| 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 Fiscal 2017 2nd Quarter and Six Months Financial Results
· 22% Increase of 1st half, Fiscal 2017, Diluted Net Income per Common Share available to Common Shareholders to $1.17, versus same six month period of prior year.
· 25% Increase of 1st half, Fiscal 2017, Net Income, to $9.4 million, versus same six month period of prior year, including a $800,000 impact of deferred income tax benefits.
· 19% Increase of 1st half, Fiscal 2017, Income from Operations, to $9.4 million, versus same six month period of prior year
· 3% Increase of 1st half, Fiscal 2017, Total Revenues – Net, to $37.1 million, versus same six month period of prior year
MELVILLE, NEW YORK,February 9, 2017- FONAR Corporation (NASDAQ-FONR), The Inventor of MR Scanning™,reportedtodayits financial results for the 2nd Fiscal Quarter of 2017 and the six month period ended December 31, 2016.
In 1980 FONAR birthed the MRI industry with its installation of the first commercial whole-body MRI (Magnetic Resonance Imaging) scanner. Since then the Company has manufactured and installed hundreds of MRIs the world over. While FONAR continues to manufacture and service its products, the Company’s primary source of income is derived from the management of 26 MRI centers though it subsidiary, Health Management Company of America (HMCA). Twenty-five of the 26 centers feature the FONAR UPRIGHT® Multi-Position™ MRI, aka Stand-Up® MRI, the only MRI scanner able to scan patients in normal full-weight-bearing positions.
The Company’s extensive patent portfolio includes technology that enables Weight-Bearing MRI, allowing diagnosticians 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. For example, patients with lower back problems are often most uncomfortable when in a particular weight-bearing position. If diagnosticians can evaluate the spine in those positions, they can minimize or completely avoid the risks of mischaracterizing or underestimating the patients’ problems. In light of the fact that most MRI exams are of the spine, this technology is of great importance.
FONAR’s latest works-in-progress technology is aimed at visualizing and quantifying the flow of cerebrospinal fluid (CSF) throughout the brain and vertebral column, which circulates at a rate of 32 quarts per day. The ability to image and quantify the dynamics of this vital life-sustaining physiology of the body’s neurologic system in all the normal positions of the body, particularly in its upright flow against gravity, is made possible by FONAR technology.
FONAR CORPORATION AND SUBSIDIARIES
Financial Highlights
Income from Operations, for the six month period ended December 31, 2016, increased 19% to $9.4 million as compared to $7.8 million for the six month period ended December 31, 2015.
Income from Operations, for the quarter ended December 31, 2016, increased 9% to $4.6 million as compared to $4.2 million for the quarter ended December 31, 2015.
Net Income, for the six month period ended December 31, 2016, increased 25% to $9.4 million as compared to $7.6 million for the six month period ended December 31, 2015.
Net Income, for the quarter ended December 31, 2016, increased 20% to $4.9 million as compared to $4.1 million for the quarter ended December 31, 2015.
Total Revenues – Net, for the six month period ended December 31, 2016, increased 3% to $37.1 million as compared to $36.0 million for the six month period ended December 31, 2015.
Total Revenues – Net, for the quarters ended December 31, 2016 and 2015, was $18.4 million.
Net Income Available to Common Stockholders, for the six month period ended December 31, 2016, increased 23% to $7.3 million as compared to $5.9 for the six month period ended December 31, 2015.
Net Income Available to Common Stockholders, for the quarter ended December 31, 2016, increased 22% to $4.0 million as compared to $3.3 million for the quarter ended December 31, 2015.
Diluted Net Income per Common Share Available to Common Stockholders, for the six month period ended December 31, 2016, increased 22% to $1.17 per share as compared to $0.96 per share for the quarter ended December 31, 2015.
Diluted Net Income per Common Share Available to Common Stockholders, for the quarter ended December 31, 2016, increased 19% to $0.63 per share as compared to $0.53 per share for the quarter ended December 31, 2015.
Basic Net Income per Common Share Available to Common Stockholders, for the six month period ended December 31, 2016, increased 21% to $1.19 per share as compared to $0.98 per share for the quarter ended December 31, 2015.
Basic Net Income per Common Share Available to Common Stockholders, for the quarter ended December 31, 2016, increased 19% to $0.64 per share as compared to $0.54 per share for the quarter ended December 31, 2015.
