NEWS    FONAR
For Immediate Release   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

 

FONAR Announces Fiscal 2016 Year End Earnings

  • 22% Increase of Fiscal 2016 Diluted Net Income per Common Share available to Common Shareholders to $2.38, versus prior year
  • 22% Increase of Fiscal 2016 Net Income to $18.8 million, versus prior year
  • 11 % Increase of Fiscal 2016 Income from Operations to $14.4 million, versus prior year
  • 6% Increase of Fiscal 2016 Net Revenues to $73.4 million, versus prior year
  • Diluted Net Income per Common Share available to Common Shareholders for the Fiscal year ending June 30, 2016 was $2.38, including a $4.6 million impact of recorded income tax benefits

MELVILLE, NEW YORK, September 19, 2016 - FONAR Corporation (NASDAQ-FONR), The Inventor of MR Scanning™, reported today its fiscal 2016 results for the year ended June 30, 2016. The Company introduced the world’s first commercial MRI scanner in 1980, and is known the world over for its advancements in MRI technology. FONAR’s primary source of income is derived from the management of 24 MRI centers that feature the FONAR UPRIGHT® Multi-Position™ MRI, aka Stand-Up® MRI.

Financial Highlights

Net income increased 22% to $18.8 million for the fiscal year ended June 30, 2016. This compares to $15.4 million for the fiscal year ended June 30, 2015.

Income from operations increased 11% to $14.4 million for the fiscal year ended June 30, 2016. This compares to $12.9 million for the fiscal year ended June 30, 2015.

Basic net income per common share available to common shareholders increased 22% to $2.43 for the fiscal year ended June 30, 2016 as compared to $2.00 for the fiscal year ended June 30, 2015.

Diluted net income per common share available to common shareholders increased 22% to $2.38 for the fiscal year ended June 30, 2016 as compared to $1.95 for the fiscal year ended June 30, 2015.

Net revenues increased 6% to $73.4 million for the fiscal year ended June 30, 2016. This compares to $69.1 million for the fiscal year ended June 30, 2015.

For the year ended June 30, 2016, 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 9% to $62.6 million as compared to $57.6 million one year earlier.

 Page 1 

 

FONAR

 

At June 30, 2016, total assets were $84.9 million, as compared to $76.5 million one year earlier.

At June 30, 2016, total cash and cash equivalents were $8.5 million, as compared to $9.4 million one year earlier.

At June 30, 2016, total liabilities were $24.1 million, as compared to $25.7 million one year earlier.

At June 30, 2016, total current liabilities were $20.6 million, as compared to $18.8 million one year earlier.

Significant Events

On January 6, 2016, the Company reported that its subsidiary Health Management Company of America now manages Stand-Up MRI of Great Neck, located in Great Neck, New York, bringing the total number of HMCA-managed centers to 25, of which 18 are located in New York and seven (7) in Florida.

On February 11, 2016, Timothy R. Damadian, Dr. Damadian’s son, became President and Chief Executive Officer of FONAR Corporation. Raymond V. Damadian, M.D., the founder of the Company, remains Chairman of the Board.

On June 30, 2016, Health Management Company of America, of which FONAR is the majority owner, purchased 100% of the equity in Turnkey Services of New York, LLC. Turnkey Services of New York, LLC, by way of several operating leases, had provided HMCA-managed MRI facilities in Bronx, NY, and Brooklyn, NY, with ancillary diagnostic imaging equipment.

Also on June 30, 2016, Health Management Company of America, of which FONAR is the majority owner, purchased 100% of the equity in TK2 Equipment Management, LLC. TK2 Equipment Management, LLC, by way of several operating leases, had provided ancillary diagnostic imaging equipment to an HMCA-managed facility in Queens, NY, and to an HMCA-owned facility in Ft. Lauderdale, FL.

In addition, on June 30, 2016, Health Management Company of America, which had held a 50%-equity in Yonkers Diagnostic Management Services, LLC, purchased the remaining 50%, making the Yonkers entity a wholly-owned subsidiary of Health Management Company of America.

