FONAR President's Message to Stockholders; Reports Most Recent Calendar Quarter of Unit Sales at 16 Stand-Up MRIs
MELVILLE, N.Y., May 4, 2004 (BUSINESS WIRE) -- FONAR Corporation (NASDAQ:
FONR)- Raymond V. Damadian, M.D.,(a) President and Chairman of FONAR Corporation
has delivered his annual message to stockholders.
(a) On April 29, 2004, The Franklin Institute in Philadelphia,
Pennsylvania, awarded to Dr. Damadian The Benjamin Franklin Medal
and The Bower Award for Business Leadership for MRI. For more
information go to fonar.com .
Dear Stockholders:
I am pleased to report to you that FONAR is finally becoming the
success that our stockholders have patiently been waiting for and our
employees have been so diligently working towards.
Booming Sales and Installations
In last year's shareholder letter, I reported to you that we had at
that point sold 38 Stand-Up(TM) MRIs and installed 18. Now I am
pleased to deliver the good news that we have, in just one year's
time, doubled those numbers. As of the March 31, 2004, the end of the
3rd Quarter of Fiscal 2004, we had sold 76 Stand-Up(TM) MRIs and
installed 40. Some of these sales have not been previously announced.
A chart fonar.com and table of the
Stand-Up(TM) MRI sales is provided. Notice the cyclical nature of
sales during the year with the April 1 to June 30 quarter being
greatest, followed by the January 1 to March 31 quarter.
FONAR CORPORATION
Stand-Up(TM) MRI Unit Sales Per Quarter
2000-'01 2001-'02 2002-'03 2003-'04
-------- -------- -------- --------
Jul-Sep (b) 1 6 8
Oct-Dec 1 2 2 5
Jan-Mar 1 4 4 16
Apr-Jun 6 9 11 (c)
(b) This period is prior to commencement of Stand-Up(TM) MRI sales
(c) Current period
The Stand-Up(TM) MRI - The World's Only Position Imaging MRI Scanner
Seeing Pathology that Lie-Down MRIs Miss
There are three major reasons for the success of the Stand-Up(TM) MRI
product. First, the Stand-Up(TM) MRI detects pathology that lie-down
MRI scanners can miss. The importance of this feature to physicians
must not be underestimated. Certain medical problems manifest
themselves only when patients are in a particular position. Every one
of our competitors' whole-body MRI scanners can only scan patients
lying down. If the problem can only be seen, say, when the patient is
sitting up, then a recumbent-only scanner will miss it. Only the
Stand-Up(TM) MRI will detect it. With the Stand-Up(TM) MRI, patients
can be scanned in any position, including sitting, standing, bending,
in flexion and extension, or lying down. We call this unique ability
Position Imaging(TM) (pMRI(TM)). The ability of the Stand-Up(TM) MRI
to scan a patient in a weight-bearing position, or in any other
position in which the patient experiences pain or other symptoms, has
enabled it to detect pathology that went undetected on conventional
lie-down (recumbent) MRI scanners.
Dr. Francis Smith, a researcher at the University of Aberdeen in
Scotland, scanned 63 patients with unexplained low back pain on the
University's Stand-Up(TM) MRI. In the scientific paper he delivered at
the November 2003 meeting of the Radiological Society of North America
in Chicago, Dr. Smith reported that he found that 10% of the patients
had a previously unsuspected spinal instability. He also discovered
"in 56 cases there was obvious prolapse of the intervertebral disc,
whose degree of prolapse changed between the neutral position and
either flexion or extension."
This is key information. The National Center for Health Statistics
reports that "14% of new patient visits to physicians each year are
due to low back pain, and almost 13 million physician visits per year
occur because of chronic low back pain." Back pain is second only to
the common cold as a cause of lost time from work. Accordingly, it
comes as no surprise that roughly half of all MRI scans performed
today are of the spine. Thus Position Imaging(TM) provides a very
important contribution to the practice of medicine.
