| 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 1st Quarter Financial Results For Fiscal 2017
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| · | Diluted Net Income per Common Share Available to Common Stockholders increased 26% to $0.54 per share for 1st Quarter Fiscal 2017 from $0.43 during the same quarter one year earlier. |
| · | Net Income Available to Common Stockholders increased 25% to $3.3 million for 1st Quarter Fiscal 2017 versus the same quarter one year earlier. |
| · | Net Income increased 30% to $4.5 million for 1st Quarter Fiscal 2017 versus the same quarter one year earlier. |
| · | Income from Operations for 1st Quarter Fiscal 2017 increased 31% to $4.8 million versus the same quarter one year earlier. |
| · | Total Revenues - Net for 1st Quarter Fiscal 2017 increased 6% to $18.7 million versus the same quarter one year earlier. |
MELVILLE, NEW YORK, November 9, 2016 - FONAR Corporation (NASDAQ-FONR), The Inventor of MR Scanning™, reported today its first quarter fiscal 2017 results for the quarter ended September 30, 2016. The Company introduced the world’s first commercial MRI scanner in 1980, and is known the world over for its advancements in MRI technology. FONAR’s primary source of income is derived from the management of 25 MRI centers that feature the FONAR UPRIGHT® Multi-Position™ MRI, aka Stand-Up® MRI. FONAR’s substantial list of patents include 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.
These include FONAR’s newest 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. 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 and its latest works-in-progress for quantifying CSF in all the normal positions of the body, particularly in its upright flow against gravity.
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 CORPORATION AND SUBSIDIARIES
Financial Highlights
Total Revenues - Net for the quarter ended September 30, 2016 increased 6% to $18.7 million as compared to $17.6 million for the corresponding quarter ended September 30, 2015.
Net Income for the quarter ended September 30, 2016 increased 30% to $4.5 million as compared to $3.5 million for the corresponding quarter ended September 30, 2015.
Income from Operations for the quarter ended September 30, 2016 increased 31% to $4.8 million as compared to $3.6 million for the corresponding quarter ended September 30, 2015.
Basic Net Income per Common Share Available to Common Shareholders for the quarter ended September 30, 2016 increased 25% to $0.55 as compared to $0.44 for the corresponding quarter ended September 30, 2015.
Diluted Net Income per Common Share Available to Common Shareholders for the quarter ended September 30, 2016 increased 26% to $0.54 as compared to $0.43 for the corresponding quarter ended September 30, 2015.
Total Assets at September 30, 2016 were $86.1 million, as compared to $84.9 million at June 30, 2016.
Total Current Assets at September 30, 2016 were $47.0 million, as compared to $45.6 million at June 30, 2016.
Total Cash and Cash Equivalents at September 30, 2016 was $8.0 million, as compared to $8.5 million at June 30, 2016.
Total Liabilities at September 30, 2016 were $20.5 million, as compared to $24.1 million at June 30, 2016.
Total Current Liabilities at September 30, 2016 were $18.3 million, as compared to $20.6 million at June 30, 2016.
FONAR CORPORATION AND SUBSIDIARIES
Management Discussion
President and CEO Timothy R. Damadian said, “I am delighted with our Diluted Net Income Per Common Share Available to Common Stockholders of $0.54, a 26% year-over-year increase. Further, Net Income Available to the Common Stockholder advanced to $3.3 million, a 25% increase, and Income from Operations grew to $4.8 million, a 31% increase.
“Despite the uncertainties and challenges in today’s healthcare arena, we are proud to have achieved a 6% growth rate in Net Revenue and a 31% increase in Income from Operations in the first quarter as compared to the first quarter of fiscal 2016. Much of our success is attributable to key acquisitions, and so we will continue to seek additional opportunities consistent with our growth strategy.”
Raymond V. Damadian, M.D. Chairman of the Board of FONAR Corporation, said, “Another important reason for our success is the tremendous appeal the UPRIGHT® Multi-Position™ MRI has among patients. Most patients are scanned in the seated position watching TV, and for patients who are claustrophobic, it’s a godsend. In fact, it’s very common for patients to ask their physicians if they can have their MRI scans completed on the UPRIGHT® MRI, as opposed to a ‘tube’ or ‘tunnel’ MRI. Furthermore, among the growing number of physicians who recognize the diagnostic value of scanning patients in weight-bearing positions, particularly patients who need MRIs of the spine, the UPRIGHT® is the only choice.
