FONAR Announces Fiscal 2017 3rd Quarter and Nine Months Financial Results
MELVILLE,
NEW YORK, May 10, 2017 - 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 TABLE |
Nine 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, 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 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 patient claustrophobic rejection rate. 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 watching
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 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. 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 |
— |
|
|
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 |
— |
|
|
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 |
|
|
3,322 |
3,322 |
Other intangible assets – net
|
6,920 |
7,719 |
|
|
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)
|
Stockholders' Equity:
|
March 31,
2017 |
June 30,
2016 *
|
|
|
|
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
|
|
|
$ 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 |
|
|
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 |
|
|
332 |
395 |
Selling, general and administrative
|
4,483 |
4,063 |
|
|
14,006 |
14,522 |
|
|
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 Basis 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
|
|
|
$ 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 |
|
|
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 |
|
|
1,105 |
1,243 |
Selling, general and administrative
|
12,617 |
12,125 |
|
|
41,782 |
42,662 |
|
|
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 Basis 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
================ |
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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