FONAR Corporation (NASDAQ-FONR), The Inventor of MR Scanning™,
announced today its financial results for the 3rd Fiscal Quarter of
2019 and the nine-month period ended March 31, 2019. The Company’s
two industry segments are: development, manufacturing and servicing
of the FONAR UPRIGHT® Multi-Position™ MRI, aka Stand-Up® MRI, and
management or ownership of 26 MRI centers through its subsidiary,
Health Management Company of America (HMCA).
The majority of MRI exams are of the spine, and
FONAR’s UPRIGHT® MRI technology is of great importance.
Diagnosticians are able to view human anatomy in its normal
weight-bearing positions, including sitting, standing and bending.
Certain anatomical regions are very sensitive to body-position and
gravity. If diagnosticians can evaluate the spine in those
positions, they can minimize or completely avoid the risks of
mischaracterizing or underestimating the patients’ problems.
Statement of Operations Items
Revenues increased 9% for the third fiscal
quarter ended March 31, 2019 to $22.8 million as compared to $21.0
million for the corresponding quarter one year earlier. Revenues
increased 7% for the nine-month period ended March 31, 2019 to $
64.5 million as compared to $60.5 million for the corresponding
period one year earlier.
Part of the reason for this revenue growth was
product sales – net increased to $0.8 million from $0.1 million
during the third fiscal quarter ended March 31, 2019.
Income from Operations increased 50% for the
third fiscal quarter ended March 31, 2019 to $6.7 million as
compared to $4.4 million for the corresponding quarter one year
earlier. Income from Operations increased 21% for the nine-month
period ended March 31, 2019 to $18.1 million as compared to $15.0
million for the corresponding period one year earlier.
Net Income increased 22% for the third fiscal
quarter ended March 31, 2019 to $5.2 million as compared to $4.3
million for the corresponding quarter one year earlier. Net Income
increased 3% for the nine-month period ended March 31, 2019 to
$14.6 million as compared to $14.1 million for the corresponding
period one year earlier, as a result of the Company's requirement
to re-evaluate the need for a deferred tax valuation allowance and
record a full Provision for Income Taxes in the amount of $3.8
million.
The Provision for Income Taxes increased 828%
for the third fiscal quarter ended March 31, 2019 to $1.5 million
as compared to $0.2 million for the corresponding quarter one year
earlier. The Provision for Income Taxes increased 316% for the
nine-month period ended March 31, 2019 to $3.8 million as compared
to $0.9 million for the corresponding period one year
earlier. This results from the re-evaluation of the need for
a deferred tax valuation allowance and requirement to record a full
tax provision for the nine months March 31, 2019 in the amount of
$3.7 million.
Diluted Net Income Per Common Share Available to
Common Shareholders increased 10% for the third fiscal quarter
ended March 31, 2019 to $0.56 as compared to $0.51 for the
corresponding quarter one year earlier. Diluted Net Income Per
Common Share Available to Common Shareholders decreased 7% for the
nine-month period ended March 31, 2019 to $1.55 as compared to
$1.66 for the corresponding period one year earlier.
Total Costs and Expenses decreased 2% for the
third fiscal quarter ended March 31, 2019 to $16.2 million as
compared to $16.6 million for the corresponding quarter one year
earlier. Total Costs and Expenses increased 2% for the nine-month
period ended March 31, 2019 to $46.6 million as compared to $45.5
million for the corresponding period one year earlier.
Balance Sheet Items
Total Cash and Cash Equivalents at March 31,
2019, increased 26% to $24.8 million, as compared to $19.6 million
at June 30, 2018.
Total Assets ended March 31, 2019, increased 7%
to $126.6 million, as compared to $118.3 million at June 30,
2018.
Total Current Assets ended March 31, 2019,
increased 18% to $ 78.8 million, as compared to $67.1 million at
June 30, 2018.
Total Liabilities ended March 31, 2019,
decreased 21% to $ 12.7 million, as compared to $16.1 million at
June 30, 2018.
Total Current Liabilities ended March 31, 2019,
decreased 23% to $ 11.3 million, as compared to $14.6 million at
June 30, 2018.
