News Column

FONAR Announces 3rd Quarter Fiscal 2014 & Nine Month Earnings Report

May 15, 2014

MELVILLE, NY -- (Marketwired) -- 05/15/14 -- FONAR Corporation (NASDAQ: FONR)

•Third Quarter Fiscal 2014 Net Revenues increased 46% to $17.0 million over Third Quarter Fiscal 2013 •Third Quarter Fiscal 2014 Diluted Net Income per common share available to common shareholders was $0.26, an increase of 53% over Third Quarter Fiscal 2013 •Third Quarter Fiscal 2014 Net Income was $2.1 million, an increase of 36% over Third Quarter Fiscal 2013 •Record sixteenth (16) straight quarter of positive net income and income from operations of which most recent eleven (11) were greater than $1.5 million





Fonar Corporation (NASDAQ: FONR), The Inventor of MR Scanning™, reported its financial position for the period ended March 31, 2014. The Company's two industry segments are: development, manufacturing and servicing of the UPRIGHT® Multi-Position™ MRI and management of Stand-Up® MRI (UPRIGHT® MRI) centers. The Company is known as the first Company to invent and manufacture an MRI (Magnetic Resonance) scanner. Leading the list of FONAR's most recent patented inventions is its technology enabling full weight-bearing MRI imaging, in contrast to the conventional weightless recumbent MRI imaging. This enables, for the first time, full weight-bearing imaging of all the gravity sensitive regions of the human anatomy, e.g. the spine, brain, hip, knee, ankle, foot, shoulder, and pelvis. The FONAR UPRIGHT® Multi-Position™ MRI scanner is the world's only MRI scanner licensed under FONAR's multiple UPRIGHT® MRI patents to scan all the patient's body parts in their normal full weight-bearing UPRIGHT® position.

Statement of Operations Items

Revenues increased 67% to $51.5 million for the nine month period ended March 31, 2014 from $30.8 million for the corresponding nine month period one year earlier. Revenues for the third fiscal quarter ended March 31, 2014 were $17.0 million versus $11.6 million for the corresponding quarter one year earlier.

Net Income increased 77% to $8.8 million for the nine month period ended March 31, 2014 from $5.0 million for the corresponding nine month period one year earlier. Net Income for the third fiscal quarter ended March 31, 2014 was $2.1 million versus $1.6 million for the corresponding nine month period one year earlier.

Income from Operations increased 85% to $9.7 million for the nine month period ended March 31, 2014 from $5.2 million for the corresponding nine month period one year earlier. Income from Operations for the third fiscal quarter ended March 31, 2014 was $2.3 million, an increase of 42% from $1.6 million for the corresponding nine month period one year earlier.

Diluted net income per common share available to common shareholders increased 60% to $0.96 for the nine month period ended March 31, 2014 from $0.60 for the corresponding nine month period one year earlier. Diluted net income per common share available to common shareholder for the third fiscal quarter ended March 31, 2014 was $0.26 versus $0.17 for the corresponding quarter one year earlier, an increase of 53%.

Balance Sheet Items

Total assets at the quarter ended March 31, 2014 were $76.1 million, as compared to $73.2 million at June 30, 2013.

Total liabilities at the quarter ended March 31, 2014 were $32.7 million, as compared to $35.4 million at June 30, 2013.

Total current assets at the quarter ended March 31, 2014 were $43.4 million, as compared to $37.9 million at June 30, 2013.

Total cash and cash equivalents March 31, 2014, were $9.6 million, as compared to $7.9 million at June 30, 2013.

Total current liabilities at the quarter ended March 31, 2014 were $22.2 million, as compared to $21.1 million at June 30, 2013.

Management Discussion

Raymond V. Damadian, president and chairman of Fonar Corporation, said, "We have had increased pressure due to cuts in MRI reimbursements brought about by the Affordable Care Act. Thanks to the uniqueness of our UPRIGHT® full weight-loaded MRI scans, the steadily increasing volumes at the Stand-Up® MRI scanning centers provide significant relief."

"In March, the scan volume at the MRI scanning centers we manage was 15% higher than that of March 2013, setting a new company record," said Dr. Damadian. "I am very pleased."

"We expect to facilitate growth of imaging centers through acquisitions, supporting new UPRIGHT® imaging centers, and increasing scan volume at our existing locations by continuing to educate the medical community about the unique diagnostic advantages of UPRIGHT® Multi-Position™ full weight-loaded MRI," added Dr. Damadian.

