GlobeNewswire Inc | Feb 16, 2021 08:00AM EST

February 16, 2021

-- The 38th HMCA-managed MRI scanner recently became operational at the White Plains, New York scanning center. -- The COVID-19 pandemic continues to be a hindrance to business. Total Revenues-Net decreased by 2% to $42.1 million for the six months ended December 31, 2020, versus corresponding six months one year earlier. -- Net Income for the six months ended December 31, 2020 decreased 18% to $7.2 million, versus corresponding six months one year earlier. -- Net Income for the quarter ended December 31, 2020 was $3.9 million, which was an increase of 21% over the preceding quarter ended September 30, 2020. -- Cash and cash equivalents and short-term investments increased 10% to $40.6 million at December 31, 2020, versus the fiscal year ended June 30, 2020. -- FONARs Book Value is $20.00 per common share.

MELVILLE, N.Y., Feb. 16, 2021 (GLOBE NEWSWIRE) -- FONAR Corporation (NASDAQ-FONR), The Inventor of MR Scanning, reported today its financial results for the fiscal 2021 2nd Quarter and Six Months period ended December 31, 2020. FONARs primary source of income and growth is attributable to its diagnostic imaging management subsidiary, Health Management Company of America (HMCA). In 2009, HMCA managed 9 MRI scanners. Currently, HMCA manages 38 MRI scanners.

Financial Results

Total Revenues-Net was $42.1 million for the six months ended December 31, 2020, as compared to $43.2 million for the corresponding six month-period ended December 31, 2019.

Total Revenues-Net for the quarter ended December 31, 2020 was $21.2 million as compared to $21.5 million for the quarter ended December 31, 2019. This also compares to $21.0 million for the preceding quarter ended September 30, 2020.

Income from Operations for the six months ended December 31, 2020 was $9.1 million as compared to $10.5 million for the corresponding six-month period ended December 31, 2019.

Income from Operations for the quarters ended December 31, 2020 and December 31, 2019 was $5.0 million. There was a 20% increase for the recent quarter as compared to $4.2 million for the preceding quarter ended September 30, 2020.

Net Income for the six months ended December 31, 2020 was $7.2 million as compared to $8.7 million for the corresponding six-month period ended December 31, 2019.

Net Income for the quarter ended December 31, 2020 was $3.9 million as compared to $4.2 million for the corresponding quarter ended December 31, 2019. There was a 22% increase for the recent quarter as compared to $3.3 million for the preceding quarter ended September 30, 2020.

Diluted Net Income per Common Share Available to Common Stockholders for the six months ended December 31, 2020 was $0.80 as compared to $0.92 for the corresponding six-month period ended December 31, 2019.

Diluted Net Income per Common Share Available to Common Stockholders for the quarters ended December 31, 2020 and December 31, 2019 was $0.44. There was a 22% increase for the recent quarter as compared to $0.36 for the preceding quarter ended September 30, 2020.

Selling, general & administrative expenses (SG&A) for the six months ended December 31, 2020 increased 27% to $10.7 million as compared to $8.5 million for the corresponding six months ended December 31, 2019. This increase was almost exclusively due to reserves of an incremental $3.9 million placed on service contracts and management fees and other receivables resulting from the COVID-19 pandemic. It is too early to know how much of these reserves will be recovered.

Selling, general & administrative expenses (SG&A) for the quarter ended December 31, 2020 increased 9% to $4.5 million, as compared to $4.2 million for the corresponding quarter ended December 31, 2019. This increase was almost exclusively due to reserves of an incremental $1.7 million placed on service contracts and management fees and other receivables resulting from the COVID-19 pandemic. It is too early to know how much of these reserves will be recovered.

Research and Development (R&D) expenses were $0.8 million for the six months ended December 31, 2020, as compared to $1.1 million for the corresponding six-month period ended December 31, 2019.

Research and Development (R&D) expenses for the quarter ended December 31, 2020 were $0.4 million as compared to $0.6 million for the quarter ended December 31, 2019.

Operating Cash Flow at December 31, 2020 decreased 6% to $9.6 million, compared with $10.2 million for the period ended December 31, 2019. For comparison, Operating Cash Flow for the year ended June 30, 2020 was $20.4 million, an increase of 5% versus $19.4 million for the previous fiscal year ended June 30, 2019.