Significant Event
On March 14, 2019, the Company reported in a
press release the on-line publication of a chapter where the
physician-author-researchers utilized the FONAR UPRIGHT®
Multi-Position™ MRI. The title of their chapter is: Craniocervical
Junction Syndrome: Anatomy of the Craniocervical and Atlantoaxial
Junctions and the Effect of Misalignment on Cerebrospinal Fluid
Flow.Management Discussion. To learn more visit:
www.fonar.com/news/031419.htm.
One of the authors, Dr. Scott Rosa, has
developed a patented method to restore cerebrospinal integrity by
correcting misalignments at the cranio-cervical junction (CCJ)
called Image Guided Atlas Treatment™ or IGAT™. He says that the
FONAR UPRIGHT® MRI and its imaging sequences are a critical part of
the IGAT™ methodology in correcting the misalignments found at the
CCJ. This is because only the FONAR UPRIGHT® MRI can visualize the
CCJ in the upright, fully weight-loaded position, necessary for
detecting fully distended cerebellar tonsillar ectopia and CSF flow
impeding vertebral malalignments.
Management Discussion
Raymond V. Damadian, M.D., Chairman of the Board
of Directors of Fonar Corporation, remarked: “I was very pleased to
report that a central part of this peer-reviewed, research chapter,
strongly endorsed the FONAR UPRIGHT® Multi-Position™ MRI. The
chapter reports: ‘The FONAR upright weight-bearing MRI has been
shown to be most sensitive in detecting cerebellar tonsillar
ectopia since the weight-bearing posture presents the cerebellar
tonsils further distended into the foramen magnum.’ In addition, it
recognized that, 'Upright Cine MRI of the cranio-cervical junction
demonstrates CSF flow dynamics.” These dynamic studies cannot be
obtained on a recumbent-only MRI.
President and CEO, Timothy R. Damadian said, “We
are very pleased with the third quarter results, in particular the
9% increase in revenues and the 50% increase in Income from
Operations. Eleven (11) of our 26 sites had record scan volumes
this quarter.
“Much of our success is attributable to the
installation of additional MRI equipment at high-volume centers.
The ability to offer referring physicians a broad spectrum of MRI
services together with the cost benefits from shared expenses has
resulted in higher profit margins and record scan volumes at sites
in New York and Florida. Encouraged by such performance, we are
currently in the process of installing additional equipment at
other high-volume centers.
“In addition to expanding capacity at existing
centers, we have also grown by expanding our footprint with de novo
projects. In fact, we have made the decision to open our
eighth location in Florida and expect to have the lease finalized
shortly. We continue to search for acquisitions within our
footprint consistent with our business model. While several
acquisition opportunities have arisen over the past six months,
none offered our requisite combination of price and growth
potential to warrant our use of capital.
“Naturally, the costs involved in purchasing and installing
additional equipment, establishing new MRI centers, or making
acquisitions are substantial. With our strong balance sheet,
we are grateful to be able to pursue our business plan on a sound
financial footing.”
The Company also sold an UPRIGHT® Multi-Position
MRI to a new customer in central Florida who had become aware of
its enormous appeal in his community.
Our cash position, which is now over $24
million, is growing at a significant rate. Along with other
strong balance sheet items, the Company is in excellent position
for future growth. Such growth will be well planned and executed in
order to maintain the Company’s profit trajectory.
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.
