8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report
Pursuant To Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) April 27, 2005

PSYCHEMEDICS CORPORATION

(Exact Name of Registrant As Specified In Its Charter)

Delaware
(State or Other Jurisdiction of Incorporation)

1-13738	58-1701987
(Commission File Number)	(I.R.S. Employer Identification No.)

125 Nagog Park, Acton, Massachusetts	01720
(Address of Principal Executive Offices)	(Zip Code)

(978) 206-8220
(Registrant’s Telephone Number, Including Area Code)

N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
	ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
SIGNATURE
Ex-99.1 Press release dated April 27, 2005

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

     On April 27, 2005, Psychemedics Corporation issued a press release announcing preliminary results for the quarter ended March 31, 2005. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.

     Limitation on Incorporation by Reference. The information in this Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.

     Cautionary Note Regarding Forward-Looking Statements. Except for historical information contained in the press release attached as an exhibit hereto, the press release contains forward-looking statements which involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. Please refer to the cautionary note in the press release regarding these forward-looking statements.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(c)   Exhibits

The following exhibits are filed herewith:
99.1	Press Release dated April 27, 2005.

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

	PSYCHEMEDICS CORPORATION
Dated: April 28, 2005
	By:	/s/ Peter C. Monson Peter C. Monson, Vice President and      Chief Financial Officer

EXHIBIT INDEX

Exhibit
Number	Description
99.1	Press release dated April 27, 2005 of Psychemedics Corporation announcing its financial results for the quarter ended March 31, 2005.

EX-99.1

EXHIBIT 99.1

NEWS RELEASE

Contact:	Peter Monson
	Chief Financial Officer
	(978) 206-8220
	Peterm@psychemedics.com

PSYCHEMEDICS CORPORATION ANNOUNCES RECORD
1^st QUARTER REVENUE AND NET INCOME
DECLARES QUARTERLY DIVIDEND

Acton, Massachusetts, April 27, 2005 — Psychemedics Corporation (AMEX: PMD) today announced first quarter results for the period ending March 31, 2005. The Company also announced a quarterly dividend of $.08 per share, which will be paid on June 24, 2005 to shareholders of record on June 10, 2005.

The Company’s first quarter revenue was $5,337,750, up 28% compared to $4,155,872 in the first quarter of 2004. Net income was $948,140 or $0.18 per share, up 109% from $452,988 or $0.09 per share for the same period in 2004.

Raymond C. Kubacki, Chairman and Chief Executive Officer, said, “We are pleased to be able to report record results for the first quarter of 2005. Our revenue and net income for the first quarter of 2005 represent another significant milestone for our Company — it was the highest revenue and net income for any first quarter in the history of Psychemedics Corporation. Our revenue growth of 28% came from both new and existing customers, and with our continued adherence to rigid cost controls, resulted in strong operating margins and an increase in net income of 109%. Significantly, we achieved these superior results in a job market that continues to be challenging.”

Kubacki added, “Our strong revenue increase of over 28% was aided by the addition of a new client that undertook a major start-up hiring effort at its new facility that resulted in over 11,000 tests during the first quarter. However, it should be noted that our revenue for the first quarter still would have increased by a healthy 20% if we had not added this

new client. We will also be doing all the ongoing testing for this client after this initial start-up phase is completed.”

Kubacki continued, “We continue to add new accounts at a brisk pace and to demonstrate our ability to produce strong profit margins. With our patented and FDA-cleared hair test and our large and diverse customer base, we feel we are well-positioned for substantial growth in the future. The Company’s balance sheet remains strong with over $4.1 million of cash and short-term investments, no long-term debt and approximately $6.1 million of working capital. We are pleased to declare our 35th consecutive quarterly dividend, demonstrating the Directors’ commitment to rewarding shareholders and sharing the financial success of the Company with them as we grow.”

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. Psychemedics is the only company that has received FDA clearance for a five-drug panel test of hair samples for drugs of abuse.

Financial Highlights:

•   Revenue for the first quarter increased 28% over the prior year quarter to $5,337,750

•   Net Income for the first quarter of $948,140, or $0.18 per diluted share, up 109% from the prior year quarter

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 growth, 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
STATEMENTS OF INCOME

	THREE MONTHS
	ENDED MARCH 31,
	2005		2004
REVENUE	$	5,337,750	$	4,155,872
DIRECT COSTS		2,164,830		2,004,706
Gross profit		3,172,920		2,151,166
EXPENSES:
General and administrative		872,638		743,801
Marketing and selling		729,081		606,529
Research and development		71,947		77,019
		1,673,666		1,427,349
OPERATING INCOME		1,499,254		723,817
INTEREST INCOME		12,636		7,921
OTHER INCOME		1,250		3,750
		13,886		11,671
NET INCOME BEFORE INCOME TAXES		1,513,140		735,488
PROVISION FOR INCOME TAXES		565,000		282,500
NET INCOME	$	948,140	$	452,988
BASIC NET INCOME PER SHARE	$	0.18	$	0.09
DILUTED NET INCOME PER SHARE	$	0.18	$	0.09
DIVIDENDS DECLARED PER SHARE	$	0.08	$	0.08
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING		5,128,508		5,126,907
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING, ASSUMING DILUTION		5,141,527		5,133,050

PSYCHEMEDICS CORPORATION
BALANCE SHEETS

	MARCH 31,			DECEMBER 31,
	2005			2004
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	2,068,783		$	3,260,178
Short-term investments		2,000,000			—
Accounts receivable, net		3,527,303			3,289,863
Prepaid expenses and other assets		568,427			246,372
Deferred tax asset		529,752			529,752
Total current assets		8,694,265			7,326,165
PROPERTY AND EQUIPMENT:
Equipment and leasehold improvements, at cost		10,000,889			9,960,831
Less — accumulated depreciation and amortization		(9,203,041	)		(9,099,472	)
		797,848			861,359
DEFERRED TAX ASSET		166,583			166,583
OTHER ASSETS, NET		60,462			79,529
	$	9,719,158		$	8,433,636
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	550,101		$	554,214
Accrued expenses		1,562,890			1,157,740
Deferred revenue		502,543			487,633
Total current liabilities		2,615,534			2,199,587
SHAREHOLDERS’ EQUITY:
Preferred stock, $0.005 par value; 872,521 shares authorized; none issued or outstanding		—			—
Common stock; $0.005 par value; 50,000,000 shares authorized; 5,738,202 shares in 2005 and 5,710,704 shares in 2004 issued		28,691			28,554
Paid-in capital		25,309,490			24,978,039
Accumulated deficit		(9,111,866	)		(9,649,853	)
Less — Treasury stock, at cost; 583,797 shares		(9,122,691	)		(9,122,691	)
Total shareholders’ equity		7,103,624			6,234,049
	$	9,719,158		$	8,433,636