FONAR Corporation (NASDAQ:FONR), The Inventor of MR Scanning™,
reported today its fiscal 2017 results as of June 30, 2017. Known
throughout the world for its contributions to the MRI industry,
FONAR’s primary source of income is derived from its subsidiary’s
(Health Management Company of American) management of 26 diagnostic
imaging centers, 24 of which feature the FONAR UPRIGHT®
Multi-Position™ MRI, aka Stand-Up® MRI
Basic net income per common share available to
common shareholders increased 23% to $2.98 for the fiscal year
ended June 30, 2017 as compared to $2.43 for the fiscal year ended
June 30, 2016.
Diluted net income per common share available to
common shareholders increased 23% to $2.92 for the fiscal year
ended June 30, 2017 as compared to $2.38 for the fiscal year ended
June 30, 2016.
Net income increased 26% to $23.7 million for
the fiscal year ended June 30, 2017, as compared to $18.8 million
for the fiscal year ended June 30, 2016.
Income from operations increased 33% to $19.1
million for the fiscal year ended June 30, 2017, as compared to
$14.4 million for the fiscal year ended June 30, 2016.
Net revenues increased 6% to $78.0 million for
the fiscal year ended June 30, 2017, as compared to $73.4 million
for the fiscal year ended June 30, 2016.
Total Costs and Expenses for the fiscal year
ending June 30, 2017, remained basically flat at $58.9 million as
compared to $59.0 million for the fiscal year ended June 30,
2016.
For the year ended June 30, 2017, the revenues
from the management of the diagnostic imaging center segment,
consisting of patient and management and other fee revenue, and
less the provision for bad debt for patient revenue, increased 7%
to $66.8 million as compared to $62.6 million one year earlier.
At June 30, 2017, total assets increased 16% to
$98.8 million, as compared to $84.9 million for the fiscal year
ended June 30, 2016.
At June 30, 2017, total cash and cash
equivalents increased 19% to $10.1 million, as compared to $8.5
million for the fiscal year ended June 30, 2016.
At June 30, 2017, total liabilities decreased
34% to $15.9 million, as compared to $24.1 million for the fiscal
year ended June 30, 2016.
At June 30, 2017, total current liabilities
decreased 31% to $14.2 million, as compared to $20.6 million for
the fiscal year ended June 30, 2016.
Significant Events
On July 3, 2017, FONAR acknowledged the 40th
anniversary of the world’s first whole-body MRI scan, thereby
birthing 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.
Effective June 26, 2017, FONAR stock joined the
Russell 3000® Index, which has increased the Company’s membership
in related index funds and ETFs (Exchange Traded Funds) to over 60,
thereby giving mutual funds, institutions, and the investing
community greater visibility of FONAR and helping to build
shareholder value.
On March 20, 2017, Dr. Damadian was the keynote
speaker at 22nd Annual Medical Technologies: A Frost &
Sullivan Executive MindXchange in San Diego, CA, where he
received special recognition as “the legendary inventor of the
first MRI (Magnetic Resonance Imaging) machine and the innovative
mind responsible for saving thousands of lives.”
On July 12, 2016 the Company’s subsidiary,
Health Management Company of America (HMCA), reported three
acquisitions. HMCA had purchased: 100% of the equity in Turnkey
Services of New York, LLC; 100% of the equity in TK2 Equipment
Management, LLC; and the remaining 50% of Diagnostic Management
Services, LLC, Yonkers, NY, making it a wholly-owned subsidiary of
HMCA.
On June 20, 2017, HMCA reported they had
purchased a 100% interest in the FONAR MRI equipment lease related
to Stand-Up MRI of Great Neck, an event that will add to FONAR’s
net income and cash flow.
Management Discussion
President and CEO Timothy R. Damadian said,
“We’re pleased with our six percent (6%) growth rate in net
revenue. The Company made several acquisitions in Fiscal 2017 that
have added to our profitability, and we remain committed to
controlling costs, which is vital in the healthcare industry where
insurer reimbursement rates continue to fall year after year.
“Thankfully, the appeal of the UPRIGHT® MRI
(also known as the Stand-Up® MRI) among both patients and
physicians, together with my experienced and competent management
team, has enabled us to thrive in a very challenging business
environment.
“We will continue to seek additional
opportunities consistent with our growth strategy and are committed
to maintaining the Company’s very positive earnings trajectory into
fiscal 2018.”
