SOURCE: FONAR Corporation

Fonar Corporation

February 14, 2014 09:30 ET

FONAR Announces Fiscal 2014 Second Quarter Earnings Results

MELVILLE, NY--(Marketwired - Feb 14, 2014) -   FONAR Corporation (NASDAQ: FONR),

  • Second Fiscal 2014 Quarter Net Revenues increase 83% over Second Fiscal Quarter 2013 to $17.6 million.
  • Second Fiscal 2014 Quarter Net Income increases 88% over Second Fiscal Quarter 2013 to $3.0 million
  • Diluted EPS Available to Common Stockholders for the Second Fiscal 2014 Quarter was $0.33, an increase of 57% over Second Fiscal Quarter 2013
  • FONAR records Fifthteenth straight quarter of positive Net Income and Income from Operations of which most recent ten were greater than $1.5 Million

FONAR Corporation (NASDAQ: FONR), The Inventor of MR Scanning™, reported its second quarter, fiscal 2014 results for the quarter ended December 31, 2013. The Company's two industry segments include the management of 23 Stand-Up® MRI (UPRIGHT® MRI) centers as well as its traditional MRI development, manufacturing and service business. Its stellar product line includes the FONAR UPRIGHT® Multi-Position™ MRI (aka STAND-UP® MRI which enables full weight-bearing MRI imaging and is particularly powerful in 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.

Statement of Operations Items

Income from operations for the quarter ended December 31, 2013, increased 91% to $3.3 million, as compared to $1.7 million for the same period one year earlier. For the six month period ended December 31, 2013, income from operations was $7.4 million as compared to $3.6 million during the corresponding period one year earlier, an increase of 104%.

Net Income for the quarter ended December 31, 2013, increased 88% to $3.0 million, as compared to $1.6 million for the same period one year earlier. For the six month period ended December 31, 2013, net income was $6.7 million as compared to $3.4 million during the corresponding period one year earlier, an increase of 96%.

Diluted Net Income per Common Share available to Common shareholders for the quarter ended December 31, 2013 increased 57% to $0.33, as compared to $0.21 for the same period one year earlier. 

For the six month period ended December 31, 2013, Diluted Net Income per Common Share available to Common shareholders increased 63% to $0.70, as compared to $0.43 for the same period one year earlier. 

Total revenues for the quarter ended December 31, 2013, increased 83% to $17.6 million as compared to $9.6 million during the same period one year earlier. For the six month period ended December 31, 2013, total revenues increased 80% to $34.4 million as compared to $19.1 million, one year earlier.

Revenue from the patient fee segment and management and other fees segment, for the quarter ended December 31, 2013, increased 149% to $14.3 million, as compared to $5.7 million during the same period one year earlier. At six months this also increased 149% to $28.5 million as compared to the same period one year earlier at $11.5 million. This is the revenue that comes from patient fees and the management of the 23 FONAR Stand-Up™ MRI diagnostic imaging centers, by FONAR's HMCA subsidiary.

Balance Sheet Items

At December 31, 2013, total current assets were $43.5 million, total assets were $77.1 million, total current liabilities were $23.2 million, and total long-term liabilities were $11.8 million.

At December 31, 2013, total cash and cash equivalents were $9.4 million.

At December 31, 2013, total stockholder's equity was $42.1 million.

See the accompanying tables for more details.

Recent Significant Events

In December, 2013, the Company settled a two-year old patent infringement case brought against it. The infringement action alleged that FONAR's Upright® MRI scanners infringe plaintiff's patent which relates to the moving of a patient into the scanner. The Company took the position that the plaintiff's claims were without merit and that their patent was invalid. The parties have settled the case and while FONAR will pay $150,000, there are certain licenses and covenants not to sue again.

Management Discussion

The acquisition of Health Diagnostic Management (HDM) has been a significant source of profitability for the Company. The diluted earnings per share available for the common stockholder for the six months which ended on December 31, 2013 increased 63% to $0.70 when compared to one year earlier. The Company plans to continue to grow at a reasonable pace while maintaining its highly profitable profile."

