Fonar(FONR) - 2025 Q2 - Quarterly Report

Financial Performance - For the six-month period ended December 31, 2024, net income was $6.3 million on revenues of$50 million, a decrease from net income of $10.0 million on revenues of$51.2 million for the same period in 2023, representing a revenue decline of 2.6%[102][104] - Operating income decreased to $7.0 million for the first six months of fiscal 2025, down from$11.5 million for the same period in fiscal 2024, due to a 7.5% increase in costs and expenses to $42.8 million[108][114] - HMCA revenues decreased by 2.9$45.9 million for the first six months of fiscal 2025 from $47.3 million for the same period in fiscal 2024, with the segment contributing 92.0$9.5 million, down from $13.2 million in the same period of fiscal 2024, attributed to increased expenses and reduced patient fee revenue[132] Revenue Sources - Revenues from MRI product sales decreased to$145,000 for the first six months of fiscal 2025 from $219,000 for the same period in fiscal 2024, reflecting economic uncertainty and lower reimbursement rates[123] - Service revenues increased to$3.8 million for the first six months of fiscal 2025 from $3.7 million for the same period in fiscal 2024, while costs related to providing service increased to$2.1 million from $1.7 million[124][125] - HMCA revenues decreased by 1.8$23.1 million for the three months ending December 31, 2024, compared to $23.5 million for the same period in 2023[131] Costs and Expenses - Cost of revenues increased to$27.6 million for the first six months of fiscal 2025, compared to $26.4 million for the same period in fiscal 2024[134] - Operating loss for the medical equipment segment increased to$2.3 million for the first six months of fiscal 2025 from an operating loss of $1.7 million for the same period in fiscal 2024[128] - Interest expense decreased by 63.2$14,000 in the first six months of fiscal 2025 from $38,000 in the same period of fiscal 2024[116] - Research and development expenses decreased by 22.7$683,000 for the first six months of fiscal 2025 from $883,000 for the same period in fiscal 2024[116] Operational Metrics - The aggregate number of scans performed by owned sites decreased to 26,961 from 28,214 in the first half of fiscal 2024, while scans managed increased to 79,207 from 73,776[107] - Medicare reimbursement rates for MRI scans continue to see year-over-year reductions, impacting overall patient volume and reimbursement rates from commercial insurers[119] Cash Flow and Financial Position - Cash provided by operating activities for the first six months of fiscal 2025 was$3.9 million, primarily from net income of $6.2 million[138] - Total liabilities decreased by 14.7$49.0 million at December 31, 2024, from $57.5 million at June 30, 2024[141] - Working capital increased to$125.4 million at December 31, 2024, from $122.5 million at June 30, 2024[143] Future Plans and Risks - FONAR plans to place an additional scanner in New York by the fourth quarter of fiscal 2025, with estimated costs of$2.0 million[148] - FONAR entered into an agreement with AIRS Medical to install the SwiftMR™ product on all FONAR Upright® scanners, aiming to improve image quality and operational efficiency[150] - The company believes its business plan has supported profitability for the past ten consecutive fiscal years and the first six months of fiscal 2025[152] - Future business operations may face adverse consequences from healthcare legislation, reimbursement rates, and economic conditions[152]