FONAR Corporation Announces Fiscal 2016 Year End Earnings

MELVILLE, NY--(Marketwired - September 19, 2016) - FONAR Corporation (NASDAQ: FONR)

  • 22% Increase of Fiscal 2016 Diluted Net Income per Common Share available to Common Shareholders to $2.38, versus prior year

  • 22% Increase of Fiscal 2016 Net Income to $18.8 million, versus prior year

  • 11 % Increase of Fiscal 2016 Income from Operations to $14.4 million, versus prior year

  • 6% Increase of Fiscal 2016 Net Revenues to $73.4 million, versus prior year

  • Diluted Net Income per Common Share available to Common Shareholders for the Fiscal year ending June 30, 2016 was $2.38, including a $4.6 million impact of recorded income tax benefits

FONAR Corporation (NASDAQ: FONR), The Inventor of MR Scanning™, reported today its fiscal 2016 results for the year ended June 30, 2016. The Company introduced the world's first commercial MRI scanner in 1980, and is known the world over for its advancements in MRI technology. FONAR's primary source of income is derived from the management of 24 MRI centers that feature the FONAR UPRIGHT® Multi-Position™ MRI, aka Stand-Up® MRI.

Financial Highlights

Net income increased 22% to $18.8 million for the fiscal year ended June 30, 2016. This compares to $15.4 million for the fiscal year ended June 30, 2015.

Income from operations increased 11% to $14.4 million for the fiscal year ended June 30, 2016. This compares to $12.9 million for the fiscal year ended June 30, 2015.

Basic net income per common share available to common shareholders increased 22% to $2.43 for the fiscal year ended June 30, 2016 as compared to $2.00 for the fiscal year ended June 30, 2015.

Diluted net income per common share available to common shareholders increased 22% to $2.38 for the fiscal year ended June 30, 2016 as compared to $1.95 for the fiscal year ended June 30, 2015.

Net revenues increased 6% to $73.4 million for the fiscal year ended June 30, 2016. This compares to $69.1 million for the fiscal year ended June 30, 2015.

For the year ended June 30, 2016, the revenues from the management of the diagnostic imaging center segment, consisting of patient and management and other fee revenue, and less the provision for bad debt for patient revenue, increased 9% to $62.6 million as compared to $57.6 million one year earlier.

At June 30, 2016, total assets were $84.9 million, as compared to $76.5 million one year earlier.

At June 30, 2016, total cash and cash equivalents were $8.5 million, as compared to $9.4 million one year earlier.

At June 30, 2016, total liabilities were $24.1 million, as compared to $25.7 million one year earlier.

At June 30, 2016, total current liabilities were $20.6 million, as compared to $18.8 million one year earlier.

Significant Events

On January 6, 2016, the Company reported that its subsidiary Health Management Company of America now manages Stand-Up MRI of Great Neck, located in Great Neck, New York, bringing the total number of HMCA-managed centers to 25, of which 18 are located in New York and seven (7) in Florida.

On February 11, 2016, Timothy R. Damadian, Dr. Damadian's son, became President and Chief Executive Officer of FONAR Corporation. Raymond V. Damadian, M.D., the founder of the Company, remains Chairman of the Board.

On June 30, 2016, Health Management Company of America, of which FONAR is the majority owner, purchased 100% of the equity in Turnkey Services of New York, LLC. Turnkey Services of New York, LLC, by way of several operating leases, had provided HMCA-managed MRI facilities in Bronx, NY, and Brooklyn, NY, with ancillary diagnostic imaging equipment.

Also on June 30, 2016, Health Management Company of America, of which FONAR is the majority owner, purchased 100% of the equity in TK2 Equipment Management, LLC. TK2 Equipment Management, LLC, by way of several operating leases, had provided ancillary diagnostic imaging equipment to an HMCA-managed facility in Queens, NY, and to an HMCA-owned facility in Ft. Lauderdale, FL.

