Fonar(FONR) - 2022 Q2 - Quarterly Report

Financial Performance - For the six-month period ended December 31, 2021, the company reported a net income of $10.3 million on revenues of $48.2 million, compared to a net income of $7.2 million on revenues of $42.1 million for the same period in 2020, representing a revenue increase of 14.4%[92] - Operating income increased from $9.1 million for the first six months of fiscal 2021 to $12.2 million for the first six months of fiscal 2022, reflecting a significant improvement in profitability[95] - Patient fee revenue increased by $4.0 million, from $10.3 million in the first six months of fiscal 2021 to $14.3 million in fiscal 2022, contributing to overall revenue growth[94] - Revenues from product sales and service and repair fees increased by 9.6%, from $3.9 million to $4.2 million for the same periods[94] - HMCA revenues increased by 14.9% to $44.0 million from $38.3 million for the first six months of fiscal 2021, indicating strong performance in diagnostic facilities management[111] Operational Metrics - The number of scans performed at the company's centers increased from approximately 86,000 in the first six months of fiscal 2021 to approximately 94,000 in fiscal 2022, showing recovery in scan volume[115] - Foreign revenues increased by 72.2%, from approximately $205,000 in the first six months of fiscal 2021 to approximately $353,000 in fiscal 2022, although this is not regarded as a material trend[108] Expenses and Liabilities - Selling, general and administrative expenses decreased to $9.9 million in the first six months of fiscal 2022 from $10.7 million in the same period of fiscal 2021, primarily due to reduced reserves on management fees[120] - Research and development expenses decreased by 8.4% to $755,000 for the first six months of fiscal 2022 from $824,000 in the same period of fiscal 2021[121] - The company experienced an increase in net management fee and medical receivables by 4.5% to $59.2 million at December 31, 2021, attributed to slower collections from no-fault and workers' compensation revenue[122] - Total liabilities decreased by 5.3% to $51.3 million at December 31, 2021, down from $54.1 million at June 30, 2021[149] - The company's working capital increased to $97.9 million at December 31, 2021, up from $88.5 million at June 30, 2021[151] - The Company reported a decrease in "other" current liabilities by 49.6% to $4.6 million at December 31, 2021, from $9.2 million at June 30, 2021[149] Cash Flow and Investments - Cash provided by operating activities for the first six months of fiscal 2022 was $5.8 million, primarily due to net income of $10.3 million and depreciation of $2.4 million[145] - Cash used in investing activities for the first six months of fiscal 2022 was $2.7 million, including $2.1 million for property and equipment purchases[146] - The Company entered into a $701,000 loan agreement under the Paycheck Protection Program, which was fully forgiven in August 2021[156] - Fonar plans to invest approximately $1.0 million in capital expenditures for an additional scanner at a new facility in Florida[157] Technology and Innovation - The Upright® MRI technology allows for scanning patients in multiple positions, which can lead to better treatment outcomes[130] - The company has developed a unique Upright® MRI that can visualize conditions like scoliosis without the risks associated with x-ray exposure, benefiting over 3 million American women[137] - A study showed that the Upright® MRI detected significant pathology that was missed by traditional static MRIs, with a miss-rate of 35.1% for spondylolisthesis at the L4-5 vertebral level[140] Future Outlook - The company believes that the benefits from certain deferred tax asset carryforwards may not all be fully realized, leading to a valuation allowance being established[152] - The business plan focuses on improving and expanding MRI facilities and increasing the number of scans performed[158] - Management aims to enhance market recognition of Fonar's scanner products and increase demand for Upright® scanning[159] - The Company has achieved profitability for eight consecutive fiscal years and expects to maintain adequate capital resources through at least February 15, 2023[160] - The future impact of healthcare legislation, COVID-19, and economic conditions on the business remains uncertain[160] - The Company maintains its funds in liquid accounts, with all transactions conducted in U.S. dollars[161]