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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 2016 2nd Quarter And Six Months Financial Results

  • Diluted Net Income Per Common Share Available to Common Stockholders increased 33% to $0.53 per share for
    Fiscal 2016 2nd Quarter versus the same period a year earlier.
  • Cash and cash equivalents increased 37% to $13.0 million at December 31, 2015, from $9.5 million at June 30, 2015.
  • Net Revenues for Fiscal 2016 2nd Quarter increased 8% to $18.4 million versus the same period a year earlier.
  • Net Income for Fiscal 2016 2nd Quarter increased 19% to $4.1 million versus the same period a year earlier.
  • Net Income From Operations for Fiscal 2016 2nd Quarter increased 17% to $4.2 million versus the same period a year earlier.
  • Net Income Available to Common Stockholders for Fiscal 2016 2nd Quarter increased 31% to $3.3 million versus the same period a year earlier.

MELVILLE, NEW YORK, February 9, 2016 - FONAR Corporation (NASDAQ-FONR), The Inventor of MR Scanning™, reported its fiscal 2016 second quarter results for the quarter and six month period ended December 31, 2015. FONAR is the first Company in the MRI industry to manufacture an MRI (Magnetic Resonance Imaging) scanner. FONAR's substantial list of patents include recent patents for its technology enabling full weight-bearing MRI imaging in all the gravity sensitive regions of the human anatomy, especially the brain, extremities, spine and cerebrospinal fluid (CSF) flow.

The Company's two industry segments are the management of Stand-Up® MRI (UPRIGHT® Multi-Position™ MRI) centers, and the development, manufacturing and servicing of the UPRIGHT® MRI. Its premier MRI product, the FONAR UPRIGHT® Multi-Position™ MRI scanner, is the world's only MRI scanner licensed under FONAR's multiple UPRIGHT® Multi-Position™ MRI patents to scan all the patient's body parts in their normal fully weight-bearing UPRIGHT® positions.

Financial Highlights

Net Revenues increased 8% for the fiscal 2016 second quarter ended December 31, 2015 to $18.4 million versus $17.1 million for the corresponding quarter one year earlier.

Net Revenues increased 3% to $36.0 million for the fiscal 2016 six month period ended December 31, 2015, from $35.1 million for the corresponding six month period one year earlier.

Net Income increased 19% to $4.1 million for the fiscal 2016 second quarter ended December 31, 2015 versus $3.5 million for the corresponding quarter one year earlier.

Net Income increased 13% to $7.6 million for the fiscal 2016 six month period ended December 31, 2015 versus $6.7 million for the corresponding six month period one year earlier.

Income from Operations for the fiscal 2016 second quarter ended December 31, 2015 increased 17% to $4.2 million, from $3.6 million for the corresponding quarter one year earlier.

Income from Operations increased 11% to $7.8 million for the fiscal 2016 six month period ended December 31, 2015, versus $7.0 million for the corresponding six month period one year earlier.

Diluted net income per common share available to common shareholders increased 33% to $0.53 for the fiscal 2016 second quarter ended December 31, 2015 versus $0.40 for the corresponding quarter one year earlier.

Diluted net income per common share available to common shareholders increased 22% to $0.96 for the fiscal 2016 six month period ended December 31, 2015 versus $0.79 for the corresponding six month period one year earlier.

Total assets at December 31, 2015 were $80.4 million, as compared to $76.4 million at June 30, 2015. Total current assets at December 31, 2015 were $48.7 million, as compared to $43.6 million at June 30, 2015.

Total liabilities at December 31, 2015 were $24.8 million, as compared to $25.7 million at June 30, 2015. Total current liabilities at December 31, 2015 were $19.0 million, as compared to $18.8 million at June 30, 2015.

Stockholder's equity at December 31, 2015 was $80.4 million, as compared to $76.5 million at June 30, 2015.

Cash and cash equivalents increased 37% to $13.0 million at December 31, 2015, from $9.5 million at June 30, 2015.

