Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Sep. 30, 2019 | Nov. 06, 2019 | |
Entity Registrant Name | FONAR CORP | |
Entity Central Index Key | 0000355019 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Year Focus | 2020 | |
Current Fiscal Year End Date | --06-30 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity File Number | 0-10248 | |
Entity Incorporation State Country Code | DE | |
Is Entity Interactive Data Current | Yes | |
Is Entity's Reporting Status Current? | Yes | |
Is Entity a Small Business | true | |
Entity Filer Category | Accelerated Filer | |
Is Entity an Emerging Growth Company | false | |
Common Shares | ||
Entity Common Stock, Shares Outstanding | 6,447,463 | |
Class A Non-Voting Preferred Stock | ||
Entity Common Stock, Shares Outstanding | 313,438 | |
Class C Common Stock | ||
Entity Common Stock, Shares Outstanding | 382,513 | |
Class B Members | ||
Entity Common Stock, Shares Outstanding | 146 |
Balance Sheets
Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 |
Current Assets: | ||
Cash and cash equivalents | $ 13,794 | $ 13,882 |
Short term investments | 15,213 | 15,095 |
Accounts receivable - net | 3,765 | 3,737 |
Account Receivable - Related parties | 90 | |
Medical receivables -net | 15,866 | 15,729 |
Management and other fees receivable -net | 26,666 | 25,709 |
Management and other fees receivable - related medical practices -net | 6,715 | 6,501 |
Inventories | 1,791 | 1,798 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 307 | 525 |
Income taxes receivable - current | 600 | 600 |
Prepaid expenses and other current assets | 2,230 | 1,513 |
Total Current Assets | 87,037 | 85,089 |
Income taxes receivable | 600 | 600 |
Deferred income tax asset | 19,934 | 20,937 |
Property and equipment - net | 18,643 | 16,986 |
Right-of-use asset - net | 30,876 | |
Goodwill | 3,985 | 3,985 |
Other intangible assets - net | 4,553 | 4,756 |
Other Assets | 1,252 | 1,207 |
Total Assets | 166,880 | 133,560 |
Current Liabilities: | ||
Current portion of long-term debt and capital leases | 41 | 41 |
Accounts payable | 1,516 | 1,861 |
Other current liabilities | 4,675 | 7,577 |
Unearned revenue on service contracts | 3,742 | 3,812 |
Unearned revenue on service contracts - related parties | 83 | |
Lease liability | 3,123 | |
Customer deposits | 736 | 799 |
Total Current Liabilities | 13,916 | 14,090 |
Long-Term Liabilities: | ||
Deferred Income Tax Liability | 243 | 243 |
Due to related party medical practices | 93 | 93 |
Long-term debt and capital leases, less current portion | 266 | 273 |
Lease liability- net of current portion | 29,487 | |
Other Liabilities | 21 | 749 |
Total Long-Term Liabilities | 30,110 | 1,358 |
Total Liabilities | 44,026 | 15,448 |
STOCKHOLDERS' EQUITY: | ||
Paid-in capital in excess of par value | 183,077 | 181,086 |
Accumulated deficit | (61,157) | (64,456) |
Treasury stock, at cost | (675) | (675) |
Total Fonar Corporation Stockholder Equity | 121,246 | 115,956 |
Noncontrolling interests | 1,608 | 2,156 |
Total Stockholders' Equity | 122,854 | 118,112 |
Total Liabilities and Stockholders' Equity | 166,880 | 133,560 |
Common Shares | ||
STOCKHOLDERS' EQUITY: | ||
Common Stock Value | $ 1 | $ 1 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2019 | Jun. 30, 2019 |
Class A Non-Voting Preferred Stock | ||
Preferred Stock, Par Value | $ 0.0001 | $ 0.0001 |
Preferred Stock, Authorized | 453,000 | 453,000 |
Preferred Stock, Issued | 313,000 | 313,000 |
Preferred Stock, Outstanding | 313,000 | 313,000 |
Preferred Stock | ||
Preferred Stock, Par Value | $ 0.001 | $ 0.001 |
Preferred Stock, Authorized | 567,000 | 567,000 |
Common Shares | ||
Common Stock, Par Value | $ 0.0001 | $ 0.0001 |
Common Stock, Authorized | 8,500,000 | 8,500,000 |
Common Stock, Issued | 6,459,000 | 6,369,000 |
Common Stock, Outstanding | 6,447,000 | 6,357,000 |
Class B Members | ||
Common Stock, Par Value | $ 0.0001 | $ 0.0001 |
Common Stock, Authorized | 227,000 | 227,000 |
Common Stock, Issued | 146 | 146 |
Common Stock, Outstanding | 146 | 146 |
Class C Common Stock | ||
Common Stock, Par Value | $ 0.0001 | $ 0.0001 |
Common Stock, Authorized | 567,000 | 567,000 |
Common Stock, Issued | 383,000 | 383,000 |
Common Stock, Outstanding | 383,000 | 383,000 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
REVENUES | ||
Patient fee revenue, net of contractual allowances and discounts | $ 6,045 | $ 5,525 |
Product sales - net | 192 | 50 |
Service and repair fees - net | 2,064 | 2,131 |
Service and repair fees - related parties - net | 28 | 28 |
Management and other fees - net | 11,028 | 10,684 |
Management and other fees - related medical practices - net | 2,390 | 2,287 |
Total Revenues - net | 21,747 | 20,705 |
COSTS AND EXPENSES | ||
Costs related to patient fee revenue | 2,863 | 2,575 |
Costs related to product sales | 330 | 5 |
Costs related to service and repair fees | 750 | 745 |
Costs related to service and repair fees - related parties | 10 | 9 |
Costs related to management and other fees | 6,005 | 5,756 |
Costs related to management and other fees - related medical practices | 1,537 | 1,382 |
Research and development | 472 | 437 |
Selling, general and administrative | 4,294 | 4,259 |
Total Costs and Expenses | 16,261 | 15,168 |
INCOME | ||
Income From Operations | 5,486 | 5,537 |
Interest Expense | (21) | (25) |
Investment Income | 148 | 108 |
Income Before Provision for Income Taxes and Noncontrolling Interests | 5,613 | 5,620 |
Provision for Income Taxes | (1,107) | (1,128) |
Net Income | 4,506 | 4,492 |
Net Income - Noncontrolling Interests | (1,207) | (1,174) |
Net Income - Controlling Interests | $ 3,299 | $ 3,318 |
Basic Net Income Per Common Share | $ 0.51 | $ 0.52 |
Weighted Average Basic Shares Outstanding - Common Shareholders | 6,432,000 | 6,344,000 |
Common Shares | ||
INCOME | ||
Net Income - Controlling Interests | $ 3,097 | $ 3,113 |
Basic Net Income Per Common Share | $ 0.48 | $ 0.49 |
Diluted Net Income Per Common Share | $ 0.47 | $ 0.48 |
Weighted Average Basic Shares Outstanding - Common Shareholders | 6,432,000 | 6,344,000 |
Weighted Average Diluted Shares Outstanding - Common Shareholders | 6,560,000 | 6,472,000 |
Preferred Stock Class A | ||
INCOME | ||
Net Income - Controlling Interests | $ 151 | $ 153 |
Class C Common Stock | ||
INCOME | ||
Net Income - Controlling Interests | $ 51 | $ 52 |
Basic Net Income Per Common Share | $ 0.13 | $ 0.14 |
Diluted Net Income Per Common Share | $ 0.13 | $ 0.14 |
Weighted Average Basic Shares Outstanding - Common Shareholders | 383,000 | 383,000 |
Weighted Average Diluted Shares Outstanding - Common Shareholders | 383,000 | 383,000 |
Shareholders Equity and Compreh
Shareholders Equity and Comprehensive Income - USD ($) $ in Thousands | Common Shares | Paid-in Capital in Excess of Par Value | Accumulated Deficit | Notes Receivable from Employee Stockholders | Treasury Stock | Noncontrolling Interests | Total |
Balance - Beginning, Value at Jun. 30, 2018 | $ 1 | $ 179,131 | $ (79,772) | $ (9) | $ (675) | $ 3,559 | $ 102,235 |