FONAR CORPORATION AND SUBSIDIARIESCONDENSED
CONSOLIDATED BALANCE SHEETS(Amounts and shares in thousands, except
per share amounts)(UNAUDITED)
ASSETS
|
March 31,2019 |
|
June 30,2018 |
Cash and cash equivalents |
$ |
24,780 |
|
$ |
19,634 |
Accounts receivable – net |
|
3,709 |
|
|
3,814 |
Accounts receivable - related
party |
|
30 |
|
|
- |
Medical receivable – net |
|
15,318 |
|
|
13,351 |
Management and other fees
receivable – net |
|
24,979 |
|
|
21,863 |
Management and other fees
receivable – related medical practices – net |
|
6,204 |
|
|
5,535 |
Inventories |
|
1,810 |
|
|
1,431 |
Costs and estimated earnings in
excess of billings on uncompleted contracts |
|
335 |
|
|
87 |
Prepaid expenses and other
current assets |
|
1,647 |
|
|
1,350 |
Total Current Assets |
|
78,812 |
|
|
67,065 |
Income taxes receivable |
|
1,200 |
|
|
1,200 |
Deferred income tax asset |
|
18,989 |
|
|
22,689 |
Property and equipment - net |
|
17,440 |
|
|
16,492 |
Goodwill |
|
3,985 |
|
|
3,985 |
Other intangible assets -
net |
|
4,959 |
|
|
5,602 |
Other Assets |
|
1,207 |
|
|
1,278 |
Total Assets |
$ |
125,592 |
|
$ |
118,311 |
|
|
|
|
|
|
FONAR CORPORATION AND SUBSIDIARIESCONDENSED
CONSOLIDATED BALANCE SHEETS(Amounts and shares in thousands, except
per share amounts) (UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
|
March 31, 2019 |
|
June 30, 2018 |
Current Liabilities: |
|
|
|
Current portion of long-term debt and capital leases |
$ |
40 |
|
$ |
39 |
Accounts payable |
|
1,631 |
|
|
1,300 |
Other current liabilities |
|
4,973 |
|
|
8,178 |
Unearned revenue on service contracts |
|
3,777 |
|
|
4,192 |
Unearned revenue on service contracts - related party |
|
27 |
|
|
- |
Customer advances |
|
834 |
|
|
858 |
Total Current Liabilities |
|
11,282 |
|
|
14,567 |
Long-Term Liabilities: |
|
|
|
Deferred income tax liability |
|
239 |
|
|
239 |
Due to related medical practices |
|
93 |
|
|
227 |
Long-term debt and capital leases, less current portion |
|
282 |
|
|
306 |
Other liabilities |
|
755 |
|
|
737 |
Total Long-Term Liabilities |
|
1,369 |
|
|
1,509 |
Total Liabilities |
|
12,651 |
|
|
16,076 |
|
|
|
|
|
|
FONAR CORPORATION AND SUBSIDIARIESCONDENSED
CONSOLIDATED BALANCE SHEETS(Amounts and shares in thousands, except
per share amounts) (UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY (Continued)
|
March 31, 2018 |
|
June 30, 2019 |
STOCKHOLDERS' EQUITY: |
|
|
|
Class A
non-voting preferred stock $.0001 par value; 453 shares authorized
at March 31, 2019 and June 30, 2018, 313 issued and outstanding at
March 31, 2019 and June 30, 2018 |
$ |
- |
|
|
$ |
- |
|
Preferred stock $.001 par value; 567 shares authorized
at March 31, 2019 and June 30, 2018, issued and outstanding –
none |
|
- |
|
|
|
- |
|
Common Stock $.0001 par value; 8,500 shares authorized
at March 31, 2019 and June 30, 2018, 6,369 and 6,299 issued at
March 31, 2019 and June 30, 2018; 6,357 and 6,288 outstanding at
March 31, 2019 and June 30, 2018 |
|
1 |
|
|
|
1 |
|
Class B Common Stock (10 votes per share) $ .0001 par
value; 227 shares authorized at March 31, 2019 and June 30, 2018,
.146 issued and outstanding at March 31, 2019 and June 30,
2018 |
|
- |
|
|
|
- |
|
Class C Common Stock (25 votes per share) $.0001 par
value; 567 shares authorized at March 31, 2019 and June 30, 2018,
