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Fonar Corp (FONR) SEC Filing 8-K Material Event for the period ending Monday, May 16, 2022

Fonar Corp

CIK: 355019 Ticker: FONR

 

 

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 3RD QUARTER AND NINE-MONTH PERIOD FINANCIAL RESULTS FOR FISCAL 2022

·
Total MRI scan volume at the HMCA-managed sites increased 8% to 140,650 scans for the nine-month period ended March 31, 2022 versus the corresponding period one year earlier
·Income From Operations increased 37% to $5.6 million for the quarter ended March 31, 2022 as compared to the corresponding quarter one year ago. Income From Operations increased 35% to $17.9 million for the nine-month period ended March 31, 2022 as compared to the corresponding nine-month period one year ago.
·Net Income was $3.3 million for the quarter ended March 31, 2022 and $13.6 million for the nine-month period ended March 31, 2022.
·Diluted Net Income per Common Share Available to Common Stockholders was $0.32 for the quarter ended March 31, 2022 and $1.43 for the nine-month period ended March 31, 2022.
·Total Revenues-Net increased 6% to $24.6 million for the quarter ended March 31, 2022 as compared to the corresponding quarter one year ago. Total Revenues-Net increased 12% to $72.8 million for the nine-month period ended March 31, 2022, as compared to the corresponding nine-month period one year ago.
·Cash and Cash Equivalents were $46.0 million at March 31, 2022 as compared to $44.5 million at June 30, 2021.
·Net Book Value per Common Share increased 6% to $21.59 at March 31, 2022 as compared to $20.37 at March 31, 2021, one year ago. .

MELVILLE, NEW YORK, May 16, 2022 - FONAR Corporation (NASDAQ-FONR), The Inventor of MR Scanning™, reported today its financial results for the 3rd fiscal 2022 quarter and nine-month period ended March 31, 2022. 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 scanners. Currently, HMCA manages 40 MRI scanners.

 

Operating Results

 

Total Revenues-Net for the third fiscal quarter ended March 31, 2022 increased 6% to $24.6 million as compared to $23.1 million for the third fiscal quarter ended March 31, 2021. Total Revenues-Net for the nine-month period ended March 31, 2022 increased 12% to $72.8 million as compared to $65.2 million for the nine-month period ended March 31, 2021.

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Income from Operations for the third fiscal quarter ended March 31, 2022 increased 37% to $5.6 million as compared to $4.1 million for the third fiscal quarter ended March 31, 2021. Income from Operations for the nine-month period ended March 31, 2022 increased 35% to $17.9 million as compared to $13.3 million for the nine-month period ended March 31, 2021.

 

The Provision for Income Taxes for the third fiscal quarter ended March 31, 2022 was $2.5 million as compared to $12 thousand for the third fiscal quarter ended March 31, 2021. This difference is approximately $2.5 million. The Provision for Income Taxes for the nine-month period ended March 31, 2022 was $5.3 million as compared to $2.0 million for the nine-month period ended March 31, 2021. This is a difference of approximately $3.3 million. These differences directly impacted Net Income and Net Income Per Common Share Available to Common Shareholders while not impacting Income from Operations.

 

Subsequently, Net Income for the third fiscal quarter ended March 31, 2022 was $3.3 million as compared to $4.3 million for the quarter ended March 31, 2021, a difference of $1.0 million. Net Income for the nine-month period ended March 31, 2022 was $13.6 million as compared to $11.5 million for the nine-month period ended March 31, 2021. Therefore, Net Income was reduced directly due to the Provision for Income Taxes.

 

Diluted Net Income Per Common Share Available to Common Shareholders was $0.32 for the third fiscal quarter ended March 31, 2022 as compared to $0.54 for the third fiscal quarter ended March 31, 2021. Diluted Net Income Per Common Share Available to Common Shareholders for the nine-month period ended March 31, 2022 was $1.43 as compared to $1.35 for the nine-month period ended March 31, 2021. The large increase of the Provision for Income Tax significantly impacted Diluted Net Income Per Common Share Available to Common Shareholders.

