| 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) 390-1709 |
FONAR Announces 3rd Quarter and Nine Months Financial Results for Fiscal 2016
- Third Quarter Fiscal 2016 Net Revenues increased 9% to $18.6 million versus the same period a year earlier.
- Third Quarter Fiscal 2016 Diluted Net Income Per Common Share Available to Common Stockholders increased 45% to $0.45 per share versus the same period a year earlier.
- At March 31, 2016 Cash and Cash Equivalents increased 39% to $13.1 million from $9.4 million at June 30, 2015.
- Third Quarter Fiscal 2016 Income from Operations increased 54% to $4.1 million versus the same period a year earlier.
- Third Quarter Fiscal 2016 Net Income increased 54% to $3.9 million versus the same period a year earlier.
- Company appoints Timothy R. Damadian as President and CEO of FONAR.
- Company announces date of annual shareholder’s meeting: June 13, 2016.
MELVILLE, NEW YORK, May 10, 2016 - FONAR Corporation (NASDAQ-FONR), The Inventor of MR Scanning™, reported its fiscal 2016 third quarter and nine-months results for the period ended March 31, 2016. FONAR, a leader in the MRI industry, is the first to manufacture an MRI (Magnetic Resonance Imaging) scanner. FONAR’s substantial list of patents include recent patents for its technology enabling full weight-bearing MRI imaging in all the gravity-sensitive regions of the human anatomy, especially the brain, extremities, and spine.
The Company’s two industry segments: HMCA, which manages 25 FONAR-equipped centers (all but one are equipped with UPRIGHT® Multi-Position™ MRIs); and the development, manufacturing and servicing of the FONAR scanners. Its premier MRI product, the FONAR UPRIGHT® Multi-Position™ MRI scanner, is the world’s only MRI scanner licensed under FONAR’s multiple UPRIGHT® Multi-Position™ MRI patents to scan all the patient’s body parts in their normal fully weight-bearing UPRIGHT® positions.
Statement of operation items
Net Revenues for the quarter ended March 31, 2016 increased 9% to $18.6 million as compared to $17.1 million for the corresponding quarter one year earlier.
Net Revenues for the nine-month period ended March 31, 2016 increased 5% to $54.6 million as compared to $52.2 million for the corresponding nine-month period one year earlier.
Net Income for the quarter ended March 31, 2016 increased 54% to $3.9 million as compared to $2.5 million for the corresponding quarter one year earlier.
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Net Income for the nine-month period ended March 31, 2016 increased 24% to $11.5 million as compared to $9.2 million for the corresponding nine-month period one year earlier.
Income from Operations for the quarter ended March 31, 2016 increased 54% to $4.1 million as compared to $2.7 million for the corresponding quarter one year earlier.
Income from Operations for the nine-month period ended March 31, 2016 increased 23% to $11.9 million as compared to $9.7 million for the corresponding nine-month period one year earlier.
Diluted net income per common share available to common shareholders for the quarter ended March 31, 2016 increased 45% to $0.45 as compared to $0.31 for the corresponding quarter one year earlier.
Diluted net income per common share available to common shareholders for the nine-month period ended March 31, 2016 increased 30% to $1.42 as compared to $1.09 for the corresponding nine-month period one year earlier.
Balance sheet items
Cash and cash equivalents increased 39% to $13.1 million at March 31, 2016, from $9.4 million at June 30, 2015.
Total current assets at March 31, 2016 were $50.9 million, as compared to $43.6 million at June 30, 2015.
Total assets at March 31, 2016 were $82.0 million, as compared to $76.5 million at June 30, 2015.
Total current liabilities at March 31, 2016 were $18.6 million, as compared to $18.8 million at June 30, 2015.
Total liabilities at March 31, 2016 were $23.9 million, as compared to $25.7 million at June 30, 2015.
Total stockholder’s equity at March 31, 2016 was $58.1 million, as compared to $50.8 million at June 30, 2015.
Significant Events
On February 8, 2016, The Company announced that Timothy R. Damadian was named President and Chief Executive Officer of FONAR Corporation.
Tim Damadian joined FONAR as a consultant in 2010, at which point FONAR embraced his vision and plan for improving the performance of FONAR’s management subsidiary, HMCA. Over the next five years FONAR’s revenue more than doubled (from $31.8 million for the year ending June 30, 2010 to $69.1 million for the year ending June 30, 2015) - an achievement primarily attributable to the success of HMCA. Over the same period Net (Loss) Income per Common Share went from ($0.61) to $2.00. (For more details visit: www.fonar.com/news/020816.htm)
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Raymond V. Damadian, the founder of FONAR Corporation continues his role as Chairman of the Board. Dr. Damadian founded FONAR in 1978 after making the key discovery that ushered in the MRI industry. Since then, the Company made many of the inventions used today on MRI scanners as well as manufacturing approximately 400 MRI scanners.
