EX-99 2 fonar_exhibit-99.htm FONAR PRESS RELEASE

 

 

NEWS   Fonar Corporation
For Immediate Release   The Inventor of MR Scanning™
Contact: Daniel Culver   An ISO 9001 Company
Director of Communications   Melville, New York 11747
E-mail: investor@fonar.com   Phone: (631) 694-2929
www.fonar.com   Fax: (631) 390-1772

 

FONAR ANNOUNCES FINANCIAL RESULTS FOR FISCAL 2023 3RD QUARTER AND NINE-MONTH PERIOD

·Total MRI scan volume at the HMCA-managed sites increased 7% to 49,451 scans for the quarter ended March 31, 2023 versus the corresponding quarter one year earlier. For the nine-month period ended March 31, 2023, 139,339 scans were performed as compared to 140,650 for the corresponding nine-month period one year ago.
·Net Income increased 37% to $4.5 million for the quarter ended March 31, 2023 and decreased 27% to $9.9 million for the nine-month period ended March 31, 2023.
·Diluted Net Income Per Common Share Available to Common Stockholders increased 72% to $0.55 for the third fiscal quarter ended March 31, 2023 and decreased 19% to $1.16 for the nine-month period ended March 31, 2023.
·Total Revenues-Net increased 3% to $25.4 million for the quarter ended March 31, 2023 as compared to the corresponding quarter one year ago. Total Revenues-Net were $72.9 million for the nine-month period ended March 31, 2023, approximately the same as the corresponding nine-month period one year ago.
·Total Cash, Cash Equivalents and Short Term Investments increased 2% to $49.7 million at March 31, 2023 as compared to $48.8 million at June 30, 2022.
·Net Book Value per Common Share increased 6% to $22.79 at March 31, 2023 as compared to $21.59 at March 31, 2022, one year ago.

 

MELVILLE, NEW YORK, May 15, 2023 - FONAR Corporation (NASDAQ-FONR), The Inventor of MR Scanning™, reported today its financial results for the 3rd fiscal 2023 quarter and nine-month period ended March 31, 2023. FONAR’s primary source of income and growth is attributable to its diagnostic imaging management subsidiary, Health Management Company of America (HMCA). In 2009, HMCA managed 9 MRI scanners. Currently, HMCA manages 41 MRI scanners.

 

Operating Results

 

Total Revenues-Net for the third fiscal quarter ended March 31, 2023 increased 3% to $25.4 million as compared to $24.6 million for the third fiscal quarter ended March 31, 2022. Total Revenues-Net for the nine-month period ended March 31, 2023 was $72.9 million as compared to $72.8 million for the nine-month period ended March 31, 2022.

 

Income From Operations for the third fiscal quarter ended March 31, 2023 decreased 26% to $4.2 million as compared to $5.6 million for the third fiscal quarter ended March 31, 2022. Income From Operations for the nine-month period ended March 31, 2023 decreased 31% to $12.3 million as compared to $17.9 million for the nine-month period ended March 31, 2022.

 

   

 

 

Net Income for the third fiscal quarter ended March 31, 2023 decreased 37% to $4.5 million as compared to $3.3 million for the quarter ended March 31, 2022. Net Income for the nine-month period ended March 31, 2023 decreased 27% to $9.9 million as compared to $13.6 million for the nine-month period ended March 31, 2022.

 

Diluted Net Income Per Common Share Available to Common Stockholders increased 72% to $0.55 for the third fiscal quarter ended March 31, 2023 as compared to $0.32 for the third fiscal quarter ended March 31, 2022. Diluted Net Income Per Common Share Available to Common Stockholders for the nine-month period ended March 31, 2023 decreased 19% to $1.16 as compared to $1.43 for the nine-month period ended March 31, 2022.

