FONAR Corporation (NASDAQ-FONR), Inventor of MR Scanning™, reported
today its financial results for the first quarter of 2019 which
ended September 30, 2018. FONAR’s primary source of income and
growth is attributable to its diagnostic imaging management
subsidiary, Health Management Company of America (HMCA). In
2009, HMCA managed 9 MRI facilities. Today, HMCA manages 26
diagnostic imaging centers (19 in New York and 7 in Florida)
collectively equipped with 34 MRI scanners.
Financial Results
Total Revenues-Net for the quarter ended
September 30, 2018, increased 7% to $20.7 million as compared to
$19.3 million for the corresponding quarter ended September 30,
2017.
Income from Operations for the quarter ended
September 30, 2018, increased 16% to $5.5 million as compared to
$4.8 million for the corresponding quarter ended September 30,
2017.
Net Income for the quarter ended September 30,
2018, decreased 2% to $4.5 million as compared to $4.6 million for
the corresponding quarter ended September 30, 2017. The Company
recorded an income tax provision of $1.1 million in 2018 as
compared to $0.2 million in 2017. The Company is required at the
end of each interim period to determine the best estimate of its
annual effective tax rate and apply that rate to year-to-date
ordinary income. The resulting tax expense is adjusted for
the tax effect of specific events, if any, required to be
discretely recognized in the interim period as they occur. For the
three months ended September 30, 2018, the Company recorded a
current income tax expense of $0.6 million and deferred income tax
expense of $0.5 million. Given the Company’s available net
operating loss carryforwards, a substantial portion of the income
tax expense for the quarter will not require cash outlay.
Basic Net Income per Common Share Available to
Common Stockholders, for the quarter ended September 30, 2018,
decreased 11% to $0.49 as compared to $0.55 for the corresponding
quarter ended September 30, 2017.
Diluted Net Income per Common Share Available to
Common Stockholders, for the quarter ended September 30, 2018,
decreased 11% to $0.48 as compared $0.54 for the corresponding
quarter ended September 30, 2017.
Total Cash and Cash Equivalents at September 30,
2018, increased 8% to $21.2 million, as compared to $19.6 million
at June 30, 2018.
Total Current Assets at September 30, 2018
increased 5% to $70.6 million, as compared to $67.1 million at June
30, 2018.
Total Assets at September 30, 2018 increased 2%
to $120.2 million as compared to $118.3 million at June 30,
2018.
Total Current Liabilities at September 30, 2018
decreased 19% to $11.8 million, as compared to $14.6 million at
June 30, 2018.
Total Liabilities at September 30, 2018
decreased 17% to $13.3 million, as compared to $16.1 million at
June 30, 2018.
The Total Assets / Total Liabilities ratio for
the quarter ended September 30, 2018 was 9.0.
Significant Event
On September 3, 2018, Dr. Damadian’s
presentation of ‘The First MRI Scan’ was featured on the BBC
(British Broadcasting Corporation) radio program, Witness.
During the nine-minute broadcast to a BBC World Service radio
network audience of more than 300 million listeners world-wide, Dr.
Damadian relived the excitement of the moment when he conducted the
world’s first MRI scan. “Well, we put Larry (Minkoff) in, we
got a signal immediately from his heart, and I said, ‘Holy smokes.
It’s actually going to work!’” The BBC broadcast of this
pioneering episode in MRI can be heard online at:
https://www.bbc.co.uk/programmes/w3cswsj4
Management Discussion
President and CEO, Timothy R. Damadian, said,
“We are pleased to report that Income from Operations improved 16
percent to $5.5 million during the first fiscal quarter of 2019
over the same quarter one year earlier. We continue to grow. In
fact, over the 12-month period ended September 30, 2018, our
HMCA-managed facilities completed approximately 179,000 MRI scans,
which was 13,000 scans, or 8%, more than we completed during the
preceding 12-month period.
