FONAR Corporation (NASDAQ:FONR), The Inventor of MR Scanning™,
reported today its first quarter fiscal 2018 results for the
quarter ended September 30, 2017.
FONAR’s primary source of income is derived from
its subsidiary’s (Health Management Company of America) management
of 26 MRI centers of which 24 feature the FONAR UPRIGHT®
Multi-Position™ MRI, aka Stand-Up® MRI.
The FONAR MRI scans patients in numerous
positions, including standing, sitting, in flexion and extension,
as well as in the conventional lie-down position. It is the
only MRI that scans patients in weight-bearing positions, which
enables it to detect patient problems missed by or underestimated
by conventional lie-down-only scanners. With most patients
scanned in a seated position watching TV, and with a near-zero
claustrophobic patient rejection rate, the FONAR scanner is by far
today’s most patient–friendly MRI.
To accommodate the high demand for the UPRIGHT®
Multi-Position™ MRI, the HMCA-managed MRI center in Bronx, New
York, last month became the first FONAR center to install a second
UPRIGHT MRI at the same location.
FONAR’s extensive patent portfolio includes
recently issued patents for its technology for visualizing and
quantifying the flow of cerebrospinal fluid (CSF) in all the normal
positions of the human body, particularly in its upright flow
against gravity. CSF circulates throughout the brain and vertebral
column at the rate of 32 quarts per day. Imaging and quantifying
the dynamics of this vital life-sustaining physiology of the body’s
neurologic system has been made possible by FONAR’s introduction of
the MRI.
Financial Highlights
Total Revenues - Net for the quarter ended
September 30, 2017, increased 3% to $19.3 million as compared to
$18.7 million for the corresponding quarter ended September 30,
2016.
Net Income for the quarter ended September 30,
2017, increased 2% to $4.6 million as compared to $4.5 million for
the corresponding quarter ended September 30, 2016.
Income from Operations for the quarter ended
September 30, 2017 increased 1% to $4.79 million as compared to
$4.75 million for the corresponding quarter ended September 30,
2016.
Basic Net Income per Common Share Available to
Common Shareholders was $0.55 for both the quarter ended September
30, 2017, and the corresponding quarter ended September 30,
2016.
Diluted Net Income per Common Share Available to
Common Shareholders was $0.54 for both the quarter ended September
30, 2017, and the corresponding quarter ended September 30,
2016.
Total Cash and Cash Equivalents at September 30,
2017, increased 12% to $11.3 million, as compared to $10.1 million
at June 30, 2017.
Total Current Assets at September 30, 2017 were
$56.1 million, as compared to $53.4 million at June 30, 2017.
Total Assets at September 30, 2017 were $101.2
million, as compared to $98.8 million at June 30, 2017.
Total Current Liabilities at September 30, 2017
were $13.8 million, as compared to $14.2 million at June 30,
2017.
Total Liabilities at September 30, 2017 were
$15.4 million, as compared to $15.9 million at June 30, 2017.
Significant Events
On July 3, 2017, FONAR acknowledged the 40th
anniversary of the world’s first whole-body MRI scan, the event
that marked the birth of the MRI industry. This remarkable
achievement was accomplished by FONAR founder Raymond Damadian,
M.D., with the assistance of graduate-students Larry Minkoff and
Michael Goldsmith.
First quarter Fiscal 2018 was the first complete
quarter in which FONAR stock was included in the Russell 3000®
Index, having joined the index effective June 26, 2017. The
Company has since seen an increase in related index funds and ETFs
(Exchange Traded Funds), mutual funds, and institutional owners.
Currently, Institutional ownership currently is 44.3%, and mutual
fund ownership is 13.6%, of Fonar's outstanding Common Stock."
Management Discussion
Timothy R. Damadian, President and CEO, said,
“Of course we’re very pleased with the first quarter results,
especially our growth in revenue and net income. Much of the credit
goes to my management team that consistently keeps the company on a
very positive growth
trajectory.”
Raymond V. Damadian, M.D. Chairman of the Board
of FONAR Corporation, added, “Given that reimbursement rates for
independent MRI providers continue to fall year after year, HMCA’s
performance is truly remarkable. I attribute it to good
management, unwavering adherence to a now-proven business plan, and
the enormous appeal and effectiveness the UPRIGHT® MRI.”
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 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 flow in all the normal positions of the
body, particularly in its upright flow against gravity. Patients
with whiplash or other neck injuries as well as patients with
childhood autism, Multiple Sclerosis, Alzheimer's disease,
Amyotrophic Lateral Scherosis (Lou Gehrig's disease), Parkinson's
disease and dementia are among those who FONAR believes are likely
to benefit from this new understanding of CSF flow physiology.
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.