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
 
ASSETS   December 31,
2013
  June 30,
2013
Cash and cash equivalents   $ 9,425   $ 7,871
Accounts receivable - net     5,359     4,444
Accounts receivable - related party     60     -
Medical receivable - net     8,884     8,126
Management and other fees receivable - net     12,347     11,466
Management and other fees receivable - related medical practices - net     2,985    
 2,382
Inventories     2,562     2,077
Prepaid expenses and other current assets     1,901     1,500
Total Current Assets     43,523     37,866
             
Property and equipment - net     16,538     17,524
Goodwill     1,767     1,767
Other intangible assets - net     11,271     11,904
Deferred income tax asset     2,936     2,936
Other assets     1,050     1,154
Total Assets   $ 77,085   $ 73,151
             
LIABILITIES AND STOCKHOLDERS' EQUITY
 
LIABILITIES   December 31,
2013
  June 30,
2013
Current Liabilities:            
  Current portion of long-term debt and capital leases   $ 3,048   $ 2,886
  Accounts payable     2,941     2,752
  Other current liabilities     9,401     8,636
  Unearned revenue on service contracts     5,725     4,965
  Unearned revenue on service contracts - related party     55     -
  Customer advances     2,041     1,858
  Income tax payable     -     20
    Total Current Liabilities     23,211     21,117
             
Long-Term Liabilities:            
  Due to related medical practices     229     231
  Long-term debt and capital leases, less current portion     10,530     12,887
  Deferred income tax liability     462     462
  Other liabilities     596     654
    Total Long-Term Liabilities     11,817     14,234
    Total Liabilities     35,028     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:   December 31, 2013     June 30, 2013  
Class A non-voting preferred stock $.0001 par value; 453 shares authorized at December 31, 2013 and June 30, 2013, 313 issued and outstanding at December 31, 2013 and June 30, 2013     -       -  
Preferred stock $.001 par value; 567 shares authorized at December 31, 2013 and June 30, 2013, issued and outstanding - none     -       -  
Common Stock $.0001 par value; 8,500 shares authorized at December 31, 2013 and June 30, 2013, 6,022 and 5,981 issued at December 31, 2013 and June 30, 2013, respectively; 6,010 and 5,969 outstanding at December 31, 2013 and June 30, 2013, respectively     1       1  
Class B Common Stock (10 votes per share) $ .0001 par value; 227 shares authorized at December 31, 2013 and June 30, 2013, .146 issued and outstanding at December 31, 2013 and June 30, 2013     -       -  
Class C Common Stock (25 votes per share) $.0001 par value; 567 shares authorized at December 31, 2013 and June 30, 2013, 383 issued and outstanding at December 31, 2013 and June 30, 2013     -       -  
Paid-in capital in excess of par value     174,770       174,499  
Accumulated deficit     (155,075 )     (159,655 )
Notes receivable from employee stockholders     (42 )     (55 )
Treasury stock, at cost - 12 shares of common stock at December 31, 2013 and June 30, 2013    
(675
)    
(675
)
Total Fonar Corporation Stockholder Equity     18,979       14,115  
Non controlling interests     23,078       23,685  
                 
Total Stockholders' Equity     42,057       37,800  
                 
Total Liabilities and Stockholders' Equity   $ 77,085     $ 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 DECEMBER 31,  
REVENUES   2013     2012  
  Product sales - net   $ 755     $ 1,080  
  Service and repair fees - net     2,548       2,765  
  Service and repair fees - related parties - net     28       28  
  Patient fee revenue, net of contractual allowances and discounts     5,894       -  
  Provision for bad debts for patient fee     (2,223 )     -  
  Management and other fees - net     8,274       3,775  
  Management and other fees - related medical practices - net     2,333       1,965  
    Total Revenues - Net     17,609       9,613  
                     