Cash and cash equivalents and short term investments increased 10% to $40.6 million at December 31, 2020 versus $36.8 million at the fiscal year ended June 30, 2020.

Total Current Assets at December 31, 2020 were $101.6 million, as compared to $95.9 million at June 30, 2020.

Total Assets were $182.1 million at December 31, 2020 as compared to $180.3 million at June 30, 2020.

Total Current Liabilities were $16.9 million at December 31, 2020 as compared to $18.7 million at June 30, 2020.

Total Liabilities at December 31, 2020 was $50.3 million, as compared to $54.0 million at June 30, 2020.

The Total Assets / Total Liabilities ratio at December 31, 2020 was 3.6 as compared to 3.3 at June 30, 2020 .

Working Capital increased 10% to $84.7 million at December 31, 2020 versus $77.2 million at the fiscal year ended June 30, 2020.

Management Discussion

President and CEO, Timothy R. Damadian, said, Although the COVID-19 pandemic has negatively impacted our management subsidiary, HMCA, since March of last year, we are steadily recovering.

The MRI scan volume in the quarter ending June 30, 2020 was 27,757, which was 38% lower than the scan volume in the prior quarter (45,123). The scan volume for the next quarter (the quarter ending on September 30, 2020) grew by 50% to 41,556. The scan volume for the quarter ending December 31, 2020 grew by another 7% to 44,493. In comparison to pre-pandemic scan volume a year ago (46,802 scans in the quarter ending December 31, 2019) were now 95% recovered. HMCA-managed facilities are located in Florida and New York. By the time both states return to normalcy, hopefully in fiscal 2021, I expect to be back to pre-pandemic scan volumes and once again on the path of steady growth.

Prior to the pandemic, continued Mr. Damadian, we had planned to invest between $4 million and $6 million dollars at four (4) HMCA-managed MRI scanning centers in Fiscal 2020. We installed a second MRI scanner in the Ormond Beach, Florida facility in October, 2019, and the first MRI of what will be a two-MRI facility in Pembroke Pines, Florida in June, 2020. COVID-19 delayed the installation of a second MRI in the Islandia, New York facility until October 2020. The pandemic also delayed the installation of a second MRI in the Westchester County facility. However, I am pleased to report that it was recently installed and is currently operational in White Plains, New York, making it the 38th HMCA-managed MRI. While the execution of the plan took longer than expected, we are grateful to have all four MRIs already contributing to the growth of the company.

With the installation of a second MRI in the White Plains facility, we now manage eleven (11) facilities with two or more MRI scanners five (5) in New York and six (6) in Florida. Our vertical growth strategy of installing a second or even a third MRI at high-volume, high-patient-backlog facilities has been very successful. Naturally we focus on growing our remaining single-MRI facilities sites to the point where a second MRI is justified and feasible.

As reported previously, we are planning to establish a de novo center in Bronx County, New York; we continue our search for promising locations currently underserved by FONARs Upright MRI technology; and, as always, we seek to make acquisitions that would expand our existing networks of managed facilities.

Mr. Damadian concluded, I remain grateful for the efforts of the non-controlling-interest group members of our management team. Ive worked with them for many years. Their management skills, concern for the safety of patients and employees, and commitment to the success of FONAR and HMCA have enabled us to be profitable even in the midst of a pandemic that has been hampering our business for nearly a year.

Some more good news, said Raymond V. Damadian, M.D., Chairman of the Board of FONAR Corporation, is that the enormous appeal of the comfort and diagnostic strength that is offered by our UPRIGHT Multi Position MRI, aka STAND-UP MRI, has given the Company favorable word-of-mouth benefit. I am told by our executive team that many, or most, potential patients are already aware of this technology. So, when given the opportunity to choose, they select their MRI scans at an imaging center that features our UPRIGHT Multi-Position MRI scanner.