Total Assets, at December 31, 2016, was $88.3 million, as compared to $84.9 million at June 30, 2016. Total Current Assets, at December 31, 2016, was $48.4 million, as compared to $45.6 million at June 30, 2016.
Total Liabilities, at December 31, 2016, was $19.3 million, as compared to $24.1 million at June 30, 2016. Total Current Liabilities, at December 31, 2016, was $17.3 million, as compared to $20.6 million at June 30, 2016.
Total Cash and Cash Equivalents, at December 31, 2016, was $7.7 million, as compared to $8.5 million at June 30, 2016.
FONAR CORPORATION AND SUBSIDIARIES
Management Discussion
President and CEO Timothy R. Damadian said, “I am delighted to report that our bottom line EPS (Diluted Net Income Per Common Share Available to Common Stockholders) has increased by 22% to $1.17 per share for the six months ended December 31, 2016, as compared to the corresponding period one year earlier.
“Despite the uncertainties and challenges in today’s healthcare arena, the HMCA management team is proud to have helped FONAR deliver to its shareholders a steady annual growth rate of 6% over the past 6 years.”
Mr. Damadian continued, “Our strategy of growing consistently while maintaining profitability is working nicely. We made key acquisitions over the past several years, giving us the working capital and the cash flow needed for expansion. And, of course, we are always looking for opportunities that will add to the success to our Company.”
“The good news,” said Raymond V. Damadian, M.D., Chairman of the Board of FONAR Corporation, “is that 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 growth and profitability has been positive and consistent in recent years and that’s something to be proud of,” continued Dr. Damadian. “There were many years of struggle, but now FONAR has become a very successful Company. We owe our success to the medical benefits of the FONAR UPRIGHT® Multi-Position™ MRI, along with our management team’s adherence to a business plan designed to cope with a very uncertain and challenging healthcare environment. We have now achieved27 consecutive quarters (6 3/4 years) of profitability. And I am very grateful.”
Recent Event
On January 24, 2017, Frost & Sullivan announced that Dr. Raymond Damadian, chairman of the Fonar Corporation, will receive special recognition at the 22nd Annual Medical Technologies: A Frost & Sullivan Executive MindXchange, taking place March 19 to 21, 2017 at the Loews Coronado Bay Resort in San Diego, Calif.
The press release said:Dr. Damadian is the legendary inventor of the first MRI (Magnetic Resonance Imaging) machine and the innovative mind responsible for saving thousands of lives. He will be presented with the Medtech Innovation Catalyst Award, recognizing his contributions to medical device innovation. He is the recipient of numerous awards including the Lemelson-MIT Lifetime Achievement Award, National Medal of Technology and has been inducted in the National Inventors Hall of Fame.
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
| | December 31, 2016 | | June 30, 2016 |
| Cash and cash equivalents | $ 7,692 | | $ 8,528 | |
Accounts receivable – net | 4,325 | | 4,370 | |
Accounts receivable - related party | 60 | | - | |
Medical receivable – net | 10,824 | | 10,127 | |
Management and other fees receivable – net | 17,420 | | 15,638 | |
Management and other fees receivable – related medical practices – net | 4,464 | | 4,064 | |
Inventories | 2,735 | | 2,074 | |
Prepaid expenses and other current assets | 926 | | 759 | |
Total Current Assets | 48,446 | | 45,560 | |
Deferred income tax asset | 13,842 | | 13,042 | |
Property and equipment - net | 14,914 | | 14,513 | |
Goodwill | 3,322 | | 3,322 | |
Other intangible assets - net | 7,202 | | 7,719 | |
Other assets | 560 | | 732 | |
Total Assets | $ 88,286 | | $ 84,888 | |
| | | | | | | |
FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts and shares in thousands, except per share amounts)
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
