Fonar(FONR) - 2025 Q1 - Quarterly Report

Financial Performance - For the three-month period ended September 30, 2024, Fonar Corporation reported a net income of $4.0 million on revenues of $25.0 million, compared to a net income of $5.4 million on revenues of $25.8 million for the same period in 2023, indicating a revenue decrease of 3.4%[77][94] - Operating income decreased to $4.6 million for the first three months of fiscal 2025, down from $6.6 million in the same period of fiscal 2024, due to rising costs and expenses which increased by 5.6% to $20.4 million[79][94] - Revenues from the diagnostic facilities management segment decreased by 4.1% to $22.8 million in the first three months of fiscal 2025, compared to $23.8 million in the same period of fiscal 2024[88] Revenue Sources - Patient fee revenue decreased by $1.2 million, from $8.7 million in the first three months of fiscal 2024 to $7.5 million in fiscal 2025, contributing to the overall revenue decline[78] - The company has experienced lower reimbursement rates from Medicare and private insurance, impacting revenue from its scanning center business[118] - The reduced reimbursement rates negatively affect sales of MRI scanners, leading to lower revenue projections and potential price reductions from customers[128] Operational Efficiency - The number of scans performed increased to 53,054 in the three months ended September 30, 2024, up from 50,744 in the same period of 2023, reflecting operational efficiencies[79][89] - Fonar entered into an agreement with AIRS Medical to install the SwiftMR™ product on all Fonar Upright® scanners, which is expected to improve image quality and operational efficiency[111] Expenses and Costs - Research and development expenses decreased by 34.3% to $307,000 for the first three months of fiscal 2025, down from $467,000 in the same period of fiscal 2024[95] - Inflation has increased costs for materials and labor, making it difficult to achieve organic growth and profitability[119] Cash Flow and Liquidity - Cash and cash equivalents decreased from $56.4 million at June 30, 2024, to $54.3 million at September 30, 2024[101] - Cash provided by operating activities for the first three months of fiscal 2025 was $1.6 million, primarily due to net income and depreciation[102] - Cash used in investing activities was $1.8 million, mainly for the purchase of property and equipment[103] - Cash used in financing activities totaled $2.0 million, including repayments on long-term debt and treasury stock purchases[104] Liabilities and Working Capital - Total liabilities decreased by 7.0% to $53.5 million at September 30, 2024, from $57.5 million at June 30, 2024[105] - Current liabilities decreased by 20.0% to $14.4 million at September 30, 2024, from $17.9 million at June 30, 2024[107] - Working capital increased to $124.7 million at September 30, 2024, from $122.5 million at June 30, 2024[107] Future Investments and Challenges - The company plans to invest $2.0 million to place an additional scanner in New York, expected to be completed by the fourth quarter of fiscal 2025[109] - The company faces significant competition in the diagnostic imaging market from established hospitals and independent organizations[124] - Changes in Florida insurance law may lead to higher administrative costs and lower reimbursement rates for the company's facilities[127]