Physicians are also aware of the benefits of scanning the spine in the fully weight-loaded position, continued Dr. Damadian. Being scanned on the FONAR UPRIGHT Multi-Position MRI gives them the advantage of being able to see the fully weight-loaded stress on the spine that occurs in their patients daily activities. Our management team spends a great deal of effort to assure that the need of the referring physician to visualize his patients spine in its FULL RANGE of FULLY WEIGHT-LOADED POSITIONS is a key provision. That it enables them to select the treatment that best addresses the patient's SPECIFIC physio-anatomic deficiency is our priority.

I expect that the Company will have returned to its pre-pandemic levels of growth and profitability this year. We share the sorrow that the COVID-19 pandemic has wrought upon our society. Now with the vaccine, and other measures in place, we look forward to a rebounding economy and our own continued success.

Dr. Damadian concluded, The Company continues its research of the imaging and quantifying of cerebrospinal fluid (CSF) flow as it circulates from the brain, down the spine and throughout the brain. We believe that this research will lead to a new understanding of the role of CSF physiology in the neurodegenerative diseases Multiple Sclerosis, Alzheimers, Parkinsons, Amyotrophic Lateral Sclerosis (ALS) and childhood autism. In Fiscal 2021, the Company will continue with this valuable research made possible by the introduction of Fonars UPRIGHT MRI imaging technology.

About FONAR

FONAR, the Inventor of MR Scanning, located in Melville, NY, was incorporated in 1978, and is the first, oldest and most experienced MRI company in the industry. FONAR introduced the worlds first commercial MRI in 1980, and went public in 1981. FONARs 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, 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, theyll 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 cerebral hydraulics of the central nervous system, 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 bodys neurologic system has been made possible first by FONARs 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.

FONARs primary source of income and growth is attributable to its wholly-owned diagnostic imaging management subsidiary, Health Management Company of America (HMCA) www.hmca.com.

FONARs 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. It includes its newest technology for measuring the Upright cerebral hydraulics of the cerebrospinal fluid (CSF) of the central nervous system. FONARs UPRIGHT Multi-Position MRI is the only scanner licensed under these patents.

UPRIGHT and STAND-UPare registered trademarks. The Inventor of MR Scanning, CSP, Multi-Position, UPRIGHT RADIOLOGY, The Proof is in the Picture, pMRI, CSF Videographyand Dynamic, 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 June 30, 31, 2020 * 2020Current Assets: Cash and cash equivalents $ 40,579 $ 36,802 Short term investments 32 32 Accounts receivable ? net 4,171 4,313 Accounts receivable - related party 72 6 Medical receivable ? net 16,373 16,172 Management and other fees receivable ? net 29,808 27,438 Management and other fees receivable ? related 7,262 6,896 medical practices ? netInventories 1,844 1,649 Costs and estimated earnings in excess of billings 153 153 on uncompleted contractsIncome tax receivable ? 671 Prepaid expenses and other current assets 1,302 1,758 Total Current Assets 101,596 95,890 Accounts receivable 2,594 2,730 Deferred income tax asset 16,848 18,810 Property and equipment ? net 21,683 21,364 Right-of-use Asset ? operating lease 29,570 31,392 Right-of-use Asset ? financing lease 1,226 1,326 Goodwill 3,985 3,985 Other intangible assets ? net 4,014 4,109 Other assets 632 653 Total Assets $ 182,148 $ 180,259

*Condensed from audited financial statements.

CONDENSED CONSOLIDATED BALANCE SHEETS(Amounts and shares in thousands, except per share amounts)(UNAUDITED)

LIABILITIES AND STOCKHOLDERS? EQUITY December June 30, 31, 2020 * 2020Current Liabilities: Current portion of long-term debt and capital leases $ 222 $ 108 Accounts payable 2,198 1,965 Other current liabilities 5,584 8,185 Unearned revenue on service contracts 4,029 4,105 Unearned revenue on service contracts ? related 55 ? partyOperating lease liability - current portion 3,403 3,370 Financing lease liability - current portion 200 75 Customer deposits 1,232 855 Total Current Liabilities 16,923 18,663 Long-Term Liabilities: Unearned revenue on service contracts 2,528 2,656 Deferred income tax liability 234 234 Due to related medical practices 93 93 Operating lease liability ? net of current portion 28,415 30,105 Financing lease liability ? net of current portion 1,151 1,251 Long-term debt and capital leases, less current 780 865 portionOther liabilities 148 150 Total Long-Term Liabilities 33,349 35,354 Total Liabilities 50,272 54,017

