NEWS   FONAR Corporation
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 Financial Results for Fiscal 2018 3rd Quarter and Nine-Months

*   Total Revenues – Net increased 6% to $60.5 million, for the nine-month period ended March 31, 2018, versus same period during prior year.

*   Income from Operations decreased 2% to $15.0 million, for the nine-month period ended March 31, 2018, versus same period during prior year.

*   Net Income decreased 15% to $ 14.1 million, for the nine-month period ended March 31, 2018, versus same period during prior year mostly due to net tax adjustments of $2.2 million or 13.3% of the 15% decrease.

*   For the nine months ended March 31, 2018, the Company recorded a net provision of $0.9 million and a net benefit of $1.3 million ($1.9 million benefit offset by a $0.6 million provision) for the nine-months ended March 31, 2017.

*  Diluted Net Income per Common Share available to Common Shareholders decreased 19% to $1.66, for the nine-month period ended March 31, 2018, versus same period during prior year.

*   Cash and cash equivalents increased by 52% to $15.4 million over the first nine-months of Fiscal 2018.

*   Working Capital increased by 25% to $48.8 million over the first nine-months of Fiscal 2018.

MELVILLE, NEW YORK, May 10, 2018 - FONAR Corporation (NASDAQ-FONR), The Inventor of MR Scanning™, announced today its financial results for the 3rd Fiscal Quarter of 2018 and the nine-month period ended March 31, 2018. 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.

Statement of Operations Items

Revenues for the third fiscal quarter ended March 31, 2018 were $21.0 million as compared to $20.0 million for the corresponding quarter one year earlier. Revenues increased to $ 60.5 million for the nine-month period ended March 31, 2018 from $57.1 million for the corresponding period one year earlier.

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FONAR CORPORATION

Net Income for the third fiscal quarter ended March 31, 2018, was $4.3 million as compared to $7.1 million for the corresponding quarter one year earlier mostly due to a tax provision of $0.2 million as compared to $1.1 million benefit for the corresponding quarter one year earlier. Net Income was $14.1 million for the nine-month period ended March 31, 2018 from $16.6 million for the corresponding period one year earlier mostly due to a tax provision of $0.9 million as compared to a $1.3 million benefit for the corresponding period one year earlier.

Income from Operations for the third fiscal quarter ended March 31, 2018, was $4.4 million as compared to $6.0 million for the corresponding quarter one year earlier. Income from Operations for the nine-month period ended March 31, 2018 was $15.0 million as compared to $15.4 million for the nine-month period ended March 31, 2017. During the period, costs of approximately $1.1 million are related to the acquisition of MRI scanners in Great Neck, NY, and White Plains, NY and the installation of a FONAR UPRIGHT® Multi-Position™ MRI in the Bronx, NY.

Diluted Net Income Per Common Share Available to Common Shareholders for the third fiscal quarter ended March 31, 2018 was $0.51 as compared to $0.88 for the corresponding quarter one year earlier. Diluted Net Income Per Common Share Available to Common Shareholders for the nine-month periods ended March 31, 2018 was $1.66 as compared to $2.05 for the corresponding period one year earlier. Diluted Net Income was adversely affected due to deferred tax asset adjustments and costs related to the addition of MRI scanners.

Total Costs and Expenses for the third fiscal quarter ended March 31, 2018 was $16.6 million as compared to $14.0 for the corresponding quarter one year earlier. Total Costs and Expenses for the nine-month periods ended March 31, 2018 were $45.5 million as compared to $41.8 for the corresponding period one year earlier and the increase was mainly due to increased patient volume plus the three additional aforementioned MRIs.

Balance Sheet Items

Total Cash and Cash Equivalents at March 31, 2018, was $ 15.4 million, as compared to $10.1 million at June 30, 2017.

Total Assets ended March 31, 2018 were $106.5 million, as compared to $98.8 million at June 30, 2017.

Total Current Assets ended March 31, 2018 were $ 61.2 million, as compared to $53.4 million at June 30, 2017.

Total Liabilities ended March 31, 2018 were $ 13.9 million, as compared to $15.9 million at June 30, 2017.

Total Current Liabilities ended March 31, 2018 were $ 12.3 million, as compared to $14.2 million at June 30, 2017.

Management Discussion

For the nine-month period, Total Revenues increased by $3.3 million and Total Costs and Expenses increased by $3.7 million. However, $1.2 million of the Total Costs and Expenses is attributable to the accompanying operating costs and depreciation expense resulting from the acquisition of Turnkey Equipment of Great Neck, LLC, the addition of a new imaging center in White Plains, NY, and, due to popular demand for FONAR technology, the addition of a third MRI scanner in our Bronx, NY location.

President and CEO, Timothy R. Damadian said, “We’ve grown our Company by increasing scan volume at our existing facilities, establishing de novo centers, and making key acquisitions. The increase in scan volume is reflected in the Company’s 6% increase in Revenue and its continuing profitability.”

