NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLES AND MANAGEMENT AND OTHER FEES RECEIVABLE (USD $)

9 Months Ended

Mar. 31, 2014

Receivables [Abstract]

NOTE 3 - ACCOUNTS RECEIVABLE. MEDICAL RECEIVABLES AND MANAGEMENT AND OTHER FEES RECEIVABLE (USD $)

FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014 and 2013

(AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(UNAUDITED)

NOTE 3 – ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE

Receivables, net is comprised of the following at March 31, 2014:

	Gross Receivable		Allowance for doubtful accounts		Net
Receivables from equipment sales and service contracts	$	4,701	$	257	$	4,444
Receivables from equipment sales and service contracts - related party	$	30		—	$	30
Medical Receivable	$	18,639	$	9,715	$	8,924
Management and other fees receivables	$	22,534	$	9,859	$	12,675
Management and other fees receivables from related medical practices ("PC’s")	$	3,866	$	403	$	3,463

Receivables, net is comprised of the following at June 30, 2013:

	Gross Receivable		Allowance for doubtful accounts		Net
Receivables from equipment sales and service contracts	$	4,701	$	257	$	4,444
Receivables from equipment sales and service contracts - related party	$	—		—	$	—
Medical Receivable	$	10,711	$	2,585	$	8,126
Management and other fees receivables	$	20,561	$	9,095	$	11,466
Management and other fees receivables from related medical practices ("PC’s")	$	2,785	$	403	$	2,382

The Company's customers are concentrated in the healthcare industry.

Accounts Receivable

Credit risk with respect to the Company’s accounts receivable related to product sales and service and repair fees is limited due to the customer advances received prior to the commencement of work performed and the billing of amounts to customers as sub-assemblies are completed. Service and repair fees are billed on a monthly or quarterly basis and the Company does not continue providing these services if accounts receivable become past due. The Company controls credit risk with respect to accounts receivable from service and repair fees through its credit evaluation process, credit limits, monitoring procedures and reasonably short collection terms. The Company performs ongoing credit authorizations before a product sales contract is entered into or service and repair fees are provided.

Medical Receivable

Medical receivables are due under fee-for-service contracts from third party payors, such as hospitals, government sponsored healthcare programs, patient’s legal counsel and directly from patients. Substantially all the revenue relates to patients residing in Florida. The carrying amount of the medical receivable is reduced by an allowance that reflects management’s best estimate of the amounts that will not be collected. The Company continuously monitors collections from its clients and maintains an allowance for bad debts based upon the Company’s historical collection experience. The Company determines allowances for contractual adjustments and uncollectible accounts based on specific agings, specific payor collection issues that have been identified and based on payor classifications and historical experience at each site.

Management and Other Fees Receivable

The Company's receivables from the related and non-related professional corporations (PC's) substantially consist of fees outstanding under management agreements. Payment of the outstanding fees is dependent on collection by the PC's of fees from third party medical reimbursement organizations, principally insurance companies and health management organizations.

Payment of the management fee receivables from the PC’s may be impaired by the inability of the PC’s to collect in a timely manner their medical fees from the third party payors, particularly insurance carriers covering automobile no-fault and workers compensation claims due to longer payment cycles and rigorous informational requirements and certain other disallowed claims. Approximately 50% and 51% of the PCs’ net revenues for the three months ended March 31, 2014 and 2013, respectively, were derived from no-fault and personal injury protection claims. Approximately 50% and 47% of the PCs’ net revenues for the nine months ended March 31, 2014 and 2013, respectively, were derived from no-fault and personal injury protection claims. The Company considers the aging of its accounts receivable in determining the amount of allowance for doubtful accounts. The Company generally takes all legally available steps to collect its receivables. Credit losses associated with the receivables are provided for in the condensed consolidated financial statements and have historically been within management's expectations.

Net revenues from management and other fees charged to the related PCs accounted for approximately 13.2% and 16.9% of the consolidated net revenues for the three months ended March 31, 2014 and 2013, respectively. Net revenues from management and other fees charged to the related PCs accounted for approximately 13.4% and 19.2% of the consolidated net revenues for the nine months ended March 31, 2014 and 2013, respectively.

Tallahassee Magnetic Resonance Imaging, PA, Stand Up MRI of Boca Raton, PA and Stand Up MRI & Diagnostic Center, PA (all related medical practices) entered into a guaranty agreement, pursuant to which they cross guaranteed all management fees which are payable to the Company, which have arisen under each individual management agreement.

The Company’s patient fee revenue, net of contractual allowances and discounts less the provision for bad debts for the three and nine months ended March 31, 2014 and 2013 are summarized in the following tables.

	For the Three Months Ended March 31,
	2014			2013
Commercial Insurance/ Managed Care	$	1,033		$	186
Medicare/Medicaid		343			81
Workers' Compensation/Personal Injury		3,329			404
Other		1,385			294
Patient Fee Revenue, net of contractual allowances and discounts		6,090			965
Provision for Bad Debts		(2,868	)		—
Net Patient Fee for Revenue	$	3,222		$	965

	For the Nine Months Ended March 31,
	2014			2013
Commercial Insurance/ Managed Care	$	3,144		$	186
Medicare/Medicaid		1,161			81
Workers' Compensation/Personal Injury		9,679			404
Other		3,827			294
Patient Fee Revenue, net of contractual allowances and discounts		17,811			965
Provision for Bad Debts		(7,130	)		—
Net Patient Fee for Revenue	$	10,681		$	965