SOURCE: FONAR Corporation

Fonar Corporation

November 15, 2013 07:30 ET

FONAR Announces First Fiscal 2014 Quarter Earnings Results

MELVILLE, NY--(Marketwired - Nov 15, 2013) - FONAR Corporation (NASDAQ: FONR)

  • First Fiscal 2014 Quarter net revenues increase 77% over First Fiscal Quarter 2013 to $16.8 million
  • First Fiscal 2014 Quarter net income increases 104% over First Fiscal Quarter 2013 to $3.6 million
  • Diluted Net Income Available to Common Stockholders for the First Fiscal 2014 Quarter was $0.37, an increase of 68% over First Fiscal Quarter 2013
  • FONAR records fifteenth straight quarter of positive net income and income from operations

FONAR Corporation (NASDAQ: FONR), The Inventor of MR Scanning™, reported its first quarter fiscal 2014 results for the quarter ended September 30, 2013. The Company's two industry segments are: development, manufacturing and servicing of the UPRIGHT® Multi-Position™ MRI, and management of Stand-Up® MRI (UPRIGHT® MRI) centers. The Company is known as the first Company to invent and manufacture an MRI (Magnetic Resonance) scanner. Leading the list of FONAR's most recent patented inventions is its technology enabling full weight-bearing MRI imaging, in contrast to the conventional weightless recumbent MRI, for the first time on all the gravity sensitive regions of the human anatomy, e.g. the spine, brain, hip, knee, ankle, foot, shoulder, and pelvis. The FONAR UPRIGHT® Multi-Position™ MRI scanner is the world's only MRI scanner licensed under FONAR's multiple UPRIGHT® MRI patents to scan all the patient's body parts in their normal fully weight-bearing UPRIGHT® position.

Financial Highlights

The management of diagnostic imaging center segment, consisting of Patient and Management fee revenues, increased 149% to $14.3 million for the quarter ended September 30, 2013, over the comparable quarter one year earlier ended September 30, 2012. The Company's total revenues were $16.8 million for the quarter ended September 30, 2013 an increase of 77% one year earlier when total revenues were $9.5 million.

The increase in revenues resulted in a 104% increase in net income to $3.6 million for the quarter ended September 30, 2013, as compared to $1.8 million for the quarter ended September 30, 2012.

Income from operations for the quarter ended September 30, 2013 was $4.0 million as compared to $1.9 million for the quarter ended September 30, 2012.

Basic net income per common share available to Common Stockholders for the quarter ended September 30, 2013 was $0.38, as compared to $0.23 for the quarter ended September 30, 2012. Diluted income per common share available to Common Stockholders for the quarter ended September 30, 2013 was $0.37, as compared to $0.22 for the quarter ended September 30, 2012.

Total assets were $75.6 million at September 30, 2013 as compared to $73.2 million at June 30, 2013.

Total liabilities were $35.3 million at September 30, 2013 as compared to $35.4 at June 30, 2013.

Total current liabilities were $22.4 million at September 30, 2013 as compared to $21.1 million at June 30, 2013.

At September 30, 2013, total cash and cash equivalents increased 17% to $9.2 million, as compared to $7.9 million at June 30, 2013.

Management Commentary

Raymond V. Damadian, M.D., president and chairman of Fonar Corporation, said: "We had understood that the acquisition of HDM would be a significant source of profitability. This has been the case and the Company's diluted earnings per share available for the common stockholder for the 1st quarter of Fiscal 2014 increased 68% to $0.37 when compared to one year earlier.

"There are more reasons why this acquisition makes a lot of sense," continued Dr. Damadian. "By combining the resources of HMCA and HDM, we will enjoy the benefits of economies of scale, shared administrative and technical expertise and capabilities, and joint marketing strategies. HMCA's 11 STAND-UP® MRIs together with HDM's 12 form a network of 23 FONAR weight-bearing MRI scanners, the largest in the world as compared to the conventional essentially weightless MRI.* Of course, we're not finished growing," said Dr. Damadian. "We will continue to pursue additional management contracts, primarily in New York and Florida."

"Our successful business model is made possible by the success of our current MRI scanner, the UPRIGHT® Multi-Position™ MRI," continued Dr. Damadian. "This scanner is extremely popular with patients who experience claustrophobia or can't lie down for long periods. However, patient comfort is only one side of this product. The much more compelling reason a patient would want to be scanned is to get the right diagnosis. This is the world's only scanner that can scan all body parts in their normal weight-bearing posture. It is essential to visualize the body in its normal weight-bearing positions in order to accurately diagnose the source of the patient's pain, so that the optimum treatment for the patient can be prescribed. In the weightless posture of the conventional recumbent MRI, it is impossible to accurately assess the patients' weight-bearing anatomic pathologies so they can be correctly treated. It is self-evident that if you can't see them you can't treat them. It is very common with the UPRIGHT® weight-bearing MRI to encounter disc herniations and spinal dislocations that were not visible in the conventional "weightless" recumbent MRI position.*"

*The calculated weight load of a 180 lb. upright patient on the L3/4 lumbar vertebral disc is 45.5 lbs. per square inch as compared to a weight-load of 4.5 lbs per square inch in a conventional recumbent "weightless" MRI which is only bearing 1/10th the weight the disc is bearing throughout the course of its common upright every day activities.