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FONAR CORPORATION 

“Regarding the dip in net income, the addition of the three aforementioned MRI scanners was certainly a contributing factor, but it’s only temporary and is to be expected when you’re making investments that will soon mature and add to the Company’s continuing growth in revenue, net income, and earnings per share. The installation of a second Stand-Up® MRI in the Bronx was due to extremely high patient demand for our flagship MRI scanner.

“We remain actively engaged in exploring new growth opportunities, whether it’s new locations, adding MRI scanners at existing locations, or strategic acquisitions that will add value to our Company,” said Mr. Damadian. “With Cash up by 52% and Working Capital up by 25%, we are well positioned, eager, and poised for continuing success.”

"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 while continuing to grow the Company. 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 fully weight bearing 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 be the optimal treatment for the patient and achieve optimal outcome. Most importantly FONAR’s latest findings from its quantitative UPRIGHT® MRI are measurements of cerebrospinal fluid flow that constitute a a revolutionary new medical frontier with strong prospects of being able to bring substantial medical benefit to patients suffering from Multiple Schlerosis, Alzheimer’s, Parkinson’s, Amyotrophis Lateral Schlerosis (Lou Gehrig’s disease), and Autism (the neurodegenerative diseases) that currently are impaired by the limited prospects of permanent solutions for these ailments."

"In addition," continued Dr. Damadian, "Please read my 2018 Letter to Shareholders. In the letter, I report that as of December 31, 2017, FONAR posted 31 consecutive quarters of positive net income and positive income from operations. Now, with another quarter reported, the tally becomes 32 quarters or 8 years of FONAR achieving a profit, which is something I am quite proud of."

 Page 3 

 

FONAR CORPORATION

 

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.

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FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

 

ASSETS

 

  

March 31,

2018

 

June 30,

2017

Cash and cash equivalents  $15,414   $10,140 

 

Accounts receivable – net

   3,585    4,322 

 

Accounts receivable - related party

   30    —   

 

Medical receivable – net

   12,898    11,745 

 

Management and other fees receivable – net

   20,282    18,594 

 

Management and other fees receivable – related medical practices – net

   5,709    4,959 

 

Inventories

   1,637    1,624 
           
Costs and estimated earnings in excess of billings    on uncompleted contracts   87    736 

 

Prepaid expenses and other current assets

   1,529    1,294 

 

Total Current Assets

   61,171    53,414 

 

Deferred income tax asset

   17,287    17,862 

 

Property and equipment - net

   17,015    16,462 

 

Goodwill

   3,985    3,927 

 

Other intangible assets - net

   5,813    6,645 

 

Other assets

   1,231    453 

 

Total Assets

  $106,502   $98,763 

 

 Page 5 

 

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

   March 31, 2018  June 30, 2017
Current Liabilities:          
Current portion of long-term debt and capital leases  $52   $180 
Accounts payable   1,259    1,423 
Other current liabilities   6,369    7,203 
Unearned revenue on service contracts   3,768    4,642 
Unearned revenue on service contracts - related party   27    —   
Customer advances   867    788 

 

Total Current Liabilities

   12,342    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   315    337 
Other liabilities   722    721 

 

Total Long-Term Liabilities

   1,596    1,617 

 

Total Liabilities

   13,938    15,853 

 

 

 Page 6 

 

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

 

LIABILITIES AND STOCKHOLDERS' EQUITY (Continued)

 

 

  

 

March 31, 2018

  June 30, 2017
STOCKHOLDERS' EQUITY:          

 

Class A non-voting preferred stock $.0001 par value; 453 shares authorized at March 31, 2018 and June 30, 2017, 313 issued and outstanding at March 31, 2018 and June 30, 2017

  $—     $—   

 

Preferred stock $.001 par value; 567 shares authorized at March 31, 2018 and June 30, 2017, issued and outstanding – none

   —      —   

 

Common Stock $.0001 par value; 8,500 shares authorized at March 31, 2018 and June 30, 2017, 6,299 issued at March 31, 2018 and June 30, 2017; 6,288 outstanding at March 31, 2018 and June 30, 2017

   1    1 

 

Class B Common Stock (10 votes per share) $ .0001 par value; 227 shares authorized at March 31, 2018 and June 30, 2017, .146 issued and outstanding at March 31, 2018 and June 30, 2017

   —      —   

 

Class C Common Stock (25 votes per share) $.0001 par value; 567 shares authorized at March 31, 2018 and June 30, 2017, 383 issued and outstanding at March 31, 2018 and June 30, 2017

   —      —   

 

Paid-in capital in excess of par value

   179,131    179,131 
Accumulated deficit   (89,614)   (101,003)
Notes receivable from employee stockholders   (11)   (17)
Treasury stock, at cost - 12 shares of common stock at March 31, 2018 and June 30, 2017   (675)   (675)
Total Fonar Corporation Stockholder Equity   88,832    77,437 
Non controlling interests   3,732    5,473 

