Fonar Corp.

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Press Release $FONR Fonar Corp.

0 COMMENTs 14 Feb
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FONAR Reports 12 Straight Quarters of Net Income From Operations and Six Straight Quarters of Profitability Greater Than $1.5 Million in 2nd Quarter Financial Results

MELVILLE, NY -- (Marketwire) -- 02/14/13 -- FONAR Corporation (NASDAQ: FONR), The Inventor of MR Scanning™, reported today its second quarter financial results of fiscal 2013. In addition to profitability being greater than $1.5 million for six straight quarters, the Company has had twelve straight quarters of income from operations. In spite of Hurricane Sandy reaping havoc in the area that four of its scanning centers are located, revenues for FONAR's imaging management division advanced when compared to a year ago or last quarter. FONAR's business is based upon utilization of its UPRIGHT® Multi-Position™ MRI, also called the STAND-UP® MRI.

Statement of Operations Items

  • Income from operations for the six months and quarter ended December 31, 2012, was $3.6 million and $1.7 million, respectively, as compared to $3.7 million and $1.9 million respectively, for the same period one year earlier.

  • Net income for the six months and quarter ended December 31, 2012, was $3.4 million and $1.6 million, respectively, as compared to $3.6 million and $1.8 million respectively, for the same period one year earlier.

  • The basic net income per common share available to common stockholders, for the six months and quarter ended December 31, 2012 was $0.44 and $0.21, as compared to $0.50 and $0.25 for the six months and quarter ended December 31, 2011.

  • The diluted net income per common share available to common stockholders, for the six months and quarter ended December 31, 2012 was $0.43 and $0.21, as compared to $0.49 and $0.24 for the six months and quarter ended December 31, 2011.

  • Total revenue for the six months and quarter ended December 31, 2012, was $19.1 million and $9.6 million, respectively, as compared to $18.9 million and $9.3 million for the same period one year earlier.

  • Total operating costs and expenses for the six months and quarter ended December 31, 2012, were $15.5 million and $7.9 million, respectively, as compared to $15.3 million and $7.4 million for the same period one year earlier.

  • Revenue from the management and other fees segment, (HMCA management of the eleven FONAR UPRIGHT® Multi-Position™ MRI diagnostic imaging centers segment), for the six months and quarter ended December 31, 2012, was $11.5 million and $5.7 million respectively, as compared to $9.8 million and $4.9 million for the same period one year earlier. These are increases of 17% and 17% respectively.

  • Revenue from the manufacturing and service segments for the FONAR UPRIGHT® Multi-Position™ MRI for the six months and quarter ended December 31, 2012, was $7.7 million and $3.9 million, respectively, as compared to $9.2 million and $4.4 million for the same period one year earlier.

  • Research & development (R&D) and selling, general & administrative costs (S,G&A) were $2.7 million for the quarter ended December 31, 2012, as compared to $2.3 million for the quarter ended December 31, 2011.

Balance Sheet Items

  • As of December 31, 2012 total current assets were $29.6 million, total assets were $36.8 million, total current liabilities were $21.4 million, and total long-term liabilities were $1.3 million.

  • As of December 31, 2012, total cash and cash equivalents were $14.8 million.

  • As of December 31, 2012, the total stockholders' equity was $14.1 million.

See the accompanying tables for more details.

Management Discussion

Raymond V. Damadian, M.D., president and chairman of FONAR said, "I am quite pleased with the Company's consistent progress since we redefined our corporate business strategy following the 2008 banking crisis. It is remarkable that we have had 1 1/2 years of net income and income from operations exceeding $1.5 million. Each quarter over the past three years we have consistently been profitable having earned income from operations. Our total assets have grown from $21.6 million at June 30, 2010 to $36.8 million most recently, shareholders' equity has climbed to over $14 million and our long-term liabilities are a low of $1.25 million."

"The eleven UPRIGHT® Multi-Position™ MRI centers that we manage continue to add scan volume," said Dr. Damadian. "In fact, for the three months ended December 31, 2012, the number of scans was 10,563 as compared to 10,332 scans over the same period one year earlier. This occurred in spite of the interruption caused by Hurricane Sandy which did cause several of our scanning centers to temporarily stop for a short period."

