FONAR Stock Gains Post Y/Y Decline in Q1 Earnings and Profit

Core Insights - FONAR Corporation's stock has seen a slight increase of 0.2% following its earnings report for the quarter ended September 30, 2025, while the S&P 500 Index rose by 1.9% during the same period [1] - The company reported a 4.3% increase in total revenues to $26 million, driven by growth in its Health Management Company of America (HMCA) subsidiary, but profitability weakened with a 30.7% decline in income from operations [2][3] Revenue and Profitability - Total revenues increased from $24.9 million to $26 million, primarily due to the expansion of HMCA [2] - Income from operations decreased by 30.7% to $3.2 million, and consolidated net income fell by 33.3% to $2.7 million [2] - Diluted net income per share dropped by 26.1% to $0.34 from $0.46 [2] Segment Performance - The FONAR equipment and service division saw a revenue increase of 17.9% to $2.5 million, while HMCA revenues rose by 3.1% to $23.5 million [3] - Despite revenue growth, rising selling, general and administrative (SG&A) costs increased by 32.8% to $6.8 million, impacting overall profitability [3][9] Operational Metrics - Scan volume reached 55,106, a 3.9% increase compared to the same quarter of the previous fiscal year, marking the second-highest quarterly scan volume in HMCA's history [4] - Total costs and expenses rose by 12.3% to $22.8 million, reflecting inflationary pressures and increased operational activity [5][9] Cash Position and Liquidity - Cash and cash equivalents decreased from $56.3 million to $54.3 million, but the company maintains a strong liquidity position with a current ratio of 8.6 [6] Management Insights - Management highlighted the growth of the HMCA network, which now operates 44 MRI scanners, with plans for further expansions to alleviate patient backlogs [7][8] - A second MRI is expected to be added at a Nassau County center in the fiscal second quarter, with additional centers planned [8] Future Outlook - While no formal financial guidance was provided for the remainder of fiscal 2026, management anticipates continued growth in scan volume and the HMCA network [11] - The company is evaluating a non-binding proposal to take FONAR private, with a special committee reviewing the proposal [12] Stock Repurchase Program - As of September 30, 2025, FONAR had repurchased over 283,770 shares at a total cost of $6.1 million, although share repurchases are currently suspended pending discussions on the potential going-private transaction [13]