FONAR Announces Fiscal 2016 2nd Quarter and Six Months Financial Results

MELVILLE, NY--(Marketwired - Feb 9, 2016) - FONAR Corporation (NASDAQ: FONR)

• Diluted Net Income Per Common Share Available to Common Stockholders increased 33% to $0.53 per share for Fiscal 2016 2nd Quarter versus the same period a year earlier.
  
  
• Cash and cash equivalents increased 37% to $13.0 million at December 31, 2015, from $9.5 million at June 30, 2015.
  
  
• Net Revenues for Fiscal 2016 2nd Quarter increased 8% to $18.4 million versus the same period a year earlier.
  
  
• Net Income for Fiscal 2016 2nd Quarter increased 19% to $4.1 million versus the same period a year earlier.
  
  
• Net Income From Operations for Fiscal 2016 2nd Quarter increased 17% to $4.2 million versus the same period a year earlier.
  
  
• Net Income Available to Common Stockholders for Fiscal 2016 2nd Quarter increased 31% to $3.3 million versus the same period a year earlier.
  
  

FONAR Corporation (NASDAQ: FONR), The Inventor of MR Scanning™, reported its fiscal 2016 second quarter results for the quarter and six month period ended December 31, 2015. FONAR is the first Company in the MRI industry to manufacture an MRI (Magnetic Resonance Imaging) scanner. FONAR's substantial list of patents include recent patents for its technology enabling full weight-bearing MRI imaging in all the gravity sensitive regions of the human anatomy, especially the brain, extremities, spine and cerebrospinal fluid (CSF) flow.

The Company's two industry segments are the management of Stand-Up® MRI (UPRIGHT® Multi-Position™ MRI) centers, and the development, manufacturing and servicing of the UPRIGHT® MRI. Its premier MRI product, the FONAR UPRIGHT® Multi-Position™ MRI scanner, is the world's only MRI scanner licensed under FONAR's multiple UPRIGHT® Multi-Position™ MRI patents to scan all the patient's body parts in their normal fully weight-bearing UPRIGHT® positions.

Financial Highlights

Net Revenues increased 8% for the fiscal 2016 second quarter ended December 31, 2015 to $18.4 million versus $17.1 million for the corresponding quarter one year earlier.

Net Revenues increased 3% to $36.0 million for the fiscal 2016 six month period ended December 31, 2015, from $35.1 million for the corresponding six month period one year earlier.

Net Income increased 19% to $4.1 million for the fiscal 2016 second quarter ended December 31, 2015 versus $3.5 million for the corresponding quarter one year earlier.

Net Income increased 13% to $7.6 million for the fiscal 2016 six month period ended December 31, 2015 versus $6.7 million for the corresponding six month period one year earlier.

Income from Operations for the fiscal 2016 second quarter ended December 31, 2015 increased 17% to $4.2 million, from $3.6 million for the corresponding quarter one year earlier.

Income from Operations increased 11% to $7.8 million for the fiscal 2016 six month period ended December 31, 2015, versus $7.0 million for the corresponding six month period one year earlier.

Diluted net income per common share available to common shareholders increased 33% to $0.53 for the fiscal 2016 second quarter ended December 31, 2015 versus $0.40 for the corresponding quarter one year earlier.

Diluted net income per common share available to common shareholders increased 22% to $0.96 for the fiscal 2016 six month period ended December 31, 2015 versus $0.79 for the corresponding six month period one year earlier.

Total assets at December 31, 2015 were $80.4 million, as compared to $76.4 million at June 30, 2015. Total current assets at December 31, 2015 were $48.7 million, as compared to $43.6 million at June 30, 2015.

Total liabilities at December 31, 2015 were $24.8 million, as compared to $25.7 million at June 30, 2015. Total current liabilities at December 31, 2015 were $19.0 million, as compared to $18.8 million at June 30, 2015.

Stockholder's equity at December 31, 2015 was $80.4 million, as compared to $76.5 million at June 30, 2015.

Cash and cash equivalents increased 37% to $13.0 million at December 31, 2015, from $9.5 million at June 30, 2015.

Management Discussion

Raymond V. Damadian, president and chairman of FONAR Corporation said, "While we are still concerned about the environment created under the Affordable Care Act, we have continued to grow our business consistently. This is because of the adherence to a business strategy that we have mastered which has made the difference."

Dr. Damadian continued: "Our business plan is to grow consistently and to always provide our customers with the most optimal service. Our FONAR UPRIGHT® Multi-Position™ MRI scanner is not only the most comfortable MRI for our customers but the results from the scanner are of the highest professional quality. In this current medical era, it doesn't get any better than this for our patients. The patient sits, watches TV comfortably and obtains a weight-bearing MRI of his problem. Physicians appreciate that it is going to be a scan that can 'SEE IT ALL' and allow the doctor to optimize the TREATMENT OUTCOMES FOR THEIR PATIENT."

