FONAR Corporation (NASDAQ: FONR), The Inventor of MR Scanning™,
reported its 3rd quarter fiscal 2013 and nine month financial
results today, for the period ended March 31, 2013. The Company's
two industry segments are: Development, manufacturing and servicing
of the UPRIGHT® Multi-Position™ MRI, and management of 23 Stand-Up®
MRI, (UPRIGHT® MRI) centers.
Third Quarter Highlights
During the quarter the Company's subsidiary, HMCA, entered into
an agreement with outside investors to acquire a 50.5% controlling
interest in a newly formed limited liability company, Health
Diagnostics Management, LLC (HDM). HMCA contributed $20.2 million
to HDM and the group of outside investors contributed $19.8 million
for its non-controlling membership interest.
On March 5, 2013, HDM purchased from Health Diagnostics, LLC and
certain of its subsidiaries (HD), a business managing 12 Stand-Up®
MRI centers and two other scanning centers located in the states of
New York and Florida.
With the purchase of HD, the Company increased total assets to
$73.3 million at March 31, 2013. This compares to total assets of
$33.6 million at June 30, 2012, an increase of 118%. Meanwhile,
total liabilities increased to $38.3 million at March 31, 2013 as
compared to $22.5 million on June 30, 2012, an increase of 70%.
Stockholder's equity increased to $35.0 million at March 31, 2013
from $11.1 million on June 30, 2012, an increase of 216%.
FONAR continued on its surge of profitable quarters where net
income was greater than $1.5 million, climbing to seven straight
quarters. The Company has had 13 straight quarters of income from
operations.
Revenues increased 22% to $11.6 million for the quarter ended
March 31, 2013, an increase of 21% from $9.6 million for the
preceding quarter ending December 31, 2012. The revenues for this
quarter are the largest quarterly revenue since the Nation's 2008
financial crisis. Approximately $2.8 million of revenue was from
the acquisition of HD.
Statement of Operations Items
Net income for the quarters ended March 31, 2013 and March 31,
2012 was $1.6 million. Net income for the nine months ended March
31, 2013 was $5.0 million, as compared to $5.1 million for the
nine-month period ended March 31, 2012. Net income for the quarter
ended March 31, 2013 included only 3 weeks of the net income of HDM
which was acquired on March 5, 2013.
Income from operations for the quarters ended March 31, 2013 and
March 31, 2012, was $1.6 million. Income from operations for the
nine months ended March 31, 2013, was $5.2 million, as compared to
$5.3 million, for the nine-month period ended March 31, 2012.
Total revenues, for the quarter ended March 31, 2013, increased
22% to $11.6 million, as compared to the quarter ended March 31,
2012, when total revenues were $9.5 million. Total revenues, for
the nine months ended March 31, 2013, increased 8% to $30.8
million, as compared to the nine months ended March 31, 2012, when
total revenues were $28.5 million.
Basic net income per common share for the quarter ended March
31, 2013, was $0.17, as compared to $0.21 for the quarter ended
March 31, 2012. Diluted net income per common share for the quarter
ended March 31, 2013, was $0.17, as compared to $0.20 for the
quarter ended March 31, 2012.
Basic net income per common share for the nine months ended
March 31, 2013, was $0.61, as compared to $0.71 for the nine months
ended March 31, 2012. Diluted net income per common share for the
nine months ended March 31, 2013, was $0.60, as compared to $0.69
for the nine months ended March 31, 2012.
Revenues from the HMCA management and other fees segment which
manages the FONAR UPRIGHT® Multi-Position™ MRI diagnostic imaging
centers, increased 42% to $7.4 million for the three months ended
March 31, 2013, from $5.2 million for the three-month period ended
March 31, 2012. In addition, revenues from a new category called
Patient Revenue - Net were $965,000. Patient revenue represents
revenues generated by the acquisition of HD on March 5, 2013.
Costs related to HMCA management and other fees segment for the
three months ended March 31, 2013, were $3.5 million. For the
three-month period ended March 31, 2012, costs were $3.3 million.
Costs related to patient revenue - net were $791,000 for the
quarter ended March 31, 2013.
Balance Sheet Items
Total assets doubled for the quarter ended March 31, 2013 to
$73.3 million, a 118% increase, as compared to $33.6 million at
June 30, 2012.
Total liabilities at March 31, 2013 were $38.3 million, a 70%
increase as compared to $22.5 million at June 30, 2012.
Total current assets at March 31, 2013 were $39.7 million, a 54%
increase as compared to $25.9 million at June 30, 2012.
