EX-99 2 ex99-1101705.htm EXHIBIT 99.1 Exhibit 99.1

Exhibit 99.1

MEDTOX Scientific, Inc.
402 West County Road D
St. Paul, MN 55112
Contact: (877) 715-7236

FOR IMMEDIATE RELEASE

MEDTOX SCIENTIFIC ANNOUNCES THIRD QUARTER RESULTS
NET INCOME INCREASES 45%

ST.  PAUL, October 17, 2005 – MEDTOX Scientific, Inc. (AMEX-TOX) announced today results for the third quarter ended September 30, 2005.


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Revenues increased $2,040,000 to $16,513,000, or 14%


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Consolidated gross margin increased to 44% from 42%


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Operating Income increased $407,000 to $1,688,000, or 32%


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Net Income increased $256,000 to $825,000, or 45%


For the three-month period ended September 30, 2005, revenues increased to $16,513,000 compared to $14,473,000 from the prior-year period. Operating income increased to $1,688,000 compared to $1,281,000 from the prior-year period. The Company recorded net income of $825,000, or $0.10 per diluted share, compared to net income of $569,000, or $0.07 per diluted share, or a 45% increase in net income from the comparable period last year.

For the nine-month period ended September 30, 2005, revenues increased to $48,047,000 compared to $43,120,000, or 11%, from the prior-year period. Operating income increased to $4,650,000 compared to $3,887,000, or 20%, from the comparable period last year. Net income increased to $2,261,000, or $0.28 per diluted share, compared to net income of $1,711,000, or $0.22 per diluted share, or an increase of 32% in net income from the comparable period last year.

Overall, expenses for the quarter were in line with expectations. Total selling, general and administrative expenses for the quarter were 30% of revenues which is comparable with the same period last year. Research and development expenses increased 56% to $552,000 for the quarter from $354,000 in the comparable period last year.


MEDTOX Scientific, Inc.
October 17, 2005
Page 2

MEDTOX will hold a teleconference to discuss third quarter 2005 results today at 9:30 a.m. Central Time (10:30 a.m. Eastern). Dialing 800-387-5648 a few minutes prior to the scheduled start time on October 17 will access a listen-only broadcast of the teleconference. International callers may access the call by dialing 706-634-5527. Callers should ask for the MEDTOX quarterly conference call, hosted by Dick Braun, president and CEO of MEDTOX. A simultaneous webcast of the conference call will be available on the MEDTOX website in the “investors” section at www.medtox.com. An audio replay of the conference call will be available through October 24 at 800-642-1687 conference ID #9647412. International callers may access the replay at 706-645-9291 with the same conference ID #9647412.

MEDTOX Scientific, Inc., headquartered in St. Paul, Minn., is a provider of high quality specialized laboratory testing services and on-site/point-of-collection (POC) devices. The company also supports customers with complete logistics, data and program management services. MEDTOX is a leader in providing esoteric laboratory testing services to hospitals and laboratories nationwide. This includes both central laboratory and bio-analytical testing for pharmaceutical clinical trials. MEDTOX develops and manufactures diagnostic devices for quick and economical on-site/point-of-collection analysis for drugs-of-abuse, therapeutic drugs and biological and agricultural toxins and provides employment drug screening and occupational health testing. For more information see www.medtox.com.

Note: Forward-looking statements contained in this press release are made under the Private Securities Reform Act of 1995. Actual results may differ due to a number of factors including a change in the employment pattern of client companies, the ability of MEDTOX to acquire new business, and changes in the competitive environment. Further discussions of factors that may cause such results to differ are identified in the Company’s 2004 Annual Report on Form 10-K.


MEDTOX Scientific, Inc.
October 17, 2005
Page 3

MEDTOX SCIENTIFIC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)


Three Months Ended
September 30,
Nine Months Ended
September 30,
2005
2004
2005
2004
REVENUES:                    
   Laboratory services   $ 12,740   $ 10,979   $ 36,808   $ 32,694  
   Product sales    3,773    3,494    11,239    10,426  




     16,513    14,473    48,047    43,120  
COST OF REVENUES:  
  Cost of services    7,783    7,055    22,758    20,638  
  Cost of sales    1,470    1,386    4,587    4,096  




     9,253    8,441    27,345    24,734  




GROSS PROFIT    7,260    6,032    20,702    18,386  
   
OPERATING EXPENSES:  
   Selling, general and administrative    5,020    4,397    14,264    13,310  
   Research and development    552    354    1,788    1,189  




     5,572    4,751    16,052    14,499  




INCOME FROM OPERATIONS    1,688    1,281    4,650    3,887  
   
OTHER INCOME (EXPENSE):  
   Interest expense    (182 )  (264 )  (620 )  (790 )
   Other expense, net    (175 )  (99 )  (383 )  (337 )




     (357 )  (363 )  (1,003 )  (1,127 )




INCOME BEFORE INCOME TAX EXPENSE    1,331    918    3,647    2,760  
   
INCOME TAX EXPENSE    (506 )  (349 )  (1,386 )  (1,049 )




NET INCOME   $ 825    569   $ 2,261   $ 1,711  




BASIC EARNINGS PER COMMON SHARE   $ 0.10   $ 0.08   $ 0.30   $ 0.23  




DILUTED EARNINGS PER COMMON SHARE   $ 0.10   $ 0.07   $ 0.28   $ 0.22  




WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:  
          Basic    7,896,777    7,444,973    7,662,716    7,451,174  
          Diluted    8,324,880    7,930,347    8,094,210    7,806,901  
  

MEDTOX Scientific, Inc.
October 17, 2005
Page 4

MEDTOX SCIENTIFIC, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)


September 30,
2005

December 31,
2004

ASSETS            
   Cash and cash equivalents   $ 674   $ 263  
   Accounts receivable    11,011    8,287  
   Inventories    3,074    3,624  
   Other current assets    2,504    2,824  


         Total current assets    17,263    14,998  
   
   Building, equipment and improvements, net    17,753    16,348  
   
   Other assets    23,073    24,614  


         Total assets   $ 58,089   $ 55,960  


   
LIABILITIES AND STOCKHOLDERS' EQUITY   
   Current liabilities   $ 8,616   $ 12,081  
   
   Long-term obligations    5,845    6,090  
   
   Stockholders' equity    43,628    37,789  


         Total liabilities and stockholders' equity   $ 58,089   $ 55,960