FONAR CORPORATION
Fonar MRI news @ aol . com The MRI Specialist
For Immediate Release An ISO 9001 Company
Contact: Daniel Culver, 110 Marcus Drive
Director of Communications Melville, NY 11742
David Terry, Exec. V.P. Tel: 631/694-2929
Email: invest @ fonar. com Fax: 631/390-9540
Contact: Kathy Price Tel212/983-1702x212
The Anne McBride Company www.AnneMcBride.com
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FONAR ANNOUNCES FISCAL 2005 3RD QUARTER AND NINE MONTHS RESULTS
Revenues Increase 30% to $25.3 Million
First Nine Months Revenues Increase 58% to $79.9 Mil.
MELVILLE, NEW YORK, May 11, 2005 - FONAR Corporation (NASDAQ-FONR), The MRI
Specialist(TM), today announced financial results for the third quarter and
first nine months of fiscal 2005, which ended March 31, 2005.
Q3 Fiscal 2005 Financial Highlights
o Total Revenues increased 31% to $25.3 million
o Revenues attributable to the medical equipment (MRI) segment increased 43%
to $19.4 million
o Upright(TM) MRI sales were $17.2 million, representing 89% of medical
equipment sales
o Service and repair revenues rose 85% to $1.6 million
o HMCA revenues rose modestly to $5.9 million
o Net loss was $480,000 compared to a net loss of $1.5 million in Q3 Fiscal
2004
o Basic and diluted loss per share was less than $0.01
Nine Months Fiscal 2005 Financial Highlights
o Total Revenues increased 58% to $79.9 million
o Revenues attributable to the medical equipment (MRI) segment increased 89%
to $62.3 million
o MRI product sales were $56.5 million, representing 91% of medical equipment
segment sales
o Service and repair revenues rose 76% to $4.0 million
o HMCA revenues remained constant at $17.6 million
o Net income was $1.4 million compared to a net loss of $8.0 million for the
first nine months of fiscal 2004
o Basic and diluted EPS was $0.01
Management Commentary
"We are pleased to once again achieve year-over-year top line growth this
quarter," said David B. Terry, Senior Vice President of FONAR. "A primary reason
for the loss this quarter was related to expenses incurred in our medical
equipment segment related to marketing and customer relations programs, such as
trade shows, increased commissions, and our 2nd Annual Upright(TM) Imaging
Technologist Workshop & Marketers/Owners Meeting. There was also the defense and
settlement of certain litigation involving a customer's sub-contractor related
incident. In addition, there were professional fees related to Sarbanes-Oxley
Section 404 compliance. Even so, our revolutionary technology and ability to
meet the special needs of physicians and surgeons continues to command market
demand and translate into sales for the Upright(TM) MRI.
Mr. Terry concluded, "We have made progress increasing shareholder value. We
plan to continue building a strong business and increasing shareholder value.
All at FONAR remain focused on increasing our pace of new sales and
installations and aggressively marketing to customers, while continuing to
upgrade and streamline our operations."
Q3 Fiscal 2005 Financial Results
Revenues for the third quarter of fiscal 2005 increased 31% to $25.3 million,
compared to $19.4 million in the third quarter of fiscal 2004. Overall revenues
attributable to the medical equipment (MRI) segment increased 43% in the third
quarter to $19.4 million compared to $13.6 million in the same quarter of last
year. This growth is primarily the result of increased scanner sales revenues
for the FONAR Upright(TM) MRI, which rose 40% to $17.2 million in the third
quarter of fiscal 2005 from $12.1 million in the third quarter of fiscal 2004.
Service and repair revenues were $1.6 million in the third quarter of fiscal
2005 compared to $846,000 in the third quarter of fiscal 2004, an increase of
89%. The increase in service and repair revenues is primarily attributable to
warranty expirations and service contract agreements for Upright(TM) MRI
machines installed last year. License fees and royalties remained constant at
$585,000.
Revenues attributable to FONAR's physician and diagnostic services management
segment (HMCA) rose modestly to $5.9 million in the third quarter of fiscal
2005, compared to $5.7 million in the third quarter of fiscal 2004.
Net loss for the third quarter of fiscal 2005 was $480,000, or less than $0.01
per share (basic and diluted), compared to a net loss of $1.5 million, or $0.02
loss per share (basic and diluted), for the same period of last year.
Costs related to product sales were $11.0 million in the third quarter of fiscal
2005 compared to $7.7 million in the same quarter of last year. Costs related to
providing service were $1.4 million in the third quarter of fiscal 2005 compared
to $1.0 million in the third quarter of fiscal 2004. Costs related to HMCA rose
slightly to $3.7 million in the third quarter of 2005 compared to $3.6 million
in the same quarter of last year.
As of March 31, 2005, FONAR had $16.9 million in cash and cash equivalents and
marketable securities, as compared to $20.6 million as of June 30, 2004.
