Fonar 2026 Q1 Earnings Net Income Declines 33.3% Amid Rising Expenses

Fonar Corporation (NASDAQ: FONR) reported mixed results for Q1 2026, with revenue growth offset by declining profitability. The company’s EPS and net income fell year-over-year as operating expenses surged, raising concerns about margin pressures. Fonar did not provide forward guidance, leaving investors to assess future performance trends.

Revenue

Fonar’s total revenue rose 4.3% to $26.04 million in Q1 2026, driven by its diagnostic imaging management subsidiary, HMCA. Patient fee revenue, net of contractual allowances and discounts, contributed $7.57 million, while management and other fees totaled $15.93 million, including $2.99 million from related medical practices. Product sales and service/repair fees added $316,000 and $2.225 million, respectively. The 4% year-over-year revenue increase reflects HMCA’s 44 MRI scanner operations but highlights margin compression due to rising costs.

Earnings/Net Income

Net income plummeted 33.3% to $2.67 million in Q1 2026, compared to $4 million in Q1 2025, while EPS dropped 23.1% to $0.10. The decline was driven by a 33% spike in selling, general, and administrative expenses to $6.8 million and a 12% rise in total costs to $22.8 million. The EPS shortfall underscores the company’s struggle to balance revenue growth with cost control.

Price Action

The stock price of Fonar edged up 0.48% during the latest trading day

Post-Earnings Price Action Review

Despite the earnings report, Fonar’s stock has shown mixed short-term performance. The latest trading day saw a modest 0.48% gain, but the stock has underperformed over the past week (-0.47%) and month (-5.25%). The lack of guidance and declining profitability may have dampened investor confidence, though the 4.3% revenue growth suggests some resilience in core operations. The weak price action reflects uncertainty around cost management and potential strategic moves like the proposed “take private” transaction.

CEO Commentary

Timothy Damadian, Chairman and CEO of FONAR, emphasized HMCA’s role as the company’s primary growth engine, noting a 3.9% increase in quarterly scan volume to 55,106. He highlighted plans to expand capacity, including adding a second MRI at an existing Nassau County center and launching a new facility later in the fiscal year. However, he acknowledged margin pressures, citing the 33% rise in SG&A expenses. Damadian also reiterated the ongoing evaluation of the “take private” proposal led by the management team, which could reshape the company’s strategic direction if finalized.

Guidance

FONAR did not provide explicit forward-looking guidance for future quarters. The CEO’s remarks focused on maintaining current operations and exploring strategic opportunities, with no quantitative targets disclosed. Investors remain cautious about the company’s ability to improve margins amid rising costs and potential share repurchase suspensions.

Additional News

FONAR’s recent news includes a non-binding “take private” proposal led by Timothy Damadian and Luciano Bonanni, offering $17.25 per share—a 27% premium over the 90-day average. A special board committee is reviewing the offer, though no decision has been made. Additionally, the company appointed Robert M. Carrino as an independent director to support its transition to an accelerated filer. Share repurchases under the 2022 program have been suspended due to the potential transaction, leaving $3.35 million of the $9 million authorization unused. These developments underscore strategic uncertainty but also signal governance enhancements.

The stock’s post-earnings volatility and pending corporate actions highlight Fonar’s precarious balance between operational growth and financial discipline. Investors will closely watch the outcome of the “take private” negotiations and the company’s ability to curb expenses while expanding its MRI network.