“I attribute our success to the ever-growing
popularity among patients who strongly prefer and sometimes even
insist on having their MRIs done on our patient-friendly,
non-claustrophobic FONAR scanners, as well as physicians’ growing
awareness of the unique diagnostic benefits of weight-bearing MRI,
which only FONAR scanners can provide. Credit is also due to
our very capable and experienced management team that keeps our
centers operating profitably and successfully promotes the
advantages of FONAR technology throughout the medical
community.”
Chairman of the Board, Raymond V. Damadian,
M.D., said, “There are many reasons for FONAR’s success. First, we
began the MRI industry in 1980 and have since manufactured and sold
more than 400 MRI scanners worldwide. Today, we have a
one-of-a-kind scanner – the FONAR UPRIGHT® Multi-Position™ MRI, aka
the Stand-Up® MRI. It is the only whole-body MRI that can scan
patients in numerous weight-bearing positions, including sitting,
standing, as well as bending in flexion or extension.”
Dr. Damadian continued, “Regarding our research
efforts, over the past few years we have been making movies (cines)
of the cerebrospinal fluid (CSF) as it moves up and down the neck
and around the brain. Thanks to the UPRIGHT® MRI’s ability to
scan patients in weight-bearing positions as well as in the
recumbent, non-weight-bearing position, we are finding significant
differences in CSF flow cines. These cines often provide
clues that enable physicians to find solutions to their patients’
medical problems.”
“Currently, our research is focused on
determining the velocity of the CSF as it navigates through the
neck and head. We’ve been able to use CSF velocity data
collected from normal patients to identify CSF flow abnormalities
in patients with problems.”
“We have recently been issued a patent covering
the use of the FONAR UPRIGHT® Multi-Position™ MRI to diagnose
patients with Multiple Sclerosis (MS). Included in this patent is
the role of CSF in the Upright position. The patent is based on the
discovery FONAR announced on November 2, 2011.”
Dr. Damadian concluded, “We are hopeful that our
research may lead to a new understanding of the role of CSF on
brain diseases, like MS.”
About FONAR
FONAR, the Inventor of MR Scanning™ is the
first, oldest and most experienced MRI company in the
industry. Incorporated in 1978, FONAR, which is located in
Melville, New York, introduced the world’s first commercial MRI in
1980, and went public in 1981. The company’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™), allowing it to scan 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,
”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.
CONDENSED CONSOLIDATED BALANCE SHEETS(Amounts and
shares in thousands, except per share
amounts)(UNAUDITED)ASSETS |
|
|
|
September 30,2018 |
|
June 30,2018 |
Current Assets: |
|
|
|
|
|
Cash and
cash equivalents |
$ |
21,187 |
|
$ |
19,634 |
Accounts
receivable – net, |
|
4,169 |
|
|
3,814 |
Accounts
receivable – related party |
|
90 |
|
|
— |
Medical
receivables – net |
|
13,709 |
|
|
13,351 |
Management and other fees receivable – net |
|
21,973 |
|
|
21,863 |
Management and other fees receivable – related medical practices –
net |
|
6,162 |
|
|
5,535 |
Inventories |
|
1,649 |
|