Chairman of the Board Raymond V. Damadian, M.D.,
added, “In Fiscal 2017, we posted a profit of $2.92 per share
(Diluted Net Income per Common Share available to Common
Shareholders). Our net profit margin [(Net Income / Total
Revenues)] was 10% in Fiscal 2011, 26% in Fiscal 2016, and 30% for
Fiscal 2017. As far as our business plan is concerned, I
think that says it all.
“Regarding the Company’s ongoing research, we
continue to explore the impact of our new works-in-progress
technology for visualizing and quantifying the flow of
cerebrospinal fluid (CSF) circulating throughout the brain and
vertebral column with the patient scanned in the Upright
position.
“Based on a discovery FONAR had announced on
November 2, 2011, the Company was recently issued a patent for the
use of the FONAR UPRIGHT® Multi-Position™ MRI to diagnose patients
with Multiple Sclerosis. We are hopeful that this research will
help to lead to a new understanding of the role of CSF on diseases
of the brain.”
Dr. Damadian concluded, “It has been 46 years
since we made the discovery that birthed the MRI industry.*** We’ve
had the privilege and joy of witnessing its marvelous growth from
infancy. Today there are approximately 60 million MRI scans
performed each year worldwide in what has become a
multi-billion-dollar industry. After all these years, FONAR is
finally reaping the rewards, and we’re certainly very thankful for
it.”
***In 1971, Dr. Damadian’s paper in Science
contained the two key discoveries that remain fundamental to the
operation of every MRI scanner ever made: 1) his discovery that the
relaxation times of cancerous tissues are markedly prolonged
relative to those of healthy tissues and 2) his discovery there are
also marked differences in relaxation times across the full
spectrum of healthy tissue types.
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 CulverDirector of CommunicationsE-mail: investor@fonar.comwww.fonar.comThe Inventor of MR Scanning™An ISO 9001 CompanyMelville, New York 11747Phone: (631) 694-2929Fax: (631) 390-1772
|
CONSOLIDATED BALANCE SHEETS |
ASSETS |
|
|
June 30, |
|
|
2017 |
|
|
2016 |
Current Assets: |
|
|
|
Cash and cash
equivalents |
$ |
10,139,621 |
|
$ |
8,528,309 |
Accounts receivable –
net of allowances for doubtful accounts of $190,244 and $284,279 at
June 30, 2017 and 2016, respectively |
|
4,321,760 |
|
|
4,370,155 |
Medical receivables
–net of allowances for doubtful accounts of $19,853,318 and
$17,451,782 at June 30, 2017 and 2016, respectively |
|
11,744,704 |
|
|
10,126,397 |
Management and other
fees receivable – net of allowances for doubtful accounts of
$12,859,750 and $13,553,005 at June 30, 2017 and 2016,
respectively |
|
18,593,894 |
|
|
15,637,831 |
Management and other
fees receivable – related party medical practices – net of
allowances for doubtful accounts of $582,001 and $392,505 at June
30, 2017 and 2016, respectively |
|
4,959,598 |
|
|
4,063,539 |
Costs and estimated
earnings in excess of billings on uncompleted contracts |
|
736,061 |
|
|
– |
Inventories |
|
1,624,262 |
|
|
2,074,300 |
Prepaid expenses and
other current assets |
|
1,293,806 |
|
|
759,042 |
|
|
|
|
Total Current
Assets |
|
53,413,706 |
|
|
45,559,573 |
Deferred income tax
asset |
|
17,861,777 |
|
|
13,042,360 |
Property and Equipment
– Net |
|
16,462,504 |
|
|
14,512,706 |
Goodwill |
|
3,927,123 |
|
|
3,322,158 |