“I am personally grateful,” continued Dr. Damadian, “that after many years of struggle, FONAR has become a very successful Company. Thanks to the medical benefits of FONAR’s unique and patented technology, together with our management team’s adherence to a business plan designed to cope with a very uncertain and challenging healthcare environment, we have now achieved 26 consecutive quarters (6 ½ years) of profitability. And that’s something to be proud of.”
FONAR CORPORATION AND SUBSIDIARIES
About FONAR
FONAR, TheInventor 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 FONARUPRIGHT® 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-progresstechnology 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 onlyscanner 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.
FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts and shares in thousands, except per share amounts)
(UNAUDITED)
ASSETS
| | | September 30,
2016 | | June 30,
2016 * |
| Current Assets: | | | | | | | | |
| Cash and cash equivalents | | $ | 7,994 | | | $ | 8,528 | |
| Accounts receivable – net | | | 4,604 | | | | 4,370 | |
| Accounts receivable - related party | | | 90 | | | | — | |
| Medical receivable – net | | | 10,547 | | | | 10,127 | |
| Management and other fees receivable - net | | | 16,560 | | | | 15,638 | |
| Management and other fees receivable – related medical practices – net | | | 4,232 | | | | 4,064 | |
| Inventories | | | 2,214 | | | | 2,074 | |
| Prepaid expenses and other current assets | | | 722 | | | | 759 | |
| Total Current Assets | | | 46,963 | | | | 45,560 | |
| Deferred income tax asset | | | 13,042 | | | | 13,042 | |
| Property and equipment – net | | | 14,563 | | | | 14,513 | |
| Goodwill | | | 3,322 | | | | 3,322 | |
| Other intangible assets – net | | | 7,456 | | | | 7,719 | |
| Other assets | | | 794 | | | | 732 | |
| Total Assets | | $ | 86,140 | | | $ | 84,888 | |
*Condensed from audited financial statements.
FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts and shares in thousands, except per share amounts)
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS’ EQUITY
| | | September 30,
2016 | | June 30, 2016 * |
| Current Liabilities: | | | | | | | | |
| Current portion of long-term debt and capital leases | | $ | 2,436 | | | $ | 2,448 | |
| Accounts payable | | | 1,304 | | | | 1,254 | |
| Other current liabilities | | | 8,269 | | | | 10,827 | |
| Unearned revenue on service contracts | | | 4,936 | | | | 4,679 | |
| Unearned revenue on service contracts – related party | | | 83 | | | | — | |
| Customer deposits | | | 1,067 | | | | 1,199 | |
| | | | | | | | | |
| Billings in excess of costs and estimated earnings on uncompleted contracts | | | 176 | | | | 207 | |
| Total Current Liabilities | | | 18,271 | | | | 20,614 | |
| Long-Term Liabilities: | | | | | | | | |
| Deferred income tax liability | | | 482 | | | | 482 | |
| Due to related medical practices | | | 236 | | | | 245 | |
| Long-term debt and capital leases, less current portion | | | 661 | | | | 2,059 | |
| Other liabilities | | | 803 | | | | 712 | |
| Total Long-Term Liabilities | | | 2,182 | | | | 3,498 | |
| Total Liabilities | | | 20,453 | | | | 24,112 | |
*Condensed from audited financial statements.