In addition, on June 30, 2016, Health Management Company of America, which had held a 50%-equity in Yonkers Diagnostic Management Services, LLC, purchased the remaining 50%, making the Yonkers entity a wholly-owned subsidiary of Health Management Company of America.

Management Discussion

President and CEO Timothy R. Damadian said, "I am pleased with our six percent (6%) growth rate in net revenue and our eleven percent (11%) increase in income from operations during fiscal 2016. The three acquisitions will add to net income, thereby contributing to the financial stability of the Company. We will continue to seek additional opportunities consistent with our growth strategy."

Chairman of the Board Raymond V. Damadian, M.D. said, "I am grateful for the current state of the Company. Since Fiscal 2011, FONAR's revenues have grown 121 percent and we've been profitable every quarter. As Timothy continues to execute his proven business strategy, I am confident of a favorable future for patients, employees and shareholders."

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 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 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. FONAR's UPRIGHT® Multi-Position™ MRI is the only scanner licensed under these patents.

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                     
                                                                            
                         CONSOLIDATED BALANCE SHEETS                        
                                                                            
                                   ASSETS                                   
                                                                            
                                                           June 30,         
                                                 ---------------------------
                                                      2016          2015    
                                                 ------------- -------------
Current Assets:                                                             
Cash and cash equivalents                        $   8,528,309 $   9,448,798
Accounts receivable - net of allowances for                                 
 doubtful accounts of $284,279 and $362,362 at                              
 June 30, 2016 and 2015, respectively                4,370,155     3,790,981
Medical receivables - net of allowances for                                 
 doubtful accounts of $17,451,782 and                                       
 $15,459,156 at June 30, 2016 and 2015,                                     
 respectively                                       10,126,397     9,082,319
Management and other fees receivable - net of                               
 allowances for doubtful accounts of $13,069,702                            
 and $13,271,651 at June 30, 2016 and 2015,                                 
 respectively                                       15,637,831    14,057,962
Management and other fees receivable - related                              
 party medical practices - net of allowances for                            
 doubtful accounts of $393,047 and $403,047 at                              
 June 30, 2016 and 2015, respectively                4,063,539     3,507,204
Costs and estimated earnings in excess of                                   
 billings on uncompleted contracts                           -       681,660
Inventories                                          2,074,300     2,191,849
Prepaid expenses and other current assets              759,042       860,040
                                                 ------------- -------------
                                                                            
Total Current Assets                                45,559,573    43,620,813
Deferred income tax asset                           13,042,360     8,423,306
Property and Equipment - Net                        14,512,706    12,901,195
Goodwill                                             3,322,158     1,767,098
Other Intangible Assets - Net                        7,719,358     8,950,160
Other Assets                                           731,451       829,505
                                                 ------------- -------------
Total Assets                                     $  84,887,606 $  76,492,077
                                                 ============= =============
                                                                            
                                                                            
                                                                            
                     FONAR CORPORATION AND SUBSIDIARIES                     
                                                                            
                         CONSOLIDATED BALANCE SHEETS                        
                                                                            
                                 LIABILITIES                                
                                                                            
                                                           June 30,         
                                                 ---------------------------
                                                      2016          2015    
                                                 ------------- -------------
Current Liabilities:                                                        
Current portion of long-term debt and capital                               
 leases                                          $   2,447,693 $   2,490,146
Accounts payable                                     1,254,485     1,782,442
Other current liabilities                           10,826,793     8,252,633
Unearned revenue on service contracts                4,678,914     4,187,401
Customer deposits                                    1,198,739     1,937,813
Billings in excess of costs and estimated                                   
 earnings on uncompleted contracts                     206,623       142,217
                                                 ------------- -------------
                                                                            
Total Current Liabilities                           20,613,247    18,792,652
                                                 ------------- -------------
Long-Term Liabilities:                                                      
Deferred income tax liability                          481,779       510,492
Due to related party medical practices                 245,041       236,920
Long-term debt and capital leases, less current                             
 portion                                             2,059,236     5,699,302
Other liabilities                                      711,996       469,198
                                                 ------------- -------------
Total Long-Term Liabilities                          3,498,052     6,915,912
                                                 ------------- -------------
Total Liabilities                                   24,111,299    25,708,564
                                                 ------------- -------------
                                                                            