Regarding surgeons and lie-down-only MRIs, multiple Stand-Up(TM) MRI
owner Dr. Manuel Rose said, "Relying solely on an MRI exam of a supine
patient is inadequate. Through no fault of their own, surgeons are at
a serious disadvantage that could consequently result in failed
surgeries. With the Stand-Up(TM) MRI, the surgeon can, for the first
time, visualize pathology in both the supine and upright positions,
allowing him to accurately evaluate the full extent of the problem."
It is no wonder that the Stand-Up(TM) MRI continues to be the most
exciting and talked-about advancement in the field of MRI.
Extraordinary Quality
The second reason for the success of this product is that the
Stand-Up(TM) MRI is built upon a proven platform of 0.6 Tesla
technology, which means the Stand-Up(TM) MRI produces images of
exceptional quality. FONAR introduced high-field Open MRI and remains
the most experienced provider of this technology.
Our R&D scientists and engineers constantly strive to improve the
product. For example, tremendous strides have been made over the past
year in the development of RF receiver coils. Our ever-expanding
offering of quadrature and planar receiver coils improves the quality
of images and allow for more accurate diagnoses. I am pleased that our
staff of scientists and engineers is equipped and eager to continue to
advance the opportunities offered by the only whole-body diagnostic
machine in the world that is capable of scanning patients in virtually
any position.
An Unparalleled Level of Patient Comfort
The third reason for the success of this product is that it is simply
the most Patient-Friendly(TM) MRI scanner in the world. We hear it
from our users all the time, "Patients love the Stand-Up(TM) MRI."
What a welcome difference from the highly claustrophobic and noisy
"tube," or "tunnel," MRIs that the public has unfortunately become
accustomed to!
Stand-Up(TM) MRI patients typically sit and watch a 42-inch flat
screen TV throughout their scans. Patients anxious about the confining
space of MRI scanners and their noise, who had repeatedly failed to
tolerate other MRIs, including "open" MRIs, are regularly scanned at
Stand-Up(TM) MRI centers. These patients are invariably relieved and
extremely grateful to finally have their problems addressed and to be
able to proceed with their treatment plans. Moreover, the rising
obesity problem in the U.S. has generated a remarkable increase in
patients that are too large to be scanned in any MRI other than the
FONAR Stand-Up(TM) MRI. The record to date for a FONAR upright scan is
492 lbs.
Marketing Events
In the past, our major marketing event has been our exhibition at the
November/December annual meeting of the Radiological Society of North
America (RSNA) in Chicago. Attended by 60,000, it is the largest
medical meeting in the world. Our targeted customers at RSNA are
primarily independent radiology groups and hospitals.
Surgeons, particularly spine surgeons, comprise another very important
market for our product because the Stand-Up(TM) MRI is the only
diagnostic modality that can give surgeons the complete picture of
their patients' problems. Only the Stand-Up(TM) MRI can enable the
evaluation of pathology in different positions and under
weight-bearing and non-weight-bearing conditions, providing key
information that surgeons need to optimize their surgical results and
reduce the risk of failed surgeries.
Accordingly, we are actively addressing the surgical marketplace by
presenting the Stand-Up(TM) MRI at surgery and surgery-related
meetings throughout the year. In October, 2003, we attended the 18th
annual meeting of the North American Spine Society (NASS) in San
Diego, California. Attended by 2,500 spine surgeons, the FONAR's
first-time exhibit was the 5th largest of the 130 exhibits on the
floor of the show. In March, 2004, we exhibited at the 71st annual
meeting of the American Academy of Orthopedic Surgeons (AAOS) in San
Francisco, California. Attended by 30,000, including 14,000 orthopedic
surgeons and related healthcare professionals, FONAR's 2nd-time
exhibit was among the larger of some 400 technical exhibits. Our
attendance at RSNA, NASS and AAOS has produced a substantial number of
qualified sales leads. In May, 2004, we will be attending, for the
first time, the annual meeting of the America Association of
Neurological Surgeons (AANS) in Orlando, Florida. Estimated attendance
for that meeting is approximately 3,000 neurosurgeons and related
healthcare professionals.
