FONAR Faces Go-Private Bid Amidst Modest Revenue Growth

Ticker: FONR · Form: 10-K · Filed: Sep 22, 2025 · CIK: 355019

Sentiment: mixed

Topics: Medical Imaging, MRI Scanners, Going Private Transaction, Healthcare Management, Diagnostic Services, Shareholder Value, Reimbursement Risk

Related Tickers: FONR

TL;DR

**FONAR's management is trying to take the company private, signaling a potential exit for public shareholders at a time of modest growth and competitive pressures.**

AI Summary

FONAR Corporation, a Delaware corporation, reported total revenues for its physician management and diagnostic services segment increased to $95.4 million in fiscal year 2025, up from $94.6 million in fiscal year 2024. This segment, primarily through its subsidiary Health Management Corporation of America (HMCA), manages 44 MRI scanners across New York and Florida, with six facilities in Florida directly owned and operated by HMCA subsidiaries. Patient fees net of contractual allowances for these six Florida facilities were $33,179,446 in fiscal 2025, a decrease from $33,815,796 in fiscal 2024. The company's medical equipment segment designs, manufactures, sells, and services MRI scanners, including the Upright Multi-Position MRI. A significant development is a non-binding proposal received on July 7, 2025, from a group led by CEO Timothy Damadian and COO Luciano Bonanni to acquire all outstanding common stock, potentially taking the company private and delisting FONR from NASDAQ. Medicare revenues for HMCA's clients and subsidiaries represented approximately 2.6% of total revenues in fiscal 2025, down from 2.7% in fiscal 2024, reflecting reimbursement reductions. The company's growth strategy includes upgrading existing facilities and expanding its network, with two additional high-field magnets installed in fiscal 2025 and another planned for fiscal 2026.

Why It Matters

This 10-K reveals a critical juncture for FONAR, as a management-led buyout proposal could fundamentally alter its public status and investor access. For current shareholders, the outcome of the Special Committee's negotiations will dictate their future investment in a publicly traded entity versus a cash-out. Employees and customers of HMCA's diagnostic imaging facilities will likely see continued operational focus on expansion and technology upgrades, such as new high-field magnets, regardless of ownership. In the broader medical imaging market, FONAR's niche in 'open' and 'Upright' MRI technology faces intense competition from larger health systems and diversified medical device manufacturers, making the strategic direction post-buyout crucial for its competitive standing.

Risk Assessment

Risk Level: high — The primary risk is the proposed going-private transaction led by CEO Timothy Damadian and COO Luciano Bonanni, as the group already holds voting control and is unwilling to support alternative transactions. This creates significant uncertainty for public shareholders regarding the final terms and potential delisting from NASDAQ. Additionally, the company faces ongoing reimbursement reductions for radiology services, with Medicare revenues decreasing from 2.7% in fiscal 2024 to 2.6% in fiscal 2025, impacting profitability.

Analyst Insight

Investors should closely monitor the negotiations between the Special Committee and the management-led group regarding the going-private proposal. Given the management group's stated unwillingness to support alternative transactions, shareholders should evaluate the proposed acquisition price against their own valuation of FONAR's future prospects, particularly its medical equipment segment and HMCA's growth strategy.

Financial Highlights

debt To Equity
Not Disclosed
revenue
$95.4 million
operating Margin
Not Disclosed
total Assets
Not Disclosed
total Debt
Not Disclosed
net Income
Not Disclosed
eps
Not Disclosed
gross Margin
Not Disclosed
cash Position
Not Disclosed
revenue Growth
+0.8%

Revenue Breakdown

SegmentRevenueGrowth
Physician Management and Diagnostic Services (HMCA)$95.4 million+0.8%
Medical EquipmentNot DisclosedNot Disclosed

Key Numbers

Key Players & Entities

FAQ

What is the primary business of FONAR Corporation?

FONAR Corporation operates in two segments: medical equipment, where it designs, manufactures, sells, and services MRI scanners, and physician management and diagnostic services, conducted through its subsidiary Health Management Corporation of America (HMCA). FONAR introduced the first commercial MRI scanner in 1980 and is known for its 'open' and 'Upright' MRI technology.

What significant corporate event is pending for FONAR?

On July 7, 2025, FONAR's board received a non-binding proposal from a group led by CEO Timothy Damadian and COO Luciano Bonanni to acquire all outstanding common stock. This transaction, if completed, would result in the company no longer being publicly held and its Common Stock being delisted from NASDAQ.

How did FONAR's physician management and diagnostic services segment perform financially in fiscal year 2025?