Management Discussion

Raymond V. Damadian, president and chairman of FONAR Corporation said, "While we are still concerned about the environment created under the Affordable Care Act, we have continued to grow our business consistently. This is because of the adherence to a business strategy that we have mastered which has made the difference."

Dr. Damadian continued: "Our business plan is to grow consistently and to always provide our customers with the most optimal service. Our FONAR UPRIGHT® Multi-Position™ MRI scanner is not only the most comfortable MRI for our customers but the results from the scanner are of the highest professional quality. In this current medical era, it doesn't get any better than this for our patients. The patient sits, watches TV comfortably and obtains a weight-bearing MRI of his problem. Physicians appreciate that it is going to be a scan that can 'SEE IT ALL' and allow the doctor to optimize the TREATMENT OUTCOMES FOR THEIR PATIENT."

Significant Events

As reported on January 6, 2016, the Company reported that its subsidiary Health Management Company of America, LLC (HMCA) had begun managing Stand-Up MRI of Great Neck, located at 600 Northern Blvd., Great Neck, New York, bringing the total number of HMCA-managed centers to 25: 18 in New York and 7 in Florida. Twenty four (24) of the centers are equipped with the FONAR UPRIGHT® Multi-Position™ MRI. Last year, the 24 HMCA-managed sites provided $57.6 million (83%) of FONAR's $69.1 million in revenue.

On February 4, 2016, the television network ESPN ran a 30 For 30 series documentary on the 1985 NFL Chicago Bears that featured Dr. Scott Rosa and Jim McMahon. During the approximately five minute segment, Jim McMahon said he was thankful to Dr. Rosa's treatment. Dr. Rosa provided his patented IGAT™ (Image Guided Atlas Treatment™) that utilized FONAR's UPRIGHT® MRI examination of Jim McMahon to determine the percussion direction and percussion angle of his IGAT™ procedure. FONAR provided the UPRIGHT® Multi-Position™ MRI that for the first time successfully detected and diagnosed Jim McMahon's health issues as originating in Jim's neck (not his brain) from malalignments of the craniocervical junction vertebra (C1 & C2) from prior football traumas. These malalignments were obstructing cerebrospinal fluid (CSF) flow into his brain and generating the increased intracranial pressure (ICP) that was adversely affecting his health. This enabled Jim's successful cervical realignment by Dr. Rosa's IGAT™ (traumaimagingfoundation.com/.com).

Dr. Damadian said: "We are proud that our FONAR UPRIGHT® MRI has made such a critical difference to NFL great Jim McMahon. We recommend our shareholders watch the 30 For 30 series documentary on the 1985 NFL Chicago Bears when it runs again on Friday, February 12, 2016 at 9 PM Eastern Time on ESPN2." Check your local listings.

About FONAR

FONAR, The Inventor of MR Scanning™, is 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 stellar product is the FONAR UPRIGHT® 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 the conventional lie-down position. The FONAR UPRIGHT® MRI often sees the patient's problem that other 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. As a FONAR customer states, "If the patient is claustrophobic in this scanner, they'll be claustrophobic in my parking lot." Approximately 85% of patients are scanned sitting while they watch a 42" flat screen TV.

FONAR has new works-in-progress technology for visualizing and quantifying 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 due to this latest works-in-progress for quantifying CSF in all the normal positions of the body, particularly in its upright flow against gravity. The type of patient that will benefit from this technology includes those with various types of dementia such as former NFL quarterback Jim McMahon.

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 and spine. 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.