Significant Events

As reported on January 6, 2016, the Company reported that its subsidiary Health Management Company of America, LLC (HMCA) had begun managing Stand-Up MRI of Great Neck, located at 600 Northern Blvd., Great Neck, New York, bringing the total number of HMCA-managed centers to 25: 18 in New York and 7 in Florida. Twenty four (24) of the centers are equipped with the FONAR UPRIGHT® Multi-Position™ MRI. Last year, the 24 HMCA-managed sites provided $57.6 million (83%) of FONAR's $69.1 million in revenue.

On February 4, 2016, the television network ESPN ran a 30 For 30 series documentary on the 1985 NFL Chicago Bears that featured Dr. Scott Rosa and Jim McMahon. During the approximately five minute segment, Jim McMahon said he was thankful to Dr. Rosa's treatment. Dr. Rosa provided his patented IGAT™ (Image Guided Atlas Treatment™) that utilized FONAR's UPRIGHT® MRI examination of Jim McMahon to determine the percussion direction and percussion angle of his IGAT™ procedure. FONAR provided the UPRIGHT® Multi-Position™ MRI that for the first time successfully detected and diagnosed Jim McMahon's health issues as originating in Jim's neck (not his brain) from malalignments of the craniocervical junction vertebra (C1 & C2) from prior football traumas. These malalignments were obstructing cerebrospinal fluid (CSF) flow into his brain and generating the increased intracranial pressure (ICP) that was adversely affecting his health. This enabled Jim's successful cervical realignment by Dr. Rosa's IGAT™ (traumaimagingfoundation.com/.com).

Dr. Damadian said: "We are proud that our FONAR UPRIGHT® MRI has made such a critical difference to NFL great Jim McMahon. We recommend our shareholders watch the 30 For 30 series documentary on the 1985 NFL Chicago Bears when it runs again on Friday, February 12, 2016 at 9 PM Eastern Time on ESPN2." Check your local listings.

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 stellar product is the FONAR 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 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 due to this latest works-in-progress for quantifying CSF in all the normal positions of the body, particularly in its upright flow against gravity. The type of patient that will benefit from this technology includes those with various types of dementia such as former NFL quarterback Jim McMahon.

FONAR's substantial list of patents includes recent patents for its technology enabling full weight-bearing MRI imaging on 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.

CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts and shares in thousands, except per share amounts)
(UNAUDITED)
ASSETS
		December 31, 2015			June 30, 2015 *
Cash and cash equivalents		$	12,954		$	9,449
Accounts receivable - net			4,557			3,791
Accounts receivable - related party			60			-
Medical receivable - net			9,567			9,082
Management and other fees receivable - net			14,656			14,058
Management and other fees receivable - related medical practices - net			3,644			3,507
Costs and estimated earnings in excess of billing on uncompleted contracts			279			682
Inventories			2,259			2,192
Prepaid expenses and other current assets			767			860
Total Current Assets			48,743			43,621
Deferred income tax asset			8,423			8,423
Property and equipment - net			12,277			12,901
Goodwill			1,767			1,767
Other intangible assets - net			8,348			8,950
Other assets			864			830
Total Assets		$	80,422		$	76,492

*Condensed from audited financial statements.

CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts and shares in thousands, except per share amounts)
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
				December 31, 2015			June 30, 2015 *
Current Liabilities:
	Current portion of long-term debt and capital leases			$	2,467		$	2,490
	Accounts payable				1,291			1,783
	Other current liabilities				8,733			8,253
	Unearned revenue on service contracts				4,700			4,187
	Unearned revenue on service contracts - related party				55			-
	Customer advances				1,501			1,938
	Billings in excess of costs and estimated earnings on uncompleted contracts				255			142
		Total Current Liabilities			19,002			18,793
Long-Term Liabilities:
	Deferred income tax liability				510			510
	Due to related medical practices				247			237
	Long-term debt and capital leases, less current portion				4,475			5,699
	Other liabilities				544			469
		Total Long-Term Liabilities			5,776			6,915
		Total Liabilities			24,778			25,708

*Condensed from audited financial statements.

CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts and shares in thousands, except per share amounts)
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY (Continued)
		December 31, 2015				June 30, 2015 *
STOCKHOLDERS' EQUITY:
Class A non-voting preferred stock $.0001 par value; 453 shares authorized at December 31, 2015 and June 30, 2015, 313 issued and outstanding at December 31, 2015 and June 30, 2015		$	-			$	-
Preferred stock $.001 par value; 567 shares authorized at December 31, 2015 and June 30, 2015, issued and outstanding - none			-				-
Common Stock $.0001 par value; 8,500 shares authorized at December 31, 2015 and June 30, 2015, 6,062 issued at December 31, 2015 and June 30, 2015; 6,051 outstanding at December 31, 2015 and June 30, 2015			1				1
Class B Common Stock (10 votes per share) $ .0001 par value; 227 shares authorized at December 31, 2015 and June 30, 2015, .146 issued and outstanding at December 31, 2015 and June 30, 2015			-				-
Class C Common Stock (25 votes per share) $.0001 par value; 567 shares authorized at December 31, 2015 and June 30, 2015, 383 issued and outstanding at December 31, 2015 and June 30, 2015			-				-
Paid-in capital in excess of par value			175,448				175,448
Accumulated deficit			(129,994	)			(136,349	)
Notes receivable from employee stockholders			(28	)			(32	)
Treasury stock, at cost - 12 shares of common stock at December 31, 2015 and June 30, 2015			(675	)			(675	)
Total Fonar Corporation Stockholder Equity			44,752				38,393
Non controlling interests			10,892				12,391
Total Stockholders' Equity			55,644				50,784
Total Liabilities and Stockholders' Equity		$	80,422			$	76,492