The Company will hold its annual meeting on June 13, 2016. Dr. Damadian has issued his annual shareholder letter which can be seen on the Company’s Web site at www.fonar.com/shareholder-letter.htm.
Management Discussion
Timothy R. Damadian, president and CEO of Fonar Corporation, said, “I am humbled by my appointment as president and CEO, and I look forward to serving the Company and its shareholders to the best of my ability.
“The financial results of this quarter are very good. Year-over-year comparisons show a 54% increase in Net Income. Also, our revenues and Net Income from our MRI management subsidiary, HMCA, show consistent, gradual growth.”
Mr. Damadian continued, “Although many MRI centers across the country are having a very difficult time dealing with ever-declining reimbursement rates, our centers have endured, even thrived, by increasing scan volume, which is largely attributable to the enormous appeal of the FONAR STAND-UP® MRI.
“Our goal for the future is to continue to increase profitability while maintaining a strong cash position. This can be achieved not only by improving profitability at existing centers but also by establishing new sites and through strategic acquisitions.”
Raymond V. Damadian, M.D., Chairman of FONAR Corporation, said, “I am very pleased with the seamless transition that has occurred for Timothy as he assumed the office of president and CEO. I am confident that he will guide FONAR to a sustained profitable future.
“A wonderful advantage of Timothy assuming primary management duties is my being able to focus on research into the important area of neck injury and its impact on brain health. The UPRIGHT® Multi-Position MRI is a marvelous scanner that is able to see the neck in its weight-bearing position. We often see patients’ neck problems missed by the recumbent-only MRI scanners. In addition, we have developed new technology for viewing the flow of cerebral spinal fluid (CSF) as it circulates in and around the brain. We are able to see CSF leakage and CSF pooling, and can often trace these problems to neck injuries. We can do all of this on our UPRIGHT® Multi-Position™ MRI (aka STAND-UP® MRI).
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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 stellar product is the FONAR UPRIGHT® 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 sees the patient’s problem that other 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. 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 they watch a 42” flat screen 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 due to this latest works-in-progress for quantifying CSF in all the normal positions of the body, particularly in its upright flow against gravity. The type of patient that will benefit from this technology includes those with various types of dementia such as former NFL quarterback Jim McMahon.
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 and spine. FONAR’s UPRIGHT® Multi-Position™ MRI is the only scanner licensed under these patents.
UPRIGHT® andSTAND-UP® are registered trademarks andThe 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, | June 30, | |||||||
| Cash and cash equivalents | $ | 13,147 | $ | 9,449 | ||||
| Accounts receivable – net | 4,326 | 3,791 | ||||||
| Accounts receivable - related party | 30 | — | ||||||
| Medical receivable – net | 10,097 | 9,082 | ||||||
| Management and other fees receivable – net | 15,901 | 14,058 | ||||||
| Management and other fees receivable – related medical practices – net | 4,059 | 3,507 | ||||||
| Costs and estimated earnings in excess of billing on uncompleted contracts | 279 | 682 | ||||||
| Inventories | 2,234 | 2,192 | ||||||
| Prepaid expenses and other current assets | 834 | 860 | ||||||
| Total Current Assets | 50,907 | 43,621 | ||||||
| Deferred income tax asset | 8,423 | 8,423 | ||||||
| Property and equipment – net | 11,877 | 12,901 | ||||||
| Goodwill | 1,767 | 1,767 | ||||||
| Other intangible assets – net | 8,066 | 8,950 | ||||||
| Other assets | 972 | 830 | ||||||
| Total Assets | $ | 82,012 | $ | 76,492 | ||||