|
1,431 |
Costs and
estimated earnings in excess of billings on uncompleted
contracts |
|
87 |
|
|
87 |
Prepaid
expenses and other current assets |
|
1,583 |
|
|
1,350 |
Total
Current Assets |
|
70,609 |
|
|
67,065 |
|
|
|
|
|
|
Income
taxes receivable |
|
1,200 |
|
|
1,200 |
Deferred
income tax asset |
|
21,561 |
|
|
22,689 |
Property
and equipment – net |
|
16,264 |
|
|
16,492 |
Goodwill |
|
3,985 |
|
|
3,985 |
Other
Intangible Assets – net |
|
5,378 |
|
|
5,602 |
Other
assets |
|
1,243 |
|
|
1,278 |
Total
Assets |
$ |
120,240 |
|
$ |
118,311 |
CONSOLIDATED BALANCE SHEETS(Amounts and shares in
thousands, except per share amounts)(UNAUDITED)LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
September 30,2018 |
|
June 30,2018 |
Current Liabilities: |
|
|
|
Current portion of
long-term debt and capital leases |
$ |
39 |
|
$ |
39 |
Accounts payable |
|
1,510 |
|
|
1,300 |
Other current liabilities |
|
4,783 |
|
|
8,178 |
Unearned revenue on service contracts |
|
4,381 |
|
|
4,192 |
Unearned revenue on service contracts – related party |
|
83 |
|
|
— |
Customer deposits |
|
990 |
|
|
858 |
Total Current Liabilities |
|
11,786 |
|
|
14,567 |
Long-Term Liabilities: |
|
|
|
|
|
Deferred income tax liability |
|
239 |
|
|
239 |
Due to related medical practices |
|
227 |
|
|
227 |
Long-term debt and capital leases, less current portion |
|
298 |
|
|
306 |
Other liabilities |
|
748 |
|
|
737 |
Total Long-Term Liabilities |
|
1,512 |
|
|
1,509 |
Total Liabilities |
|
13,298 |
|
|
16,076 |
CONSOLIDATED BALANCE SHEETS(Amounts and shares in
thousands, except per share amounts)(UNAUDITED)LIABILITIES AND
STOCKHOLDERS’ EQUITY (Continued) |
|
|
|
|
|
|
|
|
|
September 30,2018 |
|
June 30,2018 |
Stockholders'
Equity: |
|
|
|
Class A non-voting
preferred stock $.0001 par value; 453 shares authorized at
September 30, 2018 and June 30, 2018, 313 issued and outstanding at
September 30, 2018 and June 30, 2018 |
$ |
|
|
— |
|
|
|
|
$ |
— |
|
|
|
Preferred stock $.001
par value; 567 shares authorized at September 30, 2018 and June 30,
2018, issued and outstanding – none |
|
|
|
— |
|
|
|
|
|
— |
|
|
|
Common stock $.0001 par
value; 8,500 shares authorized at September 30, 2018 and June 30,
2018, 6,369 and 6,299 issued at September 30, 2018 and June 30,
2018, 6,357 and 6,288 outstanding at September 30, 2018 and June
30, 2018 |
|
|
|
1 |
|
|
|
|
|
1 |
|
|
|
Class B Common Stock
(10 votes per share) $.0001 par value; 227 shares authorized
at September 30, 2018 and June 30, 2018, .146 issued and
outstanding at September 30, 2018 and June 30, 2018, |
|
|
|
— |
|
|
|
|
|
— |
|
|
|
Class C Common
Stock (25 votes per share) $.0001 par value; 567 shares authorized
at September 30, 2018 and June 30, 2018, 383 issued and outstanding
at September 30, 2018 and June 30, 2018 |
|
|
|
— |
|
|
|
|
|
— |
|
|
|
Paid-in capital in
excess of par value |
|
|
|
181,086 |
|
|
|
|
|
179,132 |
|
|
|
Accumulated
deficit |
|
|
|
(76,454 |
) |
|
|
|
|
(79,773 |
) |
|
|
Notes receivable from
employee stockholders |
|
|
|
(9 |
) |
|
|
|
|
(9 |
) |
|
|
Treasury stock, at cost
– 12 shares of common stock at September 30, 2018 and June
30, 2018 |
|
(675 |
) |
|
|
(675 |
) |
|
Total Fonar
Corporation’s Stockholders’ Equity |
|
103,949 |
|
|
|
98,676 |
|
|
Noncontrolling interests |
