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Psychemedics Corporation Announces 2008 Year End Results
Date:2/18/2009

Declares Quarterly Dividend

ACTON, Mass., Feb. 18 /PRNewswire-FirstCall/ -- Psychemedics Corporation (Nasdaq: PMD) today announced fourth quarter and year-end financial results for the period ended December 31, 2008. The Company also announced a quarterly dividend of $0.17 per share payable to shareholders of record as of March 6, 2009 to be paid on March 20, 2009. This will be the Company's 50th consecutive quarterly dividend.

The Company's revenue for the year ended December 31, 2008 was $22,948,604, a decrease of 7% as compared to $24,568,824 for 2007. Net income for the year ended December 31, 2008 was $2,968,789 or $0.57 per share, a decrease of 34% from 2007 during which the Company earned $4,483,687 or $0.85 per share. Revenue for the fourth quarter was $4,824,016, a decrease of 18% as compared to $5,891,412 in the fourth quarter of 2007. Net income was $172,728 or $0.03 per share, down 81% from $906,817 or $0.17 per share for the same period of 2007.

Raymond C. Kubacki, Chairman and Chief Executive Officer, said, "Despite a challenging economic environment, the strength of our balance sheet and cash flow from operations provides Psychemedics with a solid foundation to withstand challenging economic downturns. In addition, our new business remains healthy. In fact, we continue to see significant opportunities for increasing new business. Our clients not only use the most rigorous and effective drug test available to screen out drug abusers, and save costs, but also to send a very important message to all their employees: that they take great pride in having a workforce with integrity and character. They have established a drug free culture and, in doing so, also have invested in a culture of integrity. We take great pride in working with our clients to meet these important goals. And these goals are even more important today in this challenging environment."

Kubacki concluded, "The Company's balance sheet remains strong with approximately $6.6 million of cash and short-term investments, no long-term debt and over $9.5 million of working capital. Our directors share our confidence in the future of Psychemedics and remain committed to rewarding shareholders and sharing the financial success of the Company with them as we grow. Therefore, we are pleased to declare our 50th consecutive quarterly dividend."

Psychemedics is the world's largest provider of hair testing for drugs of abuse with thousands of corporations relying on the patented Psychemedics drug testing services. Psychemedics' clients include over 10% of the Fortune 500, some of the largest police departments in America and six Federal Reserve Banks.

The Psychemedics web site is www.drugtestwithhair.com

Cautionary Statement for purposes of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995: From time to time, information provided by Psychemedics may contain forward-looking information that involves risks and uncertainties. In particular, statements contained in this release that are not historical facts (including but not limited to statements concerning earnings, earnings per share, revenues, dividends, future business, new accounts, customer base, market share, test volume and sales and marketing strategies) may be "forward looking" statements. Actual results may differ from those stated in any forward-looking statements. Factors that may cause such differences include but are not limited to risks associated with the expansion of the Company's sales and marketing network, development of markets for new products and services offered, the economic health of principal customers of the Company, government regulation, including but not limited to FDA regulations, competition and general economic conditions and other factors disclosed in the Company's filings with the Securities and Exchange Commission.

                          Psychemedics Corporation
                   For the Period Ending December 31, 2008

                             Three Months Ended        Twelve Months Ended
                                 December 31,             December 31,
                                 ------------             ------------
                               2008        2007         2008         2007
                               ----        ----         ----         ----

    TOTAL REVENUES          $4,824,016  $5,891,412  $22,948,604  $24,568,824
    DIRECT COSTS             2,224,289   2,496,674    9,598,515    9,892,226
    Gross Profit             2,599,727   3,394,738   13,350,089   14,676,598

    EXPENSES
    Marketing and Selling      933,699     822,833    3,648,584    3,099,909
    General &
     Administrative          1,257,268     978,962    4,520,074    3,948,642
    Research and
     Development               112,092     111,526      474,622      489,007
    Total Operating
     Expenses                2,303,059   1,913,321    8,643,280    7,537,558

    Operating Income           296,668   1,481,417    4,706,809    7,139,040

    Interest Income             58,073     114,600      308,034      416,647

    Income before taxes        354,741   1,596,017    5,014,843    7,555,687
                              --------   ---------    ---------    ---------

    Tax Provision              182,013     689,200    2,046,054    3,072,000
                              --------   ---------    ---------    ---------

    Net Income                $172,728    $906,817   $2,968,789   $4,483,687

    Basic net income per
     share                       $0.03       $0.17        $0.57        $0.86

    Diluted income per
     share                       $0.03       $0.17        $0.57        $0.85

    Dividends declared
     per share                   $0.67       $0.15        $1.18       $0.575

    Weighted average
     common shares
     outstanding, Basic      5,206,158   5,220,326    5,219,141    5,205,032
    Weighted average
     common shares
     outstanding, Diluted    5,215,743   5,303,474    5,245,713    5,301,620



                           Psychemedics Corporation
                                Balance Sheet
                  For the Period Ending December 31, 2008

                                                For the period ended
                                             December 31,   December 31,
                                                 2008          2007
                                                 ----          ----

    ASSETS
    CURRENT ASSETS:
      Cash and cash equivalents                6,630,119     6,096,734
      Short-term investments                          --     3,875,000
      Accounts receivable, net of
       allowance for doubtful
       accounts of $246,462 in 2008
       and $235,337 in 2007 bad debt           3,398,455     3,555,342

      Prepaid expenses and other
       current assets                          1,105,886       498,919
      Deferred tax asset                         449,398       429,472
                                                 -------       -------
        Total current assets                  11,583,858    14,455,467

    PROPERTY AND EQUIPMENT
      Equipment & Leasehold Improvements      10,877,479    10,792,657
      Less accumulated depreciation          (10,047,755)   (9,977,315)
                                             -----------    ----------

        Net Fixed Assets                         829,724       815,342


      DEFERRED TAX ASSET                         139,021       231,346
      OTHER ASSETS                                75,182        58,613
                                                  ------        ------
      Total Assets                            12,627,785    15,560,768
                                              ==========    ==========

    LIABILITIES AND SHAREHOLDERS' EQUITY
    CURRENT LIABILITIES:
        Accounts payable                         644,894       488,640
        Accrued expenses                       1,268,924       951,242
        Deferred revenue                         154,080       242,955
                                                 -------       -------

      Total Liabilities                        2,067,898     1,682,837

    SHAREHOLDERS' EQUITY:
    Preferred stock, $.005 par value;
     authorized 872,521 shares;
     none outstanding
    Common stock; $.005 par
     value; authorized 50,000,000
     shares; 5,843,068 shares issued
     in 2008 and 5,811,982 shares
     issued in 2007                               29,215        29,060
    Paid-in capital                           27,118,743    26,539,764
    Accumulated deficit                       (6,614,114)   (3,527,269)
    Less - Treasury stock, at
     cost; 647,304 shares in 2008
     and 586,197 shares in 2007               (9,973,957)   (9,163,624)
                                              ----------    ----------
    Total shareholders' equity                10,559,887    13,877,931

    Total Liabilities &
     Shareholder Equity                       12,627,785    15,560,768
                                              ==========    ==========

    Contact:
    Raymond Ruddy
    Vice President and Controller
    (978) 206-8220
    raymondr@psychemedics.com


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SOURCE Psychemedics Corporation
Copyright©2009 PR Newswire.
All rights reserved

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