MEDTOX Scientific Announces Third Quarter Results

ST. PAUL, Minn., Oct. 13, 2011 (GLOBE NEWSWIRE) -- MEDTOX Scientific, Inc. (Nasdaq:MTOX) today announced results for the third quarter ended September 30, 2011. Highlights from the quarter compared to the prior-year period include:

• Total revenues increased 6.9% to $27.6 million
   
• Gross profit increased 5.2% to $11.4 million
   
• Operating expenses were $9.3 million, an increase of 3.7%
   
• Operating income was $2.1 million, an increase of 12.3%
   
• Net income was $1.3 million, an increase of 15.0%
   
• Earnings per diluted share were $0.15 compared to $0.13

For the nine-month period ended September 30, 2011, revenues were $81.2 million, compared to $72.1 million for the prior-year period. Gross profit was $33.9 million, compared to $29.3 million for the prior-year period. Operating income was $5.5 million, compared to $3.5 million for the prior-year period. The Company recorded net income of $3.5 million, compared to $2.2 million for the prior-year period. Earnings per diluted share were $0.39, compared to $0.25 for the prior-year period.

For the three-month period ended September 30, 2011, overall gross margin was relatively flat at 41.2%, compared to 41.9% in the third quarter of 2010. Operating expenses for the quarter were 33.7% of revenue, compared to 34.8% of revenue in the prior-year period, and were down from 35.5% of revenue in the second quarter of 2011.

In our Laboratory segment, revenues from drugs-of-abuse (DAU) testing in the quarter increased 3.8% compared to the prior-year period. A strong 12.9% increase in revenues from new business was offset by a 9.1% decrease in revenues from existing clients. Revenues from existing clients continue to be negatively impacted due to economic conditions. In our clinical laboratory, revenues from Clinical and Other Laboratory Services in the quarter increased 12.1% compared to the prior-year period, and revenues in the quarter from Clinical Trial Services (CTS) were up slightly from the strong third quarter of 2010. Since CTS is a project-based business that can be variable from quarter to quarter, the Company believes it is more meaningful to measure success on a longer term basis. For example, in the nine-month period ended September 30, 2011, CTS revenues were up 38.4% from the prior-year period; and for the most recent four quarters ended September 30, 2011, CTS revenues increased 52.2% compared to the prior four-quarter period.

In the Diagnostic segment, revenues were up 8.1% for the quarter compared to the prior-year period. Solid revenue growth from our substance abuse products was partially offset by a $114,000 reduction in Contract Manufacturing revenue quarter over quarter. As we have previously disclosed, Contract Manufacturing is a business that we have been exiting and expect the remaining client relationship to terminate within the next two quarters.

Cash on hand at quarter-end was $1.6 million and the Company currently has no short or long term debt.

MEDTOX will hold a teleconference to discuss 2011 third quarter results today at 9:30 a.m. Central Time (10:30 a.m. Eastern). The Company will discuss these results and other corporate matters. During the conference call, the Company may discuss and answer questions concerning business and financial developments and trends. The Company's responses to questions, as well as other matters discussed during the conference call, may contain or constitute information that has not been previously disclosed. To access the teleconference, dial (888) 820-9416 ten minutes before the scheduled start time today. International callers may access the call by dialing (913) 312-0945. 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 under "webcasts" at www.medtox.com. An audio replay of the conference call will be available through October 20 at (888) 203-1112, passcode # 9749645. International callers may access the replay at (719) 457-0820 with the same passcode # 9749645.

MEDTOX Scientific, Inc., headquartered in St. Paul, Minn., is a provider of high quality specialized laboratory testing services and on-site/point-of-collection testing (POCT) 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.

The MEDTOX Scientific, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3264

Note: Forward-looking statements contained in this press release are made under the Private Securities Reform Act of 1995. Forward-looking statements, including those relating to revenues from existing clients being negatively impacted by reduced hiring and our exiting the Contract Manufacturing business, are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those stated in such statements. Actual results may differ due to a number of factors including economic conditions, a change in the employment pattern of client companies, the ability of MEDTOX to acquire new business and retain existing business, changes in the competitive environment, and the requirements of our remaining client in the Contract Manufacturing business. Further discussions of factors that may cause such results to differ are identified in the Company's 2010 Annual Report on Form 10-K and incorporated herein by reference. You should take such factors into account when making investment decisions and are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update any forward-looking statements.