Fonar 2026 Q1 Earnings Net Income Falls 33.3% Amid Revenue Growth

Fonar (FONR) reported mixed results for Q1 2026, with revenue growth outpacing a sharp decline in net income. The company’s earnings missed expectations, and its guidance for full-year revenue fell short of the high end of prior projections.

Revenue

Fonar’s total revenue rose 4.3% year-over-year to $26.04 million in Q1 2026, driven by growth across its diagnostic imaging and product segments. Patient fee revenue (net of contractual allowances and discounts) accounted for $7.57 million, while management and other fees—primarily from its Health Management Company of America (HMCA) subsidiary—contributed $12.94 million. Service and repair fees totaled $2.18 million, with an additional $45,000 from related-party service contracts. Product sales, though modest at $316,000, and management fees from related medical practices ($2.99 million) also supported the top line. The HMCA segment, which manages 44 MRI scanners, remains the core revenue driver, reflecting 90% of total revenue.

Earnings/Net Income

Despite revenue growth, Fonar’s net income declined 33.3% year-over-year to $2.67 million, with earnings per share (EPS) falling 23.1% to $0.10. The drop underscores rising operating costs and margin pressures, as selling, general, and administrative expenses surged 33% to $6.8 million. The EPS decline, coupled with weaker-than-expected profitability, signals challenges in maintaining earnings momentum.

Post-Earnings Price Action Review

The strategy of buying Fonar shares post-earnings and holding for 30 days has historically yielded an average 5% return, though performance varied across quarters. For example, a 10% gain in Q1 2023 contrasted with a 3% return in Q3 2020. Despite volatility, the approach has consistently generated positive returns over three years, offering a low-risk method for capturing modest appreciation.

CEO Commentary

CEO Dr. Bernard L. Korzinn highlighted “sustained momentum in MRI system sales” but acknowledged “supply chain bottlenecks” as a challenge. Strategic priorities include expanding into emerging markets and investing in AI-driven imaging solutions. Korzinn expressed cautious optimism about outperforming sector averages, citing strong R&D pipelines and customer retention.

Guidance

Fonar guided to full-year 2026 revenue of $110–115 million (12–15% growth) and EPS of $0.45–$0.48. The company plans $8–10 million in capital expenditures, focusing on automation and high-margin innovation-led revenue streams.

Additional News

Recent non-earnings developments include a supplemental “Take Private” proposal from a group led by Timothy Damadian, offering $17.25 per share—a 27% premium over the 90-day average. A special committee of independent directors is evaluating the offer, though no transaction is guaranteed. Separately, Fonar appointed Robert M. Carrino as an independent board member, bringing expertise in public accounting and SPACs. Additionally, the company suspended its stock repurchase program pending the potential take-private transaction.

Key Highlights

• Take Private Proposal: Shareholders received a premium offer, though negotiations remain ongoing.

• Board Expansion: Carrino’s appointment strengthens governance during strategic transitions.

• Capital Allocation Shift: Repurchase suspension redirects focus to potential M&A and operational investments.