The physician management and diagnostic services segment, primarily through HMCA, recognized revenues of $95.4 million in fiscal year 2025, an increase from $94.6 million in fiscal year 2024. However, patient fees net of contractual allowances for the six Florida facilities owned by HMCA subsidiaries decreased to $33,179,446 in fiscal 2025 from $33,815,796 in fiscal 2024.

What is the role of Health Management Corporation of America (HMCA) within FONAR?

HMCA is a wholly-owned subsidiary of FONAR that provides comprehensive non-medical management services to diagnostic imaging facilities. These services include administrative, billing and collection, credentialing, contract negotiations, IT services, and personnel management. HMCA also owns and operates six diagnostic imaging facilities in Florida.

What are the key risks associated with FONAR's operations?

Key risks include the uncertainty surrounding the proposed going-private transaction, as the management group has voting control and is unwilling to support alternative transactions. Additionally, the company faces ongoing reimbursement reductions for radiology services, with Medicare revenues for HMCA's clients and subsidiaries decreasing from 2.7% in fiscal 2024 to 2.6% in fiscal 2025.

How does FONAR's management plan to grow HMCA?

HMCA's growth strategy focuses on upgrading and expanding existing facilities it manages and increasing the number of facilities it either owns or manages. This includes adding high-field MRI scanners, extremity scanners, and x-ray machines to existing sites, and exploring new locations, such as a planned high-field magnet installation in Lynbrook, NY, and a new location in Nassau County, NY, in fiscal year 2026.

What is the impact of Medicare reimbursement changes on FONAR's business?

FONAR has experienced reimbursement reductions for radiology services provided to Medicare beneficiaries. In calendar year 2025, changes to the Medicare Physician Fee Schedule included a reduction in the conversion factor. For fiscal year 2025, Medicare revenues represented approximately 2.6% of the revenues for HMCA's clients and subsidiaries, a slight decrease from 2.7% in fiscal 2024.

Who are the key executives involved in the proposed going-private transaction for FONAR?

The non-binding proposal to acquire all outstanding common stock of FONAR is led by Timothy Damadian, the Company's Chief Executive Officer, and Luciano Bonanni, the Company's Chief Operating Officer. This group currently holds voting control of the Company's equity securities.

What is the current market value of FONAR's common stock held by non-affiliates?

As of December 31, 2024, the aggregate market value of the shares of Common Stock held by non-affiliates was approximately $91.8 million, based on a closing price of $15.14 per share on the NASDAQ System.

What is the competitive landscape for FONAR's physician and diagnostic management services segment?

The physician and diagnostic management services field is highly competitive, with a trend of large health systems acquiring medical practices. HMCA anticipates increased competition, and many competitors possess greater financial and other resources. The outpatient diagnostic imaging industry is also highly competitive, focusing primarily on attracting physician referrals at the local market level.

Risk Factors

Industry Context

FONAR operates in the diagnostic imaging sector, a field characterized by technological advancements and evolving reimbursement landscapes. The company competes in both medical equipment manufacturing (MRI scanners) and service provision (physician management and diagnostic services). Key trends include the adoption of advanced imaging technologies and the impact of government and private payer reimbursement policies on service providers.

Regulatory Implications

The company faces regulatory risks primarily related to healthcare reimbursement policies, particularly from Medicare, which has seen reductions impacting revenue. Additionally, as a manufacturer and provider of medical services, FONAR must comply with various healthcare regulations and cybersecurity standards to protect patient data and ensure operational integrity.

What Investors Should Do

  1. Monitor the proposed take-private transaction closely.
  2. Analyze the performance of the HMCA segment, particularly Florida facilities.
  3. Evaluate the impact of ongoing Medicare reimbursement changes.
  4. Assess the competitive positioning of FONAR's MRI equipment.

Key Dates

Glossary

HMCA
Health Management Corporation of America, a subsidiary of FONAR Corporation that provides physician management and diagnostic services. (This segment is a primary revenue generator for FONAR, managing MRI scanners and operating diagnostic facilities.)
Upright Multi-Position MRI scanner
A type of MRI scanner developed by FONAR that allows patients to be scanned in various upright positions, including standing. (Represents a key product in FONAR's medical equipment segment, highlighting its innovation in MRI technology.)
Contractual Allowances
Reductions from gross patient service revenue to reflect amounts that will not be collected due to contractual agreements with third-party payors (e.g., insurance companies, Medicare). (Affects the net patient fees reported by HMCA's Florida facilities, indicating the impact of payor contracts on actual revenue.)
Iron-core non-superconductive and permanent magnet MRI technology
A type of MRI technology that FONAR specializes in, differentiating it from superconductive magnet systems. (This is the foundational technology for FONAR's 'open' MRI scanners, including their early innovations.)