Other Intangible Assets
– Net |
|
6,644,504 |
|
|
7,719,358 |
Other Assets |
|
452,952 |
|
|
731,451 |
Total Assets |
$ |
98,762,566 |
|
$ |
84,887,606 |
|
CONSOLIDATED BALANCE SHEETS |
LIABILITIES |
|
|
June 30, |
|
|
2017 |
|
|
2016 |
Current
Liabilities: |
|
|
|
Current portion of
long-term debt and capital leases |
$ |
180,090 |
|
$ |
2,447,693 |
Accounts payable |
|
1,423,217 |
|
|
1,254,485 |
Other current
liabilities |
|
7,203,278 |
|
|
10,826,793 |
Unearned revenue on
service contracts |
|
4,641,534 |
|
|
4,678,914 |
Customer deposits |
|
787,884 |
|
|
1,198,739 |
Billings in excess of
costs and estimated earnings on uncompleted contracts |
|
– |
|
|
206,623 |
Total Current
Liabilities |
|
14,236,003 |
|
|
20,613,247 |
Long-Term
Liabilities: |
|
|
|
Deferred income tax
liability |
|
331,527 |
|
|
481,779 |
Due to related party
medical practices |
|
227,543 |
|
|
245,041 |
Long-term debt and
capital leases, less current portion |
|
336,761 |
|
|
2,059,236 |
Other liabilities |
|
720,779 |
|
|
711,996 |
Total Long-Term
Liabilities |
|
1,616,610 |
|
|
3,498,052 |
Total Liabilities |
|
15,852,613 |
|
|
24,111,299 |
|
CONSOLIDATED BALANCE SHEETS |
STOCKHOLDERS EQUITY |
|
|
June 30, |
|
|
2017 |
|
|
|
2016 |
|
Stockholders'
Equity: |
|
|
|
Class A non-voting
preferred stock $.0001 par value; 453,000 shares authorized at June
30, 2017 and 2016, 313,438 issued and outstanding at June 30, 2017
and 2016 |
$ |
31 |
|
|
$ |
31 |
|
Preferred stock $.001
par value; 567,000 shares authorized at June 30, 2017 and 2016,
issued and outstanding – none |
|
– |
|
|
|
– |
|
Common stock $.0001 par
value; 8,500,000 shares authorized at June 30, 2017 and 2016,
6,299,154 and 6,062,809 issued at June 30, 2017 and 2016,
respectively; 6,287,511 and 6,051,166 outstanding at June 30, 2017
and 2016, respectively |
|
630 |
|
|
|
607 |
|
Class B convertible
common stock (10 votes per share) $.0001 par value; 227,000 shares
authorized at June 30, 2017 and 2016, 146 issued and
outstanding at June 30, 2017 and 2016 |
|
– |
|
|
|
– |
|
Class C common stock
(25 votes per share) $.0001 par value; 567,000 shares authorized at
June 30, 2017 and 2016, 382,513 issued and outstanding at June 30,
2017 and 2016 |
|
38 |
|
|
|
38 |
|
Paid-in capital in
excess of par value |
|
179,131,780 |
|
|
|
173,702,335 |
|
Accumulated
deficit |
|
(101,003,389 |
) |
|
|
(120,624,010 |
) |
Notes receivable from
employee stockholders |
|
(16,546 |
) |
|
|
(23,879 |
) |
Treasury stock, at cost
– 11,643 shares of common stock at June 30, 2017 and
2016 |
|
(675,390 |
) |
|
|
(675,390 |
) |
Total Fonar
Corporation’s Stockholders’ Equity |
|
77,437,154 |
|
|
|
52,379,732 |
|
Noncontrolling
interests |
|
5,472,799 |
|
|
|
8,396,575 |
|
Total Stockholders'
Equity |
|
82,909,953 |
|
|
|
60,776,307 |
|
Total Liabilities and
Stockholders' Equity |
$ |
98,762,566 |
|
|
$ |
84,887,606 |
|
CONSOLIDATED STATEMENTS OF INCOME |
|
|
For the Years Ended June 30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2015 |
|
Revenues |
|
|
|
|
|
Product sales –
net |
$ |
1,572,148 |
|
|
$ |
1,276,882 |
|
|
$ |
1,820,979 |
|
Service and repair fees
– net |
|
9,537,040 |
|
|
|
9,396,736 |
|
|
|
9,549,316 |
|
Service and repair fees
– related parties – net |
|
110,000 |
|
|
|
110,000 |
|
|
|
110,000 |
|
Patient fee revenue,
net of contractual allowances and discounts |
|
36,400,600 |
|
|
|
32,985,809 |
|
|
|