Issuance of stock (value) | 1,955 | 1,955 | |||||
Net Income - Controlling Interests | 3,318 | 3,318 | |||||
Distributions to noncontrolling interests | (1,740) | (1,740) | |||||
Net Income - Noncontrolling Interests | 1,174 | 1,174 | |||||
Balance - Ending, Value at Sep. 30, 2018 | 1 | 181,086 | (76,454) | $ (9) | (675) | 2,993 | 106,942 |
Balance - Beginning, Value at Jun. 30, 2019 | 1 | 181,086 | (64,456) | (675) | 2,156 | 118,112 | |
Issuance of stock (value) | 1,991 | 1,991 | |||||
Net Income - Controlling Interests | 3,299 | 3,299 | |||||
Distributions to noncontrolling interests | (1,755) | (1,755) | |||||
Net Income - Noncontrolling Interests | 1,207 | 1,207 | |||||
Balance - Ending, Value at Sep. 30, 2019 | $ 1 | $ 183,077 | $ (61,157) | $ (675) | $ 1,608 | $ 122,854 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash Flows from Operating Activities: | ||
Net income | $ 4,506 | $ 4,492 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 995 | 922 |
Amortization on right-of-use assets | 819 | |
Provision for bad debts | (239) | 80 |
Deferred income tax | 1,004 | 1,128 |
Stock issued for costs and expenses | 1,991 | 1,955 |
(Increase) decrease in operating assets, net: | ||
Accounts, medical receivable and management fee(s) | (1,188) | (1,621) |
Notes receivable | (12) | |
Costs and estimated earnings in excess of Billings on uncompleted contracts | 218 | |
Inventories | 7 | (218) |
Prepaid expenses and other current assets | 233 | (186) |
Other assets | (44) | |
Increase (decrease) in operating liabilities, net: | ||
Accounts payable | (345) | 210 |
Other current liabilities | (2,889) | (3,123) |
Operating lease liabilities | (750) | |
Customer advances | (62) | 132 |
Other liabilities | (13) | 10 |
Net cash provided by operating activities | 4,243 | 3,769 |
Cash Flows from Investing Activities: | ||
Purchases of property and equipment | (2,411) | (449) |
Short term investment | (119) | |
Cost of patents | (38) | (20) |
Net cash used in investing activities | (2,568) | (469) |
Cash Flows from Financing Activities: | ||
Repayment of borrowings and capital lease obligations | (8) | (7) |
Distributions to noncontrolling interests | (1,755) | (1,740) |
Net cash used in financing activities | (1,763) | (1,747) |
Net Increase (decrease) in Cash and Cash Equivalents | (88) | 1,553 |
Cash and Cash Equivalents - Beginning of Period | 13,882 | 19,634 |
Cash and Cash Equivalents - End of Period | $ 13,794 | $ 21,187 |
NOTE 1 - DESCRIPTION OF BUSINES
NOTE 1 - DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | 3 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
NOTE 1 - DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2019 and 2018 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Description of Business Effective July 1, 2015, the Company restructured the corporate organization of the management of diagnostic imaging centers segment of our business. The reorganization was structured to more completely integrate the operations of Health Management Corporation of America and HDM. Imperial contributed all of its assets (which were utilized in the business of Health Management Corporation of America) to HDM and received a 24.2% interest in HDM. Health Management Corporation of America retained a direct ownership interest of 45.8% in HDM, and the original investors in HDM retained a 30.0% ownership interest in the newly expanded HDM. The entire management of diagnostic imaging centers business segment is now being conducted by HDM, operating under the name “Health Management Company of America”. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended September 30, 2019, are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2020. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K filed on September 30, 2019 for the fiscal year ended June 30, 2019. |
NOTE 2 - SUMMARY OF SIGNIFICANT
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2019 and 2018 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of FONAR Corporation, its majority and wholly-owned subsidiaries and partnerships (collectively the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation. Revenues On July 1, 2018, the Company adopted the new revenue recognition accounting standard issued by the Financial Accounting Standards Board (“FASB”) and codified in the ASC as topic 606 (“ASC 606”). The revenue recognition standard in ASC 606 outlines a single comprehensive model for recognizing revenue as performance obligations, defined in a contract with a customer as goods or services transferred to the customer in exchange for consideration, are satisfied. The standard also requires expanded disclosures regarding the Company’s revenue recognition policies and significant judgments employed in the determination of revenue. Our revenues generally relate to net patient fees received from various payers and patients themselves under contracts in which our performance obligations are to provide diagnostic services to the patients. Revenues are recorded during the period our obligations to provide diagnostic services are satisfied. Our performance obligations for diagnostic services are generally satisfied over a period of less than one day. The contractual relationships with patients, in most cases, also involve a third-party payer (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by (Medicare and Medicaid) or negotiated with (managed care health plans and commercial insurance companies) the third-party payers. The payment arrangements with third-party payers for the services we provide to the related patients typically specify payments at amounts less than our standard charges and generally provide for payments based upon predetermined rates per diagnostic services or discounted fee-for-service rates. Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals. Earnings Per Share Basic earnings per share (“EPS”) is computed based upon the weighted average number of shares of common stock and stock equivalents outstanding, net of common stock. In accordance with ASC topic 260-10, “Participating Securities and the Two-Class method”, the Company used the Two-Class method for calculating basic income per share and applied the if converted method in calculating diluted income per share for the three months ended September 30, 2019 and 2018. Diluted EPS reflects the potential dilution from the exercise or conversion of all dilutive securities into common stock based on the average market price of common shares outstanding during the period. For the three months ended September 30, 2019 and 2018, diluted EPS for common shareholders includes 128 shares upon conversion of Class C Common. Three months ended Three months ended Total Common Stock Class C Common Total Common Stock Class C Common Basic Numerator: $ 3,299 $ 3,097 $ 51 $ 3,318 $ 3,113 $ 52 Denominator: Weighted average shares outstanding 6,432 6,432 383 6,344 6,344 383 Basic income per common share $ 0.51 $ 0.48 $ 0.13 $ 0.52 $ 0.49 $ 0.14 Diluted Denominator: 6,432 383 6,344 383 Convertible Class C Stock 128 — 128 — Total Denominator for diluted earnings per share 6,560 383 6,472 383 Diluted income per common share $ 0.47 $ 0.13 $ 0.48 $ 0.14 Recent Accounting Pronouncements In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04, Intangibles – Goodwill and Other (Topic 350). The amendments in this update simplify the test for goodwill impairment by eliminating Step 2 from the impairment test, which required the entity to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities following the procedure that would be required in determining fair value of assets acquired and liabilities assumed in a business combination. The amendments in this update are effective for public companies for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. We are evaluating the impact of adopting this guidance on our consolidated condensed financial statements. During February 2016, FAS issued ASU 2016-02, Leases (Topic 842). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based upon the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Lease with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The new guidance will be effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period and is applied retrospectively. The Company adopted this guidance on July 1, 2019, as required, electing to apply retrospectively at the period of adoption with practical expedients. The adoption of this guidance had a material impact on the Company’s balance sheet by virtue of including the present value of its future operating lease payments as a liability of $33.3 million and related right-to-use lease assets as of July 1, 2019. The Company accounts for its various operating leases in accordance with Accounting Standards Codification (‘ASC’) 842 – Lease, as updated by ASU 2016-02. At the inception of a lease, the Company recognizes right-of-use lease assets and related lease liabilities measured at present value of future lease payments on its balance sheet. Lease expense is recognized on a straight-line basis over the term of the lease. The Company reviewed its contracts with vendors and customers, determining that its right-to-use lease assets consisted of only office space operating leases. In determining the right-to-use lease assets and liabilities, the Company did recognize lease extension options which the Company feels would be reasonably exercised. Also included in other current assets is a $950,000 receivable from a landlord for tenant improvements. A reconciliation of operating lease payments undiscounted cash flows to lease liabilities recognized as of September 30, 2019 is as follows: Operating Lease Payments 2020 (Nine Months) 3,592 2021 4,782 2022 4,463 2023 4,415 2024 4,120 Thereafter 21,545 Present Value discount (5.5% weighted average) (10,307 ) Total lease liability 32,610 FASB, the Emerging Issues Task Force and the SEC have issued certain other accounting standards, updates, and regulations as of September 30, 2019 that will become effective in subsequent periods; however, management does not believe that any of those updates would have significantly affected our financial accounting measures or disclosures had they been in effect during 2019 or 2018, and it does not believe that any of those pronouncements will have a significant impact on our consolidated condensed financial statements at the time they become effective. Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. The reclassifications did not have any effect on reported consolidated net income for any periods presented. |
NOTE 3 - ACCOUNTS RECEIVABLE, M
NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE | 3 Months Ended |
Sep. 30, 2019 | |
Receivables [Abstract] | |
NOTE 3 - ACCOUNTS RECEIVABLE. MEDICAL RECEIVABLES AND MANAGEMENT AND OTHER FEES RECEIVABLE (USD $) | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2019 and 2018 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 3 – ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE Receivables, net is comprised of the following at September 30, 2019, and June 30, 2019: September 30, 2019 Gross Receivable Allowance for doubtful accounts Net Accounts receivable $ 3,955 $ 190 $ 3,765 Accounts receivable - related party $ 90 — $ 90 Medical receivable $ 15,866 $ — $ 15,866 Management and other fees receivable $ 35,751 $ 9,085 $ 26,666 Management and other fees receivable from related medical practices ("PC’s") $ 9,106 $ 2,391 $ 6,715 June 30, 2019 Gross Receivable Allowance for doubtful accounts Net Accounts receivable $ 3,927 $ 190 $ 3,737 Accounts receivable - related party $ — — $ — Medical receivable $ 15,729 $ — $ 15,729 Management and other fees receivable $ 35,114 $ 9,405 $ 25,709 Management and other fees receivable from related medical practices ("PC’s") $ 8,812 $ 2,311 $ 6,501 The Company's customers are concentrated in the healthcare industry. Accounts Receivable Credit risk with respect to the Company’s accounts receivable related to product sales and service and repair fees is limited due to the customer advances received prior to the commencement of work performed and the billing of amounts to customers as sub-assemblies are completed. Service and repair fees are billed on a monthly or quarterly basis and the Company does not continue providing these services if accounts receivable become past due. The Company controls credit risk with respect to accounts receivable from service and repair fees through its credit evaluation process, credit limits, monitoring procedures and reasonably short collection terms. The Company performs ongoing credit authorizations before a product sales contract is entered into or service and repair fees are provided. Medical Receivables Medical receivables are due under fee-for-service contracts from third party payors, such as hospitals, government sponsored healthcare programs, patient’s legal counsel and directly from patients. Substantially all the revenue relates to patients residing in Florida. The carrying amount of the medical receivable is reduced by an allowance that reflects management’s best estimate of the amounts that will not be collected. The Company continuously monitors collections from its clients and maintains an allowance for bad debts based upon the Company’s historical collection experience. The Company determines allowances for contractual adjustments and uncollectible accounts based on specific agings, specific payor collection issues that have been identified and based on payor classifications and historical experience at each site. Management and Other Fees Receivable The Company's receivables from the related and non-related professional corporations (PC's) substantially consist of fees outstanding under management agreements. Payment of the outstanding fees is dependent on collection by the PC's of fees from third party medical reimbursement organizations, principally insurance companies and health management organizations. Payment of the management fee receivables from the PC’s may be impaired by the inability of the PC’s to collect in a timely