Contact: Daniel Culver Director of CommunicationsE-mail:
investor@fonar.comwww.fonar.com
The Inventor of MR Scanning™An ISO 9001 CompanyMelville, New
York 11747Phone: (631) 694-2929Fax: (631) 390-1772
CONDENSED CONSOLIDATED BALANCE SHEETS |
(Amounts and shares in thousands, except per share
amounts) |
(UNAUDITED) |
|
ASSETS |
|
|
|
September 30, 2017 |
|
June 30, 2017 * |
Current Assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
11,339 |
|
|
$ |
10,140 |
|
Accounts
receivable – net |
|
|
4,514 |
|
|
|
4,322 |
|
Accounts
receivable - related party |
|
|
90 |
|
|
|
— |
|
Medical
receivable – net |
|
|
11,848 |
|
|
|
11,745 |
|
Management and other fees receivable - net |
|
|
19,572 |
|
|
|
18,594 |
|
Management and other fees receivable – related medical practices –
net |
|
|
5,058 |
|
|
|
4,959 |
|
Inventories |
|
|
1,688 |
|
|
|
1,624 |
|
Costs and
estimated earnings in excess of billings on uncompleted
contracts |
|
|
736 |
|
|
|
736 |
|
Prepaid
expenses and other current assets |
|
|
1,229 |
|
|
|
1,294 |
|
Total
Current Assets |
|
|
56,074 |
|
|
|
53,414 |
|
Deferred
income tax asset |
|
|
17,862 |
|
|
|
17,862 |
|
Property
and equipment – net |
|
|
16,478 |
|
|
|
16,462 |
|
Goodwill |
|
|
3,985 |
|
|
|
3,927 |
|
Other
intangible assets – net |
|
|
6,365 |
|
|
|
6,645 |
|
Other
assets |
|
|
458 |
|
|
|
453 |
|
Total
Assets |
|
$ |
101,222 |
|
|
$ |
98,763 |
|
*Condensed from audited financial statements.
CONDENSED CONSOLIDATED BALANCE SHEETS |
(Amounts and shares in thousands, except per share
amounts) |
(UNAUDITED) |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
September 30, 2017 |
|
June 30, 2017 * |
Current
Liabilities: |
|
|
|
|
|
|
|
|
Current
portion of long-term debt and capital leases |
|
$ |
138 |
|
|
$ |
180 |
|
Accounts
payable |
|
|
1,606 |
|
|
|
1,423 |
|
Other
current liabilities |
|
|
6,646 |
|
|
|
7,203 |
|
Unearned
revenue on service contracts |
|
|
4,654 |
|
|
|
4,642 |
|
Unearned
revenue on service contracts – related party |
|
|
83 |
|
|
|
— |
|
Customer
deposits |
|
|
737 |
|
|
|
788 |
|
Billings
in excess of costs and estimated earnings on uncompleted
contracts |
|
|
— |
|
|
|
— |
|
Total
Current Liabilities |
|
|
13,864 |
|
|
|
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 |
|
|
329 |
|
|
|
337 |
|
Other
liabilities |
|
|
696 |
|
|
|
721 |
|
Total
Long-Term Liabilities |
|
|
1,584 |
|
|
|
1,617 |
|
Total
Liabilities |
|
|
15,448 |
|
|
|
15,853 |
|
*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: |
|
September 30, 2017 |
|
June 30, 2017 * |
Class A
non-voting preferred stock $.0001 par value; 453 shares authorized
at September 30, 2017 and June 30, 2017, 313 issued and outstanding
at September 30, 2017 and June 30, 2017 |
|
$ |
— |
|
|
$ |
— |
|
Preferred
stock $.001 par value; 567 shares authorized at September 30, 2017
and June 30, 2017, issued and outstanding – none |
|
|
— |
|
|
|
— |
|
Common
Stock $.0001 par value; 8,500 shares authorized at September 30,
2017 and June 30, 2017, 6,299 issued at September 30, 2017 and June
30, 2017, 6,288 outstanding at September 30, 2017 and June 30,
2017 |
|
|
1 |
|
|
|
1 |
|
Class B
Common Stock (10 votes per share) $.0001 par value; 227 shares
authorized at September 30, 2017 and June 30, 2017; .146 issued and
outstanding at September 30, 2017 and June 30, 2017 |
|
|
— |
|
|
|
— |
|
Class C
Common Stock (25 votes per share) $.0001 par value; 567 shares
authorized at September 30, 2017 and June 30, 2017, 383 issued and
outstanding at September 30, 2017 and June 30, 2017 |
|
|
— |