                                                                            
                                                                            
                     FONAR CORPORATION AND SUBSIDIARIES                     
                                                                            
                        CONSOLIDATED BALANCE SHEETS                         
                                                                            
                            STOCKHOLDERS' EQUITY                            
                                                                            
                                                         June 30,           
                                               ---------------------------- 
                                                    2016           2015     
                                               -------------  ------------- 
Stockholders' Equity:                                                       
Class A non-voting preferred stock $.0001 par                               
 value; 453,000 shares authorized at June 30,                               
 2016 and 2015, 313,438 issued and outstanding                              
 at June 30, 2016 and 2015                     $          31  $          31 
Preferred stock $.001 par value; 567,000                                    
 shares authorized at June 30, 2016 and 2015,                               
 issued and outstanding - none                             -              - 
Common stock $.0001 par value; 8,500,000                                    
 shares authorized at June 30, 2016 and 2015,                               
 6,062,809 and 6,062,483 issued at June 30,                                 
 2016 and 2015, respectively; 6,051,166 and                                 
 6,050,840 outstanding at June 30, 2016 and                                 
 2015, respectively                                      607            607 
Class B convertible common stock (10 votes per                              
 share) $.0001 par value; 227,000 shares                                    
 authorized at June 30, 2016 and 2015, 146                                  
 issued and outstanding at June 30, 2016 and                                
 2015                                                      -              - 
Class C common stock (25 votes per share)                                   
 $.0001 par value; 567,000 shares authorized                                
 at June 30, 2016 and 2015, 382,513 issued and                              
 outstanding at June 30, 2016 and 2015                    38             38 
Paid-in capital in excess of par value           173,702,335    175,447,586 
Accumulated deficit                             (120,624,010)  (136,348,635)
Notes receivable from employee stockholders          (23,879)       (31,495)
Treasury stock, at cost - 11,643 shares of                                  
 common stock at June 30, 2016 and 2015             (675,390)      (675,390)
                                               -------------  ------------- 
Total Fonar Corporation's Stockholders' Equity    52,379,732     38,392,742 
Noncontrolling interests                           8,396,575     12,390,771 
                                               -------------  ------------- 
Total Stockholders' Equity                        60,776,307     50,783,513 
                                               -------------  ------------- 
Total Liabilities and Stockholders' Equity     $  84,887,606  $  76,492,077 
                                               =============  ============= 
                                                                            
                                                                            
                                                                            