 

Total Costs and Expenses were $19.0 million for the third fiscal quarter ended March 31, 2022 and March 31, 2021. Total Costs and Expenses for the nine-month period ended March 31, 2022 was $54.9 million and for the nine-month period ended March 31, 2021 was $52.0 million.

 

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Balance Sheet Items

 

Total Cash and Cash Equivalents and Short Term Investments at March 31, 2022 were $46.0 million as compared to the $44.5 million at June 30, 2021.

 

Total Assets at March 31, 2022 were $195.6 million as compared to $189.5 million at June 30, 2021.

 

Total Liabilities at March 31, 2022 were $51.4 million as compared to $54.1 million at June 30, 2021.

 

The ratio of Total Assets / Total Liabilities increased 10% to 3.8 at March 31, 2022 as compared to 3.5 at June 30, 2021.

 

Total Current Assets at March 31, 2022 were $114.3 million as compared to $108.6 million at June 30, 2021.

 

Total Current Liabilities at March 31, 2022 were $14.2 million as compared to $20.0 million at June 30, 2021.

 

Working Capital increased 13% to $100.1 million at March 31, 2022 as compared to $88.5 million at June 30, 2021.

 

Net Book Value per Common Share increased 6% to $21.59 at March 31, 2022 as compared to $20.37 at March 31, 2021, one year ago.

 

Cash Flow Statement Item

 

Net Cash Provided by Operating Activities was $10.1 million for the nine-month period ended March 31, 2022 as compared to $13.1 million for the nine-month period ended March 31, 2021.

 

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Management Discussion

 

Timothy Damadian, President and CEO of FONAR said, “We finished the first nine months of Fiscal 2022 with 140,650 scans, which was 10,086 scans over what we completed in the first nine months of fiscal 2021, a 7.7% increase.

“Even though we are now entering the third year of COVID-19 and its variants, the pandemic continues to negatively impact our business through slowed patient volume, employee sicknesses, quarantine requirements, and staffing shortages. The lack of staff at several sites in New York has resulted in curtailed business hours and consequently reduced scan volumes. On the other hand, the addition of second MRIs, one in White Plains, New York, in July 2021 and another in Pembroke Pines, Florida, in November 2021 have contributed positively to the overall scan volume.

“However, our nine-month scan volume exceeded the first nine-month scan volumes of both pre-COVID Fiscal 2019 (136,321 scans) and pre-COVID Fiscal 2020 (138,941 scans). I am grateful to our HMCA employees and management team for stepping up and getting us back to pre-COVID levels in spite of the continuing effects of the pandemic.

“We recently relocated the uptown Manhattan, New York facility to midtown Manhattan and added a second MRI in April, 2022. Looking ahead, we expect to be managing a new site in the Bronx, New York, sometime in the last quarter of Fiscal 2022, and a new site in Central Florida in the early part of Fiscal 2023.

 

“While It is impossible to predict what the effects of inflation, a shrinking economy, a diminished labor pool, the lingering COVID pandemic, or possibly another of its variants will have on our business, I am confident that we will do all that can be done to meet these challenges and to grow and to remain profitable.” 

“I am pleased that the worst of the COVID-19 pandemic is behind us and normalcy is returning,” said Raymond V. Damadian, M.D., Chairman of the Board of Directors of FONAR Corporation. “Now we can continue the progress of growing our Company. Our Company was founded as the first Company in the MRI industry and we have been a leading MRI Company in the industry. Limiting our strategy to only selling MRI scanners was a very cyclic business and the Company had fiscal quarters it made money and some where it lost money. However, that changed when my son, Timothy, became a consultant to the Company in 2010 and became President and CEO in 2016. When he joined the Company he began the strategy of managing MRI centers. He and his team came up with a very unique and successful model. Since then, the Company has continually prospered. Their dynamic strategy and careful planning was a brilliant success and the Company has had 12 straight years of profitable quarters with a combined net income of over $175 million.”

