The MRI, Fonar install work perfect, all medicals apreciate this new technology. Here in Arabia Saudi, and the prince test this machine and we upgrade a company with a potential market over 60 Bill $.
From Arabia Saudi, thanks Mr. Damadian for this new and advance technology taht save lives.
Sentiment: Strong Buy
January 18 2015 I posted: "I expect Q2 revenue of $18,6 - $18.9 million and net income of $3.2 - $3.4 million. Basic net income per common share available to common stockholders of 40 cents."
Fonar just reported: Revenue of $17.1 million, net income of $3.5 million and Basic net income per common share available to common stockholders of 41 cents.
The Q2 revenue was lower than I expected. In my forecast I expected at least 1 of 3 orders from October 2014 would be shipped before December 31. The net income is much better than my expectation if you consider the lower revenue. Gross profit from total revenue in Q2 2015 of 47.1% is significantly up from 44.5% in Q1 2015 and 45.1% in fiscal 2014. Another improvement in Q2 is Provisions for bad debts of only $273,000 compared to $506,000 in Q1 2015.
Total Fonar Corporation Stockholder Equity of $30.6 million or book value of $5.0 per diluted share. Fonar's current assets reduced by total liabilities is $18.8 million or up by $3.0 million compared to Q1 2015 and up $5.9 million compared to June 2014. Fonar's cash and cash equivalents is now 40% of the company's total liabilities. Within 2 years Fonar's cash and cash equivalents surpasses its total liabilities.
At an average Basic net income per share of 40 cents per quarter Fonar's book value is going to reach $10 in 3 years. Cash and cash equivalents of $30 millions or half the book value of $10.
If Fonar in Q3 is able to ship 2 of the 3 MRI scanners in backlog ($1.5 million per MRI scanner) the basic net income is going to increase to 45 cents even if gross profit on the 2 MRI scanners is as low as 9%.
Key Stats FONR
Rev Growth (3 Yr Avg) 27.4
Net Income Growth (3 Yr Avg) 48.7
Operating Margin % 16.8
Net Margin % 14.1
FONR will go higher. Go FONR and GLTAL!
I am projecting $18 million in revenue and $2.8 million in net income for FONR for Q2 quarter. We will see in a couple weeks. Business is strong and margins are also. The numbers above would indicate consistent growth. Balance sheet is very strong. If FONR can hit the above results, I would conservatively estimate their intrinsic value to be $135 million (based on assets, liabilities, revenue, cash flow, etc). That comes to about $23 per share.
Sentiment: Strong Buy
Fonar 10-Q report released February 9 2015 page 20: "On January 8, 2015, the Company purchased 20% of the Class A members ownership interest in Health Diagnostic Management LLC for a cost of $4,971,000. After this transaction, the Company has a 60.4% ownership interest."
100% Class A members ownership has a total market value of $24,855,000 if 20% has a value of $4,971,000. According to the annual report 10-K page 63 the net income in fiscal 2014 to Class A members in HDM LLC was $2,266,473. Fonar has January 8 2015 paid Fonar paid at a P/E of 11. If HDM LLC with the 14 scanning centers has a P/E of 11. Fonar's management must believe Fonar's other 12 centers has a similar P/E value.
In fiscal 2014 Fonar's total net income was $13.4M. Minority interests was $3.0M. Net income to common shareholders was $10.4M.
In fiscal 2015 first 6 month Fonar's net income was $6.7M. Minority interests was $1.5M. Net income to common shareholders was $5.2M. Fonar's revenue isn't dependent of sesaon. We could expect another net income to common shareholders of $5.2M in the 2nd half of fiscal 2015.
If Fonar's management purchase 20% Class A members ownership at a P/E of 11, Fonar has to be priced at a P/E of 11, because managements alternative was a stock repurchase program buying back Fonar shares. Common shareholders net income in fiscal 2014 of $10.4 and another $10.4M again in fiscal 2015 at a P/E of 11. Fonar's valuation has to be $10.4M x 11 or $114.4M. Fonar has 6,179,000 basic diluted shares and must trade at minimum $18.5.
Next the share price of $18.5 doesn't even consider the value of Fonar's patents and rights to the MRI scanners. Consider the value of the MRI patents and Fonar must trade at $25 or more.