manner their medical fees from the third party payors, particularly insurance carriers covering automobile no-fault and workers compensation claims due to longer payment cycles and rigorous informational requirements and certain other disallowed claims. Approximately 67% and 67% of the PCs’ net revenues for the three months ended September 30, 2019 and 2018, respectively, were derived from no-fault and personal injury protection claims. The Company considers the aging of its accounts receivable in determining the amount of allowance for doubtful accounts. The Company generally takes all legally available steps to collect its receivables. Credit losses associated with the receivables are provided for in the condensed consolidated financial statements and have historically been within management's expectations. Net revenues from management and other fees charged to the related PCs accounted for approximately 11.0% and 11.0% of the consolidated net revenues for the three months ended September 30, 2019 and 2018, respectively. Tallahassee Magnetic Resonance Imaging, PA, Stand Up MRI of Boca Raton, PA and Stand Up MRI & Diagnostic Center, PA (all related medical practices) entered into a guaranty agreement, pursuant to which they cross guaranteed all management fees which are payable to the Company, which have arisen under each individual management agreement. Additional Company managed entities also operate under a guaranty agreement, pursuant to which management fees are payable to the Company. The Company’s patient fee revenue, net of contractual allowances and discounts for the three months ended September 30, 2019 and 2018 are summarized in the following table. For the Three Months Ended September 30, 2019 2018 Commercial Insurance/ Managed Care $ 1,354 $ 1,180 Medicare/Medicaid 266 291 Workers' Compensation/Personal Injury 4,294 3,702 Other 131 352 Patient Fee Revenue, net of contractual allowances and discounts $ 6,045 $ 5,525 |
NOTE 4 - INVENTORIES
NOTE 4 - INVENTORIES | 3 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
NOTE 4 - INVENTORIES | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2019 and 2018 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 4 - INVENTORIES Inventories included in the accompanying condensed consolidated balance sheets consist of the following: September 30, 2019 June 30, 2019 Purchased parts, components and supplies $ 1,708 $ 1,640 Work-in-process 83 158 TOTAL INVENTORIES $ 1,791 $ 1,798 |
NOTE 5 - COSTS AND ESTIMATED EA
NOTE 5 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS | 3 Months Ended |
Sep. 30, 2019 | |
Notes to Financial Statements | |
NOTE 5 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2019 and 2018 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 5 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS Information relating to uncompleted contracts is as follows: September 30, 2019 June 30, 2019 Costs incurred on uncompleted contracts $ 520 $ 448 Estimated earnings 1,059 1,089 Subtotal 1,579 1,537 Less: Billings to date 1,272 1,012 Total Costs and estimated earnings in excess of billings on uncompleted contracts $ 307 $ 525 |
NOTE 6 - OTHER INTANGIBLE ASSET
NOTE 6 - OTHER INTANGIBLE ASSETS | 3 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
NOTE 6 - OTHER INTANGIBLE ASSETS | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2019 and 2018 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 6 – OTHER INTANGIBLE ASSETS Other intangible assets, net of accumulated amortization, in the accompanying condensed consolidated balance sheets consist of the following: September 30, 2019 June 30, 2019 Capitalized software development costs $ 7,005 $ 7,005 Patents and copyrights 5,002 4,964 Non-compete 4,100 4,100 Customer relationships 3,800 3,800 Gross Other intangible assets 19,907 19,869 Less: Accumulated amortization 15,354 15,113 Other Intangible Assets $ 4,553 $ 4,756 Amortization of patents and copyrights for the three months ended September 30, 2019 and 2018 amounted to $47 and $50, respectively. Amortization of non-compete for the three months ended September 30, 2019 and 2018 amounted to $146 and $146, respectively. Amortization of customer relationships for the three months ended September 30, 2019 and 2018 amounted to $48 and $48, respectively. |
NOTE 7 - OTHER CURRENT LIABILIT
NOTE 7 - OTHER CURRENT LIABILITIES | 3 Months Ended |
Sep. 30, 2019 | |
Other Liabilities, Current [Abstract] | |
NOTE 7 - OTHER CURRENT LIABILITIES | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2019 and 2018 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 7 – OTHER CURRENT LIABILITIES Other current liabilities in the accompanying condensed consolidated balance sheets consist of the following: September 30, 2019 June 30, 2019 Accrued salaries, commissions and payroll taxes $ 1,392 $ 3,898 Litigation accruals 145 145 Sales tax payable 1,536 1,671 Legal and other professional fees 130 126 Accounting fees 50 105 Self-funded health insurance reserve — 68 Accrued interest and penalty 1,067 1,054 Other 355 510 Other Current Liabilities $ 4,675 $ 7,577 |
NOTE 8 - STOCKHOLDERS EQUITY
NOTE 8 - STOCKHOLDERS EQUITY | 3 Months Ended |
Sep. 30, 2019 | |
STOCKHOLDERS' EQUITY: | |
NOTE 8 - STOCKHOLDERS EQUITY | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2019 and 2018 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 8 – STOCKHOLDERS EQUITY Common Stock During the three months ended September 30, 2019, the Company issued 90 shares of common stock for costs and expenses of $1,990. |
NOTE 9 - SEGMENT AND RELATED IN
NOTE 9 - SEGMENT AND RELATED INFORMATION | 3 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
NOTE 9 - SEGMENT AND RELATED INFORMATION | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2019 and 2018 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 9 - SEGMENT AND RELATED INFORMATION The Company operates in two industry segments - manufacturing and the servicing of medical equipment and management of diagnostic imaging centers. The accounting policies of the segments are the same as those described in the summary of significant accounting policies as disclosed in the Company’s 10-K as of June 30, 2019. All inter-segment sales are market-based. The Company evaluates performance based on income or loss from operations. Summarized financial information concerning the Company's reportable segments is shown in the following table: Medical Management Totals For the three months ended Sept. 30, 2019 Net revenues from external customers $ 2,284 $ 19,463 $ 21,747 Inter-segment net revenues $ 219 $ — $ 219 (Loss) Income from operations $ (736 ) $ 6,222 $ 5,486 Depreciation and amortization $ 91 $ 904 $ 995 Capital expenditures $ 1,601 $ 848 $ 2,449 For the three months ended Sept. 30, 2018 Net revenues from external customers $ 2,209 $ 18,496 $ 20,705 Inter-segment net revenues $ 228 $ — $ 228 (Loss) Income from operations $ (230 ) $ 5,767 $ 5,537 Depreciation and amortization $ 93 $ 829 $ 922 Capital expenditures $ 20 $ 449 $ 469 |
NOTE 10 - SUPPLEMENTAL CASH FLO