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

ASSETS

 
December 31,
2015
June 30,
2015 *
Current Assets:
Cash and cash equivalents      
$ 12,954
$ 9,449
Accounts receivable – net
4,557
3,791
Accounts receivable - related party
60
-
Medical receivable – net
9,567
9,082
Management and other fees receivable - net
14,656
14,058
Management and other fees receivable – related medical practices – net
3,644
3,507
Costs and estimated earnings in excess of billings on uncompleted contracts
279
682
Inventories
2,259
2,192
Prepaid expenses and other current assets
767
860
Total Current Assets

48,743

43,621

Deferred income tax asset
8,423
8,423
Property and equipment – net
12,277
12,901
Goodwill
1,767
1,767
Other intangible assets – net
8,348
8,950
Other Assets
864
830
Total Assets
80,422
================
$ 76,492
================

*Condensed from audited financial statements.

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

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
December 31,
2015
June 30,
2015 *
Current Liabilities:
Current portion of long-term debt and capital leases
$ 2,467
$ 2,490
Accounts payable
1,291
1,783
Other current liabilities
8,733
8,253
Unearned revenue on service contracts
4,700
4,187
Unearned revenue on service contracts – related party
55
-
Customer deposits
1,501
1,938
Billings in excess of costs and estimated earnings on uncompleted contracts
255
142
Total Current Liabilities
19,002
18,793
 
Long-Term Liabilities:
Deferred income tax liability
510
510
Due to related medical practices
247
237
Long-term debt and capital leases, less current portion
4,475
5,699
Other Liabilities
544
469
Total Long-Term Liabilities
5,776
6,915
Total Liabilities
24,778
25,708

*Condensed from audited financial statements.

CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts and shares in thousands, except per share amounts)
(Unaudited)

LIABILITIES AND STOCKHOLDERS' EQUITY (Continued)

STOCKHOLDERS' EQUITY:
December 31,
2015
June 30,
2015 *
Class A non-voting preferred stock $.0001 par value; 453 shares authorized at December 31, 2015 and June 30, 2015, 313 issued and outstanding at December 31, 2015 and June 30, 2015
$ —
$ —
Preferred stock $.001 par value; 567 shares authorized at December 31, 2015 and June 30, 2015, issued and outstanding - none
Common Stock $.0001 par value; 8,500 shares authorized at December 31, 2015 and June 30, 2015, 6,062 issued at December 31, 2015 and June 30, 2015; 6,051 outstanding at December 31, 2015 and June 30, 2015
1
1
Class B Common Stock (10 votes per share) $ .0001 par value; 227 shares authorized at December 31, 2015 and June 30, 2015, .146 issued and outstanding at December 31, 2015 and June 30, 2015
Class C Common Stock (25 votes per share) $.0001 par value; 567 shares authorized at December 31, 2015 and June 30, 2015, 383 issued and outstanding at December 31, 2015 and June 30, 2015
Paid-in capital in excess of par value
175,448
175,448
Accumulated deficit
(129,994 )
(136,349)
Notes receivable from employee stockholders
(28 )
(32)
Treasury stock, at cost - 12 shares of common stock at December 31, 2015 and June 30, 2015
(675)
(675)
Total Fonar Corporation Stockholder Equity
44,752
38,393
Noncontrolling interests
10,892
12,391
Total Stockholders' Equity
55,644
50,784

Total Liabilities and Stockholders' Equity

$ 80,422
================
$ 76,492
================

* Condensed from audited financial statements

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts and shares in thousands, except per share amounts)
(UNAUDITED)
 