*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
March 31, | June 30, 2015 * | |||||||
| Current Liabilities: | ||||||||
| Current portion of long-term debt and capital leases | $ | 2,455 | $ | 2,490 | ||||
| Accounts payable | 1,345 | 1,783 | ||||||
| Other current liabilities | 8,638 | 8,253 | ||||||
| Unearned revenue on service contracts | 4,350 | 4,187 | ||||||
| Unearned revenue on service contracts - related party | 28 | — | ||||||
| Customer advances | 1,511 | 1,938 | ||||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | 255 | 142 | ||||||
| Total Current Liabilities | 18,582 | 18,793 | ||||||
| Long-Term Liabilities: | ||||||||
| Deferred income tax liability | 510 | 510 | ||||||
| Due to related medical practices | 237 | 237 | ||||||
| Long-term debt and capital leases, less current portion | 3,863 | 5,699 | ||||||
| Other liabilities | 718 | 469 | ||||||
| Total Long-Term Liabilities | 5,328 | 6,915 | ||||||
| Total Liabilities | 23,910 | 25,708 | ||||||
*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)
March 31, 2016 | June 30, 2015 * | |||||||
| STOCKHOLDERS' EQUITY: | ||||||||
| Class A non-voting preferred stock $.0001 par value; 453 shares authorized at March 31, 2016 and June 30, 2015, 313 issued and outstanding at March 31, 2016 and June 30, 2015 | $ | — | $ | — | ||||
| Preferred stock $.001 par value; 567 shares authorized at March 31, 2016 and June 30, 2015, issued and outstanding – none | — | — | ||||||
| Common Stock $.0001 par value; 8,500 shares authorized at March 31, 2016 and June 30, 2015, 6,062 issued at March 31, 2016 and June 30, 2015; 6,051 outstanding at March 31, 2016 and June 30, 2015 | 1 | 1 | ||||||
| Class B Common Stock (10 votes per share) $ .0001 par value; 227 shares authorized at March 31, 2016 and June 30, 2015, .146 issued and outstanding at March 31, 2016 and June 30, 2015 | — | — | ||||||
| Class C Common Stock (25 votes per share) $.0001 par value; 567 shares authorized at March 31, 2016 and June 30, 2015, 383 issued and outstanding at March 31, 2016 and June 30, 2015 | — | — | ||||||
| Paid-in capital in excess of par value | 175,448 | 175,448 | ||||||
| Accumulated deficit | (126,989 | ) | (136,349 | ) | ||||
| Notes receivable from employee stockholders | (26 | ) | (32 | ) | ||||
| Treasury stock, at cost - 12 shares of common stock at March 31, 2016 and June 30, 2015 | (675 | ) | (675 | ) | ||||
| Total Fonar Corporation Stockholder Equity | 47,759 | 38,393 | ||||||
| Noncontrolling interests | 10,343 | 12,391 | ||||||
| Total Stockholders' Equity | 58,102 | 50,784 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 82,012 | $ | 76,492 | ||||
*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 MARCH 31 | ||||||||
| REVENUES | 2016 | 2015 | ||||||
| Product sales – net | $ | 20 | $ | 160 | ||||
| Service and repair fees – net | 2,406 | 2,299 | ||||||
| Service and repair fees – related parties - net | 27 | 27 | ||||||
| Patient fee revenue, net of contractual allowances and discounts | 8,695 | 7,284 | ||||||
| Provision for bad debts for patient fee | (3,830 | ) | (3,201 | ) | ||||
| Management and other fees – net | 9,394 | 8,653 | ||||||
| Management and other fees – related medical practices – net | 1,907 | 1,874 | ||||||
| Total Revenues – Net | 18,619 | 17,096 | ||||||
| COSTS AND EXPENSES | ||||||||
| Costs related to product sales | 263 | 352 | ||||||
| Costs related to service and repair fees | 552 | 630 | ||||||
| Costs related to service and repair fees – related parties | 6 | 7 | ||||||
| Costs related to patient fee revenue | 2,549 | 2,044 | ||||||
| Costs related to management and other fees | 5,649 | 5,285 | ||||||
| Costs related to management and other fees – related medical practices | 1,045 | 1,284 | ||||||
| Research and development | 395 | 360 | ||||||
| Selling, general and administrative | 4,533 | 3,706 | ||||||
| Provision for bad debts | (470 | ) | 762 | |||||
| Total Costs and Expenses | 14,522 | 14,430 | ||||||
| Income From Operations | 4,097 | 2,666 | ||||||
| Interest Expense | (127 | ) | (169 | ) | ||||