 

“In addition to his great management team,” continued Dr. Damadian, “patients love our UPRIGHT® Multi-Position™ MRI scanner, which contributes to steady patient throughput! Patients who are claustrophobic are very happy to be placed in the seated position and watch TV while they get their MRIs. For these patients, it can be a huge relief. In addition, more and more physicians recognize the diagnostic value of scanning patients in fully weight-bearing positions, particularly those patients getting MRIs of the spine.”

 

“The Company’s research is to unleash the 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. This 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 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 enduring solutions for these ailments,” concluded Dr. Damadian.

 

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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 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 primary source of income and growth is attributable to its wholly-owned diagnostic imaging management subsidiary, Health Management Company of America (HMCA) www.hmca.com.

 

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 cerebrospinal fluid (CSF) 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. The Inventor of MR Scanning™CSP™,  Multi-Position™UPRIGHT RADIOLOGY™The Proof is in the Picture™pMRI™CSF Videography™,  and Dynamic™ 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.

 Page 5 

 

 FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(UNAUDITED)

 

ASSETS

 

   March 31,
2022
  June 30,
2021
Current Assets:          
 Cash and cash equivalents  $46,010   $44,460 
 Short term investments   32    32 
 Accounts receivable – net   3,943    4,526 
 Accounts receivable - related party   30    12 
 Medical receivable – net   19,548    17,901 
 Management and other fees receivable – net   32,804    30,948 
Management and other fees receivable – related medical practices – net   8,489    7,814 
 Contract assets   15    —   
 Inventories   2,368    1,663 
 Prepaid expenses and other current assets   1,095    1,227 
  Total Current Assets   114,334    108,583 
           
Accounts receivable – long term   2,066    2,880 
 Deferred income tax asset   12,475    15,959 
 Property and equipment – net   22,441    21,850 
 Right-of-use Asset – operating lease   34,792    30,133 
 Right-of-use Asset – financing lease   978    1,127 
 Goodwill   4,269    4,269 
 Other intangible assets – net   3,770    4,038 
 Other assets   524    667 
  Total Assets  $195,649   $189,506 

 

 

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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

 

   March 31,
2022
  June 30,
2021
Current Liabilities:          
Current portion of long-term debt and capital leases  $40   $173 
Accounts payable   1,011    1,866 
Other current liabilities   4,916    9,162 
 Unearned revenue on service contracts   3,869    4,366 
 Unearned revenue on service contracts – related party   28    —   
 Contract liabilities   —      15 
 Operating lease liability - current portion   3,733    3,533 
 Financing lease liability - current portion   208    203 
Customer deposits   361    731 
           
Total Current Liabilities   14,166    20,049 
           
Long-Term Liabilities:          
 Unearned revenue on service contracts   2,035    2,801 
 Deferred income tax liability   238    238 
 Due to related medical practices   93    93 
 Operating lease liability – net of current portion   33,659    28,975 
 Financing lease liability – net of current portion   892    1,049 
 Long-term debt and capital leases, less current portion   169    760 
 Other liabilities   123    171 
           
Total Long-Term Liabilities   37,209    34,087 
 Total Liabilities   51,375    54,136 

 

 