383 issued and outstanding at March 31, 2019 and June 30, 2018 |
|
- |
|
|
|
- |
|
Paid-in capital in excess of par value |
|
181,086 |
|
|
|
179,132 |
|
Accumulated deficit |
|
(69,039 |
) |
|
|
(79,773 |
) |
Notes receivable from employee stockholders |
|
- |
|
|
|
(9 |
) |
Treasury stock, at cost - 12 shares of common stock at
March 31, 2019 and June 30, 2018 |
|
(675 |
) |
|
|
(675 |
) |
Total Fonar Corporation Stockholder Equity |
|
111,373 |
|
|
|
98,676 |
|
Non controlling interests |
|
2,568 |
|
|
|
3,559 |
|
Total Stockholders' Equity |
|
113,941 |
|
|
|
102,235 |
|
Total Liabilities and Stockholders' Equity |
$ |
126,592 |
|
|
$ |
118,311 |
|
|
|
|
|
|
|
|
|
FONAR CORPORATION AND SUBSIDIARIESCONDENSED
CONSOLIDATED STATEMENTS OF INCOME(Amounts and shares in thousands,
except per share amounts)(UNAUDITED)
|
For the Three Months |
REVENUES |
Ended March 31, |
|
|
2019 |
|
|
|
2018 |
|
Patient fee revenue, net of contractual allowances and
discounts |
$ |
6,410 |
|
|
$ |
10,163 |
|
Provision for bad debts for patient fee |
|
- |
|
|
|
(4,552 |
) |
Patient fee revenue – net |
|
6,410 |
|
|
|
5,611 |
|
Product sales – net |
|
796 |
|
|
|
69 |
|
Service and repair fees – net |
|
1,964 |
|
|
|
2,314 |
|
Service and repair fees – related parties - net |
|
28 |
|
|
|
28 |
|
Management and other fees – net |
|
11,191 |
|
|
|
10,670 |
|
Management and other fees – related medical practices – net |
|
2,390 |
|
|
|
2,287 |
|
Total Revenues – Net |
|
22,779 |
|
|
|
20,979 |
|
COSTS AND EXPENSES |
|
|
|
Costs related to patient fee revenue |
|
2,740 |
|
|
|
2,570 |
|
Costs related to product sales |
|
216 |
|
|
|
173 |
|
Costs related to service and repair fees |
|
752 |
|
|
|
775 |
|
Costs related to service and repair fees – related parties |
|
10 |
|
|
|
9 |
|
Costs related to management and other fees |
|
5,834 |
|
|
|
5,733 |
|
Costs related to management and other fees – related medical
practices |
|
1,634 |
|
|
|
1,281 |
|
Research and development |
|
381 |
|
|
|
503 |
|
Selling, general and administrative |
|
4,604 |
|
|
|
5,533 |
|
Total Costs and Expenses |
|
16,171 |
|
|
|
16,577 |
|
Income From Operations |
|
6,608 |
|
|
|
4,402 |
|
Interest Expense |
|
(27 |
) |
|
|
(46 |
) |
Investment Income |
|
104 |
|
|
|
74 |
|
Other Expense |
|
- |
|
|
|
(8 |
) |
Income Before Provision for
Income Taxes and Non Controlling Interests |
|
6,685 |
|
|
|
4,422 |
|
Provision for Income
Taxes |
|
(1,484 |
) |
|
|
(160 |
) |
Net Income |
|
5,201 |
|
|
|
4,262 |
|
Net Income - Non Controlling
Interests |
|
(1,338 |
) |
|
|
(781 |
) |
Net Income - Controlling
Interests |
$ |
3,863 |
|
|
$ |
3,481 |
|
Net Income Available to Common
Stockholders |
$ |
3,623 |
|
|
$ |
3,263 |
|
Net Income Available to Class
A Non-Voting Preferred Stockholders |
$ |
179 |
|
|
$ |
163 |
|
Net Income Available to Class
C Common Stockholders |
$ |
61 |
|
|
$ |
55 |
|
Basic Net Income Per Common
Share Available to Common Stockholders |
$ |
0.57 |
|
|
$ |
0.52 |
|
Diluted Net Income Per Common
Share Available to Common Stockholders |
$ |
0.56 |
|
|
$ |
0.51 |
|
Basic and Diluted Income Per
Share-Class C Common |
$ |
0.16 |
|
|
$ |
0.15 |
|
Weighted Average Basis Shares
Outstanding-Common Stockholders |
|
6,357 |
|
|
|
6,287 |
|
