Fonar Corporation reports 124% CAPEX growth in 2020 while 1.7% Revenue decline
09/28/2020 • About Fonar Corporation (
$FONR) • By InTwits
Fonar Corporation reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- Fonar Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.1%. At the same time it's in pair with industry average of 5.8%
- CAPEX is quite volatile: $8m in FY2020, $3m in FY2019, $3m in FY2018, $3m in FY2017, $1m in FY2016
- The company has highly profitable business model: ROIC is 14.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Fonar Corporation's Revenue decreased slightly on 1.7%. Revenue decline showed acceleration in FY20Q4 - it was 7.5% YoY. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 3.3 pp from 29.8% to 26.5% in FY2020.
Gross Margin showed almost no change in FY2020. SG&A as a % of Revenue increased on 9.1 pp from 22.1% to 31.2% in FY2020. During FY2016-FY2020 SG&A as a % of Revenue bottomed in FY2019 at 22.1%.
Net Income margin decreased on 8.0 pp from 17.6% to 9.6% in FY2020. During the last 5 years Net Income margin topped in FY2018 at 26.0% and was declining since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 8.8% in FY2020. The company's CAPEX/Revenue increased on 5.1 pp from 3.7% in FY2017 to 8.8% in FY2020. It's average CAPEX/Revenue for the last three years was 5.3%. CAPEX as a % of Revenue grew at 1.6 pp per annum in the last 5 years.
Return on investment
The company operates at good ROIC (14.7%) while ROE is low (6.4%). ROIC dropped on 10.1 pp from 24.8% to 14.7% in FY2020. ROE decreased on 7.0 pp from 13.4% to 6.4% in FY2020. During FY2016-FY2020 ROIC topped in FY2018 at 26.9% and was declining since that time. ROE followed a declining trend at -6.7 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is -0.0x Net Debt / EBITDA and 1.6x Debt / EBITDA. Debt surged on 11,306% while cash surged on 165%.
Fonar Corporation has no short term refinancing risk: cash is higher than short term debt (1,035.7%).
Valuation and dividends
Fonar Corporation's trades at EV/EBITDA 5.8x and P/E 16.1x.
Management team
Timothy R Damadian "Tim" is a the company's CEO. Timothy R Damadian "Tim" has spent 5 years with the company. Fonar Corporation's CFO is Raymond V Damadian. Raymond V Damadian has 5 years tenure at the company.
Financial and operational results
FY ended 06/30/2020
Fonar Corporation ($FONR) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 73.368 | 78.037 | 81.516 | 87.193 | 85.690 | -1.7% |
| Gross Profit | 34.497 | 39.984 | 39.565 | 43.208 | 42.394 | -1.9% |
| SG&A | 18.510 | 19.407 | 18.125 | 19.262 | 26.717 | 38.7% |
| EBITDA | 17.653 | 22.630 | 23.584 | 25.971 | 22.695 | -12.6% |
| Net Income | 15.725 | 19.621 | 21.231 | 15.317 | 8.240 | -46.2% |
Balance Sheet
|
|---|
| Cash | 8.528 | 10.140 | 19.634 | 13.882 | 36.802 | 165.1% |
| Short Term Debt | 2.448 | 0.180 | 0.038 | 0.041 | 3.553 | 8,666.9% |
| Long Term Debt | 2.059 | 0.337 | 0.306 | 0.273 | 32.221 | 11,697.7% |
Cash flow
|
|---|
| Capex | 0.712 | 2.851 | 2.778 | 3.355 | 7.523 | 124.2% |
Ratios
|
|---|
| Revenue growth | 6.3% | 6.4% | 4.5% | 7.0% | -1.7% | |
| EBITDA growth | 7.3% | 28.2% | 4.2% | 10.1% | -12.6% | |
|
|---|
| Gross Margin | 47.0% | 51.2% | 48.5% | 49.6% | 49.5% | -0.1% |
| EBITDA Margin | 24.1% | 29.0% | 28.9% | 29.8% | 26.5% | -3.3% |
| SG&A, % of revenue | 25.2% | 24.9% | 22.2% | 22.1% | 31.2% | 9.1% |
| Net Income Margin | 21.4% | 25.1% | 26.0% | 17.6% | 9.6% | -8.0% |
| CAPEX, % of revenue | 1.0% | 3.7% | 3.4% | 3.8% | 8.8% | 4.9% |
|
|---|
| ROIC | 17.4% | 25.3% | 26.9% | 24.8% | 14.7% | -10.1% |
| ROE | 32.4% | 28.3% | 22.6% | 13.4% | 6.4% | -7.0% |
| Net Debt/EBITDA | -0.2x | -0.4x | -0.8x | -0.5x | -0.0x | 0.5x |