NOTE 10 - SUPPLEMENTAL CASH FLOW INFORMATION | 3 Months Ended |
Sep. 30, 2019 | |
Supplemental Cash Flow Elements [Abstract] | |
NOTE 10 - SUPPLEMENTAL CASH FLOW INFORMATION | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2019 and 2018 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 10 – SUPPLEMENTAL CASH FLOW INFORMATION During the three months ended September 30, 2019 and September 30, 2018, the Company paid $8 and $139 for interest, respectively. During the three months ended September 30, 2019 and September 30, 2018, the Company paid $228 and $180 for income taxes, respectively. During the three months ended September 30, 2019, the Company recorded a current receivable of $950 from a landlord for tenant improvements. |
NOTE 11 - COMMITMENTS AND CONTI
NOTE 11 - COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
NOTE 11 - COMMITMENTS AND CONTINGENCIES | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2019 and 2018 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 11 – COMMITMENTS AND CONTINGENCIES Litigation The Company is subject to legal proceedings and claims arising from the ordinary course of its business, including personal injury, customer contract and employment claims. In the opinion of management, the aggregate liability, if any, with respect to such actions, will not have a material adverse effect on the consolidated financial position or results of operations of the Company. There were no material changes in litigation from that reported in our Form 10-K for the fiscal year ended June 30, 2019. Other Matters The Company is also delinquent in filing sales tax returns for certain states, for which the Company has transacted business. As of September 30, 2019, the Company has recorded tax obligations of approximately $1,536 plus interest and penalties of approximately $1,021. The Company is in the process of determining the regulatory requirements in order to become compliant. The Company maintains a self-funded health insurance program with a stop-loss umbrella policy with a third party insurer to limit the maximum potential liability for individual claims to $100 per person and for a maximum potential claim liability based on member enrollment. With respect to this program, the Company considers historical and projected medical utilization data when estimating its health insurance program liability and related expense. As of September 30, 2019 and June 30, 2019, the Company had approximately $0 and $68, respectively, in reserve for its self-funded health insurance programs. The reserves are included in “Other current liabilities” in the condensed consolidated balance sheets. The Company regularly analyzes its reserves for incurred but not reported claims, and for reported but not paid claims related to its reinsurance and self-funded insurance programs. The Company believes its reserves are adequate. However, significant judgment is involved in assessing these reserves such as assessing historical paid claims, average lags between the claims’ incurred date, reported dates and paid dates, and the frequency and severity of claims. There may be differences between actual settlement amounts and recorded reserves and any resulting adjustments are included in expense once a probable amount is known. There were no significant adjustments recorded in the periods covered by this report. |
NOTE 12 - INCOME TAXES
NOTE 12 - INCOME TAXES | 3 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
NOTE 12 - INCOME TAXES | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2019 and 2018 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 12 - INCOME TAXES In accordance with ASC 740-270, Income Taxes – Interim Reporting, the Company is required at the end of each interim period to determine the best estimate of its annual effective tax rate and apply that rate to year-to-date ordinary income or loss. The resulting tax expense (or benefit) is adjusted for the tax effect of specific events, if any, required to be discretely recognized in the interim period as they occur. For the three months ended September 30, 2019 and 2018, the Company recorded income tax expense of $1,107 in 2019 as compared to $1,128 in 2018. The 2019 provision is comprised of a current income tax component of $103 and a deferred income tax component of $1,004. Obligations for any liability associated with the current income tax provision, has been reduced, primarily resulting from the benefits and utilization of net operating loss carryforwards. ASC topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a corporate tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the benefit recognized and measured pursuant to the interpretation are referred to as unrecognized benefits. A liability is recognized (or amount of net operating loss carryforward or amount of tax refundable is reduced) for an unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC topic 740. The Company believes there are no uncertain tax positions in prior years tax filings and therefore it has not recorded a liability for unrecognized tax benefits. In accordance with ASC topic 740, interest costs related to unrecognized tax benefits are required to be calculated (if applicable) and would be classified as “Interest expense, net”. Penalties if incurred would be recognized as a component of “Selling, general and administrative” expenses. The Company files corporate income tax returns in the United States (federal) and in various state and local jurisdictions. In most instances, the Company is no longer subject to federal, state and local income tax examinations by tax authorities for years prior to 2015. The Company recorded a deferred tax asset of $19,934 and a deferred tax liability of $243 as of September 30, 2019, primarily relating to net operating loss carryforwards of approximately $65,792 available to offset future taxable income through 2030. The net operating losses begin to expire in 2023 for federal tax and state income tax purposes. Future ownership changes as determined under Section 382 of the Internal Revenue code could further limit the utilization of net operating loss carryforwards. As of September 30, 2019, no such changes in ownership have occurred. The ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible or when such net operating losses can be utilized. The Company considers projected future taxable income, the regulatory environment of the industry and tax planning strategies in making this assessment. At present, the Company believes that it is more likely than not that the benefits from certain deferred tax asset carryforwards, will not all be fully realized. In recognition of this inherent risk, a valuation allowance was established for the partial value of the deferred tax asset, (principally related to research and development tax credits). A valuation allowance will be maintained until sufficient positive evidence exists to support the reversal of the remainder of the valuation. |
NOTE 13 - SUBSEQUENT EVENTS
