NEWS		FONAR
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 Fiscal 2016 Year End Earnings

• 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

MELVILLE, NEW YORK, September 19, 2016 - 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.

FONAR

 

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."

FONAR

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.

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 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 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

 

 

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