Fonar Corporation ($FONR) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 22 | 21 | 22 | 21 | | 5.0% | 1.1% | -4.8% | -7.5% |
| EBITDA | 6 | 6 | 4 | 1 | | 0.3% | -13.0% | -52.4% | -71.2% |
| Net Income | 3 | 3 | 1 | 1 | | -0.6% | -12.6% | -67.4% | -87.4% |
Balance Sheet
|
|---|
| Cash | 14 | 15 | 31 | 37 | | -34.9% | -33.9% | 25.2% | 165.1% |
| Short Term Debt | 3 | 3 | 3 | 4 | | 8,012.8% | 8,153.8% | 8,020.0% | 8,666.9% |
| Long Term Debt | 30 | 29 | 28 | 32 | | 9,884.2% | 9,878.6% | 9,875.9% | 11,697.7% |
Ratios
|
|---|
| Gross Margin | 47.1% | 45.5% | 47.8% | 57.7% | | -2.3% | -2.2% | -3.1% | 7.7% |
| EBITDA Margin | 29.8% | 28.1% | 16.7% | 6.9% | | -1.4% | -4.6% | -16.6% | -15.3% |
| Net Income Margin | 15.2% | 14.5% | 5.8% | 2.8% | | -0.9% | -2.3% | -11.1% | -17.6% |
Peers in Health Care Equipment
Below you can find Fonar Corporation benchmarking vs. other companies in Health Care Equipment industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MISONIX, Inc. ($MSON) | - | 18.0% | 34.5% | 5.9% | 60.8% |
| Cantel Medical Corp. ($CMD) | - | 15.9% | 13.2% | 5.3% | 10.7% |
| Allied Healthcare Products, Inc. ($AHPI) | - | -6.8% | 0.7% | -7.0% | 1.6% |
| Viveve Medical, Inc. ($VIVE) | - | 114.1% | 21.1% | -64.5% | -16.6% |
| |
|---|
| Median (4 companies) | - | 18.0% | 13.2% | -7.0% | 6.1% |
|---|
| Fonar Corporation ($FONR) | - | 6.4% | 4.5% | 7.0% | -1.7% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MISONIX, Inc. ($MSON) | 67.1% | 69.9% | 73.3% | 70.2% | 70.0% |
| Cantel Medical Corp. ($CMD) | 46.5% | 47.7% | 47.5% | 46.6% | 42.9% |
| Allied Healthcare Products, Inc. ($AHPI) | 20.5% | 19.6% | 19.1% | 16.1% | 17.5% |
| Viveve Medical, Inc. ($VIVE) | 35.4% | 48.7% | 39.5% | 15.5% | 5.4% |
| |
|---|
| Median (4 companies) | 35.4% | 47.7% | 39.5% | 36.3% | 30.2% |
|---|
| Fonar Corporation ($FONR) | 47.0% | 51.2% | 48.5% | 49.6% | 49.5% |
Top companies by EBITDA margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Cantel Medical Corp. ($CMD) | 18.4% | 18.7% | 17.9% | 13.7% | 12.0% |
| Allied Healthcare Products, Inc. ($AHPI) | -1.9% | -2.9% | -3.2% | -6.2% | -7.4% |
| MISONIX, Inc. ($MSON) | -18.1% | -20.3% | -4.1% | -14.8% | -24.8% |
| Viveve Medical, Inc. ($VIVE) | -260.4% | -217.7% | -238.6% | -444.7% | -308.5% |
| |
|---|
| Median (4 companies) | -18.1% | -20.3% | -4.1% | -14.8% | -16.1% |
|---|
| Fonar Corporation ($FONR) | 24.1% | 29.0% | 28.9% | 29.8% | 26.5% |
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Viveve Medical, Inc. ($VIVE) | 3.6% | 5.9% | 11.6% | 16.6% | 14.3% |
| Cantel Medical Corp. ($CMD) | 2.8% | 3.5% | 4.3% | 10.4% | 3.3% |
| Allied Healthcare Products, Inc. ($AHPI) | 0.3% | 0.1% | 0.0% | 0.0% | 1.9% |
| MISONIX, Inc. ($MSON) | 2.0% | 1.8% | 1.0% | 1.8% | 0.5% |
| |
|---|
| Median (4 companies) | 2.8% | 3.3% | 2.4% | 10.4% | 2.6% |
|---|
| Fonar Corporation ($FONR) | 1.0% | 3.7% | 3.4% | 3.8% | 8.8% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Cantel Medical Corp. ($CMD) | 17.5% | 17.3% | 16.1% | 9.5% | 3.5% |
| MISONIX, Inc. ($MSON) | -24.0% | -24.9% | -11.1% | -31.9% | -18.0% |
| Allied Healthcare Products, Inc. ($AHPI) | -9.8% | -11.8% | -13.1% | -21.2% | -26.0% |
| InVivo Therapeutics Holdings Corp. ($NVIV) | -98.6% | -119.4% | -94.0% | -98.7% | -68.1% |
| Viveve Medical, Inc. ($VIVE) | -212.5% | -188.5% | -144.4% | -106.5% | -105.8% |
| |
|---|
| Median (8 companies) | -63.9% | -95.9% | -80.8% | -95.1% | -87.0% |
|---|
| Fonar Corporation ($FONR) | 17.4% | 25.3% | 26.9% | 24.8% | 14.7% |
Top companies by Net Debt / EBITDA
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Cantel Medical Corp. ($CMD) | 0.7x | 0.6x | 0.7x | 1.5x | 6.8x |
| |
|---|
| Median (1 company) | 0.7x | 0.6x | 0.7x | 1.5x | 6.8x |
|---|
| Fonar Corporation ($FONR) | -0.2x | -0.4x | -0.8x | -0.5x | -0.0x |
