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™, 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 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.
Contact: Daniel CulverDirector of CommunicationsE-mail:
investor@fonar.com www.fonar.com
The Inventor of MR Scanning™An ISO 9001 CompanyMelville, New
York 11747Phone: (631) 694-2929 Fax: (631) 390-1772
|
|
|
|
FONAR CORPORATION AND SUBSIDIARIESCONDENSED
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 SUBSIDIARIESCONDENSED
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 SUBSIDIARIESCONDENSED
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 |
|
Non controlling
interests |
|
4,646 |
|
|
|
5,473 |
|
Total Stockholders'
Equity |
|
89,995 |
|
|
|
82,910 |
|
Total Liabilities and
Stockholders' Equity |
$ |
105,183 |
|
|
$ |
98,763 |
|
|
|
FONAR CORPORATION AND SUBSIDIARIESCONDENSED
CONSOLIDATED STATEMENTS OF INCOME (Amounts and shares in thousands,
except per share amounts) (UNAUDITED) |
|
|
|
For the Three Months |
REVENUES |
Ended December 31, |
|
|
2017 |
|
|
|
2016 |
|
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 SUBSIDIARIESCONDENSED
CONSOLIDATED STATEMENTS OF INCOME (Amounts and shares in thousands,
except per share amounts) (UNAUDITED) |
|
|
|
For the Six Months EndedDecember 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 |
|
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