| | December 31, 2016 | | June 30, 2016 |
| Current Liabilities: | | | |
| Current portion of long-term debt and capital leases | $ 1,674 | | $ 2,448 |
| Accounts payable | 1,470 | | 1,254 |
| Other current liabilities | 8,109 | | 10,827 |
| Unearned revenue on service contracts | 4,752 | | 4,679 |
| Unearned revenue on service contracts - related party | 55 | | - |
| Customer advances | 1,036 | | 1,199 |
| Billings in excess of costs and estimated earnings on uncompleted contracts | 176 | | 207 |
Total Current Liabilities | 17,272 | | 20,614 |
Long-Term Liabilities: | | | |
| Deferred income tax liability | 482 | | 482 |
| Due to related medical practices | 228 | | 245 |
| Long-term debt and capital leases, less current portion | 411 | | 2,059 |
| Other liabilities | 883 | | 712 |
Total Long-Term Liabilities | 2,004 | | 3,498 |
Total Liabilities | 19,276 | | 24,112 |
FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts and shares in thousands, except per share amounts)
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY (Continued)
| | December 31, 2016 | | June 30, 2016 |
| STOCKHOLDERS' EQUITY: | | | |
Class A non-voting preferred stock $.0001 par value; 453 shares authorized at December 31, 2016 and June 30, 2016, 313 issued and outstanding at December 31, 2016 and June 30, 2016 | $ - | | $ - |
Preferred stock $.001 par value; 567 shares authorized at December 31, 2016 and June 30, 2016, issued and outstanding – none | - | | - |
Common Stock $.0001 par value; 8,500 shares authorized at December 31, 2016 and June 30, 2016, 6,171 and 6,062 issued at December 31, 2016 and June 30, 2016; 6,159 and 6,051 outstanding at December 31, 2016 and June 30, 2016 | 1 | | 1 |
Class B Common Stock (10 votes per share) $ .0001 par value; 227 shares authorized at December 31, 2016 and June 30, 2016, .146 issued and outstanding at December 31, 2016 and June 30, 2016 | - | | - |
Class C Common Stock (25 votes per share) $.0001 par value; 567 shares authorized at December 31, 2016 and June 30, 2016, 383 issued and outstanding at December 31, 2016 and June 30, 2016 | - | | - |
Paid-in capital in excess of par value | 175,970 | | 173,702 |
| Accumulated deficit | (112,812) | | (120,624) |
| Notes receivable from employee stockholders | (20) | | (24) |
| Treasury stock, at cost - 12 shares of common stock at December 31, 2016 and June 30, 2016 | (675) | | (675) |
| Total Fonar Corporation Stockholder Equity | 62,464 | | 52,380 |
| Non controlling interests | 6,546 | | 8,396 |
Total Stockholders' Equity | 69,010 | | 60,776 |
Total Liabilities and Stockholders' Equity | $ 88,286 | | $ 84,888 |
FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts and shares in thousands, except per share amounts)
(UNAUDITED)
| | | FOR THE THREE MONTHS ENDED DECEMBER 31, |
| REVENUES | | 2016 | | 2015 |
| Product sales – net | | $ | 93 | | | $ | 742 | |
| Service and repair fees – net | | | 2,356 | | | | 2,280 | |
| Service and repair fees – related parties - net | | | 28 | | | | 28 | |
| Patient fee revenue, net of contractual allowances and discounts | | | 8,657 | | | | 7,786 | |
| Provision for bad debts for patient fee | | | (4,002 | ) | | | (3,270 | ) |
| Management and other fees – net | | | 9,364 | | | | 8,958 | |
| Management and other fees – related medical practices – net | | | 1,907 | | | | 1,845 | |
| Total Revenues – Net | | | 18,403 | | | | 18,369 | |
| COSTS AND EXPENSES | | | | | | | | |
| Costs related to product sales | | | (34 | ) | | | 564 | |
| Costs related to service and repair fees | | | 683 | | | | 447 | |
| Costs related to service and repair fees – related parties | | | 8 | | | | 5 | |
| Costs related to patient fee revenue | | | 2,323 | | | | 2,238 | |
| Costs related to management and other fees | | | 5,257 | | | | 5,597 | |
| Costs related to management and other fees – related medical practices | | | 1,127 | | | | 1,012 | |
| Research and development | | | 361 | | | | 412 | |
| Selling, general and administrative | | | 4,069 | | | | 3,869 | |
