Fonar Corp., a pioneer in magnetic resonance imaging, received approval for tax breaks from Suffolk County Thursday to keep the business' headquarters in Melville for 10 more years.
The public company said it would move to Florida, where it already operates seven MRI screening centers, if Suffolk didn't reduce its tax burden.
The county's Industrial Development Agency gave preliminary approval for $440,500 in tax incentives, including a $431,500 reduction, or 27.5 percent savings, in property taxes over 10 years.See alsoEditorial: Stop bad tax breaks
In return, Fonar will maintain 133 local jobs. The employees earn, on average, $63,875 per year, records show.
The company has another 39 workers locally, and a worldwide payroll of 440. It employed 600 in the 1980s.
"We are very excited about the prospects for growth" stemming from sales and use of a stand-up MRI machine, said Luciano Bonanni, executive vice president. "But we are the underdogs in this industry. . . . There are other properties we have looked at that are more attractive" than those on Long Island.
He said that while Fonar chief executive Dr. Raymond Damadian holds the first MRI patent, his business faces intense competition from General Electric, Phillips and other giants. Of the 17,000 MRI machines in use around the globe, only 140 are from Fonar.
Bonanni said this fierce rivalry and the lower reimbursement rates since Obamacare began have affected the company's revenues.
Despite these challenges, Fonar reported a profit of $13.4 million for the fiscal year ended June 30, 2014, a gain of 31 percent from 2013. Sales also rose, year over year, to $68.5 million, an increase of 39 percent.
The company will soon report financial results for its 2015 fiscal year.
Asked why the tax breaks were necessary, Bonanni said in an interview, "We need to cut costs to be more competitive, and this will help us do that."
Fonar now plans to renew its lease on 79,000 square feet of space at 110 Marcus Dr. More than $1 million in building improvements and equipment purchases are anticipated.
IDA executive director Anthony J. Catapano said it was critical for Suffolk to keep Fonar after the loss of the headquarters of Arrow Electronics, now in Colorado, and Voxx International, moving to Florida. He said, "There is a greater risk with public companies of them leaving the area."