                     FONAR CORPORATION AND SUBSIDIARIES                     
                                                                            
                     CONSOLIDATED STATEMENTS OF INCOME                      
                                                                            
                                         For the Years Ended June 30,       
                                   ---------------------------------------- 
                                       2016          2015          2014     
                                   ------------  ------------  ------------ 
Revenues                                                                    
Product sales - net                $  1,276,882  $  1,820,979  $  1,877,932 
Service and repair fees - net         9,396,736     9,549,316    10,082,631 
Service and repair fees - related                                           
 parties - net                          110,000       110,000       110,000 
Patient fee revenue, net of                                                 
 contractual allowances and                                                 
 discounts                           32,985,809    28,153,598    24,307,192 
Provision for bad debts for                                                 
 patient fee                        (14,539,786)  (12,770,249)  (10,333,082)
Management and other fees - net      36,633,230    34,805,627    34,839,969 
Management and other fees -                                                 
 related party medical practices -                                          
 net                                  7,505,339     7,381,725     7,620,835 
                                   ------------  ------------  ------------ 
Total Revenues - Net                 73,368,210    69,050,996    68,505,477 
                                   ------------  ------------  ------------ 
Costs and Expenses                                                          
Costs related to product sales        1,254,328     1,882,230     1,067,120 
Costs related to service and                                                
 repair fees                          2,148,143     2,189,373     2,496,985 
Costs related to service and                                                
 repair fees - related parties           25,147        25,220        27,242 
Costs related to patient fee                                                
 revenue                              9,418,935     7,939,524     7,670,484 
Costs related to management and                                             
 other fees                          21,949,583    20,970,116    20,851,065 
Costs related to management and                                             
 other fees - related party                                                 
 medical practices                    4,074,762     5,397,818     5,134,553 
Research and development              1,631,846     1,812,398     1,760,821 
Selling, general and                                                        
 administrative, inclusive of                                               
 compensatory element of stock                                              
 issuances of $2,006, $53,200 and                                           
 $223,000 for the years ended June                                          
 30, 2016, 2015 and 2014,                                                   
 respectively                        18,711,799    13,459,408    15,388,239 
Provision for bad debts                (201,949)    2,475,032     1,806,299 
                                   ------------  ------------  ------------ 
Total Costs and Expenses             59,012,594    56,151,119    56,202,808 
                                   ------------  ------------  ------------ 
Income from Operations               14,355,616    12,899,877    12,302,669 
Other Income and (Expenses):                                                
Interest expense                       (262,193)     (702,095)     (884,541)
Investment income                       224,263       225,270       238,928 
Other income (expense) - net            190,560       394,810      (608,599)
                                   ------------  ------------  ------------ 
Income before benefit for income                                            
 taxes and noncontrolling                                                   
 interests                           14,508,246    12,817,862    11,048,457 
Benefit for Income Taxes              4,287,271     2,612,521     2,348,312 
                                   ------------  ------------  ------------ 
Net Income                         $ 18,795,517  $ 15,430,383  $ 13,396,769 
Net Income - Noncontrolling                                                 
 Interests                           (3,070,892)   (2,519,732)   (3,000,639)
                                   ------------  ------------  ------------ 
Net Income - Attributable to FONAR $ 15,724,625  $ 12,910,651  $ 10,396,130 
                                   ============  ============  ============ 
                                                                            
                                                                            
                                                                            
                     FONAR CORPORATION AND SUBSIDIARIES                     
                                                                            
                CONSOLIDATED STATEMENTS OF INCOME (Continued)               
                                                                            
                                           For the Years Ended June 30,     
                                      --------------------------------------
                                          2016         2015         2014    
                                      ------------ ------------ ------------
Net Income Available to Common                                              
 Stockholders                         $ 14,702,834 $ 12,071,670 $  9,720,030
                                      ============ ============ ============
Net Income Available to Class A Non-                                        
 Voting Preferred Stockholders        $    761,561 $    625,309 $    503,911
                                      ============ ============ ============
Net Income Available to Class C                                             
 Common Stockholders                  $    260,230 $    213,672 $    172,189
                                      ============ ============ ============
Basic Net Income Per Common Share                                           
 Available to Common Stockholders     $       2.43 $       2.00 $       1.62
                                      ============ ============ ============
Diluted Net Income Per Common Share                                         
 Available to Common Stockholders     $       2.38 $       1.95 $       1.58
                                      ============ ============ ============
Basic and Diluted Income Per Share -                                        
 Common C                             $       0.68 $       0.56 $       0.45
                                      ============ ============ ============
Weighted Average Basic Shares                                               
 Outstanding - Common Stockholders       6,050,893    6,050,632    6,009,822
                                      ============ ============ ============
Weighted Average Diluted Shares                                             
 Outstanding - Common Stockholders       6,178,397    6,178,136    6,137,326
                                      ============ ============ ============
Weighted Average Basic and Diluted                                          
 Shares Outstanding - Class C Common       382,513      382,513      382,513
                                      ============ ============ ============
                                                                            

Contact:
Daniel Culver
Director of Communications
E-mail: Email Contact
www.fonar.com
Melville, New York 11747
Phone: (631) 694-2929

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