"This past April 6th we held 'Symposium 2013' in New York City. The symposium was called 'The Cranio-Cervical Syndrome (CCS): The Vulnerability of the Human Neck and Its Impact on Cerebrospinal Fluid (CSF) Flow'," said Dr. Damadian. "There is a pandemic degree of injuries to the neck and head, resulting from the 1.2 million automobile whiplash injuries occurring each year in the United States that are currently going unrecognized. The principal purpose of Symposium 2013 was to bring the existence of this Cranio-Cervical Syndrome to the attention of the medical community and to the general populace. We will publish early next year a monograph containing the presentation of the faculty who presented at the conference. I urge all interested parties to see the presentations which are found on line at: www.youtube.com/user/FonarMRIimaging."

"Our understanding of the Cranio-Cervical Syndrome (CCS) and the vulnerability of the human neck and its impact on cerebrospinal fluid (CSF) flow began with our UPRIGHT® MRI research and findings on multiple sclerosis," said Dr. Damadian. "On September 20, 2011, I and co-author, FONAR scientist David Chu, PhD., published a paper titled "The Possible Role of Cranio-Cervical Trauma and Abnormal CSF Hydrodynamics in the Genesis of Multiple Sclerosis," in the journal Physiological Chemistry and Physics and Medical NMR (Sept. 20, 2011, 41: 1-17), found at http://www.fonar.com/. With this new understanding of the role that cervical trauma plays in the etiology of disease, it is imperative to certify that the sustained neck or head injuries of professional athletes such as NFL football players, whiplash patients and others with severe neck trauma, have not resulted in any obstructions of CSF flow, which would eventually lead to the symptomatology of the Cranio-Cervical Syndrome."

"The Company is fortunate to have as its flagship product the FONAR UPRIGHT® Multi-Position™ MRI," continued Dr. Damadian. "This is truly a unique technology producing exquisite images in all positions of the body. It not only yields a whole new treasure of new medical applications in such calamitous medical categories as multiple sclerosis, and other dementia, but it also possesses the strong potential to provide fresh new insights into the debilitating chronic consequences of sports injuries, the current epidemic of automobile whiplash injuries, all spine injuries, and more diseases yet to be unearthed."

About FONAR

FONAR (NASDAQ: FONR), Melville, NY, The Inventor of MR Scanning™, 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. Since its inception, nearly 300 recumbent-OPEN MRIs and 157 UPRIGHT® Multi-Position™ MRI scanners have been installed worldwide. FONAR's stellar product is the UPRIGHT® 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 FONAR UPRIGHT® MRI often sees the patient's problem that other scanners cannot because they are lie-down and "weightless" only scanners. The patient-friendly UPRIGHT® 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. FONAR is headquartered on Long Island, New York.

UPRIGHT® and STAND-UP® are registered trademarks and The Inventor of MR Scanning™, Full Range of Motion™, Multi-Position™, Upright Radiology™, The Proof is in the Picture™, True Flow™, pMRI™, Spondylography™, Dynamic™,Spondylometry™, CSP™, and Landscape™, are trademarks of FONAR Corporation.

This release may include forward-looking statements from the company that may or may not materialize. Additional information on factors that could potentially affect the company's financial results may be found in the company's filings with the Securities and Exchange Commission.

   
FONAR CORPORATION AND SUBSIDIARIES  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(AMOUNTS AND SHARES IN THOUSANDS,EXCEPT PER SHARE AMOUNTS)  
(UNAUDITED)  
   
ASSETS  
             
    September 30, 2013     June 30, 2013*  
Current Assets:                
  Cash and cash equivalents   $ 9,238     $ 7,871  
  Accounts receivable - net     5,026       4,444  
  Accounts receivable - related party     90       --  
  Medical receivable - net     8,552       8,126  
  Management and other fees receivable - net     12,075       11,466  
  Management and other fees receivable - related medical practices - net     2,743       2,382  
  Inventories     2,126       2,077  
  Prepaid expenses and other current assets     1,292       1,500  
      Total Current Assets     41,142       37,866  
  Property and equipment - net     17,067       17,524  
  Goodwill     1,767       1,767  
  Other intangible assets - net     11,608       11,904  
  Deferred income tax asset     2,936       2,936  
  Other assets     1,078       1,154  
      Total Assets   $ 75,598     $ 73,151  
                 
                 
                 
FONAR CORPORATION AND SUBSIDIARIES  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(AMOUNTS AND SHARES IN THOUSANDS,EXCEPT PER SHARE AMOUNTS)  
(UNAUDITED)  
   
