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Psychemedics Corporation Announces Year End Results Record Annual and Quarterly Revenue
Date:2/14/2008

Declares Quarterly Dividend

ACTON, Mass., Feb. 14 /PRNewswire-FirstCall/ -- Psychemedics Corporation (Amex: PMD) today announced fourth quarter and year-end financial results for the period ended December 31, 2007, which included record revenues for both the quarterly and full-year periods. The Company also announced a quarterly dividend of $0.15 per share payable to shareholders of record as of March 7, 2008 to be paid on March 21, 2008. This will be the Company's 46th consecutive quarterly dividend.

The Company's revenue for the year ended December 31, 2007 was $24,568,824, up 5% as compared to $23,425,090 for all of 2006. Net income for the year ended December 31, 2007 was $4,483,687 or $0.85 per share, a decrease of 9% over the comparable period last year during which the Company earned $4,902,201 or $0.94 per share. Revenue for the fourth quarter was $5,891,412, an increase of 2% as compared to $5,797,012 in the fourth quarter of 2006. Net income was $906,817 or $0.17 per share, down 23% from $1,175,963 or $0.22 per share for the same period of 2006.

Raymond C. Kubacki, Chairman and Chief Executive Officer, said, "We are pleased to report that Psychemedics has once again set new records for revenue for both the fourth quarter and full year, despite a very challenging hiring environment. Our revenue increase, however, was below historical trends caused by a decline in our base business (accounts over one year), largely influenced by a major auto-related client who was off 84% from its spike in hiring in 2006. Our new business continues to remain healthy."

Kubacki continued, "While our earnings did not match last year's record results due to increased general and administrative expenses and extra R&D expenses, we continue to show very strong operating margins. Our gross margin remained at 60% for 2007 and 2006, while our pre-tax margin continued to be above 30%, despite higher than anticipated legal and accounting expenses and increased R&D. Our 2007 net income was also unfavorably impacted by a three percentage point increase in our effective tax rate, resulting in lower net income and earnings per share. It is important to note that the fourth quarter is seasonably low and, therefore fluctuations in revenue, expenses and/or tax rates have a disproportionate impact on the results.

"We continue to see significant opportunities for further growth. To capitalize on these prospects, we have already in 2008 added a Director of Marketing who will establish and manage our lead generation initiative, thereby increasing our sales team's productivity. In 2007, we added two regional sales professionals and anticipate further additions in 2008."

Kubacki concluded, "The Company's balance sheet remains strong with approximately $10.0 million of cash and short-term investments, no long-term debt and over $12.8 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 46th 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.

Financial Highlights:

-- Record Revenue for 2007, an increase of 5% over 2006 to $24,568,824

-- Record Revenue for the fourth quarter, an increase of 2% over the prior

year quarter to $5,891,412

-- Pretax Income for 2007 of $7,555,687, down 4% from 2006

-- Pretax Income for the fourth quarter of $1,596,017, down 16% from the

prior year quarter

-- Net Income for 2007 of $4,483,687, or $0.85 per diluted share, down 9%

from 2006

-- Net Income for the fourth quarter of $906,817, or $0.17 per diluted

share, down 23% from the prior year quarter

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, 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.

Contact: Jennifer Chmieleski

Vice President and Controller

(978) 206-8220

Jenniferc@psychemedics.com

PSYCHEMEDICS CORPORATION

STATEMENTS OF INCOME

Three months ended Twelve months ended

Dec 31 Dec 31 Dec 31 Dec 31

2007 2006 2007 2006 REVENUE $5,891,412 $5,797,012 $24,568,824 $23,425,090 COST OF REVENUE 2,496,674 2,397,481 9,892,226 9,369,257

Gross profit 3,394,738 3,399,531 14,676,598 14,055,833 OPERATING EXPENSES:

General and

administrative 978,962 812,431 3,948,642 3,278,826

Marketing and selling 822,833 682,328 3,099,909 2,769,310

Research and

development 111,526 103,870 489,007 444,532

1,913,321 1,598,629 7,537,558 6,492,668

Income from

operations 1,481,417 1,800,902 7,139,040 7,563,165

Interest income 114,600 94,061 416,647 294,036

INCOME BEFORE PROVISION

FOR INCOME TAXES 1,596,017 1,894,963 7,555,687 7,857,201

PROVISION FOR INCOME

TAXES 689,200 719,000 3,072,000 2,955,000

NET INCOME $906,817 $1,175,963 $4,483,687 $4,902,201

BASIC NET INCOME

PER SHARE $0.17 $0.23 $0.86 $0.95

DILUTED NET INCOME

PER SHARE $0.17 $0.22 $0.85 $0.94

DIVIDENDS DECLARED

PER SHARE $0.15 $0.125 $0.60 $ 0.475

WEIGHTED AVERAGE COMMON

SHARES OUTSTANDING,

BASIC 5,220,326 5,172,247 5,205,032 5,170,258

WEIGHTED AVERAGE COMMON

SHARES OUTSTANDING,

DILUTED 5,303,474 5,248,503 5,301,620 5,240,155

PSYCHEMEDICS CORPORATION

BALANCE SHEETS

December 31,

2007 2006

ASSETS

CURRENT ASSETS:

Cash and cash equivalents $6,096,734 $4,180,235

Short-term investments 3,875,000 3,683,192

Accounts receivable, net of allowance

for doubtful accounts of $235,337 in

2007 and $333,281 in 2006 3,555,342 3,196,384

Prepaid expenses and other current assets 498,919 506,161

Deferred tax assets 429,472 412,486

Total current assets 14,455,467 11,978,458

PROPERTY AND EQUIPMENT:

Computer software 1,205,840 1,205,840

Office furniture and equipment 2,146,269 2,021,991

Laboratory equipment 6,545,889 6,254,228

Leasehold improvements 894,659 894,659

10,792,657 10,376,718

Less - Accumulated depreciation and

amortization (9,977,315) (9,630,190)

815,342 746,528

DEFERRED TAX ASSETS 231,346 183,555

OTHER ASSETS 58,613 39,830

$15,560,768 $12,948,371

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable $488,640 $499,420

Accrued expenses 951,242 553,043

Deferred revenue 242,955 392,403

Total current liabilities 1,682,837 1,444,866

SHAREHOLDERS' EQUITY:

Preferred stock, $0.005 par value; 872,521

shares authorized and none outstanding - -

Common stock, $0.005 par value; 50,000,000

shares authorized, 5,811,982 shares issued

in 2007 and 5,756,044 shares issued in 2006 29,060 28,780

Paid-in capital 26,539,764 25,609,800

Accumulated deficit (3,527,269) (5,012,384)

Less - Treasury stock, at cost; 586,197

shares in 2007 and 583,797 shares in 2006 (9,163,624) (9,122,691)

Total shareholders' equity 13,877,931 11,503,505

$15,560,768 $12,948,371


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SOURCE Psychemedics Corporation
Copyright©2008 PR Newswire.
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