| Total Costs and Expenses | | | 13,794 | | | | 14,144 | |
| Income From Operations | | | 4,609 | | | | 4,225 | |
| Interest Expense | | | (77 | ) | | | (139 | ) |
| Investment Income | | | 49 | | | | 58 | |
| Income Before Benefit/(Provision) for Income Taxes and Non Controlling Interests | | | 4,581 | | | | 4,144 | |
| Benefit/(Provision) for Income Taxes | | | 353 | | | | (40 | ) |
| Net Income | | | 4,934 | | | | 4,104 | |
| Net Income - Non Controlling Interests | | | (692 | ) | | | (611 | ) |
| Net Income - Controlling Interests | | $ | 4,242 | | | $ | 3,493 | |
| Net Income Available to Common Stockholders | | $ | 3,971 | | | $ | 3,266 | |
| Net Income Available to Class A Non-Voting Preferred Stockholders | | $ | 202 | | | $ | 169 | |
| Net Income Available to Class C Common Stockholders | | $ | 69 | | | $ | 58 | |
| Basic Net Income Per Common Share Available to Common Stockholders | | $ | 0.64 | | | $ | 0.54 | |
| Diluted Net Income Per Common Share Available to Common Stockholders | | $ | 0.63 | | | $ | 0.53 | |
| Basic and Diluted Income Per Share-Class C Common | | $ | 0.18 | | | $ | 0.15 | |
| Weighted Average Basis Shares Outstanding-Common Stockholders | | | 6,158 | | | | 6,051 | |
| Weighted Average Diluted Shares Outstanding-Common Stockholders | | | 6,286 | | | | 6,179 | |
| Weighted Average Basic Shares Outstanding – Class C Common | | | 383 | | | | 383 | |
| Weighted Average Diluted Shares Outstanding – Class C Common | | | 383 | | | | 383 | |
FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts and shares in thousands, except per share amounts)
(UNAUDITED)
| | FOR THE SIX MONTHS ENDED DECEMBER 31, |
| | 2016 | | 2015 |
| REVENUES | | | |
| Product sales – net | $ 335 | | $ 760 |
| Service and repair fees – net | 4,708 | | 4,564 |
| Service and repair fees – related parties - net | 55 | | 55 |
| Patient fee revenue, net of contractual allowances and discounts | 17,481 | | 15,901 |
| Provision for bad debts for patient fee | (7,880) | | (6,778) |
| Management and other fees – net | 18,625 | | 17,786 |
| Management and other fees – related medical practices – net | 3,814 | | 3,691 |
| Total Revenues – Net | 37,138 | | 35,979 |
COSTS AND EXPENSES | | | |
| Costs related to product sales | 179 | | 676 |
| Costs related to service and repair fees | 1,339 | | 990 |
| Costs related to service and repair fees – related parties | 16 | | 12 |
| Costs related to patient fee revenue | 4,737 | | 4,466 |
| Costs related to management and other fees | 10,518 | | 11,015 |
| Costs related to management and other fees – related medical practices | 2,080 | | 2,070 |
| Research and development | 773 | | 849 |
| Selling, general and administrative | 8,135 | | 8,061 |
| Total Costs and Expenses | 27,777 | | 28,139 |
| Income From Operations | 9,361 | | 7,840 |
| Interest Expense | (174) | | (289) |
| Investment Income | 97 | | 107 |
| Other (Expense) Income | (3) | | 1 |
Income Before Benefit/(Provision) for Income Taxes and Non Controlling Interests | 9, 281 | | 7,659 |
| Benefit/(Provision) for Income Taxes | 153 | | ( 90) |
| Net Income | 9,434 | | 7,569 |
| Net Income - Non Controlling Interests | (1,622) | | (1,214) |
| Net Income - Controlling Interests | $ 7,812 | | $ 6,355 |
| Net Income Available to Common Stockholders | $ 7,313 | | $ 5,942 |
| Net Income Available to Class A Non-Voting Preferred Stockholders | $ 372 | | $ 308 |
| Net Income Available to Class C Common Stockholders | $ 127 | | $ 105 |
| Basic Net Income Per Common Share Available to Common Stockholders | $ 1.19 | | $ 0.98 |
| Diluted Net Income Per Common Share Available to Common Stockholders | $ 1.17 | | $ 0.96 |
| Basic and Diluted Income Per Share-Class C Common | $ 0.33 | | $ 0.27 |
| Weighted Average Basic Shares Outstanding-Common Stockholders | 6,131 | | 6,051 |
| Weighted Average Diluted Shares Outstanding-Common Stockholders | 6,259 | | 6,179 |
| Weighted Average Basic Shares Outstanding – Class C Common | 383 | | 383 |
| Weighted Average Diluted Shares Outstanding – Class C Common | 383 | | 383 |