At March 31, 2013, total cash and cash equivalents were $9.2
million, as compared to $12.0 million at June 30, 2012. This $2.8
million reduction was primarily due to the $6.2 million used in the
acquisition of HDM.
Total current liabilities at March 31, 2013 were $24.3 million,
a 15% increase as compared to $21.1 million at June 30, 2012.
Significant Events
The Company will hold its annual meeting on June 24, 2013. Dr.
Raymond Damadian, president and chairman of FONAR Corporation, has
issued his annual shareholder letter which can be seen on the
Company's Web site at www.fonar.com/shareholder_letter.htm.
On March 5, 2013, the Company and its subsidiary, Health
Management Corporation of American (HMCA), acquired a majority
interest (50.5%) in a newly formed limited liability company,
Health Diagnostics Management (HDM). Prior to the acquisition, HMCA
was managing 11 STAND-UP® MRI diagnostic centers -- 8 in New York
and 3 in Florida, collectively completing 45,000 scans in 2012. In
one giant step, HMCA grew by 14 MRI facilities under HMCA
management -- 10 in New York and 4 in Florida, 12 of them equipped
with STAND-UP® MRIs. Those 14 centers completed 68,000 MRI scans in
2012. Together the two groups of centers completed 113,000 scans in
2012, a strong indicator of the patient throughput run rate that is
expected for HMCA going forward.
During the third quarter, the Company installed a new FONAR
UPRIGHT®, Weight-Bearing, Multi-Position™ MRI in Texarkana, Texas.
The Company has now installed 157 UPRIGHT® Multi-Position™ MRI
scanners and they have performed approximately 2.75 million
UPRIGHT® MRI scans worldwide.
On May 1, 2013, the Company repaid a portion of the Class A
Stockholders capital contribution in the amount of $1.2 million.
The Company's subsidiary, HMCA, now owns an 85% interest in
Imperial Management Services.
Management Commentary
Dr. Raymond Damadian, M.D., president and chairman of Fonar
Corporation, said: "The acquisition of HDM is expected to be a
significant source of profitability. With this acquisition we
doubled the assets of the Company and tripled our stockholder's
equity and book value. Funds were obtained for the $40 million
acquisition from a commercial bank at a low interest rate."
"There are more reasons why this acquisition makes a lot of
sense," continued Dr. Damadian. "By combining the resources of HMCA
and HDM, we will enjoy the benefits of economies of scale, shared
administrative and technical expertise and capabilities, and joint
marketing strategies. HMCA's 11 STAND-UP® MRIs together with HDM's
12 form a network of 23 STAND-UP® MRIs, the largest in the
world."
"Of course, we're not finished growing," said Dr. Damadian. "We
will continue to pursue additional management contracts, primarily
in New York and Florida."
"This past April 6th we held 'Symposium 2013' in New York City.
The symposium was called 'The Cranio-Cervical Syndrome (CCS): The
Vulnerability of the Human Neck and Its Impact on Cerebrospinal
Fluid (CSF) Flow'," said Dr. Damadian. "There is a pandemic
dimension of injuries of the neck and head, including 1.2 million
whiplash injuries each year in the United States, and the principal
purpose of Symposium 2013 was to bring the existence of this
Cranio-Cervical Syndrome to the medical community and general
populace. We will publish, before year-end, a monograph containing
the complete presentation of the eight faculty who presented at the
conference. We will also place their presentations online."
"Our understanding of the Cranio-Cervical Syndrome (CCS) and the
vulnerability of the human neck and its impact on cerebrospinal
fluid (CSF) flow began with our research and findings on multiple
sclerosis. On September 20, 2011, I and co-author, FONAR scientist
David Chu, PhD., published a paper titled 'The Possible Role of
Cranio-Cervical Trauma and Abnormal CSF Hydrodynamics in the
Genesis of Multiple Sclerosis,' in the journal Physiological
Chemistry and Physics and Medical NMR (Sept. 20, 2011, 41: 1-17),
found at http://www.fonar.com/. With this new understanding of the
role that cervical trauma plays in the etiology of disease, it is
imperative to certify that the sustained neck or head injuries of
professional athletes such as NFL football players, whiplash
patients and others with severe neck trauma, have not resulted in
any obstructions of CSF flow, which would eventually lead to the
symptomatology we have reported as related to the Cranio-Cervical
Syndrome," said Dr. Damadian.
