Human Resources & Staffing Consulting Industry News

ACTON, Mass., Nov. 3 /PRNewswire-FirstCall/ -- Psychemedics Corporation (Nasdaq: PMD) today announced third quarter financial results for the period ended September 30, 2009. The Company also announced a quarterly dividend of $0.12 per share payable to shareholders of record as of December 3, 2009 to be paid on December 17, 2009. This will be the Company's 53rd consecutive quarterly dividend.

The Company's third quarter revenue was $4.7 million, down 25% as compared to $6.2 million in the third quarter of 2008. Net income was $0.8 million or $0.15 per diluted share, down 12% from $0.9 million or $0.17 per share for the same period in 2008. The Company's revenue for the nine months ended September 30, 2009 was $12.7 million, down 30% as compared to $18.1 million for the comparable period of 2008. Net income for the nine months ended September 30, 2009 was $1.0 million or $0.19 per diluted share, a decrease of 65% from the comparable period last year during which the Company earned $2.8 million or $0.53 per diluted share.

Raymond C. Kubacki, Chairman and Chief Executive Officer, said, "Stating the obvious: these are difficult times. However, despite a 25% decline in revenue during the third quarter of 2009, we were nearly able to match last year's third quarter earnings per share of $0.17. Our EPS was $0.15 in the current quarter. We were able to achieve this level of profitability because we took significant cost reduction/control actions early, and did them logically and methodically. These included reductions in force, changes in certain benefits such as elimination of bonuses, stock grants, and 401k match. We also increased required employee healthcare contributions and implemented salary cuts for all personnel. These actions substantially aided our ability to achieve a significant improvement in both gross and operating margins when compared to the second quarter of 2009."

Kubacki concluded, "We are pleased that Psychemedics continues to demonstrate its ability to successfully weather the downturn. Further, some good news is that the year/year rate of decline in the third quarter revenue was less than in the past 2 quarters. We feel confident about our future prospects. It is important to also note that the Company continues to have a strong balance sheet with no long-term debt and approximately $4.6 million of cash and investments. Our cash flow from operations was $0.5 million for the first three quarters of 2009. For all these reasons, our board is declaring our 53rd consecutive quarterly dividend which demonstrates our continued commitment to maximizing shareholder returns as we move forward."

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 $4.7 million, down 25% from the prior
        year quarter
    --  Revenue for the nine month period of $12.7 million, down 30% from the
        prior year
    --  Pretax income for the third quarter of $1.3 million, down 10% from the
        prior year
    --  Pretax income for the nine month period of $1.7 million, down 64% from
        the prior year
    --  Net income for the third quarter of $0.8 million, or $0.15 per diluted
        share, down 12% from the prior year quarter

    --  Net income for the nine month period of $1.0 million, or $0.19 per
        diluted share, down 65% from the prior year period

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 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 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 Ended     Nine Months Ended
                                        September 30,          September 30,
                                       2009       2008        2009        2008
                                       ----       ----        ----        ----

    Revenue                      $4,669,894 $6,204,647 $12,683,654 $18,124,587
    Cost of Revenue               1,779,732  2,552,014   5,595,740   7,374,228
                                  ---------  ---------   ---------  ----------
    Gross Profit                  2,890,162  3,652,633   7,087,914  10,750,359
                                  ---------  ---------   ---------  ----------
    General & Administrative        862,518  1,145,486   2,784,379   3,262,804
    Marketing & Selling             643,139  1,013,510   2,325,538   2,714,882
    Research & Development          111,402    125,039     353,965     362,532
                                  ---------  ---------   ---------   ---------
    Total Operating Expenses      1,617,059  2,284,035   5,463,882   6,340,218
                                  ---------  ---------   ---------   ---------
    Operating Income              1,273,103  1,368,598   1,624,032   4,410,141
    Interest Income                  11,576     64,999      34,166     249,961
                                  ---------  ---------   ---------   ---------
    Net Income Before
    Provision for Income Taxes    1,284,679  1,433,597   1,658,198   4,660,102

    Provision for Income Taxes      516,373    560,042     676,986   1,864,041
                                  ---------  ---------    --------   ---------
    Net Income                     $768,306   $873,555    $981,212  $2,796,061
                                  =========  =========   =========   =========
    Basic net income per share        $0.15      $0.17       $0.19       $0.54
                                      =====      =====       =====       =====

    Diluted net income per share      $0.15      $0.17       $0.19       $0.53
                                      =====      =====       =====       =====

    Dividends declared per share      $0.12      $0.17       $0.41       $0.49
                                      =====      =====       =====       =====

    Weighted average common
     shares outstanding, basic    5,178,545  5,226,237   5,182,504   5,223,581
                                  =========  =========   =========   =========

    Weighted average common
     shares outstanding, diluted  5,184,061  5,255,301   5,194,118   5,275,311
                                  =========  =========   =========   =========



                                 PSYCHEMEDICS CORPORATION
                                     BALANCE SHEETS
                                        UNAUDITED

                                                September 30,   December 31,
                                                         2009          2008
                                                         ----          ----
                ASSETS
     Current Assets:
       Cash and cash equivalents                   $3,616,323    $6,630,119
       Short term investments                       1,002,781           ---
       Accounts receivable, net of allowance for
        doubtful accounts of $169,939 in 2009
        and $246,462 in 2008                        3,810,216     3,398,455
       Prepaid expenses                               548,642     1,023,841
       Other current assets                           175,788        82,045
       Deferred tax assets                            570,089       449,398
                                                    ---------    ----------
    Total Current Assets                            9,723,839    11,583,858
                                                   ----------    ----------
    Fixed Assets:
       Equipment & leasehold improvements          10,911,902    10,877,479
       Less accumulated depreciation              (10,308,017)  (10,047,755)
                                                   ----------    ----------
    Net Fixed Assets                                  603,885       829,724
                                                   ----------    ----------
       Deferred tax assets, long term                 139,021       139,021
       Other assets                                    85,481        75,183
                                                   ----------    ----------
    Total Assets                                  $10,552,226   $12,627,786
                                                   ==========    ==========
           LIABILITIES AND SHAREHOLDERS' EQUITY
    Liabilities:
    Current Liabilities:
       Accounts payable                              $302,755      $644,894
       Accrued expenses                               653,417     1,268,924
       Accrued income taxes                           213,216           ---
       Deferred revenue                                44,730       154,080
                                                    ---------     ---------
    Total Current Liabilities                       1,214,118     2,067,898
                                                    ---------     ---------
    Commitments and Contingencies

    Shareholders' Equity:
       Preferred-stock, $0.005 par value, 872,521
        shares authorized, no shares issued
        or outstanding
                                                          ---           ---
       Common stock, $0.005 par value; 50,000,000
        shares authorized                              29,308        29,216
       5,861,554 shares issued in 2009 and 5,843,068
        shares issued in 2008
       Paid-in capital                             27,385,486    27,118,743
       Accumulated deficit                         (8,023,322)   (6,614,114)
       Less - Treasury stock, at
        cost, 664,523 shares in
        2009 and 647,304 shares in
        2008                                      (10,053,364)   (9,973,957)
                                                   ----------    ----------
    Total Shareholders' Equity                      9,338,108    10,559,888
                                                   ----------    ----------
    Total Liabilities and
     Shareholders' Equity                         $10,552,226   $12,627,786
                                                   ==========    ==========

    Contact:  Raymond Ruddy
              Vice President and Controller
              (978) 206-8220
              Raymondr@psychemedics.com

SOURCE Psychemedics Corporation