LIABILITIES AND STOCKHOLDERS' EQUITY  
             
    September 30, 2013     June 30, 2013  
Current Liabilities:                
  Current portion of long-term debt and capital leases     3,154       2,886  
  Accounts payable     2,695       2,752  
  Other current liabilities     9,011       8,636  
  Unearned revenue on service contracts     5,516       4,965  
  Unearned revenue on service contracts - related party     83       --  
  Customer advances     1,917       1,858  
  Income tax payable     --       20  
      Total Current Liabilities     22,376       21,117  
  Long-Term Liabilities:                
  Due to related medical practices     230       231  
  Long-term debt and capital leases, less current portion     11,649       12,887  
  Deferred income tax liability     462       462  
  Other liabilities     625       654  
      Total Long-Term Liabilities     12,966       14,234  
      Total Liabilities     35,342       35,351  
                 
                 
                 
FONAR CORPORATION AND SUBSIDIARIES  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(AMOUNTS AND SHARES IN THOUSANDS,EXCEPT PER SHARE AMOUNTS)  
(UNAUDITED)  
   
LIABILITIES AND STOCKHOLDERS' EQUITY (Continued)  
             
STOCKHOLDERS' EQUITY:   September 30, 2013     June 30, 2013  
  Class A non-voting preferred stock $.0001 par value; 453 shares authorized at September 30, 2013 and June 30, 2013, 313 issued and outstanding at September 30, 2013 and June 30, 2013     --       --  
  Preferred stock $.001 par value; 567 shares authorized at September 30, 2013 and June 30, 2013, issued and outstanding - none     --       --  
  Common Stock $.0001 par value; 8,500 shares authorized at September 30, 2013 and June 30, 2013, 5,999 and 5,981 issued at September 30, 2013 and June 30, 2013, respectively; 5,988 and 5,969 outstanding at September 30, 2013 and June 30, 2013, respectively     1       1  
  Class B Common Stock (10 votes per share) $.0001 par value; 227 shares authorized at September 30, 2013 and June 30, 2013; .146 issued and outstanding at September 30, 2013 and June 30, 2013     --       --  
  Class C Common Stock (25 votes per share) $.0001 par value; 567 shares authorized at September 30, 2013 and June 30, 2013, 383 issued and outstanding at September 30, 2013 and June 30, 2013     --       --  
  Paid-in capital in excess of par value     174,628       174,499  
  Accumulated deficit     (157,218 )     (159,655 )
  Notes receivable from employee stockholders     (53 )     (55 )
  Treasury stock, at cost - 12 shares of common stock at September 30, 2013 and June 30, 2013     (675 )     (675 )
  Total Fonar Corporation Stockholder Equity     16,683       14,115  
  Noncontrolling interests     23,573       23,685  
  Total Stockholders' Equity     40,256       37,800  
  Total Liabilities and Stockholders' Equity   $ 75,598     $ 73,151  
                   
                   
   
FONAR CORPORATION AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF INCOME  
(AMOUNTS AND SHARES IN THOUSANDS,EXCEPT PER SHARE AMOUNTS)  
(UNAUDITED)  
    FOR THE THREE MONTHS ENDED SEPTEMBER 30,  
REVENUES   2013     2012  
  Product sales - net   $ 28     $ 1,041  
  Service and repair fees - net     2,512       2,709  
  Service and repair fees - related parties - net     28       27  
  Patient fee revenue, net of contractual allowances and discounts     5,827       --  
  Provision for bad debts for patient fee     (2,040 )     --  
  Management and other fees - net     8,143       3,769  
  Management and other fees - related medical practices - net     2,333       1,965  
  Total Revenues - Net     16,831       9,511  
COSTS AND EXPENSES                
  Costs related to product sales     48       1,056  
  Costs related to service and repair fees     544       865  
  Costs related to service and repair fees - related parties     6       9  
  Costs related to patient fee revenue     1,848       --  
  Costs related to management and other fees     5,075       2,171  
  Costs related to management and other fees - related medical practices     1,219       817  
  Research and development     395       330  
  Selling, general and administrative     3,737       2,212  
  Provision for bad debts     (94 )     175  
  Total Costs and Expenses     12,778       7,635  
  Income From Operations     4,053       1,876  
  Interest Expense     (243 )     (76 )
  Investment Income     61       59  
  Other Expense     (151 )     (9 )
  Income Before Provision for Income Taxes and Noncontrolling Interests     3,720       1,850  
  Provision for Income Taxes     100       72  
  Net Income     3,620       1,778  
  Net Income - Noncontrolling Interests     (1,183 )     (326 )
  Net Income - Controlling Interests   $ 2,437     $ 1,452  
  Net Income Available to Common Stockholders   $ 2,277     $ 1,355  
  Net Income Available to Class A Non-Voting Preferred Stockholders   $ 119     $ 72  
  Net Income Available to Class C Common Stockholders   $ 41     $ 25  
  Basic Net Income Per Common Share Available to Common Stockholders   $ 0.38     $ 0.23  
  Diluted Net Income Per Common Share Available to Common Stockholders   $ 0.37     $ 0.22  
  Basic and Diluted Income Per Share - Common C   $ 0.11     $ 0.06  
  Weighted Average Basic Shares Outstanding - Common Stockholders     5,978       5,901  
  Weighted Average Diluted Shares Outstanding - Common Stockholders     6,106       6,029  
  Weighted Average Basic Shares Outstanding - Class C Common     383       383  
  Weighted Average Diluted Shares Outstanding - Class C Common     383       383  
                 
                 

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