|
|
|
— |
|
Paid-in
capital in excess of par value |
|
|
179,131 |
|
|
|
179,131 |
|
Accumulated deficit |
|
|
(97,283 |
) |
|
|
(101,003 |
) |
Notes
receivable from employee stockholders |
|
|
(15 |
) |
|
|
(17 |
) |
Treasury
stock, at cost - 12 shares of common stock at September 30, 2017
and June 30, 2017 |
|
|
(675 |
) |
|
|
(675 |
) |
Total
Fonar Corporation Stockholder Equity |
|
|
81,159 |
|
|
|
77,437 |
|
Noncontrolling interests |
|
|
4,615 |
|
|
|
5,473 |
|
Total
Stockholders' Equity |
|
|
85,774 |
|
|
|
82,910 |
|
Total
Liabilities and Stockholders' Equity |
|
$ |
101,222 |
|
|
$ |
98,763 |
|
*Condensed from audited financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
(Amounts and shares in thousands, except per share
amounts) |
|
(UNAUDITED) |
|
FOR THE THREE MONTHS ENDED SEPTEMBER 30, |
REVENUES |
|
2017 |
|
2016 |
Product
sales – net |
|
$ |
162 |
|
|
$ |
242 |
|
Service
and repair fees – net |
|
|
2,264 |
|
|
|
2,351 |
|
Service
and repair fees - related parties – net |
|
|
28 |
|
|
|
28 |
|
Patient
fee revenue, net of contractual allowances and discounts |
|
|
8,653 |
|
|
|
8,823 |
|
Provision
for bad debts for patient fee |
|
|
(3,750 |
) |
|
|
(3,878 |
) |
Management and other fees – net |
|
|
9,771 |
|
|
|
9,261 |
|
Management and other fees - related medical practices – net |
|
|
2,206 |
|
|
|
1,907 |
|
Total
Revenues – Net |
|
|
19,334 |
|
|
|
18,734 |
|
COSTS AND EXPENSES |
|
|
|
|
|
|
|
|
Costs
related to product sales |
|
|
143 |
|
|
|
213 |
|
Costs
related to service and repair fees |
|
|
780 |
|
|
|
655 |
|
Costs
related to service and repair fees - related parties |
|
|
9 |
|
|
|
8 |
|
Costs
related to patient fee revenue |
|
|
2,479 |
|
|
|
2,414 |
|
Costs
related to management and other fees |
|
|
5,558 |
|
|
|
5,261 |
|
Costs
related to management and other fees – related medical
practices |
|
|
1,150 |
|
|
|
953 |
|
Research
and development |
|
|
349 |
|
|
|
412 |
|
Selling,
general and administrative |
|
|
4,081 |
|
|
|
4,065 |
|
Total
Costs and Expenses |
|
|
14,549 |
|
|
|
13,981 |
|
Income
From Operations |
|
|
4,785 |
|
|
|
4,753 |
|
Interest
Expense |
|
|
(43 |
) |
|
|
(98 |
) |
Investment Income |
|
|
46 |
|
|
|
48 |
|
Other
Expense |
|
|
(2 |
) |
|
|
(3 |
) |
Income
Before Provision for Income Taxes and Noncontrolling Interests |
|
|
4,786 |
|
|
|
4,700 |
|
Provision
for Income Taxes |
|
|
(185 |
) |
|
|
(200 |
) |
Net
Income |
|
|
4,601 |
|
|
|
4,500 |
|
Net
Income - Noncontrolling Interests |
|
|
(882 |
) |
|
|
(929 |
) |
Net
Income - Controlling Interests |
|
$ |
3,719 |
|
|
$ |
3,571 |
|
Net
Income Available to Common Stockholders |
|
$ |
3,486 |
|
|
$ |
3,343 |
|
Net
Income Available to Class A Non-Voting Preferred Stockholders |
|
$ |
174 |
|
|
$ |
170 |
|
Net
Income Available to Class C Common Stockholders |
|
$ |
59 |
|
|
$ |
58 |
|
Basic Net
Income Per Common Share Available to Common Stockholders |
|
$ |
0.55 |
|
|
$ |
0.55 |
|
Diluted
Net Income Per Common Share Available to Common Stockholders |
|
$ |
0.54 |
|
|
$ |
0.54 |
|
Basic and
Diluted Income Per Share – Class C Common |
|
$ |
0.16 |
|
|
$ |
0.15 |
|
Weighted
Average Basic Shares Outstanding – Common Stockholders |
|
|
6,287 |
|
|
|
6,105 |
|
Weighted
Average Diluted Shares Outstanding - Common Stockholders |
|
|
6,415 |
|
|
|
6,233 |
|
Weighted
Average Basic Shares Outstanding – Class C Common |
|
|
383 |
|
|
|
383 |
|
Weighted
Average Diluted Shares Outstanding – Class C Common |
|
|
383 |
|
|
|
383 |
|
|
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