| Investment Income | 56 | 52 | ||||||
| Income Before Provision for Income Taxes and Noncontrolling Interests | 4,026 | 2,549 | ||||||
| Provision for Income Taxes | 145 | 30 | ||||||
| Net Income | 3,881 | 2,519 | ||||||
| Net Income - Noncontrolling Interests | (876 | ) | (500 | ) | ||||
| Net Income - Controlling Interests | $ | 3,005 | $ | 2,019 | ||||
| Net Income Available to Common Stockholders | $ | 2,810 | $ | 1,888 | ||||
| Net Income Available to Class A Non-Voting Preferred Stockholders | $ | 145 | $ | 98 | ||||
| Net Income Available to Class C Common Stockholders | $ | 50 | $ | 33 | ||||
| Basic Net Income Per Common Share Available to Common Stockholders | $ | 0.46 | $ | 0.31 | ||||
| Diluted Net Income Per Common Share Available to Common Stockholders | $ | 0.45 | $ | 0.31 | ||||
| Basic and Diluted Income Per Share-Class C Common | $ | 0.13 | $ | 0.09 | ||||
| Weighted Average Basic Shares Outstanding-Common Stockholders | 6,050 | 6,050 | ||||||
| Weighted Average Diluted Shares Outstanding – Common Stockholders | 6,178 | 6,178 | ||||||
| Weighted Average Basic Shares Outstanding – Class C Common | 383 | 383 | ||||||
| Weighted Average Diluted Shares Outstanding – Class C Common | 383 | 383 | ||||||
See accompanying notes to condensed consolidated 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 NINE MONTHS ENDED MARCH 31, | ||||||||
| REVENUES | 2016 | 2015 | ||||||
| Product sales – net | $ | 780 | $ | 1,806 | ||||
| Service and repair fees – net | 6,970 | 7,288 | ||||||
| Service and repair fees – related parties - net | 83 | 83 | ||||||
| Patient fee revenue, net of contractual allowances and discounts | 24,596 | 20,700 | ||||||
| Provision for bad debts for patient fee | (10,608 | ) | (9,244 | ) | ||||
| Management and other fees – net | 27,180 | 26,004 | ||||||
| Management and other fees – related medical practices – net | 5,598 | 5,536 | ||||||
| Total Revenues – Net | 54,599 | 52,173 | ||||||
| COSTS AND EXPENSES | ||||||||
| Costs related to product sales | 939 | 1,674 | ||||||
| Costs related to service and repair fees | 1,542 | 1,611 | ||||||
| Costs related to service and repair fees - related parties | 18 | 18 | ||||||
| Costs related to patient fee revenue | 7,015 | 5,845 | ||||||
| Costs related to management and other fees | 16,664 | 15,665 | ||||||
| Costs related to management and other fees – related medical practices | 3,116 | 3,893 | ||||||
| Research and development | 1,243 | 1,116 | ||||||
| Selling, general and administrative | 12,425 | 11,108 | ||||||
| Provision for bad debts | (300 | ) | 1,540 | |||||
| Total Costs and Expenses | 42,662 | 42,470 | ||||||
| Income From Operations | 11,937 | 9,703 | ||||||
| Interest Expense | (416 | ) | (545 | ) | ||||
| Investment Income | 164 | 173 | ||||||
| Other Income (Expense) | 1 | (2 | ) | |||||
| Income Before Provision for Income Taxes and Noncontrolling Interests | 11,686 | 9,329 | ||||||
| Provision for Income Taxes | 235 | 99 | ||||||
| Net Income | 11,451 | 9,230 | ||||||
| Net Income - Noncontrolling Interests | (2,091 | ) | (2,018 | ) | ||||
| Net Income - Controlling Interests | $ | 9,360 | $ | 7,212 | ||||
| Net Income Available to Common Stockholders | $ | 8,752 | $ | 6,743 | ||||
| Net Income Available to Class A Non-voting Preferred Stockholders | $ | 453 | $ | 350 | ||||
| Net Income Available to Class C Common Stockholders | $ | 155 | $ | 119 | ||||
| Basic Net Income Per Common Share Available to Common Stockholders | $ | 1.45 | $ | 1.11 | ||||
| Diluted Net Income Per Common Share Available to Common Stockholders | $ | 1.42 | $ | 1.09 | ||||
| Basic and Diluted Income Per Share-Class C Common | $ | 0.40 | $ | 0.31 | ||||
| Weighted Average Basic Shares Outstanding – Common Stockholders | 6,050 | 6,050 | ||||||
| Weighted Average Diluted Shares Outstanding – Common Stockholders | 6,178 | 6,178 | ||||||
| Weighted Average Basic Shares Outstanding – Class C Common | 383 | 383 | ||||||
| Weighted Average Diluted Shares Outstanding – Class C Common | 383 | 383 | ||||||
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