*Condensed from audited financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts and shares in thousands, except per share amounts)
(UNAUDITED)
				FOR THE THREE MONTHS ENDED DECEMBER 31,
REVENUES				2015				2014
	Product sales - net			$	742			$	375
	Service and repair fees - net				2,280				2,499
	Service and repair fees - related parties - net				28				28
	Patient fee revenue, net of contractual allowances and discounts				7,786				6,629
	Provision for bad debts for patient fee				(3,270	)			(2,897	)
	Management and other fees - net				8,958				8,613
	Management and other fees - related medical practices - net				1,845				1,845
		Total Revenues - Net			18,369				17,092
COSTS AND EXPENSES
	Costs related to product sales				564				237
	Costs related to service and repair fees				447				474
	Costs related to service and repair fees - related parties				5				5
	Costs related to patient fee revenue				2,238				1,902
	Costs related to management and other fees				5,597				5,180
	Costs related to management and other fees - related medical practices				1,012				1,240
	Research and development				412				359
	Selling, general and administrative				4,117				3,824
	Provision for bad debts				(248	)			273
		Total Costs and Expenses			14,144				13,494
Income From Operations					4,225				3,598
Interest Expense					(139	)			(172	)
Investment Income					58				60
Other Expense					-				(2	)
Income Before Provision for Income Taxes and Non Controlling Interests					4,144				3,484
Provision for Income Taxes					40				29
Net Income					4,104				3,455
Net Income - Non Controlling Interests					(611	)			(797	)
Net Income - Controlling Interests				$	3,493			$	2,658
Net Income Available to Common Stockholders				$	3,266			$	2,485
Net Income Available to Class A Non-Voting Preferred Stockholders				$	169			$	129
Net Income Available to Class C Common Stockholders				$	58			$	44
Basic Net Income Per Common Share Available to Common Stockholders				$	0.54			$	0.41
Diluted Net Income Per Common Share Available to Common Stockholders				$	0.53			$	0.40
Basic and Diluted Income Per Share-Common C				$	0.15			$	0.12
Weighted Average Basis Shares Outstanding-Common Stockholders					6,051				6,051
Weighted Average Diluted Shares Outstanding- Common Stockholders					6,179				6,179
Weighted Average Basic Shares Outstanding - Class C Common					383				383
Weighted Average Diluted Shares Outstanding - Class C Common					383				383

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts and shares in thousands, except per share amounts)
(UNAUDITED)
				FOR THE SIX MONTHS ENDED DECEMBER 31,
				2015				2014
REVENUES
	Product sales - net			$	760			$	1,646
	Service and repair fees - net				4,564				4,989
	Service and repair fees - related parties - net				55				55
	Patient fee revenue, net of contractual allowances and discounts				15,901				13,416
	Provision for bad debts for patient fee				(6,778	)			(6,042	)
	Management and other fees - net				17,786				17,351
	Management and other fees - related medical practices - net				3,691				3,662
		Total Revenues - Net			35,979				35,077
COSTS AND EXPENSES
	Costs related to product sales				676				1,322
	Costs related to service and repair fees				990				981
	Costs related to service and repair fees - related parties				12				11
	Costs related to patient fee revenue				4,466				3,801
	Costs related to management and other fees				11,015				10,379
	Costs related to management and other fees - related medical practices				2,070				2,609
	Research and development				849				756
	Selling, general and administrative				7,892				7,403
	Provision for bad debts				169				779
		Total Costs and Expenses			28,139				28,041
Income From Operations					7,840				7,036
Interest Expense					(289	)			(376	)
Investment Income					107				122
Other Income (Expense)					1				(2	)
Income Before Provision for Income Taxes and Non Controlling Interests					7,659				6,780
Provision for Income Taxes					90				69
Net Income					7,569				6,711
Net Income - Non Controlling Interests					(1,214	)			(1,518	)
Net Income - Controlling Interests				$	6,355			$	5,193
Net Income Available to Common Stockholders				$	5,942			$	4,856
Net Income Available to Class A Non-Voting Preferred Stockholders				$	308			$	251
Net Income Available to Class C Common Stockholders				$	105			$	86
Basic Net Income Per Common Share Available to Common Stockholders				$	0.98			$	0.80
Diluted Net Income Per Common Share Available to Common Stockholders				$	0.96			$	0.79
Basic and Diluted Income Per Share-Class C Common				$	0.27			$	0.22
Weighted Average Basic Shares Outstanding-Common Stockholders					6,051				6,050
Weighted Average Diluted Shares Outstanding-Common Stockholders					6,179				6,178
Weighted Average Basic Shares Outstanding - Class C Common					383				383
Weighted Average Diluted Shares Outstanding - Class C Common					383				383