THREE MONTHS
ENDED DECEMBER 31,
REVENUES
2015
2014  
Product sales - net
$ 742
$ 375
Service and repair fees - net
2,280
2,499
Service and repair fees - related parties - net
28
28
Patient fee revenue, net of contractual allowances and discounts
7,786
6,629
Provision for bad debts for patient fee
(3,270 )
(2,897 )
Management and other fees - net
8,958
8,613
Management and other fees–related medical practices – net
1,845
1,845
Total Revenues - Net
18,369
17,092
COSTS AND EXPENSES
Costs related to product sales
564
237
Costs related to service and repair fees
447
474
Costs related to service and repair fees - related parties
5
5
Costs related to patient fee revenue
2,238
1,902
Costs related to management and other fees
5,597
5,180
Costs related to management and other fees - related medical practices
1,012
1,240
Research and development
412
359
Selling, general and administrative
4,117
3,824
Provision for bad debts
(248 )
273
Total Costs and Expenses
14,144
13,494
Income From Operations
4,225
3,598
Interest expense
(139)
(172)
Investment income
58
60
Other Expense
(2)
Income Before Provision for Income Taxes and noncontrolling Interests
4,144
3,484
Provision for Income Taxes
40
29
Net Income
4,104
3,455
Net Income - Noncontrolling Interests
(611)
(797)
Net Income - Controlling Interests
$ 3,493
================
$ 2,658
================
Net Income Available to Common Stockholders
$ 3,266
================
$ 2,485
================
Net Income Available to Class A Non-Voting Preferred Stockholders
$ 169
================
$ 129
================
Net Income Available to Class C Common Stockholders
$ 58
================
$ 44
================
Basic Net Income Per Common Share Available to Common Stockholders
$ 0.54
================
$ 0.41
================
Diluted Net Income Per Common Share Available to Common Stockholders
$ 0.53
================
$ 0.40
================
Basic and Diluted Income Per Share - Class C Common
$ 0.15
================
$ 0.12
================
Weighted Average Basic Shares Outstanding – Common Stockholders
6,051
================
6,051
================
Weighted Average Diluted Shares Outstanding - Common Stockholders
6,179
================
6,179
================
Weighted Average Basic Shares Outstanding – Class C Common
383
================
383
================
Weighted Average Diluted Shares Outstanding – Class C Common
383
================
383
================

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts and shares in thousands, except per share amounts)
(UNAUDITED)
 
FOR THE SIX MONTHS
ENDED DECEMBER 31,
REVENUES
2015
2014  
Product sales - net
$ 760
$ 1,646
Service and repair fees - net
4,564
4,989
Service and repair fees - related parties - net
55
55
Patient fee revenue, net of contractual allowances and discounts
15,901
13,416
Provision for bad debts for patient fee
(6,778)
(6,042)
Management and other fees - net
17,786
17,351
Management and other fees–related medical practices – net
3,691
3,662
Total Revenues - Net
35,979
35,077
COSTS AND EXPENSES
Costs related to product sales
676
1,322
Costs related to service and repair fees
990
981
Costs related to service and repair fees - related parties
12
11
Costs related to patient fee revenue
4,466
3,801
Costs related to management and other fees
11,015
10,379
Costs related to management and other fees - related medical practices
2,070
2,609
Research and development
849
756
Selling, general and administrative
7,892
7,403
Provision for bad debts
169
779
Total Costs and Expenses
28,139
28,041
Income From Operations
7,840
7,036
Interest expense
(289)
(376)
Investment income
107
122
Other Income (Expense)
1
(2)
Income Before Provision for Income Taxes and noncontrolling Interests
7,659
6,780
Provision for Income Taxes
90
69
Net Income
7,569
6,711
Net Income - Noncontrolling Interests
(1,214)
(1,518)
Net Income - Controlling Interests
$ 6,355
================
$ 5,193
================
Net Income Available to Common Stockholders
$ 5,942
================
$ 4,856
================
Net Income Available to Class A Non-Voting Preferred Stockholders
$ 308
================
$ 251
================
Net Income Available to Class C Common Stockholders
$ 105
================
$ 86
================
Basic Net Income Per Common Share Available to Common Stockholders
$ 0.98
================
$ 0.80
================
Diluted Net Income Per Common Share Available to Common Stockholders
$ 0.96
================
$ 0.79
================
Basic and Diluted Income Per Share - Class C Common
$ 0.27
================
$ 0.22
================
Weighted Average Basic Shares Outstanding – Common Stockholders
6,051
================
6,050
================
Weighted Average Diluted Shares Outstanding - Common Stockholders
6,179
================
6,178
================
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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