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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:  March 31,
2022
  June 30,
2021
Class A non-voting preferred stock $.0001 par value; 453 shares authorized at March 31, 2022 and June 30, 2021, 313 issued and outstanding at March 31, 2022 and June 30, 2021  $—     $—   
Preferred stock $.001 par value; 567 shares authorized at March 31, 2022 and June 30, 2021, issued and outstanding – none   —      —   
Common Stock $.0001 par value; 8,500 shares authorized at March 31, 2022 and June 30, 2021, 6,566 issued at March 31, 2022 and June 30, 2021, 6,554 outstanding at March 31, 2022 and June 30, 2021   1    1 
Class B Common Stock (10 votes per share) $.0001 par value; 227 shares authorized at March 31, 2022 and June 30, 2021; .146 issued and outstanding at March 31, 2022 and June 30, 2021   —      —   
 Class C Common Stock (25 votes per share) $.0001 par value; 567 shares authorized at March 31, 2022 and June 30, 2021, 383 issued and outstanding at March 31, 2022 and June 30, 2021   —      —   
 Paid-in capital in excess of par value   184,531    185,101 
 Accumulated deficit   (35,810)   (46,008)
Treasury stock, at cost - 12 shares of common stock at March 31, 2022 and June 30, 2021   (675)   (675)
 Total Fonar Corporation’s Stockholders’ Equity   148,047    138,419 
 Noncontrolling interests   (3,773)   (3,049)
 Total Stockholders' Equity   144,274    135,370 
 Total Liabilities and Stockholders' Equity  $195,649   $189,506 
           

 

 

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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 MARCH 31,
REVENUES  2022  2021
Patient fee revenue – net of contractual allowances and discounts  $7,641   $6,043 
Product sales – net   135    503 
Service and repair fees – net   1,876    1,914 
Service and repair fees - related parties – net   28    28 
Management and other fees – net   11,904    11,808 
Management and other fees - related medical practices – net   2,987    2,794 
Total Revenues – Net   24,571    23,090 
COSTS AND EXPENSES          
Costs related to patient fee revenue   3,306    2,828 
Costs related to product sales   53    152 
Costs related to service and repair fees   747    627 
Costs related to service and repair fees - related parties   11    9 
Costs related to management and other fees   6,696    7,073 
Costs related to management and other fees – related medical practices   1,698    1,746 
Research and development   354    419 
Selling, general and administrative   6,068    6,114 
Total Costs and Expenses   18,933    18,968 
Income From Operations   5,638    4,122 
Other Income   —      144 
Interest Expense   31    (19)
Investment Income   58    64 
Income Before Provision for Income Taxes and Noncontrolling Interests   5,727    4,311 
Provision for Income Taxes   (2,465)   (12)
Net Income   3,262    4,299 
Net Income - Noncontrolling Interests   (971)   (431)
Net Income – Attributable to FONAR  $2,291   $3,868 
Net Income Available to Common Stockholders  $2,153   $3,634 
Net Income Available to Class A Non-Voting Preferred Stockholders  $103   $174 
Net Income Available to Class C Common Stockholders  $35   $60 
Basic Net Income Per Common Share Available to Common Stockholders  $0.33   $0.55 
Diluted Net Income Per Common Share Available to Common Stockholders  $0.32   $0.54 
Basic and Diluted Income Per Share – Class C Common  $0.09   $0.16 
Weighted Average Basic Shares Outstanding – Common Stockholders   6,554    6,554 
Weighted Average Diluted Shares Outstanding - Common Stockholders   6,682    6,682 
Weighted Average Basic and Diluted Shares Outstanding – Class C Common   383    383 

 


 Page 9 

 

