Total revenue for FONAR Corporation’s first‑quarter fiscal 2026 rose 4 % to $26.0 million, up from $25.0 million in the same period a year earlier. The increase was driven by a 3 % lift in the Health Management Company of America (HMCA) segment, which generated $23.5 million, and a 14 % jump in the medical‑equipment segment, which earned $2.5 million. HMCA’s scan volume reached 55,106, a 3.9 % increase over the comparable quarter of fiscal 2025 and only 0.7 % below the record high of 55,473 seen the previous quarter, underscoring steady demand for the company’s imaging‑management services.
Operating income fell 30 % to $3.2 million from $4.6 million a year earlier, while net income declined 33 % to $2.7 million. The margin squeeze is largely attributable to a 33 % rise in selling, general and administrative (SG&A) expenses, which climbed to $6.8 million. Management attributes the SG&A increase to higher staffing costs and expanded service‑delivery investments under the company’s dual‑engine strategy, which aims to grow both the HMCA and product‑sales businesses. The higher operating costs, combined with modest revenue growth, eroded profitability despite the top‑line gain.
Cash and cash equivalents decreased 4 % to $54.3 million, and working capital slipped 0.3 % to $127.1 million. The modest decline in liquidity reflects the company’s ongoing capital allocation to support its dual‑engine expansion, including the purchase of additional MRI scanners and the development of new service contracts. The company’s stock‑repurchase program, which has bought more than 283,770 shares for $6.1 million as of September 30 2025, also contributed to the cash outflow.
Chairman and CEO Timothy Damadian noted that HMCA remains the company’s primary profit driver, citing the 3.9 % scan‑volume growth as evidence of sustained demand. He added that the company is “continuing to invest in high‑return verticals” and that the dual‑engine strategy will “position FONAR for long‑term growth” even as it navigates rising operating costs. Damadian also highlighted the impact of Florida’s 2023 Tort Reform Act, which reduced patient fees at six Florida facilities and contributed to the modest revenue decline in that region.
The results signal a short‑term challenge: margin compression amid higher SG&A and modest revenue growth. However, the company’s solid cash position, ongoing scan‑volume momentum, and strategic investments suggest that FONAR is positioning itself for future profitability. Investors will likely focus on how effectively the company can control costs while expanding its service and product portfolios, and whether the dual‑engine strategy will translate into sustainable margin recovery in the coming quarters.
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