Weighted Average Diluted
Shares Outstanding-Common Stockholders |
|
6,485 |
|
|
|
6,415 |
|
Weighted Average Basic Shares
Outstanding – Class C Common |
|
383 |
|
|
|
383 |
|
Weighted Average Diluted
Shares Outstanding – Class C Common |
|
383 |
|
|
|
383 |
|
|
|
|
|
|
|
|
|
FONAR CORPORATION AND SUBSIDIARIESCONDENSED
CONSOLIDATED STATEMENTS OF INCOME (Amounts and shares in thousands,
except per share amounts) (UNAUDITED)
|
For the Nine Months Ended March 31, |
|
|
2019 |
|
|
|
2018 |
|
REVENUES |
|
|
|
Patient fee revenue, net of contractual allowances and
discounts |
$ |
17,856 |
|
|
$ |
28,353 |
|
Provision for bad debts for patient fee |
|
- |
|
|
|
(12,873 |
) |
Patient fee revenue – net |
|
17,856 |
|
|
|
15,480 |
|
Product sales – net |
|
1,241 |
|
|
|
508 |
|
Service and repair fees – net |
|
6,116 |
|
|
|
6,929 |
|
Service and repair fees – related parties - net |
|
83 |
|
|
|
83 |
|
Management and other fees – net |
|
32,448 |
|
|
|
30,781 |
|
Management and other fees – related medical practices – net |
|
6,965 |
|
|
|
6,699 |
|
Total Revenues – Net |
|
64,709 |
|
|
|
60,480 |
|
COSTS AND EXPENSES |
|
|
|
Costs related to patient fee revenue |
|
8,016 |
|
|
|
7,619 |
|
Costs related to product sales |
|
539 |
|
|
|
562 |
|
Costs related to service and repair fees |
|
2,242 |
|
|
|
2,309 |
|
Costs related to service and repair fees – related parties |
|
30 |
|
|
|
27 |
|
Costs related to management and other fees |
|
17,493 |
|
|
|
17,116 |
|
Costs related to management and other fees – related medical
practices |
|
4,421 |
|
|
|
3,692 |
|
Research and development |
|
1,368 |
|
|
|
1,258 |
|
Selling, general and administrative |
|
12,474 |
|
|
|
12,899 |
|
Total Costs and Expenses |
|
46,583 |
|
|
|
45,482 |
|
Income From Operations |
|
18,126 |
|
|
|
14,998 |
|
Interest Expense |
|
(78 |
) |
|
|
(138 |
) |
Investment Income |
|
336 |
|
|
|
179 |
|
Other (Expense) Income |
|
- |
|
|
|
(15 |
) |
Income Before Provision for
Income Taxes and Non Controlling Interests |
|
18,384 |
|
|
|
15,024 |
|
Provision for Income
Taxes |
|
(3,826 |
) |
|
|
(920 |
) |
Net Income |
|
14,558 |
|
|
|
14,104 |
|
Net Income - Non Controlling
Interests |
|
(3,824 |
) |
|
|
(2,715 |
) |
Net Income - Controlling
Interests |
$ |
10,734 |
|
|
$ |
11,389 |
|
Net Income Available to Common
Stockholders |
$ |
10,067 |
|
|
$ |
10,675 |
|
Net Income Available to Class
A Non-Voting Preferred Stockholders |
$ |
496 |
|
|
$ |
532 |
|
Net Income Available to Class
C Common Stockholders |
$ |
170 |
|
|
$ |
182 |
|
Basic
Net Income Per Common Share Available to Common Stockholders |
$ |
1.58 |
|
|
$ |
1.70 |
|
Diluted Net Income Per Common Share Available to Common
Stockholders |
$ |
1.55 |
|
|
$ |
1.66 |
|
Basic and Diluted Income Per
Share-Class C Common |
$ |
0.44 |
|
|
$ |
0.48 |
|
Weighted Average Basic Shares
Outstanding-Common Stockholders |
|
6,353 |
|
|
|
6,287 |
|
Weighted Average Diluted
Shares Outstanding-Common Stockholders |
|
6,481 |
|
|
|
6,415 |
|
Weighted Average Basic Shares
Outstanding – Class C Common |
|
383 |
|
|
|
383 |
|
Weighted Average Diluted
Shares Outstanding – Class C Common |
|
383 |
|
|
|
383 |
|
|
|
|
|
|
|
|
|
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 |
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