Shares of FONAR Corporation (FONR Quick QuoteFONR - Free Report) have rallied 15.4% since the company released its earnings results for the fiscal third quarter ended March 31, 2025, significantly outperforming the S&P 500 Index, which gained just 0.7% during the same period. Over the past month, FONR stock has appreciated 16.9%, again outpacing the S&P 500’s 12.1% advance.

FONR’s Financial Performance Overview

For the quarter ended March 31, 2025, FONAR Corporation reported a 5.6% year-over-year increase in total net revenues, reaching $27.2 million from $25.7 million in the prior-year period. Net income attributable to the company climbed 25.8% to $3.1 million from $2.5 million a year earlier despite a 2.2% decline in income from operations to $3.66 million from $3.75 million. FONR’s diluted net income per common share available to stockholders surged 37% to $0.37, up from $0.27 in the third quarter of fiscal 2024. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Segmentally, FONAR Corporation generated $12.9 million in management and other fees, a 6.4% increase over the year-ago figure of $12.1 million. Service and repair fees rose 26.2% year over year to $2.3 million from the year-ago figure of $1.8 million, while patient fee revenues increased 2.8% to $8.9 million from $8.6 million. However, product sales dropped 50% to $55,000 from $110,000 in the comparable period last year.

FONAR Corporation’s Operational Efficiency and Business Metrics

FONAR Corporation maintained tight control over its expenses, although total costs and expenses increased 6.9% to $23.5 million from $21.9 million. Selling, general and administrative (SG&A) expenses rose 5.2% to $7.9 million from $7.6 million. Despite these increases, FONR reported a solid net margin improvement due to its revenue growth and a significantly lower tax provision of $1 million, down from $1.8 million in the prior year.

The balance sheet remained healthy, with total assets edging up slightly to $214.9 million as of March 31, 2025 from $214.2 million as of June 30, 2024, and total liabilities declining to $54.7 million from $57.5 million. FONAR Corporation’s current ratio improved to 10.0 as of March 31, 2025, up from 7.9 as of June 30, 2024, indicating robust short-term liquidity. Working capital also increased 4% to $127.1 million as of March 31, 2025 from $122.5 million as of June 30, 2024, and net book value per common share rose 5% to $25.98 as of March 31, 2025 from $24.78 per share March 31, 2024.

Operating cash flow for the nine months ended March 31, 2025 was $7 million, down from $9.5 million in the prior year, largely due to greater provisioning for credit losses and a decrease in net receivables.

FONR’s Management Commentary

Chairman and CEO Timothy Damadian highlighted record-setting scan volumes as a key driver of revenue growth. In the third quarter, Health Management Company of America (HMCA), FONAR’s diagnostic imaging management subsidiary, completed 54,612 MRI scans, a 2.8% sequential increase and a 3.4% rise year-over-year. For the nine-month period, scan volume rose 3.9% to 160,780, underscoring growing demand for imaging services.

Mr. Damadian emphasized the success of combining high-field MRIs with Stand-Up MRIs at certain facilities, noting that this hybrid model attracts a broader physician referral base and alleviates patient backlogs. A high-field MRI was added to the Melville, Long Island location in March, and a similar installation is underway at a Nassau County facility, expected to become operational in the fourth quarter of fiscal 2025.

Drivers Behind FONAR Corporation’s Numbers

The increase in net income despite a dip in operating income was primarily driven by lower income tax provisions and stable investment income. While revenue gains were modest, particularly over the nine-month period, careful expense management and optimized operational efficiencies helped bolster the bottom-line performance. Revenue diversification — particularly through services and management fees — also contributed to a more balanced earnings profile.

However, FONAR Corporation faced headwinds in the form of rising SG&A expenses and a decline in product sales. Management attributed certain cost increases to utility charges, taxes and receivables-related reserves recorded in the fiscal second quarter. These unusual items may have weighed on margins, although their effect seems to have moderated in the fiscal third quarter.

FONR’s Other Developments

Under a stock repurchase plan announced in September 2022, FONR has repurchased 373,942 shares at a cost of approximately $6.1 million as of March 31, 2025. The $9 million buyback program is subject to the restrictions of Rule 10b-18, and FONAR Corporation continues to repurchase shares opportunistically.

There were no reported acquisitions, divestitures, or major restructuring activities during the quarter.