Significant Events

The Company will hold its annual meeting on June 23, 2014. Dr. Damadian has issued his annual shareholder letter which can be seen on the Company's Web site at http://www.fonar.com/shareholder_letter_5_2014.htm.

About FONAR

FONAR (NASDAQ: FONR), Melville, NY, The Inventor of MR Scanning™, 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 157 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 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 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 (AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) ASSETS March 31, June 30, 2014 2013 * ---------- ---------- Cash and cash equivalents $ 9,589$ 7,871 Accounts receivable - net 4,444 4,444 Accounts receivable - related party 30 - Medical receivable - net 8,924 8,126 Management and other fees receivable - net 12,675 11,466 Management and other fees receivable - related medical practices - net 3,463 2,382 Inventories 2,510 2,077 Prepaid expenses and other current assets 1,708 1,500 ---------- ---------- Total Current Assets 43,343 37,866 ---------- ---------- Property and equipment - net 16,045 17,524 Goodwill 1,767 1,767 Other intangible assets - net 11,043 11,904 Deferred income tax asset 2,936 2,936 Other assets 1,013 1,154 ---------- ---------- Total Assets $ 76,147$ 73,151 ========== ========== * Condensed from audited financial statements CONDENSED CONSOLIDATED BALANCE SHEETS (AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) LIABILITIES AND STOCKHOLDERS' EQUITY March 31, June 30, 2014 2013 * ---------- ---------- Current Liabilities: Current portion of long-term debt and capital leases $ 2,967$ 2,886 Accounts payable 2,863 2,752 Other current liabilities 9,665 8,636 Unearned revenue on service contracts 4,873 4,965 Unearned revenue on service contracts - related party 28 - Customer advances 1,791 1,858 Income tax payable - 20 ---------- ---------- Total Current Liabilities 22,187 21,117 Long-Term Liabilities: Due to related medical practices 231 231 Long-term debt and capital leases, less current portion 9,404 12,887 Deferred income tax liability 462 462 Other liabilities 433 654 ---------- ---------- Total Long-Term Liabilities 10,530 14,234 ---------- ---------- Total Liabilities $ 32,717$ 35,351 ---------- ---------- * Condensed from audited financial statements CONDENSED CONSOLIDATED BALANCE SHEETS (AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) LIABILITIES AND STOCKHOLDERS' EQUITY (Continued) March 31, June 30, LIABILITIES AND STOCKHOLDERS' EQUITY 2014 2013 * ---------- ---------- STOCKHOLDERS' EQUITY: Class A non-voting preferred stock $.0001 par value; 453 shares authorized at March 31, 2014 and June 30, 2013, 313 issued and outstanding at March 31, 2014 and June 30, 2013 $ - $ - Preferred stock $.001 par value; 567 shares authorized at March 31, 2014 and June 30, 2013, issued and outstanding - none - - Common Stock $.0001 par value; 8,500 shares authorized at March 31, 2014 and June 30, 2013, 6,037 and 5,981 issued at March 31, 2014 and June 30, 2013, respectively; 6,025 and 5,969 outstanding at March 31, 2014 and June 30, 2013, respectively 1 1 Class B Common Stock (10 votes per share) $ .0001 par value; 227 shares authorized at March 31, 2014 and June 30, 2013, .146 issued and outstanding at March 31, 2014 and June 30, 2013 - - Class C Common Stock (25 votes per share) $.0001 par value; 567 shares authorized at March 31, 2014 and June 30, 2013, 383 issued and outstanding at March 31, 2014 and June 30, 2013 - - Paid-in capital in excess of par value 175,023 174,499 Accumulated deficit (153,336) (159,655) Notes receivable from employee stockholders (41) (55) Treasury stock, at cost - 12 shares of common stock at March 31, 2014 and June 30, 2013 (675) (675) ---------- ---------- Total Fonar Corporation Stockholder Equity 20,972 14,115 Non controlling interests 22,458 23,685 ---------- ---------- Total Stockholders' Equity 43,430 37,800 ---------- ---------- Total Liabilities and Stockholders' Equity $ 76,147$ 73,151 ========== ========== * 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 MARCH 31 ---------------------- REVENUES 2014 2013 ---------- ---------- Product sales - net $ 478$ 416 Service and repair fees - net 2,518 2,867 Service and repair fees - related parties - net 27 27 Patient fee revenue, net of contractual allowances and discounts 6,090 965 Provision for bad debts for patient fee (2,868) - Management and other fees - net 8,538 5,402 Management and other fees - related medical practices - net 2,257 1,965 ---------- ---------- Total Revenues - Net 17,040 11,642 ---------- ---------- COSTS AND EXPENSES Costs related to product sales 223 498 Costs related to service and repair fees 623 819 Costs related to service and repair fees - related parties 7 8 Costs related to patient fee revenue 1,947 791 Costs related to management and other fees 5,327 2,606 Costs related to management and other fees - related medical practices 1,318 900 Research and development 360 381 Selling, general and administrative 3,935 3,774 Provision for bad debts 981 235 ---------- ---------- Total Costs and Expenses 14,721 10,012 ---------- ---------- Income From Operations 2,319 1,630 Interest Expense (203) (79) Investment Income 57 55 Other Income 39 - ---------- ---------- Income Before Provision for Income Taxes 2,212 1,606 Provision for Income Taxes 65 25 ---------- ---------- Net Income 2,147 1,581 Net Income - Non Controlling Interests (408) (505) ---------- ---------- Net Income - Controlling Interests $ 1,739$ 1,076 ========== ========== Net Income Available to Common Stockholders $ 1,625$ 1,005 ========== ========== Net Income Available to Class A Non-Voting Preferred Stockholders $ 85$ 53 ========== ========== Net Income Available to Class C Common Stockholders $ 29$ 18 ========== ========== Basic Net Income Per Common Share Available to Common Stockholders $ 0.27$ 0.17 ========== ========== Diluted Net Income Per Common Share Available to Common Stockholders $ 0.26$ 0.17 ========== ========== Basic and Diluted Income Per Share-Common C $ 0.08$ 0.05 ========== ========== Weighted Average Basis Shares Outstanding-Common Stockholders 6,022 5,937 ========== ========== Weighted Average Diluted Shares Outstanding 6,150 6,065 ========== ========== Weighted Average Basic Shares Outstanding - Class C 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 NINE MONTHS ENDED MARCH 31, ---------------------------- REVENUES 2014 2013 ------------- ------------- Product sales - net $ 1,261$ 2,536 Service and repair fees - net 7,578 8,341 Service and repair fees - related parties - net 83 83 Patient fee revenue, net of contractual allowances and discounts 17,811 965 Provision for bad debts for patient fee (7,130) - Management and other fees - net 24,955 12,946 Management and other fees - related medical practices - net 6,923 5,895 ------------- ------------- Total Revenues - Net 51,481 30,766 ------------- ------------- COSTS AND EXPENSES Costs related to product sales 902 2,457 Costs related to service and repair fees 1,755 2,579 Costs related to service and repair fees - related parties 19 26 Costs related to patient fee revenue 5,823 791 Costs related to management and other fees 15,591 7,013 Costs related to management and other fees - related medical practices 3,808 2,568 Research and development 1,128 1,031 Selling, general and administrative 12,024 8,338 Provision for bad debts 763 735 ------------- ------------- Total Costs and Expenses 41,813 25,538 ------------- ------------- Income From Operations 9,668 5,228 Interest Expense (682) (258) Investment Income 178 174 Other Expense (113) (13) ------------- ------------- Income Before Provision for Income Taxes 9,051 5,131 Provision for Income Taxes 235 152 ------------- ------------- Net Income 8,816 4,979 Net Income - Non Controlling Interests (2,497) (1,103) ------------- ------------- Net Income - Controlling Interests $ 6,319$ 3,876 ============= ============= Net Income Available to Common Stockholders $ 5,907$ 3,621 ============= ============= Net Income Available to Class A Non-voting Preferred Stockholders $ 307 $ 190 ============= ============= Net Income Available to Class C Common Stockholders $ 105 $ 65 ============= ============= Basic Net Income Per Common Share Available to Common Stockholders $ 0.98$ 0.61 ============= ============= Diluted Net Income Per Common Share Available to Common Stockholders $ 0.96$ 0.60 ============= ============= Basic and Diluted Income Per Share-Common C $ 0.27$ 0.17 ============= ============= Weighted Average Basic Shares Outstanding 6,002 5,921 ============= ============= Weighted Average Diluted Shares Outstanding 6,130 6,049 ============= ============= Weighted Average Basic Shares Outstanding - Class C Common 383 383 ============= ============= Weighted Average Diluted Shares Outstanding - Class C Common 383 383 ============= =============



Contact: Daniel Culver Director of Communications E-mail: Email Contact www.fonar.com The Inventor of MR Scanning™ An ISO 9001 Company Melville, New York 11747 Phone: (631) 694-2929 Fax: (631) 390-1709



Source: Fonar Corporation


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