 

Total Costs and Expenses were $21.3 million for the third fiscal quarter ended March 31, 2023 and were $18.9 million for the third fiscal quarter ended March 31, 2022. Total Costs and Expenses for the nine-month period ended March 31, 2023 were $60.6 million and for the nine-month period ended March 31, 2022 were $54.9 million.

 

Balance Sheet Items

 

Total Cash and Cash Equivalents and Short Term Investments at March 31, 2023 were $49.7 million as compared to the $48.8 million at June 30, 2022.

 

Total Assets at March 31, 2023 and June 30, 2022 were $199.3 million.

 

Total Liabilities at March 31, 2023 were $48.7 million as compared to $53.1 million at June 30, 2022.

 

The ratio of Total Assets / Total Liabilities increased 9% to 4.1 at March 31, 2023 as compared to 3.8 at June 30, 2022.

 

Total Current Assets at March 31, 2023 were $122.0 million as compared to $118.7 million at June 30, 2022.

 

Total Current Liabilities at March 31, 2023 were $13.9 million as compared to $16.7 million at June 30, 2022.

 

Total Stockholders Equity at March 31, 2023 was $150.6 million as compared to $146.2 million at June 30, 2022.

 

The Current Ratio (Current Assets / Current Liabilities) increased 24% to 8.8 as compared to 7.1 at June 30, 2022.

 

Working Capital increased 6% to $108.1 million at March 31, 2023 as compared to $101.9 million at June 30, 2022.

 

Net Book Value per Common Share increased 6% to $22.79 at March 31, 2023 as compared to $21.59 at March 31, 2022, one year ago.

 

Cash Flow Statement Item

 

Net Cash Provided by Operating Activities was $10.1 million for the nine-month periods ended March 31, 2023 and March 31, 2022.

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Management Discussion

 

Timothy Damadian, Chairman, President and CEO of FONAR, said: “Scan volume at HMCA-managed sites for the nine-month period ending on March 31, 2023 was 139,339, which was down 1% in comparison to 140,650 scans in the corresponding period of the previous year. This was largely due to initial and then lingering COVID-related staffing shortages felt throughout the healthcare industry. In our case, the shortage has been especially acute among MRI technologists.”

 

“Thanks to innovative recruitment efforts, I’m pleased to report that we have been successful in filling many of the technologist vacancies, enabling most sites to return to their usual business hours, which is clearly reflected in the third quarter: Scan volume for the 3-month period ending on March 31, 2023 was 49,451, setting a new record number for the number of scans completed in any 3-month period in the history of the Company. The third quarter scan volume was 8.9% higher than that of the previous quarter (45,412) and 7.1% higher than the scan volume of the corresponding period of the previous fiscal year (46,190).”

 

Mr. Damadian continued, “The COVID pandemic was certainly the most destructive business disruption in HMCA’s history. We felt the worst of it in the last quarter of Fiscal 2020 and have been dealing with it ever since. So we are grateful that in spite of the pandemic, the Company has been able to maintain positive trends in both revenue and profit. SG&A and net income continue to be affected by management fee reserves, as well as tax adjustments resulting from a very detailed analysis of FONAR’s tax loss carry-forwards.”

“I would also like to report that pursuant to our September 13, 2022 announcement of a FONAR stock repurchase plan of up to $9 million, we have to date repurchased 79,540 shares at a cost of approximately $1.35 million.”

 

“As of March 31, 2023, HMCA was managing 41 MRI scanners, 24 in New York and 17 in Florida. In the fourth quarter of Fiscal 2023, we expect to be managing a brand new facility in the southern part of the Bronx, New York, which will be an ideal extension of the existing site located in the central part of that borough.”

 

“I am grateful to our management team and all the HMCA employees who have been working diligently to get our COVID-impaired sites back on track, planning, preparing and working towards growth, and keeping the Company profitable.”

