Fonar(US:FONR)2022-09-28 19:16MRI Technology and Market Position - Fonar's Upright® MRI scanners accounted for approximately 0.1% of total revenues and 0.8% of medical equipment revenues in fiscal 2022, down from 0.8% and 10.0% respectively in fiscal 2021[42]. - The Upright® MRI technology has shown significant medical benefits, particularly for conditions like Arnold-Chiari Syndrome, which affects an estimated 200,000 to 500,000 Americans[28]. - The company introduced the Upright® MRI scanner in 1980, which allows for weight-bearing imaging, a unique feature not available in conventional MRI systems[22]. - Fonar's principal markets for its scanners are private diagnostic imaging centers and hospitals[44]. - Fonar's installed base of MRI scanners continues to provide an additional source of income independent of direct sales[50]. - The company maintains a competitive advantage in the MRI market due to its unique ability to scan patients in weight-bearing positions[70]. - The Upright MRI technology offers a significant contrast advantage, with soft tissue contrasts for detecting cancers reaching up to 180%[66]. - Fonar's MRI scanners are classified as Class II devices by the FDA, requiring compliance with general and special controls[82]. Financial Performance and Revenue - Service and maintenance revenues from the external installed base of MRI scanners were approximately $7.7 million for both fiscal 2022 and fiscal 2021[51]. - HMCA recognized revenues of $89.4 million from MRI facilities in fiscal 2022, up from $80.9 million in fiscal 2021, representing an increase of approximately 6.2%[122]. - Patient fees net of provision for bad debts at Florida facilities were $29,582,238 in fiscal 2022, compared to $23,307,389 in fiscal 2021, representing a growth of approximately 27.5%[136]. - Medicare revenues accounted for approximately 3.2% of the revenues for HMCA's clients in fiscal 2022, down from 3.4% in fiscal 2021[149]. - Medicaid revenues represented approximately 0.07% of HMCA's clients' revenues in fiscal 2022, a decrease from 0.09% in fiscal 2021[150]. - The management fees payable by facilities to HMCA in fiscal 2022 averaged $4,865,443 per month, slightly down from $4,897,720 per month in fiscal 2021[134]. - For the fiscal year ended June 30, 2022, approximately 57.7% of HMCA's clients' receipts were from patients covered by no-fault insurance, while 8.6% were from workers' compensation programs[186]. Research and Development - Research and development expenditures for the fiscal year ended June 30, 2022, were $1,494,181, compared to $1,635,979 for the fiscal year ended June 30, 2021[53]. - The development of new clinical protocols and software improvements is ongoing, enhancing the diagnostic capabilities of Fonar's MRI scanners[57]. - Fonar holds 223 issued patents and has approximately 10 patents pending as of June 30, 2022, enhancing its competitive position in the MRI market[64]. Compliance and Regulatory Matters - The company believes it is in compliance with federal regulations, including the False Claims Act and Stark Law, which govern healthcare practices[162]. - The company maintains a compliance program to monitor adherence to federal and state laws, including periodic audits of operations and educational programs for clients[187][188]. - The company anticipates encountering costs associated with future compliance with HIPAA and state laws, which could materially affect its business[177]. - Fonar has initiated six voluntary recalls, with five classified as Class II and one as Class III, involving minor corrections to products[101]. - The company received ISO 13485 certification for its Quality Management System in April 2003, ensuring compliance with international standards[114]. Operational Strategy and Growth - Fonar expects to continue focusing on the Upright® MRI in the immediate future due to its unique capabilities[43]. - HMCA's growth strategy includes upgrading existing facilities and expanding the number of facilities managed, with plans to install two new facilities in fiscal 2023[123]. - The company aims to increase the number of managed facilities in promising market conditions to enhance patient volume and revenue[140]. - The implementation of the Deficit Reduction Act has adversely affected reimbursement rates, but the company has countered this by increasing scan volumes through marketing efforts[168]. - HMCA's marketing programs focus on establishing and maintaining relationships with referring physicians to drive patient referrals[142]. - The outpatient diagnostic imaging industry is highly competitive, with HMCA emphasizing the advantages of its Upright® MRI scanning technology[156]. Financial Position and Assets - Total current assets increased to $118,686,174 in June 2022, up from $108,583,484 in June 2021, representing a growth of approximately 10.2%[299]. - Medical receivables net increased to $20,108,989 in June 2022, compared to $17,900,489 in June 2021, reflecting a rise of about 12.3%[299]. - Total assets increased to $199,341,982 in June 2022, up from $189,506,195 in June 2021, marking a growth of approximately 5.4%[299]. - Total liabilities decreased to $53,105,701 in June 2022 from $54,136,070 in June 2021, indicating a reduction of approximately 1.9%[302]. - Current portion of long-term debt and capital leases significantly reduced to $40,078 in June 2022 from $173,206 in June 2021, a decrease of about 76.8%[302]. - Long-term debt and capital leases, less current portion, decreased to $155,379 in June 2022 from $760,254 in June 2021, a significant reduction of approximately 79.6%[302]. - Accounts receivable net of allowances decreased to $4,335,956 in June 2022 from $4,525,435 in June 2021, a decline of about 4.2%[299]. - Other current liabilities decreased to $6,417,227 in June 2022 from $9,162,118 in June 2021, representing a decline of approximately 30.0%[302].