Exhibit 99.1
MEDTOX Scientific, Inc.
402 West County Road D
St. Paul, MN 55112
Contact: Paula Perry (877) 715-7236
FOR IMMEDIATE RELEASE
MEDTOX SCIENTIFIC ANNOUNCES RECORD
SECOND QUARTER AND YEAR-TO-DATE NET INCOME
ST. PAUL, July 17, 2006 – MEDTOX Scientific, Inc. (Nasdaq:MTOX) announced today results for the second quarter ended June 30, 2006.
For the six-month period, revenues increased to $33,749,000, compared to $31,534,000, or 7.0%, from the prior-year period. Operating income increased to $3,875,000 compared to $2,962,000, or 30.8%, from the prior-year period. The Company recorded net income of $2,036,000, or $0.23 per diluted share, compared to net income of $1,436,000, or $0.18 per diluted share, or a 41.8% increase in net income from the comparable period last year.
For the three-month period ended June 30, 2006, revenues increased to $17,399,000 compared to $16,845,000, or 3.3%, from the prior-year period. Operating income increased to $2,325,000 compared to $1,950,000, or 19.2%, from the comparable period last year. Net income increased to $1,282,000, or $0.15 per diluted share, compared to net income of $1,015,000, or $0.13 per diluted share, or a 26.3% increase in net income from the comparable period last year.
Overall, expenses for the quarter were in line with expectations. Total operating expenses were 31.1% of revenues for the quarter compared to 32.9% for the comparable period last year. Total operating expenses were 32.6% year-to-date compared to 33.2% for the comparable period last year. Gross margin for the quarter was 44.5% compared to 44.4% for the comparable period last year. Gross margin year-to-date was 44.1% compared to 42.6% for the comparable period last year.
MEDTOX Scientific, Inc.
July 17, 2006
Page 2
Although there was a reduction in hiring activity by existing clients in the second quarter, the new account activity was strong which resulted in record revenues, operating income, pre-tax income and net income for the quarter. The Company has implemented a number of initiatives to compensate for lower activity from existing clients that it believes will have a positive benefit in the second half of 2006. These initiatives will be discussed during the Company’s teleconference to be held this morning.
MEDTOX will hold a teleconference to discuss second quarter 2006 results today at 9:30 a.m. Central Time (10:30 a.m. Eastern). Dialing 877-421-3959 a few minutes prior to the scheduled start time on July 17 will access a listen-only broadcast of the teleconference. International callers may access the call by dialing 706-634-5527. 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 at www.medtox.com. An audio replay of the conference call will be available through July 24 at 800-642-1687 conference ID # 2234420. International callers may access the replay at 706-645-9291 with the same conference ID # 2234420.
MEDTOX Scientific, Inc., headquartered in St. Paul, Minn., is a provider of high quality specialized laboratory testing services and on-site/point-of-collection (POC) 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.
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 2005 Annual Report on Form 10-K.
MEDTOX Scientific, Inc.
July 17, 2006
Page 3
MEDTOX SCIENTIFIC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
| Three Months Ended |
| Six Months Ended | ||||
| June 30, 2006 |
| June 30, 2005 |
| June 30, 2006 |
| June 30, 2005 |
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REVENUES: |
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Laboratory services | $ 13,413 |
| $ 12,920 |
| $ 25,815 |
| $ 24,068 |
Product sales | 3,986 |
| 3,925 |
| 7,934 |
| 7,466 |
| 17,399 |
| 16,845 |
| 33,749 |
| 31,534 |
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COST OF REVENUES: |
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Cost of services | 8,175 |
| 7,750 |
| 15,809 |
| 14,975 |
Cost of sales | 1,488 |
| 1,611 |
| 3,060 |
| 3,117 |
| 9,663 |
| 9,361 |
| 18,869 |
| 18,092 |
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GROSS PROFIT | 7,736 |
| 7,484 |
| 14,880 |
| 13,442 |
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OPERATING EXPENSES: |
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Selling, general and administrative | 4,880 |
| 4,896 |
| 10,014 |
| 9,244 |
Research and development | 531 |
| 638 |
| 991 |
| 1,236 |
| 5,411 |
| 5,534 |
| 11,005 |
| 10,480 |
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INCOME FROM OPERATIONS | 2,325 |
| 1,950 |
| 3,875 |
| 2,962 |
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OTHER INCOME (EXPENSE): |
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Interest expense | (119 | ) | (227 | ) | (273 | ) | (438) |
Other expense, net | (118 | ) | (86 | ) | (286 | ) | (208) |
| (237 | ) | (313 | ) | (559 | ) | (646) |
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INCOME BEFORE INCOME TAX EXPENSE | 2,088 |
| 1,637 |
| 3,316 |
| 2,316 |
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INCOME TAX EXPENSE | (806 | ) | (622 | ) | (1,280 | ) | (880) |
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NET INCOME | $ 1,282 |
| $ 1,015 |
| $ 2,036 |
| $ 1,436 |
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BASIC EARNINGS PER COMMON SHARE | $ 0.16 |
| $ 0.13 |
| $ 0.25 |
| $ 0.19 |
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DILUTED EARNINGS PER COMMON SHARE | $ 0.15 |
| $ 0.13 |
| $ 0.23 |
| $ 0.18 |
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WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: |
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Basic | 8,183,455 |
| 7,546,972 |
| 8,169,106 |
| 7,543,746 |
Diluted | 8,839,176 |
| 7,929,546 |
| 8,786,645 |
| 8,070,235 |
MEDTOX Scientific, Inc.
July 17, 2006
Page 4
MEDTOX SCIENTIFIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| June 30, 2006 |
| December 31, 2005 |
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ASSETS |
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Cash and cash equivalents | $ 847 |
| $ 1,312 |
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Accounts receivable | 11,691 |
| 9,889 |
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Inventories | 3,281 |
| 3,301 |
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Other current assets | 2,378 |
| 2,627 |
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Total current assets | 18,197 |
| 17,129 |
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Building, equipment and improvements, net | 18,704 |
| 17,927 |
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Other assets | 22,861 |
| 24,334 |
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Total assets | $ 59,762 |
| $ 59,390 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities | $ 10,445 |
| $ 8,752 |
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Long-term obligations | 3,426 |
| 5,793 |
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Stockholders’ equity | 45,891 |
| 44,845 |
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Total liabilities and stockholders’ equity | $ 59,762 |
| $ 59,390 |
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