 

Total Stockholders' Equity

   92,564    82,910 

 

Total Liabilities and Stockholders' Equity

  $106,502   $98,763 

 

 

 Page 7 

 

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

  

FOR THE THREE MONTHS

ENDED MARCH 31,

REVENUES  2018  2017
Product sales – net  $69   $768 
Service and repair fees – net   2,314    2,366 
Service and repair fees – related parties - net   28    27 
Patient fee revenue, net of contractual allowances and discounts   10,163    9,028 
Provision for bad debts and bad debt expense for patient fee   (4,552)   (3,979)
Management and other fees – net   10,670    9,592 
Management and other fees – related medical practices – net   2,287    2,206 
Total Revenues – Net   20,979    20,008 

 

COSTS AND EXPENSES

          
Costs related to product sales   173    364 
Costs related to service and repair fees   775    829 
Costs related to service and repair fees – related parties   9    10 
Costs related to patient fee revenue   2,570    1,744 
Costs related to management and other fees   5,733    5,122 
Costs related to management and other fees – related medical practices   1,281    1,122 
Research and development   503    332 
Selling, general and administrative   5,533    4,483 
Total Costs and Expenses   16,577    14,006 
Income From Operations   4,402    6,002 
Interest Expense   (46)   (69)
Investment Income   74    47 
Other (Expense)/Income   (8)   2 

 

Income Before (Provision)/Benefit for Income Taxes and Non Controlling Interests

   4,422    5,982 
(Provision)/Benefit for Income Taxes   (160)   1,140 
Net Income   4,262    7,122 
Net Income - Non Controlling Interests   (781)   (1,222)
Net Income - Controlling Interests  $3,481   $5,900 
Net Income Available to Common Stockholders  $3,263   $5,526 
Net Income Available to Class A Non-Voting Preferred Stockholders  $163   $279 
Net Income Available to Class C Common Stockholders  $55   $95 
Basic Net Income Per Common Share Available to Common Stockholders  $0.52   $0.90 
Diluted Net Income Per Common Share Available to Common Stockholders  $0.51   $0.88 
Basic and Diluted Income Per Share-Class C Common  $0.15   $0.25 
Weighted Average Basis Shares Outstanding-Common Stockholders   6,287    6,166 
Weighted Average Diluted Shares Outstanding-Common Stockholders   6,415    6,294 
Weighted Average Basic Shares Outstanding – Class C Common   383    383 
Weighted Average Diluted Shares Outstanding – Class C Common   383    383 

 Page 8 

 

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

  

FOR THE NINE MONTHS

ENDED MARCH 31,

   2018  2017
REVENUES      
Product sales – net  $508   $1,103 
Service and repair fees – net   6,929    7,074 
Service and repair fees – related parties - net   83    83 
Patient fee revenue, net of contractual allowances and discounts   28,353    26,509 
Provision for bad debts and bad debt expense for patient fee   (12,873)   (11,859)
Management and other fees – net   30,781    28,216 
Management and other fees – related medical practices – net   6,699    6,020 
Total Revenues – Net   60,480    57,146 

 

COSTS AND EXPENSES

          
Costs related to product sales   562    543 
Costs related to service and repair fees   2,309    2,168 
Costs related to service and repair fees – related parties   27    25 
Costs related to patient fee revenue   7,619    6,481 
Costs related to management and other fees   17,116    15,641 
Costs related to management and other fees – related medical practices   3,692    3,202 
Research and development   1,258    1,105 
Selling, general and administrative   12,899    12,617 
Total Costs and Expenses   45,482    41,782 
Income From Operations   14,998    15,364 
Interest Expense   (138)   (244)
Investment Income   179    145 
Other Expense   (15)   (1)

Income Before (Provision)/Benefit for Income Taxes and Non Controlling Interests

   15,024    15,264 
(Provision)/Benefit for Income Taxes   (920)   1,293 
Net Income   14,104    16,557 
Net Income - Non Controlling Interests   (2,715)   (2,844)
Net Income - Controlling Interests  $11,389   $13,713 
Net Income Available to Common Stockholders  $10,675   $12,842 
Net Income Available to Class A Non-Voting Preferred Stockholders  $532   $649 
Net Income Available to Class C Common Stockholders  $182   $222 
 Basic Net Income Per Common Share Available to Common Stockholders  $1.70   $2.09 
 Diluted Net Income Per Common Share Available to Common Stockholders  $1.66   $2.05 
Basic and Diluted Income Per Share-Class C Common  $0.48   $0.58 
Weighted Average Basic Shares Outstanding-Common Stockholders   6,287    6,143 
Weighted Average Diluted Shares Outstanding-Common Stockholders   6,415    6,271 
Weighted Average Basic Shares Outstanding – Class C Common   383    383 
Weighted Average Diluted Shares Outstanding – Class C Common   383    383 

 

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