HMCA
Health Management Corporation of America (HMCA), our wholly-owned
physician and diagnostic services management subsidiary, has undergone
some very positive changes. With the opening of Stand-Up(TM) MRI of
Boca Raton, Florida, we now have four HMCA-managed Stand-Up(TM) MRI
scanning centers in operation. In March, 2004, our Islandia, New York
facility, the first HMCA-managed Stand-Up(TM) MRI facility, completed
over 450 scans. This center produced $1.1 million in operating income
in fiscal 2003. Our Bensonhurst, New York facility, the second
HMCA-managed Stand-Up(TM) MRI facility, completed over 400 scans for
the first time; and the Staten Island, New York facility, our third,
completed over 200 scans.
Our plan is to complete Stand-Up(TM) MRI upgrades at as many
HMCA-managed sites as possible. At present, HMCA manages 10 diagnostic
imaging centers, primarily in New York and Florida, and plans to
expand the number of its Stand-Up(TM) MRI centers as quickly as
capital allows. We are now in the process of installing a Stand-Up(TM)
MRI in East Elmhurst, New York, which will become the HMCA's 5th
Stand-Up(TM) MRI facility.
HMCA has completed the process of closing poor-performers, including
some multi-specialty practices and MRI scanning facilities, and we are
planning to upgrade all the remaining HMCA scanning centers with new
FONAR scanners. While the closing down of poor performers results in a
temporary loss of management revenues, the savings in expenses will
more than compensate and thereby ultimately add to FONAR's
profitability.
Revenues Growing
FONAR has also experienced eight (8) consecutive years of growth in
total revenue, from under $14M in Fiscal 1996 to approximately $52.9M
in Fiscal 2003. I am pleased to report that results from the first two
quarters of Fiscal 2004 show that the trend is continuing.
Total Revenues Table for the Past 3 1/2 Years
---------------------------------------------
Fiscal 2001 $42,273,000
Fiscal 2002 $43,161,000
Fiscal 2003 $52,892,000
1st 6 Months of Fiscal 2004 $31,191,000
My Sincere Thanks to Our Stockholders and Employees
We are becoming successful. Revenues are on the increase and sales are
up. We now have over 76 Stand-Up(TM) MRI sales, more than twice the
number we had at this time last year. Most of our sales have been to
multiple-unit purchasers; perhaps the most potent endorsement of our
product.
I believe that our decision to focus our time, energy and resources on
the development, sales and marketing of the Stand-Up(TM) MRI is
finally delivering the results that we have all so diligently been
working towards.I remain grateful to FONAR employees and stockholders,
especially the ones who have stood by us for so many years.
It has been said, "A rising tide lifts all boats." I see Upright
Imaging(TM), which only the Stand-Up(TM) MRI can provide, on the rise.
Interest is continually growing and among physicians of all
specialties, orthopedic surgeons, neurosurgeons, radiologists and
hospitals and independent diagnostic centers. I believe as the tide
of Upright Imaging(TM) continues to rise, it will be FONAR customers
and their patients, FONAR employees, and FONAR stockholders that will
rise along with it.
Sincerely,
Raymond V. Damadian
President and Chairman
MRI Specialist, Stand-Up, Upright, Position, pMRI and The Proof is in the
Picture are trademarks of FONAR Corporation.
Be sure to visit FONAR's Web site for Company product and investor information:
www.fonar.com
This release may include forward-looking statements from the company that may or
may not materialize. Additional information on factors that could potentially
affect the company 's financial results may be found in the company's filings
with the Securities and Exchange Commission.
SOURCE: FONAR Corporation
CONTACT: FONAR Corporation
Daniel Culver or David Terry
Phone: 631-694-2929
Fax: 631-390-9540
www.fonar.com
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