Fonar 2026 Q1 Earnings Revenue Rises 4.3% Amid 33.3% Net Income Drop

FONAR (FONR) reported mixed first-quarter fiscal 2026 results, with revenue growth offset by a sharp decline in profitability. The company’s shares edged up 0.48% in the latest session but face broader short-term volatility.

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 contributed $7.57 million, with product sales accounting for $316,000. Service and repair fees totaled $2.18 million, including $45,000 from related parties. Management and other fees were the largest segment at $12.94 million, with an additional $2.99 million from related medical practices.

Earnings/Net Income

Despite revenue growth, Fonar’s net income plummeted 33.3% to $2.67 million, while EPS fell 23.1% to $0.10. The earnings decline reflects rising operating costs and administrative expenses, which surged 33% to $6.8 million.

Price Action

The stock has faced short-term headwinds, dropping 5.25% month-to-date. Historically, buying shares on revenue raise announcements has yielded mixed results, with the strategy experiencing gains in some quarters but losses in others over the past three years.

Post-Earnings Price Action Review

The strategy of buying Fonar shares on the date of its revenue raise announcement and holding for 30 days showed mixed performance over the past three years. The 30-day holding period captures short-term volatility, including potential gains from the initial positive reaction to the revenue raise announcement. The total return over the three years includes the compounding effect of the 30-day returns, which can either enhance or diminish the overall gain. The strategy’s success is dependent on the company’s continued growth trajectory and the market’s response to its revenue announcements.

CEO Commentary

Timothy Damadian, Chairman and CEO, emphasized HMCA’s role as the primary revenue driver, noting a 3.9% increase in scan volume year-over-year to 55,106. He highlighted plans to expand MRI capacity in Nassau County, including adding a second scanner at an existing STAND-UP MRI center and opening a new facility. Damadian also reiterated the company’s focus on leveraging its patented upright MRI technology to meet diverse diagnostic needs.

Guidance

The company did not provide explicit financial guidance for the remainder of fiscal 2026. However, management expressed optimism about growth through strategic expansions and technological advancements in MRI services.

Additional News

1. Take-Private Proposal: A group led by CEO Timothy Damadian submitted a $17.25-per-share cash offer, representing a 27% premium over the 90-day average price. The Special Committee of independent directors is evaluating the proposal.

2. Board Appointment: Robert M. Carrino joined the board as an independent director, bringing expertise in public accounting and SPACs to support the company’s strategic initiatives.

3. Stock Buyback Suspension: Share repurchases under the $9 million plan were paused due to the ongoing take-private negotiations.

Earnings Decline Overshadows Revenue Growth

The earnings shortfall, despite robust revenue, underscores margin pressures from rising operational costs. Investors will need to monitor how management navigates these challenges while advancing its expansion plans.