FONAR CORPORATION AND SUBSIDIARIES

 

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 First Quarter Earnings of Fiscal 2018

• 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.

• Diluted Net Income per Common Share Available to Common Stockholders was $0.54 for both the quarter ended September 30, 2017, and the corresponding quarter ended September 30, 2016.

MELVILLE, NEW YORK, November 9, 2017 - 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 it’s 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.

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FONAR CORPORATION AND SUBSIDIARIES

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.

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FONAR CORPORATION AND SUBSIDIARIES

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.”

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 FONAR CORPORATION AND SUBSIDIARIES

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.

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FONAR CORPORATION AND SUBSIDIARIES

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.

 

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FONAR CORPORATION AND SUBSIDIARIES

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.

 

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FONAR CORPORATION AND SUBSIDIARIES

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.

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FONAR CORPORATION AND SUBSIDIARIES

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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