"The Company is fortunate to have as its flagship product the
FONAR UPRIGHT® Multi-Position™ MRI," continued Dr. Damadian. "This
is truly a unique technology producing exquisite images in all
positions of the body. It not only yields a whole new treasure of
new medical applications in such calamitous medical categories as
multiple sclerosis, and other dementia, but it also possesses the
strong potential to provide fresh new insights into the
debilitating chronic consequences of sports injuries, the current
epidemic of automobile whiplash injuries, all spine injuries, and
more diseases yet to be unearthed."
About FONAR
FONAR (NASDAQ: FONR), Melville, NY, The Inventor of MR
Scanning™, 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.
Since its inception, nearly 300 recumbent-OPEN MRIs and 157
UPRIGHT® Multi-Position™ MRI scanners have been installed
worldwide. FONAR's stellar product is the 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 only. 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 is headquartered on
Long Island, New York.
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
(000's OMITTED, except shares and per share data)
(UNAUDITED)
ASSETS
March 31, June 30,
Current Assets: 2013 2012
----------- -----------
Cash and cash equivalents $ 9,243 $ 12,032
Accounts receivable - net 4,993 5,095
Accounts receivable - related party 30 -
Medical receivables - net 4,513 -
Management and other fees receivable - net 14,820 3,782
Management and other fees receivable - related
medical practices - net 2,396 1,311
Costs and estimated earnings in excess of billings
on uncompleted contracts 488 1,129
Inventories 2,284 2,195
Current portion of notes receivable - net 118 116
Prepaid expenses and other current assets 837 206
----------- -----------
Total Current Assets 39,722 25,866
----------- -----------
Property and equipment - net 17,713 3,173
Notes receivable 192 276
Goodwill 1,667 -
Other intangible assets - net 12,796 3,835
Other assets 1,191 465
----------- -----------
Total Assets $ 73,281 $ 33,615
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, June 30,
Current Liabilities: 2013 2012
----------- -----------
Current portion of long-term debt and capital
leases $ 2,517 $ 1,854
Accounts payable 2,639 2,077
Other current liabilities 8,680 7,693
Unearned revenue on service contracts 5,681 5,475
Unearned revenue on service contracts - related
party 28 -
Customer advances 4,763 3,881
Income tax payable - 100
----------- -----------
Total Current Liabilities 24,308 21,080
Long-Term Liabilities:
Accounts payable, non current - 47
Due to related medical practices 231 229
Long-term debt and capital leases, less current
portion 13,404 777
Other liabilities 362 401
----------- -----------
Total Long-Term Liabilities 13,997 1,454
----------- -----------
Total Liabilities 38,305 22,534
----------- -----------
FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's OMITTED, except shares and per share data)
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (continued)
March 31, June 30,
STOCKHOLDERS' EQUITY: 2013 2012
----------- -----------
Class A non-voting preferred stock $.0001 par
value; 453,000 shares authorized at March 31,
2013 and June 30, 2012, 313,438 issued and
outstanding at March 31, 2013 and June 30, 2012 - -
Preferred stock $.001 par value; 567,000 shares
authorized at March 31, 2013 and June 30, 2012,
issued and outstanding - none - -
Common Stock $.0001 par value; 8,500,000 shares
authorized at March 31, 2013 and June 30, 2012,
5,977,905 and 5,912,905 issued at March 31, 2013
and June 30, 2012, respectively; 5,966,262 and
5,901,262 outstanding at March 31, 2013 and June
30, 2012, respectively 1 1
Class B Common Stock (10 votes per share) $.0001
par value; 227,000 shares authorized at March
31, 2013 and June 30, 2012, 158 issued and
outstanding at March 31, 2013 and June 30, 2012 - -
Class C Common Stock (25 votes per share) $.0001
par value; 567,000 shares authorized at March
31, 2013 and June 30, 2012, 382,513 issued and
outstanding at March 31, 2013 and June 30, 2012 - -
Paid-in capital in excess of par value 174,478 174,084
Accumulated other comprehensive loss (15) (20)
Accumulated deficit (164,457) (168,334)
Notes receivable from employee stockholders (57) (71)
Treasury stock, at cost - 11,643 shares of common
stock at March 31, 2013 and June 30, 2012 (675) (675)
Non controlling interests 25,701 6,096
----------- -----------
Total Stockholders' Equity 34,976 11,081
----------- -----------
Total Liabilities and Stockholders' Equity $ 73,281 $ 33,615
=========== ===========
FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(000's OMITTED, except shares and per share data)
FOR THE THREE MONTHS ENDED
REVENUES MARCH 31,
2013 2012
------------ ------------
Product sales - net $ 416 $ 1,309
Service and repair fees - net 2,867 3,008
