Acton, Massachusetts, November 5, 2012 — Psychemedics Corporation (NASDAQ:PMD) today announced third quarter financial results for the period ended September 30, 2012. The Company also announced a quarterly dividend of $0.15 per share payable to shareholders of record as of November 15, 2012 to be paid on November 28, 2012. This will be the Company’s 65th consecutive quarterly dividend.
The Company’s revenue for the quarter ended September 30, 2012 was $6.5 million versus $6.3 million for the quarter ended September 30, 2011, an increase of 2%. Net income for the quarter ended September 30, 2012 was $878 thousand or $0.17 per diluted share, versus $1.1 million or $0.21 per diluted share for the comparable period last year, a decrease of 20%. The Company’s revenue for the nine months ended September 30, 2012 was $19.6 million, as compared to $18.5 million for the comparable period in 2011, an increase of 6%. Net income for the nine months ended September 30, 2012 was $2.7 million or $0.51 per diluted share, as compared to last year, during which the Company earned $3.1 million or $0.58 per diluted share, a decrease of 11%.
Raymond C. Kubacki, Chairman and Chief Executive Officer, said,
“I am happy to report what I believe was a very solid quarter for our Company, in view of the soft economy and the achievement of a major transition in our operations.
“While our revenue increased, it was below expectations, primarily due to a weak hiring environment lowering testing volume from our base business. However, new business accounted for all our growth including making up for lost volume on our base business. At the same time, we made a major transition in technology and operations, which we believe bodes well for our long-term growth, despite the cost impact on our quarter.
“This was a historic quarter for the Company. During the quarter, we finalized development and put into production our new proprietary custom designed enzyme immunoassay (EIA) technology. As you can imagine, this was not a small or inexpensive task. This change required the re-engineering of several operational processes and systems. While we absorbed one-time development costs, this is an important long-term investment for our Company. Meanwhile, our pre-tax margin for Q3 2012 exceeded 22%.
“As I reported on last quarter, the FDA granted the Company 501(k) clearances for five new, additional assays to test for the detection of cocaine, opiates, PCP, methamphetamine and marijuana using our custom designed EIA analysis of head and body hair. The newly developed immunoassays produced by the R&D team at Psychemedics were uniquely designed specifically to meet and even exceed the standards of radioimmunoassay, and represent a significant technological breakthrough. By combining our new FDA-cleared immunoassays, which are equivalent in effectiveness and sensitivity to radioimmunoassay, with our new patented method of releasing the drugs from the hair, we continue to demonstrate our technological leadership and to offer truly proprietary technology that provides superior detection of drugs of abuse for our many clients. That is what sets us apart.
“Another significant change implemented this quarter was the expansion of our laboratory capacity to include production on Saturdays. The primary purpose of this was to increase our customer service by allowing timelier reporting of test results to our clients.
“We continue to have a strong balance sheet with $3.7 million in cash and cash equivalents as of September 30, 2012, despite making significant investments in equipment, and no long term debt.
“Our directors share our confidence in the long-term future of Psychemedics and remain committed to rewarding shareholders and sharing the financial success of the Company with them as we move forward.
“Therefore, the Board has declared a $0.15 dividend for the quarter. This is our 65th consecutive quarterly dividend.”