EX-99 2 ex99-1101608.htm EXHIBIT 99.1

Exhibit 99.1

MEDTOX Scientific, Inc.

402 West County Road D

St. Paul, MN 55112

Contact: Paula Perry (877) 715-7236

 

FOR IMMEDIATE RELEASE

 

MEDTOX SCIENTIFIC ANNOUNCES THIRD QUARTER RESULTS

CLINICAL LAB REVENUES INCREASE 26%

 

ST. PAUL, Minn. October 16, 2008 – MEDTOX Scientific, Inc. (Nasdaq:MTOX) announced today results for the third quarter ended September 30, 2008.

For the three-month period ended September 30, 2008, revenues increased to $22,410,000 compared to $20,759,000 from the prior-year period. Operating income was $2,770,000 compared to $3,050,000 from the prior-year period. The Company recorded net income of $1,644,000, or $0.19 per diluted share, compared to net income of $1,939,000, or $0.22 per diluted share, from the comparable period last year.

For the nine-month period ended September 30, 2008, revenues increased by 7%, to $64,992,000 compared to $60,561,000, from the prior-year period. Operating income increased to $8,587,000 compared to $8,130,000, from the comparable period last year. Net income was $5,159,000, or $0.58 per diluted share, compared to net income of $5,255,000, or $0.59 per diluted share, from the comparable period last year.

In our Laboratory Segment, revenues from drugs-of-abuse testing increased slightly, primarily as a result of increases from government testing for prison, probation and parole, which is a lower margin business. New business from workplace drugs-of-abuse testing clients was strong in the quarter, but overall volume was negatively impacted by an 11% reduction in revenues from existing clients. We believe that the reduced testing volume from existing clients is attributable to economic conditions affecting hiring decisions. Our clinical laboratory expansion initiated this year is gaining momentum with record revenues of $7.0 million for the quarter, for an increase of 26% year over year. Within the clinical laboratory, Clinical Trial Services (CTS) revenues increased to a record $2.0 million for the quarter. New signed protocols and awarded business has increased our CTS backlog to over $10.0 million. Additionally, we have entered into a third exclusive preferred provider relationship that should further expand our testing volume in CTS.

 

MEDTOX Scientific, Inc.

October 16, 2008

Page 2

 

While we are seeing positive results from our clinical laboratory expansion, we have incurred over $300,000 of incremental expenses in the quarter due to the expansion. We also incurred $250,000 incremental transportation expense in the quarter due to rising costs. We will be implementing fee adjustments throughout the rest of the year to mitigate the increased transportation cost.

In the Diagnostic Segment, revenues were flat year over year for the quarter. While we experienced growth in both the hospital and government market segments, revenues from our workplace drugs-of-abuse clients were down 9% year over year. We also experienced lower revenues from OEM contract manufacturing, a product line we are phasing out.

Except for the negative revenue impact of workplace hiring in both of our operating segments, results for the quarter were consistent with our expectations. We continue to maintain effective expense control. Total selling, general and administrative expenses for the quarter were 27.0% of revenues, down from 28.2% for the same period last year. New account activity in the clinical laboratory for the quarter was encouraging and strengthens our long term view of our continuing diversification efforts.

 

MEDTOX will hold a teleconference to discuss third quarter 2008 results today at 9:30 a.m. Central Time (10:30 a.m. Eastern). Dialing (877) 857-6144 a few minutes prior to the scheduled start time on October 16 will access a listen-only broadcast of the teleconference. International callers may access the call by dialing (719) 325-4753. 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 23 at (888) 203-1112 conference ID # 1107420. International callers may access the replay at (719) 457-0820 with the same conference ID # 1107420.

 

MEDTOX Scientific, Inc.

October 16, 2008

Page 3

 

MEDTOX Scientific, Inc., headquartered in St. Paul, Minn., is a provider of high quality specialized laboratory testing services and on-site/point-of-collection 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, including those relating to a third exclusive preferred provider relationship that should further expand the testing volume in CTS and fee adjustments that MEDTOX will implement throughout the rest of the year to mitigate increased transportation costs, 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, expand provider relationships and testing volume, and manage expenses, and changes in the competitive environment. Further discussions of factors that may cause such results to differ are identified in the Company's 2007 Annual Report on Form 10-K.

 

MEDTOX Scientific, Inc.

October 16, 2008

Page 4

MEDTOX SCIENTIFIC, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2008

 

2007

 

2008

 

2007

REVENUES:

 

 

 

 

 

 

 

Laboratory services

$ 17,431

 

$ 15,723

 

$ 49,731

 

$ 46,499

Product sales

4,979

 

5,036

 

15,261

 

14,062

 

22,410

 

20,759

 

64,992

 

60,561

COST OF REVENUES:

 

 

 

 

 

 

 

Cost of services

10,910

 

9,322

 

30,834

 

27,431

Cost of sales

2,068

 

1,936

 

6,055

 

5,310

 

12,978

 

11,258

 

36,889

 

32,741

 

 

 

 

 

 

 

 

GROSS PROFIT

9,432

 

9,501

 

28,103

 

27,820

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

Selling, general and administrative

6,050

 

5,852

 

17,798

 

17,726

Research and development

612

 

599

 

1,718

 

1,964

 

6,662

 

6,451

 

19,516

 

19,690

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

2,770

 

3,050

 

8,587

 

8,130

 

 

 

 

 

 

 

 

OTHER EXPENSE:

 

 

 

 

 

 

 

Interest expense

(14

)

(42

)

(67

)

(139)

Other expense

(167

)

(136

)

(532

)

(280)

 

(181

)

(178

)

(599

)

(419)

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAX EXPENSE

2,589

 

2,872

 

7,988

 

7,711

 

 

 

 

 

 

 

 

INCOME TAX EXPENSE

(945

)

(933

)

(2,829

)

(2,456)

 

 

 

 

 

 

 

 

NET INCOME

$ 1,644

 

$ 1,939

 

$ 5,159

 

$ 5,255

 

 

 

 

 

 

 

 

BASIC EARNINGS PER COMMON SHARE

$ 0.20

 

$ 0.23

 

$ 0.61

 

$ 0.63

 

 

 

 

 

 

 

 

DILUTED EARNINGS PER COMMON SHARE

$ 0.19

 

$ 0.22

 

$ 0.58

 

$ 0.59

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING:

 

 

 

 

 

 

 

Basic

8,354,316

 

8,397,882

 

8,453,724

 

8,286,551

Diluted

8,856,934

 

9,010,490

 

8,961,606

 

8,891,581

 

MEDTOX Scientific, Inc.

October 16, 2008

Page 5

 

MEDTOX SCIENTIFIC, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

 

September 30,

2008

 

December 31,

2007

ASSETS

 

 

 

Cash and cash equivalents

$ 3,620

 

$ 2,220

Accounts receivable, net

15,931

 

13,810

Inventories

3,873

 

3,910

Other current assets

2,610

 

2,943

Total current assets

26,034

 

22,883

 

 

 

 

Building, equipment and improvements, net

28,716

 

26,885

 

 

 

 

Other assets

17,793

 

20,181

Total assets

$ 72,543

 

$ 69,949

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities

$ 10,371

 

$ 11,634

 

 

 

 

Long-term debt

471

 

979

 

 

 

 

Other long-term obligations

2,102

 

1,680

 

 

 

 

Stockholders’ equity

59,599

 

55,656

Total liabilities and stockholders’ equity

$ 72,543

 

$ 69,949