preferred stock $.001 par value; 567 shares authorized at December 31, 2017 and June 30, 2017, issued and outstanding – none
Common Stock $.0001 par value; 8,500 shares authorized at December 31, 2017 and June 30, 2017, 6,299 issued at December 31, 2017 and June 30, 2017; 6,288 outstanding at December 31, 2017 and June 30, 2017
1
1
Class B Common Stock (10 votes per share) $ .0001 par value; 227 shares authorized at December 31, 2017 and June 30, 2017, .146 issued and outstanding at December 31, 2017 and June 30, 2017
Class C Common Stock (25 votes per share) $.0001 par value; 567 shares authorized at December 31, 2017 and June 30, 2017, 383 issued and outstanding at December 31, 2017 and June 30, 2017
Paid-in capital in excess of par value
179,131
179,131
Accumulated deficit
(93,095)
(101,003)
Notes receivable from employee stockholders
(13)
(17)
Treasury stock, at cost - 12 shares of common stock at December 31, 2016 and June 30, 2016
(675)
(675)
Total Fonar Corporation Stockholder Equity
85,349
77,437
Noncontrolling interests
4,646
5,473
Total Stockholders' Equity
89,995
82,910
Total Liabilities and Stockholders' Equity
$ 105,183
================
$ 98,763
================

*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 December 31,
 
2017
2016

REVENUES

Product sales – net
$ 276
$ 93
Service and repair fees – net
2,352
2,356
Service and repair fees - related parties – net
28
28
Patient fee revenue, net of contractual allowances and discounts
9,537
8,657
Provision for bad debts and bad debt expense for patient fee
(4,571)
(4,002)
Management and other fees – net
10,340
9,364
Management and other fees – related medical practices – net
2,206
1,907
Total Revenues – Net
20,168
18,403

COSTS AND EXPENSES

Costs related to product sales
246
(34)
Costs related to service and repair fees
753
683
Costs related to service and repair fees - related parties
9
8
Costs related to patient fee revenue
2,570
2,323
Costs related to management and other fees
5,826
5,257
Costs related to management and other fees – related medical practices
1,261
1,127
Research and development
407
361
Selling, general and administrative
3,286
4,069
Total Costs and Expenses
14,358
13,794
Income From Operations
5,810
4,609
Interest Expense
(48)
(77)
Investment Income
58
49
Other Expense
(5)
Income Before (Provision)/Benefit for Income Taxes and Non Controlling Interests
5,815
4,581
(Provision)/Benefit for Income Taxes
(575)
353
Net Income
5,240
4,934
Net Income - Non Controlling Interests
(1,051)
(692)
Net Income - Controlling Interests
$ 4,189
================
$ 4,242
================
Net Income Available to Common Stockholders
$ 3,926
================
$ 3,971
================
Net Income Available to Class A Non-Voting Preferred Stockholders
$ 196
================
$ 202
================
Net Income Available to Class C Common Stockholders
$ 67
================
$ 69
================
Basic Net Income Per Common Share Available to Common Stockholders
$ 0.62
================
$ 0.64
================
Diluted Net Income Per Common Share Available to Common Stockholders
$ 0.61
================
$ 0.63
================
Basic and Diluted Income Per Share-Class C Common
$ 0.17
================
$ 0.18
================
Weighted Average Basis Shares Outstanding-Common Stockholders
6,287
================
6,158
================
Weighted Average Diluted Shares Outstanding - Common Stockholders
6,415
================
6,286
================
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 Six Months Ended
December 31,
 
2017
2016

REVENUES

Product sales – net
$ 439
$ 335
Service and repair fees – net
4,616
4,708
Service and repair fees - related parties – net
55
55
Patient fee revenue, net of contractual allowances and discounts
18,190
17,481
Provision for bad debts and bad debt expense for patient fee
(8,321)
(7,880)
Management and other fees – net
20,111
18,625
Management and other fees – related medical practices – net
4,412
3,814
Total Revenues – Net
39,502
37,138

COSTS AND EXPENSES

Costs related to product sales
389
179
Costs related to service and repair fees
1,533
1,339
Costs related to service and repair fees - related parties
18
16
Costs related to patient fee revenue
5,049
4,737
Costs related to management and other fees
11,384
10,518
Costs related to management and other fees – related medical practices
2,411
2,080
Research and development
755
773
Selling, general and administrative
7,367
8,135
Total Costs and Expenses
28,906
27,777
Income From Operations
10,596
9,361
Interest Expense
(92)
(174)
Investment Income
104
97
Other (Expense) Income
(7)
(3)
Income Before (Provision)/Benefit for Income Taxes and Non Controlling Interests
10,601
9,281
(Provision)/Benefit for Income Taxes
(760)
153
Net Income
9,841
9,434
Net Income - Non Controlling Interests
(1,933)
(1,622)
Net Income - Controlling Interests
$ 7,908
================
$ 7,812
================
Net Income Available to Common Stockholders
$ 7,413
================
$ 7,313
================
Net Income Available to Class A Non-Voting Preferred Stockholders
$ 369
================
$ 372
================
Net Income Available to Class C Common Stockholders
$ 126
================
$ 127
================
Basic Net Income Per Common Share Available to Common Stockholders
$ 1.18
================
$ 1.19
================
Diluted Net Income Per Common Share Available to Common Stockholders
$ 1.16
================
$ 1.17
================
Basic and Diluted Income Per Share-Class C Common
$ 0.33
================
$ 0.33
================
Weighted Average Basic Shares Outstanding-Common Stockholders
6,287
================
6,131
================
Weighted Average Diluted Shares Outstanding-Common Stockholders
6,415
================
6,259
================
Weighted Average Basic Shares Outstanding – Class C Common
383
================
383
================
Weighted Average Diluted Shares Outstanding – Class C Common
383
================
383
================

 

 

FONAR™ Corporation
110 Marcus Drive
Melville, N.Y. 11747
Tel. 631-694-2929
Fax. 631-390-9540
Email sales@FONAR.com
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