To see a chart illustrating FONAR revenue and net income/(loss) trends for the
last five quarters, please visit http://www.fonar.com/news/110904.htm
Additional Q3 Fiscal 2005 Operating Highlights
o Gross profit margin for the medical equipment segment rose to 36.2%,
compared to 35.9% in the third quarter of 2004
o HMCA segment experienced operating income of $135,000 compared to an
operating loss of $457,000 in the third quarter of fiscal 2004
o SG&A expenses rose 14% to $6.8 million in the third quarter of fiscal 2005,
reflecting increased marketing efforts, trade show expenses and the 2nd
Annual Upright(TM) Imaging Technologist Workshop & Marketers/Owners Meeting
Third Quarter Fiscal 2005 Company Highlights
o Sales of the Upright(TM)MRI rose to 110 as of March 31, 2005; installed
scanners totaled 81
o Announced sale and installation to Up & Open Imaging of Dallas as 30% of
all FONAR Upright MRI customers are repeat buyers
o Exhibited at the 2005 Annual Meeting of the American Academy of Orthopaedic
Surgeons in Washington, DC
o Presented to institutional investor audience at The Wall Street Analyst
Forum in New York City
o Ranked #17 on the Deloitte & Touche USA LLP's prestigious Technology Fast
50 Program for Long Island
o Hosted 2nd Annual Upright(TM) Imaging Technologist Workshop &
Marketers/Owners Meeting
o Announced sale and installation of Upright(TM) MRI to Upright Imaging of
Westchester in Yonkers, NY; Mayor of the City of Yonkers attends grand
opening and ribbon cutting ceremony
o Announced installation of first Upright(TM) MRI in state of Alabama at
Medica Stand-Up MRI of Birmingham; this facility is the 2nd Medica facility
to use FONAR's Upright(TM) MRI technology
o Announced sales of an Upright(TM) MRI to Victoria MRI, LTD of Victoria, TX,
and Next Generation MRI of Columbia, MD
o Announced the sale and installation of an Upright(TM) MRI to Great Neck
Stand-Up MRI in Long Island, NY
Nine Months Fiscal 2005 Financial
Revenues for the first nine months of fiscal 2005 increased 58% to $79.9 million
compared to $50.5 million in the first nine months of fiscal 2004. Overall
revenues attributable to the medical equipment (MRI) segment were $62.3 million,
an 89% increase over the $33.0 million medical equipment segment revenues
reported in the comparable period of last year. The growth is primarily the
result of increased scanner sales revenues for the FONAR Upright(TM) MRI, which
nearly doubled to $55.4 million from $28.6 million in the first nine months of
fiscal 2004.
Service and repair revenues improved in the first nine months of 2005, rising
76% to $4.0 million compared to $2.3 million in the first nine months of fiscal
2004. Again, this increase is the result of warranty expirations and new service
contract agreements for Upright(TM) MRI machines installed last year.
Revenues attributable to FONAR's physician and diagnostic services management
segment (HMCA) were $17.6 million, unchanged from the first nine months of
fiscal 2004.
Net income for the first nine months of fiscal 2005 was $1.4 million, or $0.01
per share (basic and diluted), compared to a net loss of $8.0 million, or $0.09
loss per share (basic and diluted), for the same period of last year. The
Company's success in achieving profitability in the first nine months of fiscal
2005 is primarily due to the increase in product sales, revenues and the
maintenance of healthy gross profit margins on product sales.
Costs related to product sales doubled in the first nine months of fiscal 2005
to $35.7 million compared to $17.8 million in the comparable period of the prior
year. Costs related to providing service increased 30% to $3.8 million in the
first nine months of fiscal 2005 compared to $2.9 million in the same period of
last year. Costs related to HMCA increased slightly to $10.9 million in the
first nine months of fiscal 2005, compared to $10.8 million in the first nine
months of fiscal 2004.
Conference Call
FONAR will host a conference call with investors and analysts at 11:00 a.m. ET
on May 11 to discuss third quarter of fiscal 2005 results and the Company's
outlook. To access the live conference call, please dial +1-877-270-4109
(toll-free) or +1-706-679-0560 (internationally) at least 10 minutes prior to
the call. A replay of the call will be available through May 18. To access the
replay, please dial +1-800-642-1687 (toll-free) or +1-706-645-9291
(internationally) and enter access code 6193769. For the most current
information regarding the conference call, please visit the FONAR web site at:
http://www.fonar.com/conference_calls.htm.
About FONAR
FONAR was incorporated in 1978, making it the first, oldest and most experienced
MRI manufacturer in the industry. FONAR introduced the world's first commercial
MRI in 1980, and went public in 1981. Since its inception, we have installed
nearly 300 MRI scanners worldwide. FONAR's stellar product line includes the
Upright(TM) MRI (also known as the Stand-Up(TM) MRI), the only whole-body MRI
that performs Position(TM) imaging (pMRI(TM)) and scans patients in numerous
weight-bearing positions, i.e. standing, sitting, in flexion and extension, as
well as the conventional lie-down position. The FONAR Upright(TM) MRI often sees
the patient's problem that other scanners cannot because they are lie-down only.
With over 100,000 patients scanned, the patient-friendly Upright(TM) MRI has a
near zero claustrophobic rejection rate by patients. As a FONAR customer states,
"If the patient is claustrophobic in this scanner, they'll be claustrophobic in
my parking lot." Approximately 85% of patients are scanned sitting while they
watch a 42" flat screen TV. Our latest MRI scanner is the FONAR 360(TM), a
room-size recumbent scanner that optimizes openness while facilitating physician
access to the patient. FONAR is headquartered on Long Island, New York, and has
approximately 500 employees.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended For the Nine Months Ended
March 30, March 30
2005 2004 2005 2004
-------- -------- -------- ----------
Revenues $25,330 $19,353 $79,897 $50,344
Net Income (Loss) $(480) $(1,484) $1,447 $(7,957)
Basic & Diluted
Earnings (Loss)
Per Common Share $ - $( .02) $ $.01 $( .09)
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MRI Specialist, Stand-Up, Upright, Position, PMRI and
The Proof is in the Picture are trademarks of FONAR.
Be sure to visit FONAR's Web site for Company product and investor information:
www.fonar.com
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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 filings with
the Securities and Exchange Commission.