NOTE 13 - SUBSEQUENT EVENTS | 3 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
NOTE 13 - SUBSEQUENT EVENTS | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2019 and 2018 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 13 – SUBSEQUENT EVENTS The Company has evaluated events that occurred subsequent to September 30, 2019 and through the date the condensed consolidated financial statements were issued. |
NOTE 2 - SUMMARY OF SIGNIFICA_2
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of FONAR Corporation, its majority and wholly-owned subsidiaries and partnerships (collectively the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation. |
Revenue | Revenues On July 1, 2018, the Company adopted the new revenue recognition accounting standard issued by the Financial Accounting Standards Board (“FASB”) and codified in the ASC as topic 606 (“ASC 606”). The revenue recognition standard in ASC 606 outlines a single comprehensive model for recognizing revenue as performance obligations, defined in a contract with a customer as goods or services transferred to the customer in exchange for consideration, are satisfied. The standard also requires expanded disclosures regarding the Company’s revenue recognition policies and significant judgments employed in the determination of revenue. Our revenues generally relate to net patient fees received from various payers and patients themselves under contracts in which our performance obligations are to provide diagnostic services to the patients. Revenues are recorded during the period our obligations to provide diagnostic services are satisfied. Our performance obligations for diagnostic services are generally satisfied over a period of less than one day. The contractual relationships with patients, in most cases, also involve a third-party payer (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by (Medicare and Medicaid) or negotiated with (managed care health plans and commercial insurance companies) the third-party payers. The payment arrangements with third-party payers for the services we provide to the related patients typically specify payments at amounts less than our standard charges and generally provide for payments based upon predetermined rates per diagnostic services or discounted fee-for-service rates. Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals. |
Earnings Per Share | Earnings Per Share Basic earnings per share (“EPS”) is computed based upon the weighted average number of shares of common stock and stock equivalents outstanding, net of common stock. In accordance with ASC topic 260-10, “Participating Securities and the Two-Class method”, the Company used the Two-Class method for calculating basic income per share and applied the if converted method in calculating diluted income per share for the three months ended September 30, 2019 and 2018. Diluted EPS reflects the potential dilution from the exercise or conversion of all dilutive securities into common stock based on the average market price of common shares outstanding during the period. For the three months ended September 30, 2019 and 2018, diluted EPS for common shareholders includes 128 shares upon conversion of Class C Common. Three months ended Three months ended Total Common Stock Class C Common Total Common Stock Class C Common Basic Numerator: $ 3,299 $ 3,097 $ 51 $ 3,318 $ 3,113 $ 52 Denominator: Weighted average shares outstanding 6,432 6,432 383 6,344 6,344 383 Basic income per common share $ 0.51 $ 0.48 $ 0.13 $ 0.52 $ 0.49 $ 0.14 Diluted Denominator: 6,432 383 6,344 383 Convertible Class C Stock 128 — 128 — Total Denominator for diluted earnings per share 6,560 383 6,472 383 Diluted income per common share $ 0.47 $ 0.13 $ 0.48 $ 0.14 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04, Intangibles – Goodwill and Other (Topic 350). The amendments in this update simplify the test for goodwill impairment by eliminating Step 2 from the impairment test, which required the entity to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities following the procedure that would be required in determining fair value of assets acquired and liabilities assumed in a business combination. The amendments in this update are effective for public companies for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. We are evaluating the impact of adopting this guidance on our consolidated condensed financial statements. During February 2016, FAS issued ASU 2016-02, Leases (Topic 842). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based upon the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Lease with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The new guidance will be effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period and is applied retrospectively. The Company adopted this guidance on July 1, 2019, as required, electing to apply retrospectively at the period of adoption with practical expedients. The adoption of this guidance had a material impact on the Company’s balance sheet by virtue of including the present value of its future operating lease payments as a liability of $33.3 million and related right-to-use lease assets as of July 1, 2019. The Company accounts for its various operating leases in accordance with Accounting Standards Codification (‘ASC’) 842 – Lease, as updated by ASU 2016-02. At the inception of a lease, the Company recognizes right-of-use lease assets and related lease liabilities measured at present value of future lease payments on its balance sheet. Lease expense is recognized on a straight-line basis over the term of the lease. The Company reviewed its contracts with vendors and customers, determining that its right-to-use lease assets consisted of only office space operating leases. In determining the right-to-use lease assets and liabilities, the Company did recognize lease extension options which the Company feels would be reasonably exercised. Also included in other current assets is a $950,000 receivable from a landlord for tenant improvements. A reconciliation of operating lease payments undiscounted cash flows to lease liabilities recognized as of September 30, 2019 is as follows: Operating Lease Payments 2020 (Nine Months) 3,592 2021 4,782 2022 4,463 2023 4,415 2024 4,120 Thereafter 21,545 Present Value discount (5.5% weighted average) (10,307 ) Total lease liability 32,610 FASB, the Emerging Issues Task Force and the SEC have issued certain other accounting standards, updates, and regulations as of September 30, 2019 that will become effective in subsequent periods; however, management does not believe that any of those updates would have significantly affected our financial accounting measures or disclosures had they been in effect during 2019 or 2018, and it does not believe that any of those pronouncements will have a significant impact on our consolidated condensed financial statements at the time they become effective. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. The reclassifications did not have any effect on reported consolidated net income for any periods presented. |