Year-Over-Year Comparison

Total revenues for the physician management and diagnostic services segment saw a modest increase of 0.8% to $95.4 million in fiscal 2025 from $94.6 million in fiscal 2024. Patient fees at HMCA's owned Florida facilities experienced a slight decline, while Medicare revenue as a percentage of total revenue decreased marginally. A significant new development is the management-led proposal to take the company private, a factor not present in the previous filing.

Filing Stats: 4,397 words · 18 min read · ~15 pages · Grade level 13.8 · Accepted 2025-09-22 16:45:18

Key Financial Figures

Filing Documents

Business

Business 4 Item 1A.

Risk Factors

Risk Factors 22 Item 1B. Unresolved Staff Comments 24 Item 1C. Cybersecurity 25 Item 2.

Properties

Properties 26 Item 3.

Legal Proceedings

Legal Proceedings 26 Item 4. Mine Safety Disclosures 26 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 26 Item 6. [Reserved[ 28 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 28 Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk. 34 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 35 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 83 Item 9A.

Controls and Procedures

Controls and Procedures 83 Item 9B. Other Information 85 Item 9C. Disclosures Regarding Foreign Jurisdictions that Prevent Inspections 85 PART III Item 10. Directors, Executive Officers and Corporate Governance 85 Item 11.

Executive Compensation

Executive Compensation 88 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 90 Item 13. Certain Relationships and Related Transactions, and Director Independence 92 Item 14. Principal Accountant Fees and Services 93 PART IV Item 15. Exhibits and Financial Statement Schedules 94 Page 3 FONAR CORPORATION AND SUBSIDIARIES PART I

BUSINESS

ITEM 1. BUSINESS GENERAL FONAR Corporation, sometimes referred to as the "Company" or "FONAR", is a Delaware corporation which was incorporated on July 17, 1978. Our address is 110 Marcus Drive, Melville, New York 11747 and our telephone number is 631-694-2929. FONAR also maintains a website at www.fonar.com. FONAR provides copies of its filings with the Securities and Exchange Commission on Forms 10-K, 10-Q and 8-K and amendments to these reports to stockholders on request. We conduct our business in two segments. Our medical equipment segment is conducted directly through FONAR. Our physician management and diagnostic services segment is conducted through our subsidiary Health Management Corporation of America ("HMCA"). HMCA provides management services, administrative services, billing and collection services, credentialing services, contract negotiations, compliance consulting, purchasing, IT services, hiring, conducting interviews and managing personnel, storage of medical records, office space, equipment, repair, maintenance service, and clerical and other non-medical personnel to medical providers engaged in diagnostic imaging. In addition to acting as a management company, HMCA owns and operates six diagnostic imaging facilities in Florida. See Note 15 for a more detailed analysis. FONAR is engaged in the business of designing, manufacturing, selling and servicing magnetic resonance imaging scanners, also referred to as "MRI" or "MR" scanners, which utilize MRI technology for the detection and diagnosis of human disease, abnormalities, other medical conditions and injuries. FONAR's founders built the first MRI scanner in 1977 and FONAR introduced the first commercial MRI scanner in 1980. FONAR is also the originator of the iron-core non-superconductive and permanent magnet MRI technology. FONAR's iron frame technology made FONAR the originator of "open" MRI scanners. We introduced the first "open" MRI in 1980. Since that time we have concentrated on f

Forward-looking statements involve risks and uncertainties

Forward-looking statements involve risks and uncertainties which may cause actual results or outcomes to differ materially from those expressed herein. While we make such statements in good faith and we believe such statements are based on reasonable assumptions, including without limitation, management's examination of historical operating trends, data contained in records and other data available from third parties, we cannot assure you that our projections will be achieved. These assumptions involve judgments with respect to future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Factors that may cause such differences include: economic conditions generally and in each of the markets in which we are located, the amount of sales contributed by new and existing locations, labor costs for our personnel, and the level of competition from existing or new competitors. While we believe that our assumptions are reasonable, it is very difficult to predict the impact of unknown factors, and it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this report in the context of the factors that could cause outcomes to differ materially from our expectations. These statements are not guarantees of future performance and undue reliance should not be placed on them. The forward-looking statements included in this report are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law. PHYSICIAN AND DIAGNOSTIC SERVICES MANAGEMENT SEGMENT Health Diagnostics Management, LLC (HDM) is owned by Health Management Corpo

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