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, 2016 | | June 30, 2016 * |
| Class A non-voting preferred stock $.0001 par value; 453 shares authorized at September 30, 2016 and June 30, 2016, 313 issued and outstanding at September 30, 2016 and June 30, 2016 | | $ | — | | | $ | — | |
| Preferred stock $.001 par value; 567 shares authorized at September 30, 2016 and June 30, 2016, issued and outstanding – none | | | — | | | | — | |
| Common Stock $.0001 par value; 8,500 shares authorized at September 30, 2016 and June 30, 2016, 6,170 and 6,062 issued at September 30, 2016 and June 30, 2016, respectively; 6,158 and 6,051 outstanding at September 30, 2016 and June 30, 2016, respectively | | | 1 | | | | 1 | |
| Class B Common Stock (10 votes per share) $.0001 par value; 227 shares authorized at September 30, 2016 and June 30, 2016; .146 issued and outstanding at September 30, 2016 and June 30, 2016 | | | — | | | | — | |
| Class C Common Stock (25 votes per share) $.0001 par value; 567 shares authorized at September 30, 2016 and June 30, 2016, 383 issued and outstanding at September 30, 2016 and June 30, 2016 | | | — | | | | — | |
| Paid-in capital in excess of par value | | | 175,948 | | | | 173,702 | |
| Accumulated deficit | | | (117,053 | ) | | | (120,624 | ) |
| Notes receivable from employee stockholders | | | (22 | ) | | | (24 | ) |
| Treasury stock, at cost - 12 shares of common stock at September 30, 2016 and June 30, 2016 | | | (675 | ) | | | (675 | ) |
| Total Fonar Corporation Stockholder Equity | | | 58,199 | | | | 52,380 | |
| Noncontrolling interests | | | 7,488 | | | | 8,396 | |
| Total Stockholders' Equity | | | 65,687 | | | | 60,776 | |
| Total Liabilities and Stockholders' Equity | | $ | 86,140 | | | $ | 84,888 | |
*Condensed from audited financial statements.
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 | | 2016 | | 2015 |
| Product sales – net | | $ | 242 | | | $ | 18 | |
| Service and repair fees – net | | | 2,351 | | | | 2,284 | |
| Service and repair fees - related parties – net | | | 28 | | | | 28 | |
| Patient fee revenue, net of contractual allowances and discounts | | | 8,823 | | | | 8,114 | |
| Provision for bad debts for patient fee | | | (3,878 | ) | | | (3,507 | ) |
| Management and other fees – net | | | 9,261 | | | | 8,829 | |
| Management and other fees - related medical practices – net | | | 1,907 | | | | 1,845 | |
| Total Revenues – Net | | | 18,734 | | | | 17,611 | |
| COSTS AND EXPENSES | | | | | | | | |
| Costs related to product sales | | | 213 | | | | 112 | |
| Costs related to service and repair fees | | | 655 | | | | 543 | |
| Costs related to service and repair fees - related parties | | | 8 | | | | 7 | |
| Costs related to patient fee revenue | | | 2,414 | | | | 2,228 | |
| Costs related to management and other fees | | | 5,261 | | | | 5,419 | |
| Costs related to management and other fees – related medical practices | | | 953 | | | | 1,058 | |
| Research and development | | | 412 | | | | 436 | |
| Selling, general and administrative | | | 4,065 | | | | 4,193 | |
| Total Costs and Expenses | | | 13,981 | | | | 13,996 | |
| Income From Operations | | | 4,753 | | | | 3,615 | |
| Interest Expense | | | (98 | ) | | | (150 | ) |
| Investment Income | | | 48 | | | | 50 | |
| Other Expense | | | (3 | ) | | | — | |
| Income Before Provision for Income Taxes and Noncontrolling Interests | | | 4,700 | | | | 3,515 | |
| Provision for Income Taxes | | | 200 | | | | 50 | |
| Net Income | | | 4,500 | | | | 3,465 | |
| Net Income - Noncontrolling Interests | | | (929 | ) | | | (603 | ) |
| Net Income - Controlling Interests | | $ | 3,571 | | | $ | 2,862 | |
| Net Income Available to Common Stockholders | | $ | 3,343 | | | $ | 2,676 | |
| Net Income Available to Class A Non-Voting Preferred Stockholders | | $ | 170 | | | $ | 139 | |
| Net Income Available to Class C Common Stockholders | | $ | 58 | | | $ | 47 | |
| Basic Net Income Per Common Share Available to Common Stockholders | | $ | 0.55 | | | $ | 0.44 | |
| Diluted Net Income Per Common Share Available to Common Stockholders | | $ | 0.54 | | | $ | 0.43 | |
| Basic and Diluted Income Per Share – Class C Common | | $ | 0.15 | | | $ | 0.12 | |
| Weighted Average Basic Shares Outstanding – Common Stockholders | | | 6,105 | | | | 6,050 | |
| Weighted Average Diluted Shares Outstanding - Common Stockholders | | | 6,233 | | | | 6,178 | |
| Weighted Average Basic Shares Outstanding – Class C Common | | | 383 | | | | 383 | |
| Weighted Average Diluted Shares Outstanding – Class C Common | | | 383 | | | | 383 | |