*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 June 30,STOCKHOLDERS' EQUITY: 31, 2020 * 2020Class A non-voting preferred stock $.0001 parvalue;453shares authorized at December 31, 2020 and June 30,2020,313 issued and outstanding at December 31, $ ? $ ? 2020and June 30, 2020

Preferred stock $.001 par value; 567 sharesauthorized atDecember 31, 2020 and June 30, 2020, issued and ? ? outstanding ? none

Common Stock $.0001 par value; 8,500 sharesauthorizedat December 31, 2020 and June 30, 2020,6,566 and 6,459issued at December 31, 2020 andJune 1 1 30, 2020, 6,554 and6,447 outstanding at December31,2020 and June 30, 2020

Class B Common Stock (10 votes per share) $.0001parvalue; 227 shares authorized at December 31, 2020and ? ? June 30, 2020; .146 issued and outstandingatDecember31, 2020 and June 30, 2020

Class C Common Stock (25 votes per share) $.0001parvalue; 567 shares authorized at December 31, 2020and ? ? June 30, 2020, 383 issued and outstanding atDecember 31, 2020 and June 30, 2020

Paid-in capital in excess of par value 185,101 183,076

Accumulated deficit (50,596 ) (56,215 )

Treasury stock, at cost - 12 shares of common stockat (675 ) (675 )December 31, 2020 and June 30, 2020

Total Fonar Corporation?s Stockholders? Equity 133,831 126,187

Noncontrolling interests (1,955 ) 55

Total Stockholders' Equity 131,876 126,242

Total Liabilities and Stockholders' Equity $ 182,148 $ 180,259

*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 2020 2019Patient fee revenue ? net of contractual allowances $ 5,238 $ 5,996 and discountsProduct sales ? net 3 3 Service and repair fees ? net 1,862 2,038 Service and repair fees - related parties ? net 28 28 Management and other fees ? net 11,340 10,996 Management and other fees - related medical practices 2,693 2,390 ? netTotal Revenues ? Net 21,164 21,451 COSTS AND EXPENSES Costs related to patient fee revenue 2,649 2,958 Costs related to product sales 192 120 Costs related to service and repair fees 608 772 Costs related to service and repair fees - related 9 10 partiesCosts related to management and other fees 6,237 6,203 Costs related to management and other fees ? related 1,522 1,621 medical practicesResearch and development 424 583 Selling, general and administrative 4,541 4,163 Total Costs and Expenses 16,182 16,430 Income From Operations 4,982 5,021 Interest Expense (16 ) (19 )Investment Income 75 139 Income Before Provision for Income Taxes and 5,041 5,141 Noncontrolling InterestsProvision for Income Taxes (1,113 ) (932 )Net Income 3,928 4,209 Net Income - Noncontrolling Interests (817 ) (1,105 )Net Income ? Attributable to FONAR $ 3,111 $ 3,104 Net Income Available to Common Stockholders $ 2,923 $ 2,914 Net Income Available to Class A Non-Voting Preferred $ 140 $ 142 StockholdersNet Income Available to Class C Common Stockholders $ 48 $ 48 Basic Net Income Per Common Share Available to Common $ 0.45 $ 0.45 StockholdersDiluted Net Income Per Common Share Available to $ 0.44 $ 0.44 Common StockholdersBasic and Diluted Income Per Share ? Class C Common $ 0.12 $ 0.13 Weighted Average Basic Shares Outstanding ? Common 6,465 6,447 StockholdersWeighted Average Diluted Shares Outstanding - Common 6,593 6,575 StockholdersWeighted Average Basic and Diluted Shares Outstanding 383 383 ? Class C Common