NOTE 2 - SUMMARY OF SIGNIFICA_3
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Earnings Per Share | Earnings Per Share Three months ended Three months ended Total Common Stock Class C Common Total Common Stock Class C Common Basic Numerator: $ 3,299 $ 3,097 $ 51 $ 3,318 $ 3,113 $ 52 Denominator: Weighted average shares outstanding 6,432 6,432 383 6,344 6,344 383 Basic income per common share $ 0.51 $ 0.48 $ 0.13 $ 0.52 $ 0.49 $ 0.14 Diluted Denominator: 6,432 383 6,344 383 Convertible Class C Stock 128 — 128 — Total Denominator for diluted earnings per share 6,560 383 6,472 383 Diluted income per common share $ 0.47 $ 0.13 $ 0.48 $ 0.14 |
Long-term operating lease liabilities | A reconciliation of operating lease payments undiscounted cash flows to lease liabilities recognized as of September 30, 2019 is as follows: Operating Lease Payments 2020 (Nine Months) 3,592 2021 4,782 2022 4,463 2023 4,415 2024 4,120 Thereafter 21,545 Present Value discount (5.5% weighted average) (10,307 ) Total lease liability 32,610 |
NOTE 3 - ACCOUNTS RECEIVABLE,_2
NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Receivables [Abstract] | |
Receivables - net | Receivables, net is comprised of the following at September 30, 2019, and June 30, 2019: September 30, 2019 Gross Receivable Allowance for doubtful accounts Net Accounts receivable $ 3,955 $ 190 $ 3,765 Accounts receivable - related party $ 90 — $ 90 Medical receivable $ 15,866 $ — $ 15,866 Management and other fees receivable $ 35,751 $ 9,085 $ 26,666 Management and other fees receivable from related medical practices ("PC’s") $ 9,106 $ 2,391 $ 6,715 June 30, 2019 Gross Receivable Allowance for doubtful accounts Net Accounts receivable $ 3,927 $ 190 $ 3,737 Accounts receivable - related party $ — — $ — Medical receivable $ 15,729 $ — $ 15,729 Management and other fees receivable $ 35,114 $ 9,405 $ 25,709 Management and other fees receivable from related medical practices ("PC’s") $ 8,812 $ 2,311 $ 6,501 |
Patient fee revenue - net | The Company’s patient fee revenue, net of contractual allowances and discounts for the three months ended September 30, 2019 and 2018 are summarized in the following table. For the Three Months Ended September 30, 2019 2018 Commercial Insurance/ Managed Care $ 1,354 $ 1,180 Medicare/Medicaid 266 291 Workers' Compensation/Personal Injury 4,294 3,702 Other 131 352 Patient Fee Revenue, net of contractual allowances and discounts $ 6,045 $ 5,525 |
NOTE 4 - INVENTORIES (Tables)
NOTE 4 - INVENTORIES (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories: September 30, 2019 June 30, 2019 Purchased parts, components and supplies $ 1,708 $ 1,640 Work-in-process 83 158 TOTAL INVENTORIES $ 1,791 $ 1,798 |
NOTE 5 - COSTS AND ESTIMATED _2
NOTE 5 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Notes to Financial Statements | |
Information relating to uncompleted contracts | Information relating to uncompleted contracts is as follows: September 30, 2019 June 30, 2019 Costs incurred on uncompleted contracts $ 520 $ 448 Estimated earnings 1,059 1,089 Subtotal 1,579 1,537 Less: Billings to date 1,272 1,012 Total Costs and estimated earnings in excess of billings on uncompleted contracts $ 307 $ 525 |
NOTE 6 - OTHER INTANGIBLE ASS_2
NOTE 6 - OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Other intangible assets - net | Other intangible assets: September 30, 2019 June 30, 2019 Capitalized software development costs $ 7,005 $ 7,005 Patents and copyrights 5,002 4,964 Non-compete 4,100 4,100 Customer relationships 3,800 3,800 Gross Other intangible assets 19,907 19,869 Less: Accumulated amortization 15,354 15,113 Other Intangible Assets $ 4,553 $ 4,756 |
NOTE 7 - OTHER CURRENT LIABIL_2
NOTE 7 - OTHER CURRENT LIABILITIES (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Other Liabilities, Current [Abstract] | |
Other current liabilities | Other current liabilities: September 30, 2019 June 30, 2019 Accrued salaries, commissions and payroll taxes $ 1,392 $ 3,898 Litigation accruals 145 145 Sales tax payable 1,536 1,671 Legal and other professional fees 130 126 Accounting fees 50 105 Self-funded health insurance reserve — 68 Accrued interest and penalty 1,067 1,054 Other 355 510 Other Current Liabilities $ 4,675 $ 7,577 |
NOTE 9 - SEGMENT AND RELATED _2
NOTE 9 - SEGMENT AND RELATED INFORMATION (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment information | Summarized financial information concerning the Company's reportable segments: Medical Management Totals For the three months ended Sept. 30, 2019 Net revenues from external customers $ 2,284 $ 19,463 $ 21,747 Inter-segment net revenues $ 219 $ — $ 219 (Loss) Income from operations $ (736 ) $ 6,222 $ 5,486 Depreciation and amortization $ 91 $ 904 $ 995 Capital expenditures $ 1,601 $ 848 $ 2,449 For the three months ended Sept. 30, 2018 Net revenues from external customers $ 2,209 $ 18,496 $ 20,705 Inter-segment net revenues $ 228 $ — $ 228 (Loss) Income from operations $ (230 ) $ 5,767 $ 5,537 Depreciation and amortization $ 93 $ 829 $ 922 Capital expenditures $ 20 $ 449 $ 469 |
NOTE 2 - SUMMARY OF SIGNIFICA_4
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Basic Numerator: Net income available to common stockholders | $ 3,299 | $ 3,318 |
Basic Denominator: Weighted average shares outstanding | 6,432,000 | 6,344,000 |
Basic income per common share | $ 0.51 | $ 0.52 |
Shares included upon conversion of Class C Common to calculate a diluted EPS | 128,000 | 128,000 |
Common Shares | ||
Basic Numerator: Net income available to common stockholders | $ 3,097 | $ 3,113 |
Basic Denominator: Weighted average shares outstanding | 6,432,000 | 6,344,000 |
Basic income per common share | $ 0.48 | $ 0.49 |
Shares included upon conversion of Class C Common to calculate a diluted EPS | 128,000 | 128,000 |
Total Denominator for diluted earnings per share | 6,560,000 | 6,472,000 |
Diluted income per common share | $ 0.47 | $ 0.48 |
Class C Common Stock | ||
Basic Numerator: Net income available to common stockholders | $ 51 | $ 52 |
Basic Denominator: Weighted average shares outstanding | 383,000 | 383,000 |
Basic income per common share | $ 0.13 | $ 0.14 |
Total Denominator for diluted earnings per share | 383,000 | 383,000 |
Diluted income per common share | $ 0.13 | $ 0.14 |
NOTE 2 - SUMMARY OF SIGNIFICA_5
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recent Accounting Pronouncements - Operating Lease Payments (Details) $ in Thousands | Sep. 30, 2019USD ($) |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
2020 (Nine Months) | $ 3,592 |
2021 | 4,782 |
2022 | 4,463 |
2023 | 4,415 |
2024 | 4,120 |
Thereafter | 21,545 |
Present Value discount (5.5% weighted average) | (10,307) |
Total lease liability | $ 32,610 |
NOTE 3 - ACCOUNTS RECEIVABLE,_3
NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE - Receivables, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 |
Accounts receivable | $ 3,765 | $ 3,737 |
Accounts receivable - Related party | 90 | |