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,
REVENUES  2022  2021
Patient fee revenue – net of contractual allowances and discounts  $21,935   $16,372 
Product sales – net   481    534 
Service and repair fees – net   5,720    5,702 
Service and repair fees - related parties – net   83    83 
Management and other fees – net   35,985    34,362 
Management and other fees - related medical practices – net   8,576    8,181 
Total Revenues – Net   72,780    65,234 
COSTS AND EXPENSES          
Costs related to patient fee revenue   9,785    7,997 
Costs related to product sales   352    477 
Costs related to service and repair fees   2,190    1,861 
Costs related to service and repair fees - related parties   32    27 
Costs related to management and other fees   20,497    18,861 
Costs related to management and other fees – related medical practices   5,024    4,696 
Research and development   1,109    1,243 
Selling, general and administrative   15,928    16,818 
Total Costs and Expenses   54,917    51,980 
Income From Operations   17,863    13,254 
Other Income/(Expense)   858    4 
Interest Expense   (9)   (57)
Investment Income   180    251 
Income Before Provision for Income Taxes and Noncontrolling Interests   18,892    13,452 
Provision for Income Taxes   (5,311)   (1,974)
Net Income   13,581    11,478 
Net Income - Noncontrolling Interests   (3,383)   (1,991)
Net Income – Attributable to FONAR  $10,198   $9,487 
Net Income Available to Common Stockholders  $9,583   $8,915 
Net Income Available to Class A Non-Voting Preferred Stockholders  $458   $426 
Net Income Available to Class C Common Stockholders  $157   $146 
Basic Net Income Per Common Share Available to Common Stockholders  $1.46   $1.37 
Diluted Net Income Per Common Share Available to Common Stockholders  $1.43   $1.35 
Basic and Diluted Income Per Share – Class C Common  $0.41   $0.38 
Weighted Average Basic Shares Outstanding – Common Stockholders   6,554    6,489 
Weighted Average Diluted Shares Outstanding - Common Stockholders   6,682    6,617 
Weighted Average Basic and Diluted  Shares Outstanding – Class C Common   383    383 

 

 

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FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

(UNAUDITED)

   FOR THE NINE MONTHS
ENDED MARCH 31,
   2022  2021
Cash Flows from Operating Activities:          
 Net income  $13,581   $11,478 
 Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization   3,543    3,100 
Amortization on right-of-use assets   2,633    1,543 
Provision for bad debts   2,150    5,103 
Deferred income tax – net   3,484    1,712 
Compensatory element of stock issuances   —      83 
Stock issued for costs and expenses   —      1,941 
Abandoned patents   —      1 
Gain on forgiveness of PPP loan   (701)   —   
(Increase) decrease in operating assets, net:          
Accounts, medical and management fee receivable(s)   (4,950)   (9,551)
Notes receivable   32    36 
Contract assets   (15)   (65)
Inventories   (705)   (323)
Income tax receivable   —      671 
Prepaid expenses and other current assets   112    424 
Other assets   132    (1)
Increase (decrease) in operating liabilities, net:          
Accounts payable   (855)   (189)
Other current liabilities   (5,480)   (1,827)
Operating lease liabilities   (2,259)   (1,168)
Financing lease liabilities   (151)   (25)
Customer deposits   (370)   183 
Contract assets   (15)   —   
Other liabilities   (49)   14 
Net cash provided by operating activities   10,117    13,140 
 Cash Flows from Investing Activities:          
Purchases of property and equipment   (3,807)   (2,942)
Purchase of noncontrolling interests   (546)   —   
Purchases of imaging facility   —      (1,123)
Cost of patents   (60)   (108)
Net cash used in investing activities   (4,413)   (4,173)
 Cash Flows from Financing Activities:          
 Repayment of borrowings and capital lease obligations   (23)   (73)
 Proceeds from debt   —      63 
 Distributions to noncontrolling interests   (4,131)   (4,950)
Net cash used in financing activities   (4,154)   (4,960)
 Net Increase in Cash and Cash Equivalents   1,550    4,007 
Cash and Cash Equivalents - Beginning of Period   44,460    36,802 
Cash and Cash Equivalents - End of Period  $46,010   $40,809 

 

 Page 11 

 

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Fonar Corp provided additional information to their SEC Filing as exhibits

Ticker: FONR
CIK: 355019
Form Type: 8-K Corporate News
Accession Number: 0000355019-22-000026
Submitted to the SEC: Mon May 16 2022 5:10:48 PM EST
Accepted by the SEC: Mon May 16 2022
Period: Monday, May 16, 2022
Industry: Electromedical And Electrotherapeutic Apparatus
Events:
  1. Earnings Release

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