FONAR CORPORATION
FonarMRInews The MRI Specialist
For Immediate Release An ISO 9001 Company
Contact: Daniel Culver, 110 Marcus Drive
Director of Communications Melville, NY 11742
David Terry, VP, Secretary Tel: 631/694-2929
email: invest @ fonar. com Fax: 631/390-9540
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FONAR SHOWS INCREASE IN SCANNER SALES REVENUES;
GROSS PROFIT MARGINS ON PRODUCT SALES SHOW INCREASE
OVER SAME PERIOD OF PRIOR YEAR
First Three HMCA Managed Stand-Up MRI Centers Show Combined
Gross Margins of $1,423,000 for First Half of Fiscal 2004
MELVILLE, NEW YORK, February 12, 2004 - FONAR Corporation, The MRI
Specialist(TM), reported a net loss of $2.6 million on revenues of $17.9 million
for the second quarter of fiscal 2004 as compared to a net loss of $2.9 million
($2.8 million from continuing operations) on revenues of $16.0 million for the
second quarter of fiscal 2003. This represented a decline in our net loss of 10%
(6.2% from continuing operations) and an improvement of 12.1% in our revenues.
We reported a net loss of $6.5 million on revenues of $31.2 million for the
six-month period ended December 31, 2003, as compared to a net loss of $5.6
million ($5.4 million from continuing operations) on revenues of $29.2 million
for the six-month period ended December 31, 2002.
Most significantly, equipment sales from unrelated parties increased by 45% to
$8.6 million for the second quarter of fiscal 2004 as compared to $5.9 million
for the second quarter of fiscal 2003. Sales revenues from related parties,
however, declined by 31% to $1.9 million for the second quarter of fiscal 2004
as compared to $2.8 million for the second quarter of fiscal 2003. Overall, for
the second quarter of fiscal 2004, revenues for the medical equipment segment
increased by 17.9% to $12.0 million from $10.2 million for the second quarter of
fiscal 2003. The revenues generated by HMCA, also increased, by 2% to $5.9
million for the second quarter of fiscal 2004 as compared to $5.8 million for
the second quarter of fiscal 2003.
For the six-month period ended December 31, 2003, as compared to the six-month
period ended December 31, 2002, revenues from MRI product sales increased 13%
($16.6 million as compared to $14.7 million). Overall, revenues for the medical
equipment segment increased by 11.8% to $19.4 million for the first six-months
of fiscal 2004 as compared to $17.3 million for the first six-months of fiscal
2003. HMCA's revenues decreased, however by 1% to $11.8 million for the first
six-months of fiscal 2004 from $11.9 million for the first six-months of fiscal
2003.
Our gross profit margins on product sales increased to 37.8% for the second
quarter of fiscal 2004, as compared to 33.7% for the second quarter of fiscal
2003 and to 39.4% for the first six-months of fiscal 2004, as compared to 35%
for the first six- months of fiscal 2003.
Dr. Damadian stated, "As in the first quarter of fiscal 2004, the continuing
increases in sales to unrelated parties and increases in gross profit margins
reflects the expanding acceptance of FONAR's Upright imaging technology. The
growth of FONAR's installed base of Stand-Up MRI scanners demonstrates to the
medical community that these scanners are detecting and visualizing pathology
that cannot be seen any other way. Unrelated party sales were $3.4 million in
fiscal 2001, $5.4 million in fiscal 2002 and $17.7 million in fiscal 2003.
Unrelated party sales for the first half of fiscal 2004 are already $13.5
million. It seems to us it is only a matter of time before the continuing growth
in unrelated party sales and consistent gross margins turns into profitability."
HMCA, which provides physician and diagnostic management services, experienced
operating income of $70,000 for the second quarter of fiscal 2004 compared to an
operating loss of $547,000 for the second quarter of fiscal 2003. For the first
six-months of fiscal 2004, HMCA's operating income was $28,000 as compared to an
operating loss of $497,000 for the first six-months of fiscal 2003.
HMCA continues to pursue its business plan to replace older MRI equipment in
selected HMCA-managed sites with the Stand-Up MRIs, close non-profitable medical
offices, close non-profitable MRI facilities that are not good candidates for
the Stand-Up MRI upgrades, and open Stand-Up MRI scanning centers in entirely
new locations.
Dr. Damadian said, "We're pleased at the results of our efforts. All three of
HMCA's Stand-Up MRI upgrades are working well. The Islandia facility, HMCA's
first Stand-Up MRI upgrade (installed in January 2002), continues to do well,
reporting a gross margin of $723,000 for the first half of fiscal 2004. Our
Bensonhurst facility, which opened in January 2003, reported a gross margin of
$661,000 for the first half of fiscal 2004; our Staten Island facility, which
experienced some unexpected start-up difficulties, is nevertheless showing a
gross margin of $39,000 for the same period. In addition, we expect to be
completing the installation of a fourth Stand-Up(TM) MRI scanner in March, 2004
in Boca Raton.
In the aggregate, cash, cash equivalents and marketable securities increased by
10.8% from $15.2 million at June 30, 2003 to $16.8 million at December 31, 2003.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED
DECEMBER 31,
2003 2002
------------ ------------
Revenues $17,889,000 $15,955,000
Net Loss From ============ ============
Continuing Operations $(2,630,000) $(2,805,000)
Net Loss -
Discontinued Operations - $(116,000)
------------ ------------
Net Loss $(2,630,000) $(2,921,000)
============ ============
Basic & Diluted Net Loss per Share -
Continuing Operations $(0.03) $(0.04)
Basic & Diluted Net Loss per Share -
Discontinued Operations - -
------------ ------------
Basic & Diluted Net Loss per Share $(0.03) $(0.04)
============ ============
FOR THE SIX MONTHS ENDED
DECEMBER 31,
2003 2002
------------ ------------
Revenues $31,191,000 $29,231,000
Net Loss From ============ ============
Continuing Operations $(6,472,000) $(5,398,000)
Net Gain (Loss) -
Discontinued Operations - $(225,000)
------------ ------------
Net Loss $(6,472,000) $(5,627,000)
============ ============
Basic & Diluted Net Loss per Share -
Continuing Operations $(0.07) $(0.08)
Basic & Diluted Net Loss per Share -
Discontinued Operations - -
------------ ------------
Basic & Diluted Net Loss per Share $(0.07) $(0.08)
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MRI Specialist, Stand-Up, Upright, Position, PMRI and
The Proof is in the Picture are trademarks of FONAR Corporation.
Be sure to visit FONAR's Web site for Company product
and investor information:
www.fonar.com
This release may include forward-looking statements from the company that may or
may not materialize. Additional information on factors that could potentially
affect the company's financial results may be found in the company's filings
with the Securities and Exchange Commission.
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