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Psychemedics Corporation Announces Third Quarter Results
Date:11/3/2008

$0.17 Dividend Declared

ACTON, Mass., Nov. 3 /PRNewswire-FirstCall/ -- Psychemedics Corporation (Nasdaq: PMD) today announced third quarter financial results for the period ended September 30, 2008. The Company also announced a quarterly dividend of $0.17 per share payable to shareholders of record as of December 3, 2008 to be paid on December 17, 2008. This will be the Company's 49th consecutive quarterly dividend.

The Company's third quarter revenue was $6.2 million, down 4% as compared to $6.5 million in the third quarter of 2007. Net income was $0.9 million or $0.17 per diluted share, down 28% from $1.2 million or $0.23 per share for the same period in 2007. The Company's revenue for the nine months ended September 30, 2008 was $18.1 million, down 3% as compared to $18.7 million for the comparable period of 2007. Net income for the nine months ended September 30, 2008 was $2.8 million or $0.53 per diluted share, a decrease of 22% over the comparable period last year during which the Company earned $3.6 million or $0.67 per diluted share.

Raymond C. Kubacki, Chairman and Chief Executive Officer, said, "We are operating in a tough hiring environment. However, we continued to add new accounts at a healthy pace which has served as a significant offset to the general weakness in hiring."

Kubacki continued, "We are continuing to make investments in our sales and marketing group to capitalize on significant future growth opportunities. We believe this will continue to pay off with a steady stream of new customer wins. While these are uncertain times, our services save customers a significant cost, which is why we remain confident in our future."

Kubacki concluded, "We remain a solidly profitable company with a promising outlook. It is important to also note that the Company continues to have a strong balance sheet with no long-term debt and approximately $9.1 million of cash and investments, up 9% from the third quarter of 2007. Therefore, we are declaring our 49th consecutive quarterly dividend. This dividend demonstrates our continued commitment to maximizing shareholder returns as we move forward."

On March 17, 2008, the Company announced the authorization of a 250,000 share stock repurchase program and the Company continued to buy back its own shares in the third quarter.

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.

Financial Summary:

-- Revenue for the third quarter of $6.2 million, down 4% from the prior year quarter

-- Revenue for the nine month period of $18.1 million, down 3% from the prior year period

-- Pretax income for the third quarter of $1.4 million, down 29% from the prior year quarter

-- Pretax income for the nine month period of $4.7 million, down 22% from the prior year period

-- Net income for the third quarter of $0.9 million, or $0.17 per diluted share, down 27% from the prior year quarter

-- Net income for the nine month period of $2.8 million, or $0.53 per diluted share, down 21% from the prior year period

The Psychemedics web site is http://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, growth opportunities, 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 team, 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

STATEMENTS OF INCOME

UNAUDITED

THREE MONTHS NINE MONTHS

ENDED SEP 30, ENDED SEP 30,

2008 2007 2008 2007

REVENUE $6,204,647 $6,463,516 $18,124,587 $18,677,412

DIRECT COSTS $2,552,014 2,553,358 7,374,228 7,395,552

Gross profit 3,652,633 3,910,158 10,750,359 11,281,860

EXPENSES:

General and

administrative 1,145,486 1,108,625 3,262,804 2,969,680

Marketing and

selling 1,013,510 765,145 2,714,882 2,277,075

Research and

development 125,039 121,859 362,532 377,481

2,284,035 1,995,629 6,340,218 5,624,236

OPERATING INCOME 1,368,598 1,914,529 4,410,141 5,657,624

INTEREST INCOME 64,999 104,480 249,961 302,048

NET INCOME BEFORE

INCOME TAXES 1,433,597 2,019,009 4,660,102 5,959,672

PROVISION FOR INCOME

TAXES 560,042 809,400 1,864,041 2,382,800

NET INCOME $873,555 $1,209,609 $2,796,061 $3,576,872

BASIC NET INCOME PER

SHARE $0.17 $0.23 $0.54 $0.69

DILUTED NET INCOME PER

SHARE $0.17 $0.23 $0.53 $0.67

WEIGHTED AVERAGE

COMMON SHARES

OUTSTANDING, BASIC 5,226,237 5,216,386 5,223,581 5,199,876

WEIGHTED AVERAGE

COMMON SHARES

OUTSTANDING, DILUTED 5,255,301 5,333,341 5,275,311 5,301,756

PSYCHEMEDICS CORPORATION

BALANCE SHEETS

UNAUDITED

September December

30, 2008 31, 2007

UNAUDITED

ASSETS

CURRENT ASSETS:

Cash and cash equivalents $6,910,753 $6,096,734

Short-term investments 2,150,000 3,875,000

Accounts receivable, net of

allowance for doubtful

accounts of $235,891 in 2008 and

$235,337 in 2007 4,312,292 3,555,342

Prepaid expenses and other current

assets 840,290 498,919

Deferred tax asset 531,930 429,472

Total current assets 14,745,265 14,455,467

EQUIPMENT AND LEASEHOLD IMPROVEMENTS 10,879,870 10,792,657

Less-accumulated depreciation and

amortization (10,225,849) (9,977,315)

654,021 815,342

DEFERRED TAX ASSET 231,346 231,346

OTHER ASSETS - NET 74,375 58,613

$15,705,007 $15,560,768

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable $434,213 $488,640

Accrued expenses 1,166,457 951,242

Deferred revenue 166,261 242,955

Total current liabilities 1,766,931 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 27,003,835 26,539,764

Accumulated deficit (3,293,751) (3,527,269)

Less - Treasury stock, at cost;

626,848 shares in 2008 and 586,197

shares in 2007 (9,801,223) (9,163,624)

Total shareholders' equity 13,938,076 13,877,931

$15,705,007 $15,560,768

Contact: Raymond Ruddy

Vice President and Controller

(978) 206-8220

Raymondr@psychemedics.com


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SOURCE Psychemedics Corporation
Copyright©2008 PR Newswire.
All rights reserved

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