Service and repair fees - related parties -
net 27 27
Patient revenue - net 965 -
Management and other fees - net 5,402 3,601
Management and other fees - related medical
practices - net 1,965 1,571
------------ ------------
Total Revenues - Net 11,642 9,516
------------ ------------
COSTS AND EXPENSES
Costs related to product sales 498 962
Costs related to service and repair fees 819 891
Costs related to service and repair fees -
related parties 8 8
Costs related to patient revenue 791 -
Costs related to management and other fees 2,606 2,390
Costs related to management and other fees -
related medical practices 900 953
Research and development 381 315
Selling, general and administrative 3,774 2,224
Provision for bad debts 235 170
------------ ------------
Total Costs and Expenses 10,012 7,913
------------ ------------
Income From Operations 1,630 1,603
Interest Expense (79) (103)
Investment Income 55 53
------------ ------------
Income Before Provision for Income Taxes 1,606 1,553
Provision for Income Taxes 25 -
------------ ------------
Net Income 1,581 1,553
Net Income - Non Controlling Interests 505 261
------------ ------------
Net Income - Controlling Interests $ 1,076 $ 1,292
============ ============
Net Income Available to Common Stockholders $ 1,005 $ 1,206
============ ============
Net Income Available to Class A Non-Voting
Preferred Stockholders $ 53 $ 64
============ ============
Net Income Available to Class C Common
Stockholders $ 18 $ 22
============ ============
Basic Net Income Per Common Share Available to
Common Stockholders $ 0.17 $ 0.21
============ ============
Diluted Net Income Per Common Share Available to
Common Stockholders $ 0.17 $ 0.20
============ ============
Basic and Diluted Income Per Share-Common C $ 0.05 $ 0.06
============ ============
Weighted Average Basis Shares Outstanding 5,937,096 5,836,229
============ ============
Weighted Average Diluted Shares Outstanding 6,064,600 5,963,733
============ ============
Weighted Average Basic Shares Outstanding -
Class C Common 382,513 382,513
============ ============
Weighted Average Diluted Shares Outstanding -
Class C Common 382,513 382,513
============ ============
FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(000's OMITTED, except shares and per share data)
FOR THE NINE MONTHS ENDED
REVENUES MARCH 31,
2013 2012
------------ ------------
Product sales - net $ 2,536 $ 4,699
Service and repair fees - net 8,341 8,720
Service and repair fees - related parties -
net 83 83
Patient revenue - net 965 -
Management and other fees - net 12,946 10,238
Management and other fees - related medical
practices - net 5,895 4,712
------------ ------------
Total Revenues - Net 30,766 28,452
------------ ------------
COSTS AND EXPENSES
Costs related to product sales 2,457 3,608
Costs related to service and repair fees 2,579 2,572
Costs related to service and repair fees -
related parties 26 24
Costs related to patient revenue 791 -
Costs related to management and other fees 7,013 6,462
Costs related to management and other fees -
related medical practices 2,568 2,673
Research and development 1,031 938
Selling, general and administrative 8,338 6,261
Provision for bad debts 735 655
------------ ------------
Total Costs and Expenses 25,538 23,193
------------ ------------
Income From Operations 5,228 5,259
Interest Expense (258) (333)
Investment Income 174 178
Other (Expense) Income (13) 55
------------ ------------
Income Before Provision for Income Taxes 5,131 5,159
Provision for Income Taxes 152 21
------------ ------------
Net Income 4,979 5,138
Net Income - Non Controlling Interests 1,103 796
------------ ------------
Net Income - Controlling Interests $ 3,876 $ 4,342
============ ============
Net Income Available to Common Stockholders $ 3,621 $ 4,051
============ ============
Net Income Available to Class A Non-voting
Preferred Stockholders $ 190 $ 217
============ ============
Net Income Available to Class C Common
Stockholders $ 65 $ 74
============ ============
Basic Net Income Per Common Share Available to
Common Stockholders $ 0.61 $ 0.71
============ ============
Diluted Net Income Per Common Share Available to
Common Stockholders $ 0.60 $ 0.69
============ ============
Basic and Diluted Income Per Share-Common C $ 0.17 $ 0.19
============ ============
Weighted Average Basic Shares Outstanding 5,921,540 5,744,506
============ ============
Weighted Average Diluted Shares Outstanding 6,049,044 5,872,010
============ ============
Weighted Average Basic Shares Outstanding -
Class C Common 382,513 382,513
============ ============
Weighted Average Diluted Shares Outstanding -
Class C Common 382,513 382,513
============ ============
Contact: Daniel Culver Director of Communications FONAR
Corporation Tel: 631-694-2929 Fax: 631-390-1709
http://www.fonar.com Email Contact
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