Management Discussion

President and CEO Timothy R. Damadian said, “I am pleased with our six percent (6%) growth rate in net revenue and our eleven percent (11%) increase in income from operations during fiscal 2016. The three acquisitions will add to net income, thereby contributing to the financial stability of the Company. We will continue to seek additional opportunities consistent with our growth strategy.”

Chairman of the Board Raymond V. Damadian, M.D. said, “I am grateful for the current state of the Company. Since Fiscal 2011, FONAR’s revenues have grown 121 percent and we’ve been profitable every quarter. As Timothy continues to execute his proven business strategy, I am confident of a favorable future for patients, employees and shareholders."

 Page 2 

 

FONAR

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 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. 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.

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 Page 3 

 

 FONAR CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

 

 

ASSETS

 

 

 

   June 30,
   2016  2015
Current Assets:          
Cash and cash equivalents  $8,528,309   $9,448,798 
Accounts receivable – net of allowances for doubtful accounts of $284,279 and $362,362 at June 30, 2016 and 2015, respectively   4,370,155    3,790,981 
Medical receivables –net of allowances for doubtful accounts of $17,451,782 and $15,459,156 at June 30, 2016 and 2015, respectively   10,126,397    9,082,319 
Management and other fees receivable – net of allowances for doubtful accounts of $13,069,702 and $13,271,651 at June 30, 2016 and 2015, respectively   15,637,831    14,057,962 
Management and other fees receivable – related party medical practices – net of allowances for doubtful accounts of $ 393,047 and $403,047 at June 30, 2016 and 2015, respectively   4,063,539    3,507,204 
Costs and estimated earnings in excess of billings on uncompleted contracts   —      681,660 
Inventories   2,074,300    2,191,849 
Prepaid expenses and other current assets   759,042    860,040 
           
Total Current Assets   45,559,573    43,620,813 
Deferred income tax asset   13,042,360    8,423,306 
Property and Equipment – Net   14,512,706    12,901,195 
Goodwill   3,322,158    1,767,098 
Other Intangible Assets – Net   7,719,358    8,950,160 
Other Assets   731,451    829,505 
Total Assets  $84,887,606   $76,492,077 

 

 

 Page 4 

 

FONAR CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

 

 

LIABILITIES

 

 

 

   June 30,
   2016  2015
Current Liabilities:          
Current portion of long-term debt and capital leases  $2,447,693   $2,490,146 
Accounts payable   1,254,485    1,782,442 
Other current liabilities   10,826,793    8,252,633 
Unearned revenue on service contracts   4,678,914    4,187,401 
Customer deposits   1,198,739    1,937,813 
Billings in excess of costs and estimated earnings on uncompleted contracts   206,623    142,217 
Total Current Liabilities   20,613,247    18,792,652 
Long-Term Liabilities:          
Deferred income tax liability   481,779    510,492 
Due to related party medical practices   245,041    236,920 
Long-term debt and capital leases, less current portion   2,059,236    5,699,302 
Other liabilities   711,996    469,198 
Total Long-Term Liabilities   3,498,052    6,915,912 
Total Liabilities   24,111,299    25,708,564 

 

 

 Page 5 

 

FONAR CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

 

STOCKHOLDERS' EQUITY

 

 

 

   June 30,
   2016  2015
Stockholders' Equity:          
 Class A non-voting preferred stock $.0001 par value; 453,000 shares authorized at June 30, 2016 and 2015, 313,438 issued and outstanding at June 30, 2016 and 2015  $31   $31 
 Preferred stock $.001 par value; 567,000 shares authorized at June 30, 2016 and 2015, issued and outstanding – none   —      —   
 Common stock $.0001 par value; 8,500,000 shares authorized at June 30, 2016 and 2015, 6,062,809 and 6,062,483 issued at June 30, 2016 and 2015, respectively; 6,051,166 and 6,050,840 outstanding at June 30, 2016 and 2015, respectively   607    607 
 Class B convertible common stock (10 votes per share) $.0001 par value; 227,000 shares authorized at June 30, 2016 and 2015, 146 issued and outstanding at June 30, 2016 and 2015   —      —   
 Class C common stock (25 votes per share) $.0001 par value; 567,000 shares authorized at June 30, 2016 and 2015, 382,513 issued and outstanding at June 30, 2016 and 2015   38    38 
 Paid-in capital in excess of par value   173,702,335    175,447,586 
 Accumulated deficit   (120,624,010)   (136,348,635)
 Notes receivable from employee stockholders   (23,879)   (31,495)
Treasury stock, at cost – 11,643 shares of common stock at  June 30, 2016 and 2015   (675,390)   (675,390)
Total Fonar Corporation’s Stockholders’ Equity   52,379,732    38,392,742 
Noncontrolling interests   8,396,575    12,390,771 
Total Stockholders' Equity   60,776,307    50,783,513 
Total Liabilities and Stockholders' Equity  $84,887,606   $76,492,077 