Sentiment: Strong Buy
ronzi ( I mean coalporter123) maybe you should seek another stock to short as this one might be detrimental to your financial health. I make it a rule not to short stock with a 5 million float
Good luck you are going to need it
Sentiment: Strong Buy
One year ago, May 2014, Dr. Damadian wrote a very bullish letter to shareholders. In it he traced the number of MRI scans completed in the company's captive imaging centers. They more than tripled to over 100,000 in 2013 from 2009. What is the main import? It affirms the underlying value of the hardware, along with the equipment sales, which are certainly and understandably, inadequate. But that is the point-- the company will ultimately be valued by a major, like GE, for equipment sales POTENTIAL. And it will take a major, like GE to unleash that. That brings me to the interesting history, which I shall leave for a later post.
Sentiment: Strong Buy
Hussain, is it true that only men are allowed to have MRIs in Saudi Arabia? Saudi Arabia practices Sharia law. I wonder if ISIS will buy any MRIs from FONR. Our president's middle name is Hussain.
Revenues for the medical equipment segment as a whole increased by 13.4% to $6.7 million for the six months of fiscal 2015 from $5.9 million for the first six months of fiscal 2014. Operating results for our medical equipment segment increased to an operating income of $824,000 for the first six months of fiscal 2015 as compared to an operating income of $131,000 for the first six months of fiscal 2014. For the first six months of fiscal 2015, our medical equipment segment recognized net income of $784,000, compared to a net loss of $31,000 in the same period of fiscal 2014.
Margin of safety. The small float is double edge sword. Hedge funds and mutual funds buying FONR know that there is no easy way out if they are wrong therefore they are hesitant to enter. When you are right with a 6 million float stock you get what occurred when we rallied to 27. I think based on a P/E of 8 we should be trading at a minimum of 13 and not the 6.67 P/E that we are currently trading at..
10 P/E would get us to 16 which I think is where we are headed.
I expect Q2 revenue of $18,6 - $18.9 million and net income of $3.2 - $3.4 million. Basic net income per common share available to common stockholders of 40 cents. My taget on Fonar is $28.
Fonar trades at a value of $65 million with book value of $28 million.
Fonar has "Total deferred tax assets" of $67.9 million from operating carryforwards etc. Fonar's annual income is above 11 million and the company is income tax free of income of $200 million.
Fonar is extremely undervalued at this point. The Q2 report is released in 14-17 days.
Some additional good news in the 10Q after the close. This should give a further boost to earnings in the current quarter:
Subsequent to the end of the second quarter, on January 8, 2015, the Company purchased 20% of the outside investors’ membership interests in HDM for $5.0 million, thereby increasing the Company’s interests in HDM from 50.5% to 60.4%. The result and intent of this purchase was to increase the share of HDM’s income allocable to the Company.
FONR is at $12.81(2/25/15) now.
Note that FONR was at $21/$26 last year. (see below)
Date Open High Low Close
Jan 16, 2014 24.07 24.78 21.35 21.87
Jan 15, 2014 25.50 25.86 24.07 24.38
Jan 14, 2014 24.75 25.73 24.31 25.48
Jan 13, 2014 25.88 27.95 24.37 24.75
Jan 10, 2014 25.00 25.99 24.06 25.88
Jan 9, 2014 25.26 25.88 24.05 24.79
Jan 8, 2014 26.32 26.40 24.60 25.37
Jan 7, 2014 24.47 26.37 24.00 26.32
The best is yet to come. Go FONR and GLTAL!
FONR earnings of .40/share is pretty impressive considering they're being hurt by MRI reimbursement rate cuts due to Obamacare. And they only recognized $375K of product sales revenue in the quarter. Those 3 separate MRI orders they announced in October had only a minimal revenue impact, if any at all. And they still earned .40/share!
Looking good for next quarter as those MRI machines sell for nearly $1.5M each. So I think fiscal Q3 could see a $1M-$2M sequential revenue increase over Q2. Easier comp too. FONR could post Q3 earnings of .40-.45/share vs. only .26/share last year. I'd expect the stock to move up to $15-$18 if that happens.
FONR traded in the $20's early last year, and earnings are better now. Stock looks like a great buy in the $10's. Solid numbers last quarter, should have an even better comp coming up. Cash position at almost $2/share and should continue to grow. With Republicans back in charge of both houses of Congress and looking to make changes to Obamacare (if not repeal it completely), FONR should only benefit.