COSTS AND EXPENSES                
  Costs related to product sales     631       904  
  Costs related to service and repair fees     587       894  
  Costs related to service and repair fees - related parties     6       9  
  Costs related to patient fee revenue     2,028       -  
  Costs related to management and other fees     5,190       2,235  
  Costs related to management and other fees - related medical practices     1,270       852  
  Research and development     374       320  
  Selling, general and administrative     4,352       2,352  
  Provision for bad debts     (124 )     325  
    Total Costs and Expenses     14,314       7,891  
Income From Operations     3,295       1,722  
Interest Expense     (237 )     (103 )
Investment Income     60       60  
Other Expense     -       (4 )
Income Before Provision for Income Taxes and Non Controlling Interests     3,118       1,675  
Provision for Income Taxes     70       55  
Net Income     3,048       1,620  
Net Income - Non Controlling Interests     (905 )     (271 )
Net Income - Controlling Interests   $ 2,143     $ 1,349  
Net Income Available to Common Stockholders   $ 2,003     $ 1,259  
Net Income Available to Class A Non-Voting Preferred Stockholders   $ 104     $ 67  
Net Income Available to Class C Common Stockholders   $ 36     $ 23  
Basic Net Income Per Common Share Available to Common Stockholders   $ 0.33     $ 0.21  
Diluted Net Income Per Common Share Available to Common Stockholders   $ 0.33     $ 0.21  
Basic and Diluted Income Per Share-Common C   $ 0.09     $ 0.06  
Weighted Average Basis Shares Outstanding-Common Stockholders     6,006       5,926  
Weighted Average Diluted Shares Outstanding     6,133       6,054  
Weighted Average Basic Shares Outstanding - Class C     383       383  
Weighted Average Diluted Shares Outstanding - Class C Common     383       383  
                 
                 
                 
FONAR CORPORATION AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF INCOME  
(AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)  
(UNAUDITED)  
   
    FOR THE SIX MONTHS ENDED DECEMBER 31,  
    2013     2012  
REVENUES                
  Product sales - net   $ 783     $ 2,121  
  Service and repair fees - net     5,060       5,474  
  Service and repair fees - related parties - net     55       55  
  Patient fee revenue, net of contractual allowances and discounts     11,721       -  
  Provision for bad debts for patient fee     (4,262 )     -  
  Management and other fees - net     16,417       7,544  
  Management and other fees - related medical practices - net     4,666       3,930  
    Total Revenues - Net     34,440       19,124  
                     
COSTS AND EXPENSES                
  Costs related to product sales     678       1,959  
  Costs related to service and repair fees     1,131       1,760  
  Costs related to service and repair fees - related parties     12       18  
  Costs related to patient fee revenue     3,877       -  
  Costs related to management and other fees     10,264       4,406  
  Costs related to management and other fees - related medical practices     2,490       1,669  
  Research and development     769       650  
  Selling, general and administrative     8,089       4,564  
  Provision for bad debts     (218 )     500  
    Total Costs and Expenses     27,092       15,526  
Income From Operations     7,348       3,598  
Interest Expense     (480 )     (179 )
Investment Income     121       120  
Other Expense     (151 )     (13 )
Income Before Provision for Income Taxes and Non Controlling Interests     6,838       3,526  
Provision for Income Taxes     170       127  
Net Income     6,668       3,399  
Net Income - Non Controlling Interests     (2,088 )     (598 )
Net Income - Controlling Interests   $ 4,580     $ 2,801  
Net Income Available to Common Stockholders   $ 4,280     $ 2,616  
Net Income Available to Class A Non-voting Preferred Stockholders   $ 223     $ 138  
Net Income Available to Class C Common Stockholders   $ 77     $ 47  
Basic Net Income Per Common Share Available to Common Stockholders   $ 0.71     $ 0.44  
Diluted Net Income Per Common Share Available to Common Stockholders   $ 0.70     $ 0.43  
Basic and Diluted Income Per Share-Common C   $ 0.20     $ 0.12  
Weighted Average Basic Shares Outstanding     5,992       5,914  
Weighted Average Diluted Shares Outstanding     6,120       6,041  
Weighted Average Basic Shares Outstanding - Class C Common     383       383  
Weighted Average Diluted Shares Outstanding - Class C Common     383       383  

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