 

 

 

 Page 6 

 

FONAR CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF INCOME

 

    
   For the Years Ended June 30,
   2016  2015  2014
Revenues               
Product sales – net  $1,276,882   $1,820,979   $1,877,932 
Service and repair fees – net   9,396,736    9,549,316    10,082,631 
Service and repair fees – related parties – net   110,000    110,000    110,000 
Patient fee revenue, net of contractual allowances and discounts   32,985,809    28,153,598    24,307,192 
Provision for bad debts for patient fee   (14,539,786)   (12,770,249)   (10,333,082)
Management and other fees – net   36,633,230    34,805,627    34,839,969 
Management and other fees – related party medical practices – net   7,505,339    7,381,725    7,620,835 
Total Revenues – Net   73,368,210    69,050,996    68,505,477 
Costs and Expenses               
Costs related to product sales   1,254,328    1,882,230    1,067,120 
Costs related to service and repair fees   2,148,143    2,189,373    2,496,985 
Costs related to service and repair fees – related parties   25,147    25,220    27,242 
Costs related to patient fee revenue   9,418,935    7,939,524    7,670,484 
Costs related to management and other fees   21,949,583    20,970,116    20,851,065 
Costs related to management and other fees – related party medical practices   4,074,762    5,397,818    5,134,553 
Research and development   1,631,846    1,812,398    1,760,821 
Selling, general and administrative, inclusive of compensatory element of stock issuances of $2,006, $53,200 and $223,000 for the years ended June 30, 2016, 2015 and 2014, respectively   18,711,799    13,459,408    15,388,239 
Provision for bad debts   (201,949)   2,475,032    1,806,299 
Total Costs and Expenses   59,012,594    56,151,119    56,202,808 
Income from Operations   14,355,616    12,899,877    12,302,669 
Other Income and (Expenses):               
Interest expense   (262,193)   (702,095)   (884,541)
Investment income   224,263    225,270    238,928 
Other income (expense) – net   190,560    394,810    (608,599)
Income before benefit for income taxes and noncontrolling interests   14,508,246    12,817,862    11,048,457 
Benefit for Income Taxes   4,287,271    2,612,521    2,348,312 
Net Income  $18,795,517   $15,430,383   $13,396,769 
Net Income – Noncontrolling Interests   (3,070,892)   (2,519,732)   (3,000,639)
Net Income – Attributable to FONAR  $15,724,625   $12,910,651   $10,396,130 
                

 

 Page 7 

 

FONAR CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF INCOME (Continued)

 

 

 

   For the Years Ended June 30,
   2016  2015  2014
Net Income Available to Common Stockholders  $14,702,834   $12,071,670   $9,720,030 
Net Income Available to Class A Non-Voting Preferred Stockholders  $761,561   $625,309   $503,911 
Net Income Available to Class Common Stockholders  $260,230   $213,672   $172,189 
Basic Net Income Per Common Share Available to Common Stockholders  $2.43   $2.00   $1.62 
Diluted Net Income Per Common Share Available to Common Stockholders  $2.38   $1.95   $1.58 
Basic and Diluted Income Per Share – Common C  $0.68   $0.56   $0.45 
Weighted Average Basic Shares Outstanding – Common Stockholders   6,050,893    6,050,632    6,009,822 
Weighted Average Diluted Shares Outstanding – Common Stockholders   6,178,397    6,178,136    6,137,326 
Weighted Average Basic and Diluted Shares Outstanding – Class C Common   382,513    382,513    382,513 

 

 

# # #

 Page 8 

 


The following information was filed by Fonar Corp (FONR) on Wednesday, September 21, 2016 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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