MEDTOX Scientific Announces Strong Results for Fourth Quarter and Year-End

Full Year Revenue Increase of 15 Percent -- Net Income Growth of 47 Percent


ST. PAUL, Minn., Feb. 20, 2008 (PRIME NEWSWIRE) -- MEDTOX Scientific, Inc. (Nasdaq:MTOX) today announced fourth quarter and year-end results for the periods ending December 31, 2007. For the year ended December 31, 2007, MEDTOX achieved record revenues, gross profit, gross margin and operating income:



 * Revenues for the year increased $10.5 million to $80.3 million,
   or 15%

 * Gross margin for the year increased to 45.3% from 44.4%

 * Operating margin for the year increased to 12.5% from 11.7%

 * Net income for the year increased $2.1 million to $6.7 million
   or 47%

 * Diluted EPS for the year increased $0.23 to $0.75 or 44%

 * Operating cash flow for the year increased 23% to $12.0 million

For the three-month period, revenues were $19,724,000, compared to $17,335,000 from the prior-year period. The Company recorded operating income of $1,886,000 for the three-month period, compared to $1,680,000 for the prior-year period. The Company recorded net income of $1,435,000 for the three-month period compared to $1,036,000 for the prior-year period. Earnings per diluted share increased 33% to $0.16, compared to $0.12 in the fourth quarter of 2006.

For the twelve month period, revenues were $80,285,000 compared to $69,804,000 for the prior-year period. The Company recorded operating income of $10,016,000 for the twelve-month period compared to $8,201,000 for the prior-year period. The Company recorded net income of $6,690,000 for 2007 compared to $4,548,000 for the prior-year period. Earnings per diluted share increased 44% to $0.75, compared to 2006 earnings per diluted share of $0.52.

Margins continue to improve, with gross margin increasing to 45.3% for the year compared to 44.4% for the prior year. Total operating expenses as a percentage of sales were 32.8% for the year, compared to 32.7% for the prior year. The Company's balance sheet also continues to improve. At December 31, 2007, the revolving line of credit had no outstanding balance and continued repayment of long-term debt has reduced the balance from $2.1 million at December 31, 2006 to $1.0 million at December 31, 2007. Also, the Company made capital expenditures of $9.0 million during the year, financed from internally generated cash, up from $4.5 million in the prior year. Operating cash flows for the year were a record $12.0 million.

"The increase in capital expenditures year over year is largely attributable to acceleration in the development of our clinical laboratory capabilities. In addition to our recent entry into the clinical trials services market (CTS), the Company has identified a strategic opportunity, on a regional basis, to provide 'full service' clinical laboratory testing for physicians and patients," said Richard J. Braun, Chief Executive Officer. "We now have the staffing, infrastructure and test menu to provide clinical laboratory testing to physicians and patients in the Upper Midwest initially focusing on Minnesota and western Wisconsin. Our entrance into this new market, which we estimate exceeds $200 million, increases growth and diversification opportunities for MEDTOX. We will provide more detail during our teleconference this morning."

MEDTOX will hold a teleconference to discuss 2007 fourth quarter and year-end 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) 278-8475 ten minutes before the scheduled start time today. International callers may access the call by dialing (913) 312-0658. 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 February 27 at (888) 203-1112, passcode # 4265415. International callers may access the replay at 719-457-0820 with the same passcode # 4265415.

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.primenewswire.com/newsroom/prs/?pkgid=3264

Note: Forward looking statements contained in this press release are made under the Private Securities Reform Act of 1995. Actual results may differ due to a number of factors including a change in the employment pattern of client companies, the ability of MEDTOX to acquire new business, and changes in the competitive environment. Further discussions of factors that may cause such results to differ are identified in the Company's 2006 Annual Report on Form 10-K and incorporated herein by reference.



                        MEDTOX SCIENTIFIC, INC.
                  CONSOLIDATED STATEMENTS OF OPERATIONS
              (In thousands, except share and per share data)
                               (Unaudited)

                              Three Months Ended    Twelve Months Ended
                                  December 31,          December 31,
                                2007       2006       2007       2006
                             ---------  ---------  ---------  ---------
 REVENUES:                      
  Laboratory services        $  14,811  $  13,505  $  61,310  $  54,045
  Product sales                  4,913      3,830     18,975     15,759
                             ---------  ---------  ---------  ---------
                                19,724     17,335     80,285     69,804

 COST OF REVENUES:
  Cost of services               9,300      8,382     36,731     32,746
  Cost of sales                  1,888      1,468      7,198      6,053
                             ---------  ---------  ---------  ---------
                                11,188      9,850     43,929     38,799
                             ---------  ---------  ---------  ---------
 
 GROSS PROFIT                    8,536      7,485     36,356     31,005

 OPERATING EXPENSES:
  Selling, general and
   administrative                6,011      5,219     23,737     20,648
  Research and development         639        586      2,603      2,156
                             ---------  ---------  ---------  ---------
                                 6,650      5,805     26,340     22,804
                             ---------  ---------  ---------  ---------

 INCOME FROM OPERATIONS          1,886      1,680     10,016      8,201

 OTHER EXPENSE:
  Interest expense                 (41)       (66)      (180)      (438)     
  Other expense, net              (247)      (139)      (527)      (568)   
                             ---------  ---------  ---------  ---------
                                  (288)      (205)      (707)    (1,006)
                             ---------  ---------  ---------  ---------

 INCOME BEFORE INCOME TAX        1,598      1,475      9,309      7,195

 INCOME TAX EXPENSE               (163)      (439)    (2,619)    (2,647)  
                             ---------  ---------  ---------  ---------

 NET INCOME                  $   1,435  $   1,036  $   6,690  $   4,548
                             =========  =========  =========  =========   
 BASIC EARNINGS PER COMMON
  SHARE                      $    0.17  $    0.13  $    0.80  $    0.56
                             =========  =========  =========  ========= 

 DILUTED EARNINGS PER COMMON
  SHARE                      $    0.16  $    0.12  $    0.75  $    0.52
                             =========  =========  =========  ========= 

 WEIGHTED AVERAGE NUMBER OF
  SHARES OUTSTANDING:
   Basic                     8,427,557  8,111,781  8,322,092  8,148,726
   Diluted                   9,007,520  8,864,173  8,907,320  8,802,470


                         MEDTOX SCIENTIFIC, INC.
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                            (In thousands)
                              (Unaudited)

                                             December 31,  December 31,
                                                 2007          2006
                                             ------------  ------------
 ASSETS
  Cash and cash equivalents                  $      2,220  $      1,261
  Accounts receivable, net                         13,810        11,067
  Inventories                                       3,910         3,538
  Other current assets                              2,943         2,841
                                             ------------  ------------
     Total current assets                          22,883        18,707

  Building, equipment and improvements, net        26,885        19,572

  Other assets                                     20,181        21,595
                                             ------------  ------------
     Total assets                            $     69,949  $     59,874
                                             ============  ============
                                              
 LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities                        $     11,634  $      8,892
  
  Long-term debt                                      979         2,055
  
  Other long-term liabilities                       1,680           981

  Long-term portion of capital leases                  --             2

  Stockholders' equity                             55,656        47,944
                                             ------------  ------------
     Total liabilities and stockholders' 
      equity                                 $     69,949  $     59,874
                                             ============  ============


            

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