"Much of our success comes from the management team assembled that manages the imaging center management business. Key to their success though is the marketing strength of the FONAR STAND-UP® MRI (a.k.a. UPRIGHT® Multi-Position™ MRI)," said Dr. Damadian. "We have a considerable number of customer patients that tell us that they will never go and have a recumbent MRI again. Currently, we are managing eleven centers, all in New York and Florida."

"FONAR's UPRIGHT® MRI technology has opened a new frontier in medical imaging," said Dr. Damadian. "It is the power to make MRI motion pictures (cinés) of the cerebrospinal fluid (CSF) in the spinal canal as it flows into and out of the brain of the patient while Upright. These ciné MRIs of CSF flow in and out of the brain while the patient is Upright, are uniquely sensitive to the visualization of any impairments of CSF flow. This often leads to a better understanding of the problems with the cervical anatomy that might be contributing to the patient's symptoms."

"An example of the severe need of FONAR's unique UPRIGHT® Multi-Position™ MRI technology is FONAR's recent discovery of the potential adverse consequences of cervical spine malalignments. Such cervical spine degenerations or vertebral malalignments can obstruct the flow of cerebrospinal fluid (CSF), which in turn can generate increases of intracranial pressure (ICP) and CSF 'leakages' into the surrounding brain parenchyma. It has been proposed that CSF 'leakages', such as those shown to be joining the MS lesions in the MRI images of the MS patients studied, could be etiologic in the generation of multiple sclerosis (Damadian R.V., Chu D., 'The Possible Role of Cranio-Cervical Trauma and Abnormal CSF Hydrodynamics in the Genesis of Multiple Sclerosis', Physiol. Chem. Phys. & Med. NMR, September 20, 2011, 41:1-17). The report showed that the cervical anatomic abnormalities seen in these MS patients and the resulting CSF flow obstructions were significantly more severe with the patient in the vertical position (Table 2A, col. 10 & 11, Physiol. Chem. Phys. & Med. NMR, September 20, 2011 41:1-17) than with the patient in the recumbent position. Consequently, it is critical that any assessment of CSF flow impairment in the brain or spinal column must be assessed with the patient in the vertical position in order to determine the full extent of the CSF flow impairment, the extent of treatment needed and, most importantly, to achieve an accurate assessment post-treatment of the degree to which satisfactory CSF flow has been successfully restored. Accordingly," said Dr. Damadian, "we believe there now exists a genuine hope that if an MS patient can have their vertical position CSF flow and intracranial pressures (ICP) monitored and restored to normal, then there is also the prospect that the symptoms of this MS patient can be restored to normal."

About FONAR

FONAR (NASDAQ: FONR), Melville, NY, The Inventor of MR Scanning™, is an AMERICAN COMPANY that 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 over 150 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 only. 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.



                    CONDENSED CONSOLIDATED BALANCE SHEETS
                               (000's OMITTED)

                                   ASSETS

                                                  December 31,    June 30,
                                                      2012          2012
Current Assets:                                   (UNAUDITED)
                                                 ------------- -------------
Cash and cash equivalents                        $      14,760 $      12,032
Accounts receivable - net                                4,920         5,095
Accounts receivable - related party                         60             -
Management and other fees receivable - net               4,525         3,782
Management and other fees receivable - related
 medical practices - net                                 1,955         1,311
Costs and estimated earnings in excess of
 billings on uncompleted contracts                         747         1,129
Inventories                                              2,239         2,195
Current portion of notes receivable - net                  118           116
Prepaid expenses and other current assets                  251           206
                                                 ------------- -------------
  Total Current Assets                                  29,575        25,866
                                                 ------------- -------------

Property and equipment - net                             2,927         3,173
Notes receivable                                           207           276
Other intangible assets - net                            3,609         3,835
Other assets                                               487           465
                                                 ------------- -------------
  Total Assets                                   $      36,805 $      33,615
                                                 ============= =============



                    CONDENSED CONSOLIDATED BALANCE SHEETS
                   (000's OMITTED, except per share data)

                    LIABILITIES AND STOCKHOLDERS' EQUITY

                                                  December 31,    June 30,
                                                      2012          2012
                                                  (UNAUDITED)
                                                 ------------- -------------
Current Liabilities:

  Current portion of long-term debt and capital
   Leases                                        $       1,483 $       1,854
  Accounts payable                                       2,020         2,077
  Other current liabilities                              8,179         7,693
  Unearned revenue on service contracts                  5,536         5,475
  Unearned revenue on service contracts - related
   Party                                                    55             -
  Customer advances                                      4,138         3,881
  Income tax payable                                         -           100
                                                 ------------- -------------
    Total Current Liabilities                           21,411        21,080

Long-Term Liabilities:
  Accounts payable, non current                             10            47
  Due to related medical practices                         229           229
  Long-term debt and capital leases, less current
   Portion                                                 634           777
  Other liabilities                                        379           401
                                                 ------------- -------------
    Total Long-Term Liabilities                          1,252         1,454
                                                 ------------- -------------
    Total Liabilities                                   22,663        22,534
                                                 ------------- -------------

                   CONDENSED CONSOLIDATED BALANCE SHEETS
                   (000's OMITTED, except per share data)
                            STOCKHOLDERS' EQUITY

LIABILITIES AND STOCKHOLDERS' EQUITY           December 31,    June 30,
(continued)                                        2012           2012
STOCKHOLDERS' EQUITY:                          (UNAUDITED)
                                              -------------  -------------

Class A non-voting preferred stock  $. 0001 par
 value; 453,000 shares authorized at December
 31, 2012 and June 30, 2012, 313,438 issued
 and outstanding at December 31, 2012 and June
 30, 2012                                                 -              -

Preferred stock  $. 001 par value; 567,000
 shares authorized at December 31, 2012 and
 June 30, 2012, issued and outstanding - none             -              -

Common Stock  $. 0001 par value; 8,500,000
 shares authorized at December 31, 2012 and
 June 30, 2012, 5,942,905 and 5,912,905 issued
 at December 31, 2012 and June 30, 2012,
 respectively; 5,931,262 and 5,901,262
 outstanding at December 31, 2012 and June 30,
 2012, respectively                                       1              1

Class B Common Stock (10 votes per share)
  $. 0001 par value; 227,000 shares authorized
 at December 31, 2012 and June 30, 2012, 158
 issued and outstanding at December 31, 2012
 and June 30, 2012                                        -              -

Class C Common Stock (25 votes per share)
  $. 0001 par value; 567,000 shares authorized
 at December 31, 2012 and June 30, 2012,
 382,513 issued and outstanding at December
 31, 2012 and June 30, 2012                               -              -

Paid-in capital in excess of par value              174,231        174,084
Accumulated other comprehensive loss                    (20)           (20)
Accumulated deficit                                (165,533)      (168,334)
Notes receivable from employee stockholders             (59)           (71)
Treasury stock, at cost - 11,643 shares of
 common stock
 at December 31, 2012 and June 30, 2012                (675)          (675)
Non controlling interests                             6,197          6,096
                                              -------------  -------------
Total Stockholders' Equity                           14,142         11,081
                                              -------------  -------------
Total Liabilities and Stockholders' Equity    $      36,805  $      33,615
                                              =============  =============


           CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
                   (000's OMITTED, except per share data)

                                                         FOR THE THREE
                                                         MONTHS ENDED
                                                         DECEMBER 31,
REVENUES                                               2012         2011
                                                   -----------  -----------
  Product sales - net                              $     1,080  $     1,615
  Service and repair fees - net                          2,765        2,807
  Service and repair fees - related parties - net           28           27
  Management and other fees - net                        3,775        3,308
  Management and other fees - related medical
   practices - net                                       1,965        1,571
                                                   -----------  -----------
    Total Revenues - Net                                 9,613        9,328
                                                   -----------  -----------
COSTS AND EXPENSES
  Costs related to product sales                           904        1,171
  Costs related to service and repair fees                 894          868
  Costs related to service and repair fees -
   related parties                                           9            9
  Costs related to management and other fees             2,235        1,887
  Costs related to management and other fees -
   related medical practices                               852          901
  Research and development                                 320          293
  Selling, general and administrative                    2,352        1,995
  Provision for bad debts                                  325          310
                                                   -----------  -----------
    Total Costs and Expenses                             7,891        7,434
                                                   -----------  -----------
Income From Operations                                   1,722        1,894
Interest Expense                                          (103)        (124)
Investment Income                                           60           64
Other Expense                                               (4)          (1)
Income Before Provision for Income Taxes and Non
 Controlling Interests                                   1,675        1,833
Provision for Income Taxes                                  55           21
                                                   -----------  -----------
Net Income                                               1,620        1,812
Net Income - Non Controlling Interests                     271          276
                                                   -----------  -----------
Net Income - Controlling Interests                 $     1,349  $     1,536
                                                   ===========  ===========
Net Income Available to Common Stockholders        $     1,259  $     1,432
                                                   ===========  ===========
Net Income Available to Class A Non-Voting
 Preferred Stockholders                            $        67  $        78
                                                   ===========  ===========
Net Income Available to Class C Common Stockholders$        23  $        26
                                                   ===========  ===========
Basic Net Income Per Common Share Available to
 Common Stockholders                               $      0.21  $      0.25
                                                   ===========  ===========
Diluted Net Income Per Common Share Available to
 Common Stockholders                               $      0.21  $      0.24
                                                   ===========  ===========
Basic and Diluted Income Per Share-Common C        $      0.06  $      0.07
                                                   ===========  ===========
Weighted Average Basis Shares Outstanding            5,926,262    5,728,528
                                                   ===========  ===========
Weighted Average Diluted Shares Outstanding          6,053,766    5,856,032
                                                   ===========  ===========
Weighted Average Basic Shares Outstanding - Class C
 Common                                                382,513      382,513
                                                   ===========  ===========
Weighted Average Diluted Shares Outstanding - Class
 C Common                                              382,513      382,513
                                                   ===========  ===========



           CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
                   (000's OMITTED, except per share data)

                                                          FOR THE SIX
                                                         MONTHS ENDED
                                                         DECEMBER 31,
REVENUES                                               2012         2011
                                                   -----------  -----------
  Product sales - net                              $     2,121  $     3,391
  Service and repair fees - net                          5,474        5,712
  Service and repair fees - related parties - net           55           55
  Management and other fees - net                        7,544        6,637
  Management and other fees - related medical
   practices - net                                       3,930        3,141
                                                   -----------  -----------
    Total Revenues - Net                                19,124       18,936
                                                   -----------  -----------
COSTS AND EXPENSES
  Costs related to product sales                         1,959        2,646
  Costs related to service and repair fees               1,760        1,682
  Costs related to service and repair fees -
   related parties                                          18           16
  Costs related to management and other fees             4,406        4,072
  Costs related to management and other fees -
   related medical practices                             1,669        1,720
  Research and development                                 650          622
  Selling, general and administrative                    4,564        4,037
  Provision for bad debts                                  500          485
                                                   -----------  -----------
    Total Costs and Expenses                            15,526       15,280
                                                   -----------  -----------
Income From Operations                                   3,598        3,656
Interest Expense                                          (179)        (231)
Investment Income                                          120          126
Other (Expense) Income                                     (13)          55
Income Before Provision for Income Taxes and Non
 Controlling Interests                                   3,526        3,606
Provision for Income Taxes                                 127           21
                                                   -----------  -----------
Net Income                                               3,399        3,585
Net Income - Non Controlling Interests                     598          535
                                                   -----------  -----------
Net Income - Controlling Interests                 $     2,801  $     3,050
                                                   ===========  ===========
Net Income Available to Common Stockholders        $     2,616  $     2,842
                                                   ===========  ===========
Net Income Available to Class A Non-voting
 Preferred Stockholders                            $       138  $       155
                                                   ===========  ===========
Net Income Available to Class C Common
 Stockholders                                      $        47  $        53
                                                   ===========  ===========
Basic Net Income Per Common Share Available to
 Common Stockholders                               $      0.44  $      0.50
                                                   ===========  ===========
Diluted Net Income Per Common Share Available to
 Common Stockholders                               $      0.43  $      0.49
                                                   ===========  ===========
Basic and Diluted Income Per Share-Common C        $      0.12  $      0.14
                                                   ===========  ===========
Weighted Average Basic Shares Outstanding            5,913,762    5,698,645
                                                   ===========  ===========
Weighted Average Diluted Shares Outstanding          6,041,266    5,826,149
                                                   ===========  ===========
Weighted Average Basic Shares Outstanding - Class
 C Common                                              382,513      382,513
                                                   ===========  ===========
Weighted Average Diluted Shares Outstanding -
 Class C Common                                        382,513      382,513
                                                   ===========  ===========

Contact:
Daniel Culver
Director of Communications
E-mail: Email Contact
www.fonar.com

Source: FONAR Corporation

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