28,153,598 |
|
Provision for bad debts
for patient fee |
|
(16,171,434 |
) |
|
|
(14,539,786 |
) |
|
|
(12,770,249 |
) |
Management and other
fees – net |
|
38,361,514 |
|
|
|
36,633,230 |
|
|
|
34,805,627 |
|
Management and other
fees – related party medical practices – net |
|
8,226,718 |
|
|
|
7,505,339 |
|
|
|
7,381,725 |
|
Total Revenues –
Net |
|
78,036,586 |
|
|
|
73,368,210 |
|
|
|
69,050,996 |
|
Costs and Expenses |
|
|
|
|
|
Costs related to
product sales |
|
931,501 |
|
|
|
1,254,328 |
|
|
|
1,882,230 |
|
Costs related to
service and repair fees |
|
2,996,736 |
|
|
|
2,148,143 |
|
|
|
2,189,373 |
|
Costs related to
service and repair fees – related parties |
|
34,564 |
|
|
|
25,147 |
|
|
|
25,220 |
|
Costs related to
patient fee revenue |
|
8,987,673 |
|
|
|
9,418,935 |
|
|
|
7,939,524 |
|
Costs related to
management and other fees |
|
20,828,581 |
|
|
|
21,949,583 |
|
|
|
20,970,116 |
|
Costs related to
management and other fees – related party medical practices |
|
4,273,370 |
|
|
|
4,074,762 |
|
|
|
3,883,953 |
|
Research and
development |
|
1,480,670 |
|
|
|
1,631,846 |
|
|
|
1,812,398 |
|
Selling, general and
administrative, inclusive of compensatory element of stock
issuances of $2,397,276, $2,006 and $53,200 for the years ended
June 30, 2017, 2016 and 2015, respectively |
|
19,407,411 |
|
|
|
18,509,850 |
|
|
|
17,448,305 |
|
Total Costs and
Expenses |
|
58,940,506 |
|
|
|
59,012,594 |
|
|
|
56,151,119 |
|
Income from
Operations |
|
19,096,080 |
|
|
|
14,355,616 |
|
|
|
12,899,877 |
|
Other Income and
(Expenses): |
|
|
|
|
|
Interest expense |
|
28,299 |
|
|
|
(262,193 |
) |
|
|
(702,095 |
) |
Investment income |
|
193,141 |
|
|
|
224,263 |
|
|
|
225,270 |
|
Other (expense) income
– net |
|
(1,156 |
) |
|
|
190,560 |
|
|
|
394,810 |
|
Income before benefit
for income taxes and noncontrolling interests |
|
19,316,364 |
|
|
|
14,508,246 |
|
|
|
12,817,862 |
|
Benefit for Income
Taxes |
|
4,362,434 |
|
|
|
4,287,271 |
|
|
|
2,612,521 |
|
Net Income |
$ |
23,678,798 |
|
|
$ |
18,795,517 |
|
|
$ |
15,430,383 |
|
Net Income –
Noncontrolling Interests |
|
(4,058,177 |
) |
|
|
(3,070,892 |
) |
|
|
(2,519,732 |
) |
Net Income –
Attributable to FONAR |
$ |
19,620,621 |
|
|
$ |
15,724,625 |
|
|
$ |
12,910,651 |
|
CONSOLIDATED STATEMENTS OF INCOME (Continued) |
|
|
For the Years Ended June 30, |
|
|
2017 |
|
|
2016 |
|
|
2015 |
Net Income Available to
Common Stockholders |
$ |
18,390,586 |
|
$ |
14,702,834 |
|
$ |
12,071,670 |
Net Income Available to
Class A Non-Voting Preferred Stockholders |
$ |
916,769 |
|
$ |
761,561 |
|
$ |
625,309 |
Net Income Available to
Class C Common Stockholders |
$ |
313,266 |
|
$ |
260,230 |
|
$ |
213,672 |
Basic Net Income Per
Common Share Available to Common Stockholders |
$ |
2.98 |
|
$ |
2.43 |
|
$ |
2.00 |
Diluted Net Income Per
Common Share Available to Common Stockholders |
$ |
2.92 |
|
$ |
2.38 |
|
$ |
1.95 |
Basic and Diluted
Income Per Share – Class C Common |
$ |
0.82 |
|
$ |
0.68 |
|
$ |
0.56 |
Weighted Average Basic
Shares Outstanding – Common Stockholders |
|
6,161,599 |
|
|
6,050,893 |
|
|
6,050,632 |
Weighted Average
Diluted Shares Outstanding – Common Stockholders |
|
6,289,103 |
|
|
6,178,397 |
|
|
6,178,136 |
Weighted Average Basic
and Diluted Shares Outstanding – Class C Common |
|
382,513 |
|
|
382,513 |
|
|
382,513 |
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