 

 

 

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About FONAR

 

FONAR, the Inventor of MR Scanning™, is located in Melville, NY, 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. FONAR’s signature product is the FONAR UPRIGHT® Multi-Position™ 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 detects patient problems that other MRI scanners cannot because they are lie-down and ”weightless-only” scanners. The patient-friendly UPRIGHT® MRI has a near-zero patient claustrophobic rejection rate. 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 watching TV.

 

FONAR has new works-in-progress technology for visualizing and quantifying the cerebral hydraulics of the central nervous system, the flow of cerebrospinal fluid (CSF), which circulates throughout the brain and vertebral column at the rate of 32 quarts per day. This imaging and quantifying of the dynamics of this vital life-sustaining physiology of the body’s neurologic system has been made possible first by FONAR’s introduction of the MRI and now by this latest works-in-progress method for quantifying CSF in all the normal positions of the body, particularly in its upright flow against gravity. Patients with whiplash or other neck injuries are among those who will benefit from this new understanding.

 

FONAR's primary source of income and growth is attributable to its wholly-owned diagnostic imaging management subsidiary, Health Management Company of America (HMCA) www.hmca.com.

 

FONAR’s substantial list of patents includes recent patents for its technology enabling full weight-bearing MRI imaging of all the gravity sensitive regions of the human anatomy, especially the brain, extremities and spine. It includes its newest technology for measuring the Upright cerebral hydraulics of the central nervous system. FONAR’s UPRIGHT® Multi-Position™ MRI is the only scanner licensed under these patents.

 

UPRIGHT®, STAND-UP® and Open Sky MRI® are registered trademarks and Multi-Position™, Upright Radiology™, The Inventor of MR Scanning™, The Proof is in the Picture™, True Flow™, pMRI™, Full Range of Motion™, Spondylography™, Dynamic™, Spondylometry™, FONAR 3600™, 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.

 

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FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

 

ASSETS

 

   March 31,
2023		  June 30,
2022
Current Assets:          
 Cash and cash equivalents  $49,640   $48,723 
 Short term investments   32    32 
 Accounts receivable – net   3,720    4,336 
 Accounts receivable - related party   30    —   
 Medical receivable – net   20,460    20,109 
 Management and other fees receivable – net   35,201    33,419 
Management and other fees receivable – related medical practices – net   9,088    8,603 
 Inventories   2,661    2,360 
 Prepaid expenses and other current assets   1,166    1,104 
  Total Current Assets   121,998    118,686 
           
Accounts receivable – long term   1,003    1,872 
 Deferred income tax asset - net   10,911    12,843 
 Property and equipment – net   22,775    22,282 
 Right-of-use Asset – operating lease   33,581    34,232 
 Right-of-use Asset – financing lease   779    928 
 Goodwill   4,269    4,269 
 Other intangible assets – net   3,494    3,704 
 Other assets   526    526 
  Total Assets  $199,336   $199,342 

 

  

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FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

   March 31,
2023		  June 30,
2022
Current Liabilities:          
Current portion of long-term debt  $43   $40 
Accounts payable   1,719    1,552 
Other current liabilities   3,496    6,417 
 Unearned revenue on service contracts   3,615    4,289 
 Unearned revenue on service contracts – related party   28    —   
 Operating lease liability - current portion   3,981    3,880 
 Financing lease liability - current portion   217    210 
Customer deposits   826    361 
Total Current Liabilities   13,925    16,749 
           
Long-Term Liabilities:          
 Unearned revenue on service contracts   1,015    1,857 
 Deferred income tax liability   216    216 
 Due to related medical practices   93    93 
 Operating lease liability – net of current portion   32,630    33,091 
 Financing lease liability – net of current portion   657    838 
 Long-term debt less current portion   126    155 
 Other liabilities   57    107 
           
Total Long-Term Liabilities   34,794    36,357 
 Total Liabilities   48,719    53,106 

 

 Page 6 

 

 