CONDENSED CONSOLIDATED STATEMENTS OF INCOME(Amounts and shares in thousands, except per share amounts)(UNAUDITED) FOR THE SIX MONTHS ENDED DECEMBER 31,REVENUES 2020 2019Patient fee revenue ? net of contractual allowances $ 10,330 $ 12,041 and discountsProduct sales ? net 31 195 Service and repair fees ? net 3,788 4,102 Service and repair fees - related parties ? net 55 55 Management and other fees ? net 22,554 22,024 Management and other fees - related medical practices 5,386 4,780 ? netTotal Revenues ? Net 42,144 43,197 COSTS AND EXPENSES Costs related to patient fee revenue 5,169 5,820 Costs related to product sales 325 450 Costs related to service and repair fees 1,234 1,522 Costs related to service and repair fees - related 18 20 partiesCosts related to management and other fees 11,788 12,208 Costs related to management and other fees ? related 2,950 3,157 medical practicesResearch and development 824 1,055 Selling, general and administrative 10,704 8,458 Total Costs and Expenses 33,012 32,690 Income From Operations 9,132 10,507 Other Expenses (140 ) ? Interest Expense (38 ) (40 )Investment Income 187 287 Income Before Provision for Income Taxes and 9,141 10,754 Noncontrolling InterestsProvision for Income Taxes (1,962 ) (2,039 )Net Income 7,179 8,715 Net Income - Noncontrolling Interests (1,560 ) (2,313 )Net Income ? Attributable to FONAR $ 5,619 $ 6,402 Net Income Available to Common Stockholders $ 5,281 $ 6,010 Net Income Available to Class A Non-Voting Preferred $ 252 $ 292 StockholdersNet Income Available to Class C Common Stockholders $ 86 $ 100 Basic Net Income Per Common Share Available to Common $ 0.82 $ 0.93 StockholdersDiluted Net Income Per Common Share Available to $ 0.80 $ 0.92 Common StockholdersBasic and Diluted Income Per Share ? Class C Common $ 0.23 $ 0.26 Weighted Average Basic Shares Outstanding ? Common 6,456 6,440 StockholdersWeighted Average Diluted Shares Outstanding - Common 6,584 6,568 StockholdersWeighted Average Basic and Diluted Shares Outstanding 383 383 ? Class C Common

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts and shares in thousands, except per share amounts)(UNAUDITED) FOR THE SIX MONTHS ENDED DECEMBER 31, 2020 2019Cash Flows from Operating Activities: Net income $ 7,179 $ 8,715 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization 2,009 2,003 Amortization on right-of-use assets 1,922 1,656 Provision(Recovery) for bad debts 2,825 (978 )Deferred income tax ? net 1,962 1,816 Compensatory element of stock issuances 83 ? Stock issued for costs and expenses 1,941 1,990 Abandoned patents 1 ? (Increase) decrease in operating assets, net: Accounts, medical and management fee receivable(s) (5,549 ) (4,300 )Notes receivable 25 11 Costs and estimated earnings in excess of billings on ? 372 uncompleted contractsInventories (195 ) 47 Income tax receivable 671 ? Prepaid expenses and other current assets 452 330 Other assets (1 ) (45 Increase (decrease) in operating liabilities, net: Accounts payable 233 (576 )Other current liabilities (2,748 ) 430 Operating lease liabilities (1,657 ) (1,447 )Financing lease liabilities 24 ? Customer deposits 378 28 Billings in excess of costs and estimated earnings on ? 12 uncompleted contractsOther liabilities (3 ) 123 Net cash provided by operating activities 9,552 10,187 Cash Flows from Investing Activities: Purchases of property and equipment (2,143 ) (4,656 )Purchase of short term investment ? (199 )Cost of patents (90 ) (62 )Net cash used in investing activities (2,233 ) (4,917 )Cash Flows from Financing Activities: Repayment of borrowings and capital lease obligations (35 ) (24 )Proceeds from debt 63 ? Distributions to noncontrolling interests (3,570 ) (3,735 )Net cash used in financing activities (3,542 ) (3,759 )Net Increase in Cash and Cash Equivalents 3,777 1,511 Cash and Cash Equivalents - Beginning of Period 36,802 13,882 Cash and Cash Equivalents - End of Period $ 40,579 $ 15,393



Contact: Daniel CulverDirector of CommunicationsE-mail: investor@fonar.comwww.fonar.comPhone: (631) 694-2929Fax: (631) 390-1772