|
2,993 |
|
|
|
3,559 |
|
|
Total
Stockholders' Equity |
|
106,942 |
|
|
|
102,235 |
|
|
Total
Liabilities and Stockholders' Equity |
$ |
120,240 |
|
|
$ |
118,311 |
|
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME(Amounts and
Shares in thousands, except per share amounts)(UNAUDITED) |
|
|
|
|
|
FOR THE THREE MONTHS ENDED SEPTEMBER 30, |
REVENUES |
|
2018 |
|
|
|
2017 |
|
Patient
fee revenue – net of contractual allowances and discounts |
$ |
5,525 |
|
|
$ |
8,653 |
|
Provision
for bad debts for patient fee |
|
– |
|
|
|
(3,750 |
) |
Patient
fee revenue – net |
|
5,525 |
|
|
|
4,903 |
|
Product
sales – net |
|
50 |
|
|
|
162 |
|
Service
and repair fees – net |
|
2,131 |
|
|
|
2,264 |
|
Service
and repair fees – related parties – net |
|
28 |
|
|
|
28 |
|
Management and other fees – net |
|
10,684 |
|
|
|
9,771 |
|
Management and other fees – related medical practices – net |
|
2,287 |
|
|
|
2,206 |
|
Total
Revenues – Net |
|
20,705 |
|
|
|
19,334 |
|
COSTS AND EXPENSES |
|
|
|
|
|
|
|
Costs
related to patient fee revenue |
|
2,575 |
|
|
|
2,479 |
|
Costs
related to product sales |
|
5 |
|
|
|
143 |
|
Costs
related to service and repair fees |
|
745 |
|
|
|
780 |
|
Costs
related to service and repair fees – related parties |
|
9 |
|
|
|
9 |
|
Costs
related to management and other fees |
|
5,756 |
|
|
|
5,558 |
|
Costs
related to management and other fees – related medical
practices |
|
1,382 |
|
|
|
1,150 |
|
Research
and development |
|
437 |
|
|
|
349 |
|
Selling,
general and administrative |
|
4,259 |
|
|
|
4,081 |
|
Total
Costs and Expenses |
|
15,168 |
|
|
|
14,549 |
|
Income
from Operations |
|
5,537 |
|
|
|
4,785 |
|
Interest
Expense |
|
(25 |
) |
|
|
(43 |
) |
Investment Income |
|
108 |
|
|
|
46 |
|
Other
Expense |
|
– |
|
|
|
(2 |
) |
Income
Before Provision for Income Taxes and Noncontrolling Interests |
|
5,620 |
|
|
|
4,786 |
|
Provision
for Income Taxes |
|
(1,128 |
) |
|
|
(185 |
) |
Net
Income |
|
4,492 |
|
|
|
4,601 |
|
Net
Income – Noncontrolling interests |
|
(1,174 |
) |
|
|
(882 |
) |
Net
Income – Controlling interests |
$ |
3,318 |
|
|
$ |
3,719 |
|
Net
Income Available to Common Stockholders |
$ |
3,113 |
|
|
$ |
3,486 |
|
Net
Income Available to Class A Non-Voting Preferred Stockholders |
$ |
153 |
|
|
$ |
174 |
|
Net
Income Available to Class C Common Stockholders |
$ |
52 |
|
|
$ |
59 |
|
Basic Net
Income Per Common Share Available to Common Stockholders |
$ |
0.49 |
|
|
$ |
0.55 |
|
Diluted
Net Income Per Common Share Available to Common Stockholders |
$ |
0.48 |
|
|
$ |
0.54 |
|
Basic and
Diluted Income Per Share – Class C Common |
$ |
0.14 |
|
|
$ |
0.16 |
|
Weighted
Average Basic Shares Outstanding – Common Stockholders |
|
6,344 |
|
|
|
6,287 |
|
Weighted
Average Diluted Shares Outstanding – Common Stockholders |
|
6,472 |
|
|
|
6,415 |
|
Weighted
Average Basic Shares Outstanding – Class C Common |
|
383 |
|
|
|
383 |
|
Weighted
Average Diluted Shares Outstanding – Class C Common |
|
383 |
|
|
|
383 |
|
|
|
The Inventor of MR Scanning™ |
Contact: Daniel Culver |
|
An ISO 9001 Company |
Director of Communications |
|
Melville, New York 11747 |
E-mail: investor@fonar.com |
|
Phone: (631) 694-2929 |
www.fonar.com |
|
Fax: (631) 390-1772 |
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