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:  March 31, 2023  June 30,
2022
Class A non-voting preferred stock $.0001 par value; 453 shares authorized at March 31, 2023 and June 30, 2022, 313 issued and outstanding at March 31, 2023 and June 30, 2022  $—     $—   
Preferred stock $.001 par value; 567 shares authorized at March 31, 2023 and June 30, 2022, issued and outstanding – none   —      —   
Common Stock $.0001 par value; 8,500 shares authorized at March 31, 2023 and June 30, 2022, 6,607 and 6,566 issued at March 31, 2023 and June 30, 2022, respectively 6,538 and 6,554 outstanding at March 31, 2023 and June 30, 2022, respectively   1    1 
Class B Common Stock (10 votes per share) $.0001 par value; 227 shares authorized at March 31, 2023 and June 30, 2022,146 issued and outstanding at March 31, 2023 and June 30, 2022   —      —   
 Class C Common Stock (25 votes per share) $.0001 par value; 567 shares authorized at March 31, 2023 and June 30, 2022, 383 issued and outstanding at March 31, 2023 and June 30, 2022   —      —   
 Paid-in capital in excess of par value   184,130    184,531 
 Accumulated deficit   (25,428)   (33,567)
Treasury stock, at cost - 69 shares of common stock at March 31, 2023 and 12 shares of common stock at June 30, 2022   (1,522)   (675)
 Total Fonar Corporation’s Stockholders’ Equity   157,181    150,290 
 Noncontrolling interests   (6,564)   (4,054)
 Total Stockholders' Equity   150,617    146,236 
 Total Liabilities and Stockholders' Equity  $199,336   $199,342 

 

   

 Page 7 

 

 

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

  

FOR THE THREE MONTHS

ENDED MARCH 31,

REVENUES  2023  2022
Patient fee revenue – net of contractual allowances and discounts  $8,188   $7,641 
Product sales – net   25    135 
Service and repair fees – net   1,831    1,876 
Service and repair fees - related parties – net   28    28 
Management and other fees – net   12,375    11,904 
Management and other fees - related medical practices – net   2,975    2,987 
Total Revenues – Net   25,422    24,571 
COSTS AND EXPENSES          
Costs related to patient fee revenue   4,056    3,306 
Costs related to product sales   196    53 
Costs related to service and repair fees   801    747 
Costs related to service and repair fees - related parties   12    11 
Costs related to management and other fees   7,157    6,696 
Costs related to management and other fees – related medical practices   1,455    1,698 
Research and development   435    354 
Selling, general and administrative   7,143    6,068 
Total Costs and Expenses   21,255    18,933 
Income From Operations   4,167    5,638 
Other Expense   (6)   —   
Interest (Expense) Income   (15)   31 
Investment Income   356    58 
Income Before Provision for Income Taxes and Noncontrolling Interests   4,502    5,727 
Provision for Income Taxes   (17)   (2,465)
Net Income   4,485    3,262 
Net Income - Noncontrolling Interests   (625)   (971)
Net Income – Attributable to FONAR  $3,860   $2,291 
Net Income Available to Common Stockholders  $3,627   $2,153 
Net Income Available to Class A Non-Voting Preferred Stockholders  $174   $103 
Net Income Available to Class C Common Stockholders  $59   $35 
Basic Net Income Per Common Share Available to Common Stockholders  $0.56   $0.33 
Diluted Net Income Per Common Share Available to Common Stockholders  $0.55   $0.32 
Basic and Diluted Income Per Share – Class C Common  $0.16   $0.09 
Weighted Average Basic Shares Outstanding – Common Stockholders   6,481    6,554 
Weighted Average Diluted Shares Outstanding - Common Stockholders   6,609    6,682 
Weighted Average Basic and Diluted Shares Outstanding – Class C Common   383    383 
           

 

 Page 8 

 

 

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

  