Medical Receivables | 15,866 | 15,729 |
Management and other fees receivable | 26,666 | 25,709 |
Management and other fees receivable from related medical practices ("PC's") | 6,715 | 6,501 |
Gross Receivable | ||
Accounts receivable | 3,955 | 3,927 |
Accounts receivable - Related party | 90 | |
Medical Receivables | 15,866 | 15,729 |
Management and other fees receivable | 35,751 | 35,114 |
Management and other fees receivable from related medical practices ("PC's") | 9,106 | 8,812 |
Allowance for Doubtful Accounts | ||
Accounts receivable | 190 | 190 |
Management and other fees receivable | 9,085 | 9,405 |
Management and other fees receivable from related medical practices ("PC's") | $ 2,391 | $ 2,311 |
NOTE 3 - ACCOUNTS RECEIVABLE,_4
NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE - Patient Fees Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Patient fee revenue, net of contractual allowances and discounts | $ 6,045 | $ 5,525 |
Commercial Insurance / Managed Care | ||
Patient fee revenue, net of contractual allowances and discounts | 1,354 | 1,180 |
Medicare/Medicaid | ||
Patient fee revenue, net of contractual allowances and discounts | 266 | 291 |
Workers Compensation/Personal Injury | ||
Patient fee revenue, net of contractual allowances and discounts | 4,294 | 3,702 |
Other | ||
Patient fee revenue, net of contractual allowances and discounts | $ 131 | $ 352 |
NOTE 4 - INVENTORIES (Details)
NOTE 4 - INVENTORIES (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 |
Inventory Disclosure [Abstract] | ||
Purchased parts, components and supplies | $ 1,708 | $ 1,640 |
Work-in-process | 83 | 158 |
Total inventories | $ 1,791 | $ 1,798 |
NOTE 5 - COSTS AND ESTIMATED _3
NOTE 5 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS - Information relating to uncompleted contracts (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 |
Notes to Financial Statements | ||
Costs incurred on uncompleted contracts | $ 520 | $ 448 |
Estimated earnings | 1,059 | 1,089 |
Costs and estimated earnings on uncompleted contracts | 1,579 | 1,537 |
Less: Billings to date | 1,272 | 1,012 |
Net billings in excess of costs and estimated earnings on uncompleted contracts | $ 307 | $ 525 |
NOTE 6 - OTHER INTANGIBLE ASS_3
NOTE 6 - OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 |
Gross other intangible assets | $ 19,907 | $ 19,869 |
Accumulated amortization | 15,354 | 15,113 |
Other intangible assets-net | 4,553 | 4,756 |
Capitalized software development costs | ||
Gross other intangible assets | 7,005 | 7,005 |
Patents and copyrights | ||
Gross other intangible assets | 5,002 | 4,964 |
Non-compete | ||
Gross other intangible assets | 4,100 | 4,100 |
Customer relationships | ||
Gross other intangible assets | $ 3,800 | $ 3,800 |
NOTE 7 - OTHER CURRENT LIABIL_3
NOTE 7 - OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 |
Other Liabilities, Current [Abstract] | ||
Accrued salaries, commissions and payroll taxes | $ 1,392 | $ 3,898 |
Litigation accruals | 145 | 145 |
Sales tax payable | 1,536 | 1,671 |
Legal and other professional fees | 130 | 126 |
Accounting fees | 50 | 105 |
Self-funded health insurance reserve | 0 | 68 |
Accrued interest and penalty - sales tax | 1,067 | 1,054 |
Other | 355 | 510 |
Total other current liabilities | $ 4,675 | $ 7,577 |
NOTE 9 - SEGMENT AND RELATED _3
NOTE 9 - SEGMENT AND RELATED INFORMATION - Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Net revenues from external customers | $ 21,747 | $ 20,705 |
Inter-segment net revenues | 219 | 228 |
(Loss) Income from operations | 5,486 | 5,537 |
Depreciation and amortization | 995 | 922 |
Capital expenditures | 2,449 | 469 |
Medical Equipment | ||
Net revenues from external customers | 2,284 | 2,209 |
Inter-segment net revenues | 219 | 228 |
(Loss) Income from operations | (736) | (230) |
Depreciation and amortization | 91 | 93 |
Capital expenditures | 1,601 | 20 |
Management Of Diagnostic Imaging Centers | ||
Net revenues from external customers | 19,463 | 18,496 |
(Loss) Income from operations | 6,222 | 5,767 |
Depreciation and amortization | 904 | 829 |
Capital expenditures | $ 848 | $ 449 |
NOTE 1 - DESCRIPTION OF BUSIN_2
NOTE 1 - DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Details Narrative) | Jul. 01, 2015 |
Accounting Policies [Abstract] | |
The ownership interest of Imperial Management Services after reorganization of newly expanded HDM (percent). | 24.20% |
The ownership interest of Health Management Corporation of America after reorganization of newly expanded HDM (percent). | 45.80% |
The ownership interest of the original investors of HDM after reorganization of newly expanded HDM (percent). | 30.00% |
NOTE 2 - SUMMARY OF SIGNIFICA_6
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Jul. 01, 2019 | |
Accounting Policies [Abstract] | |||
Shares included upon conversion of Class C Common to calculate a diluted EPS. | 128,000 | 128,000 | |
Material impact on Companys balance sheet from adoption of ASU 2016-02 regarding the present value of future operating lease payments. | $ 33,300 |
NOTE 3 - ACCOUNTS RECEIVABLE,_5
NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE (Details Narrative) | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Receivables [Abstract] | ||
Net revenues derived from no-fault and personal injury protection claims | 67.00% | 67.00% |
Net revenues from management and other fees charged to related PCs | 11.00% | 11.00% |
NOTE 6 - OTHER INTANGIBLE ASS_4
NOTE 6 - OTHER INTANGIBLE ASSETS (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Patents and copyrights | ||
Amortization of intangible assets | $ 47 | $ 50 |
Non-compete | ||
Amortization of intangible assets | 146 | 146 |
Customer relationships | ||
Amortization of intangible assets | $ 48 | $ 48 |
NOTE 8 - STOCKHOLDERS EQUITY (D
NOTE 8 - STOCKHOLDERS EQUITY (Details Narrative) $ in Thousands | 3 Months Ended |
Sep. 30, 2019USD ($)shares | |
STOCKHOLDERS' EQUITY: | |
Issuance of stock for goods and services, Value | $ | $ 1,900 |
Issuance of stock for goods and services, Shares | shares | 90,000 |
NOTE 10 - SUPPLEMENTAL CASH F_2
NOTE 10 - SUPPLEMENTAL CASH FLOW INFORMATION ($) (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Supplemental Cash Flow Elements [Abstract] | ||
Interest paid | $ 8 | $ 39 |
Income taxes paid | 228 | $ 180 |
Current Receivable | $ 950 |
NOTE 11 - COMMITMENTS AND CON_2
NOTE 11 - COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
Recorded tax obligations | $ 1,536 | |
Tax interest and penalties | 1,021 | |
Maximum limit for individual claims under stop-loss umbrella policy for health insurance | 100 | |
Self-funded health insurance reserve | $ 0 | $ 68 |
NOTE 12 - INCOME TAXES (Details
NOTE 12 - INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense | $ 1,107 | $ 1,128 |
Income tax component - current | 103 | |
Income tax component - deferred | 1,004 | |
Deferred tax assets | 19,934 | |
Deferred tax liability | 243 | |
Net operating loss (NOL) carryforwards available to offset future taxable income | $ 65,792 |