Psychemedics Corporation Announces 2008 Year End Results

ACTON, Mass., Feb. 18 /PRNewswire-FirstCall/ -- Psychemedics Corporation today announced fourth quarter and year-end financial results for the period ended December 31, 2008. The Company also announced a quarterly dividend of $0.17 per share payable to shareholders of record as of March 6, 2009 to be paid on March 20, 2009. This will be the Company's 50th consecutive quarterly dividend.

The Company's revenue for the year ended December 31, 2008 was $22,948,604, a decrease of 7% as compared to $24,568,824 for 2007. Net income for the year ended December 31, 2008 was $2,968,789 or $0.57 per share, a decrease of 34% from 2007 during which the Company earned $4,483,687 or $0.85 per share. Revenue for the fourth quarter was $4,824,016, a decrease of 18% as compared to $5,891,412 in the fourth quarter of 2007. Net income was $172,728 or $0.03 per share, down 81% from $906,817 or $0.17 per share for the same period of 2007.

Raymond C. Kubacki, Chairman and Chief Executive Officer, said, "Despite a challenging economic environment, the strength of our balance sheet and cash flow from operations provides Psychemedics with a solid foundation to withstand challenging economic downturns. In addition, our new business remains healthy. In fact, we continue to see significant opportunities for increasing new business. Our clients not only use the most rigorous and effective drug test available to screen out drug abusers, and save costs, but also to send a very important message to all their employees: that they take great pride in having a workforce with integrity and character. They have established a drug free culture and, in doing so, also have invested in a culture of integrity. We take great pride in working with our clients to meet these important goals. And these goals are even more important today in this challenging environment."

Kubacki concluded, "The Company's balance sheet remains strong with approximately $6.6 million of cash and short-term investments, no long-term debt and over $9.5 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 50th 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.

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.

Psychemedics Corporation For the Period Ending December 31, 2008 Three Months Ended Twelve Months Ended December 31, December 31, ------------ ------------ 2008 2007 2008 2007 ---- ---- ---- ---- TOTAL REVENUES $4,824,016 $5,891,412 $22,948,604 $24,568,824 DIRECT COSTS 2,224,289 2,496,674 9,598,515 9,892,226 Gross Profit 2,599,727 3,394,738 13,350,089 14,676,598 EXPENSES Marketing and Selling 933,699 822,833 3,648,584 3,099,909 General & Administrative 1,257,268 978,962 4,520,074 3,948,642 Research and Development 112,092 111,526 474,622 489,007 Total Operating Expenses 2,303,059 1,913,321 8,643,280 7,537,558 Operating Income 296,668 1,481,417 4,706,809 7,139,040 Interest Income 58,073 114,600 308,034 416,647 Income before taxes 354,741 1,596,017 5,014,843 7,555,687 -------- --------- --------- --------- Tax Provision 182,013 689,200 2,046,054 3,072,000 -------- --------- --------- --------- Net Income $172,728 $906,817 $2,968,789 $4,483,687 Basic net income per share $0.03 $0.17 $0.57 $0.86 Diluted income per share $0.03 $0.17 $0.57 $0.85 Dividends declared per share $0.67 $0.15 $1.18 $0.575 Weighted average common shares outstanding, Basic 5,206,158 5,220,326 5,219,141 5,205,032 Weighted average common shares outstanding, Diluted 5,215,743 5,303,474 5,245,713 5,301,620 Psychemedics Corporation Balance Sheet For the Period Ending December 31, 2008 For the period ended December 31, December 31, 2008 2007 ---- ---- ASSETS CURRENT ASSETS: Cash and cash equivalents 6,630,119 6,096,734 Short-term investments -- 3,875,000 Accounts receivable, net of allowance for doubtful accounts of $246,462 in 2008 and $235,337 in 2007 bad debt 3,398,455 3,555,342 Prepaid expenses and other current assets 1,105,886 498,919 Deferred tax asset 449,398 429,472 ------- ------- Total current assets 11,583,858 14,455,467 PROPERTY AND EQUIPMENT Equipment & Leasehold Improvements 10,877,479 10,792,657 Less accumulated depreciation (10,047,755) (9,977,315) ----------- ---------- Net Fixed Assets 829,724 815,342 DEFERRED TAX ASSET 139,021 231,346 OTHER ASSETS 75,182 58,613 ------ ------ Total Assets 12,627,785 15,560,768 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable 644,894 488,640 Accrued expenses 1,268,924 951,242 Deferred revenue 154,080 242,955 ------- ------- Total Liabilities 2,067,898 1,682,837 SHAREHOLDERS' EQUITY: Preferred stock, $.005 par value; authorized 872,521 shares; none outstanding Common stock; $.005 par value; authorized 50,000,000 shares; 5,843,068 shares issued in 2008 and 5,811,982 shares issued in 2007 29,215 29,060 Paid-in capital 27,118,743 26,539,764 Accumulated deficit (6,614,114) (3,527,269) Less - Treasury stock, at cost; 647,304 shares in 2008 and 586,197 shares in 2007 (9,973,957) (9,163,624) ---------- ---------- Total shareholders' equity 10,559,887 13,877,931 Total Liabilities & Shareholder Equity 12,627,785 15,560,768 ========== ========== Contact: Raymond Ruddy Vice President and Controller [phone]