FOR THE NINE MONTHS

ENDED MARCH 31,

REVENUES  2023  2022
Patient fee revenue – net of contractual allowances and discounts  $21,393   $21,935 
Product sales – net   225    481 
Service and repair fees – net   5,489    5,720 
Service and repair fees - related parties – net   83    83 
Management and other fees – net   36,717    35,985 
Management and other fees - related medical practices – net   8,962    8,576 
Total Revenues – Net   72,869    72,780 
COSTS AND EXPENSES          
Costs related to patient fee revenue   11,879    9,785 
Costs related to product sales   580    352 
Costs related to service and repair fees   2,241    2,190 
Costs related to service and repair fees - related parties   34    32 
Costs related to management and other fees   20,281    20,497 
Costs related to management and other fees – related medical practices   4,345    5,024 
Research and development   1,126    1,109 
Selling, general and administrative   20,074    15,928 
Total Costs and Expenses   60,560    54,917 
Income From Operations   12,309    17,863 
Other (Expense) Income   (203)   858 
Interest Expense   (41)   (9)
Investment Income   770    180 
Income Before Provision for Income Taxes and Noncontrolling Interests   12,835    18,892 
Provision for Income Taxes   (2,889)   (5,311)
Net Income   9,946    13,581 
Net Income - Noncontrolling Interests   (1,807)   (3,383)
Net Income – Attributable to FONAR  $8,139   $10,198 
Net Income Available to Common Stockholders  $7,647   $9,583 
Net Income Available to Class A Non-Voting Preferred Stockholders  $367   $458 
Net Income Available to Class C Common Stockholders  $125   $157 
Basic Net Income Per Common Share Available to Common Stockholders  $1.18   $1.46 
Diluted Net Income Per Common Share Available to Common Stockholders  $1.16   $1.43 
Basic and Diluted Income Per Share – Class C Common  $0.33   $0.41 
Weighted Average Basic Shares Outstanding – Common Stockholders   6,487    6,554 
Weighted Average Diluted Shares Outstanding - Common Stockholders   6,615    6,682 
Weighted Average Basic and Diluted  Shares Outstanding – Class C Common   383    383 

 

 Page 9 

 

 

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

   FOR THE NINE MONTHS
ENDED MARCH 31,
   2023  2022
Cash Flows from Operating Activities:          
 Net income  $9,946   $13,581 
 Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization   3,357    3,543 
Amortization on right-of-use assets   3,306    2,953 
Provision for bad debts   4,441    2,150 
Deferred income tax – net   1,931    3,484 
Gain on forgiveness of PPP loan   —      (701)
(Increase) decrease in operating assets, net:          
Accounts, medical and management fee receivable(s)   (5,604)   (4,950)
Notes receivable   11    32 
Contract assets   —      (15)
Inventories   (301)   (705)
Prepaid expenses and other current assets   (73)   112 
Other assets   —      132 
Increase (decrease) in operating liabilities, net:          
Accounts payable   168    (855)
Other current liabilities   (4,409)   (5,480)
Operating lease liabilities   (2,865)   (2,579)
Financing lease liabilities   (175)   (151)
Customer deposits   465    (370)
Contract liabilities   —      (15)
Other liabilities   (49)   (49)
Net cash provided by operating activities   10,149    10,117 
 Cash Flows from Investing Activities:          
Purchases of property and equipment   (3,553)   (3,807)
 Purchase of noncontrolling interests   —      (546)
Cost of patents   (87)   (60)
Net cash used in investing activities   (3,640)   (4,413)
 Cash Flows from Financing Activities:          
 Repayment of borrowings and capital lease obligations   (26)   (23)
 Purchase of treasury stock   (1,249)   —   
 Distributions to noncontrolling interests   (4,317)   (4,131)
Net cash used in financing activities   (5,592)   (4,154)
 Net Increase in Cash and Cash Equivalents   917    1,550 
Cash and Cash Equivalents - Beginning of Period   48,723    44,460 
Cash and Cash Equivalents - End of Period  $49,640   $46,010 

 

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