Exhibit 99.1
FROM: FOR:
BlueFire Partners MEDTOX Scientific, Inc.
150 South Fifth St., Suite 1300 402 West County Road D
Minneapolis, MN 55402 St. Paul, MN 55112
Contact: Doug Ewing (612) 344-1036 Contact: Richard J. Braun (877) 715-7236
FOR IMMEDIATE RELEASE
MEDTOX SCIENTIFIC ANNOUNCES THIRD QUARTER RESULTS
Records $10.8 million tax benefit in the quarter
ST. PAUL, October 17, 2002 - MEDTOX Scientific, Inc. (AMEX-TOX), announced today
revenues and earnings for its third quarter ended September 30, 2002. For the
three-month period, revenues increased 8.4% to $13,632,000 compared to
$12,581,000 for the prior-year period. Operating income was $886,000, compared
to $1,084,000 for the prior-year period. Net income increased to $11,320,000, or
$2.27 per diluted share, compared to $790,000, or 17 cents per diluted share for
the prior-year period. As previously announced, the Company recorded a $10.8
million non-cash tax benefit as part of net income in the quarter. The benefit
was recorded based on the Company's recently improved historical performance and
projected future results.
"We are pleased that, despite extremely challenging economic conditions, MEDTOX
recorded its second best revenue quarter for the company," said Dick Braun,
chief executive officer. "This is the seventh consecutive comparable quarterly
increase in revenues and seventh consecutive profitable quarter. The company
continues to grow and maintain strong profitability, even though our revenue
from existing clients has yet to fully rebound from the reduction in nationwide
hiring. As a result, PROFILE(R)-II device sales to existing workplace clients
are down from 2001 levels. In the VERDICT(R)-II product line, sales to
government clients for probation, parole and rehabilitation were down from the
prior year period, primarily due to reductions in state budgets. In 2001 the
strong economy created surplus budget dollars with which large orders were
initiated at their fiscal year-end, which is in our third quarter. Continuing
success in acquiring new client relationships and gaining market share has
helped to mitigate the negative impact of lower volumes from existing clients.
As our fourth quarter begins and new government budgets are in place, ordering
patterns are recovering. Sales of PROFILE(R)-II ER and our new PROFILE(R)-IIA
devices continue to grow and have increased more than $780,000 over the same
quarter last year."
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MEDTOX Scientific, Inc.
October 17, 2002
Page 2
Jim Schoonover, chief marketing officer of MEDTOX, said, "The revenue growth in
the quarter is an indication that, despite current weakness in demand from
existing clients MEDTOX continues to grow due to its investment in a very
efficient and productive sales model. As a result of this investment, new
account sales were strong in the third quarter. Accounts sold and implemented in
the quarter will add approximately $200,000 per month in incremental revenue. In
addition, the following new client relationships will be implemented at various
times over the next three months:
o Midwestern County: Laboratory drug testing for criminal justice, juvenile
justice and treatment programming for the District Court Services
Department and County Adolescent Center for Treatment. The contract is for
drug testing and specimen collection services totaling $700,000 annually.
Three-year contract with two additional option years.
o Regional Healthcare Group: Provide laboratory drug screening, specialty
clinical laboratory testing, filter paper based pediatric lead testing, and
POC diagnostic drug screening devices for a 19 state healthcare network
comprised of 65 hospitals and 25 independent occupational health clinic
systems. Estimated value of this agreement exceeds $1,000,000 annually.
o National Retail Chain: Scheduled to provide POC diagnostic devices and
services (PROFILE-II(R) Test System(TM)) to a large division of a national
retailer currently utilizing testing services of a competitor laboratory.
This will be the first time this division has used diagnostic testing
methodology. The estimated value of the PROFILE-II(R) Test System(TM)
service agreement is $400,000 annually.
o Salvation Army: The Company was notified that it had won the award for drug
testing services required by the Western Adult Rehabilitation Center (ARC)
system. The contract calls for the use of the VERDICT(R)-II drug screening
devices and confirmatory testing at the company's St Paul, MN
SAMHSA-certified laboratory. Presently, the Western ARC tests between 4,000
and 5,000 individuals per month.
o International Distributor. In September an agreement was finalized with a
Mexico City distributor of diagnostic and laboratory products to purchase
$350,000 of PROFILE(R)-II and VERDICT(R)-II products over the next twelve
months.
"In addition, our Clinical Trial Services unit has signed protocols (contracts)
with eleven different pharmaceutical clients to perform testing services for
clinical trials," Schoonover said. "The trials are scheduled to begin in the
fourth quarter and are expected to be completed in the fourth quarter of 2002
and the first quarter of 2003. The value of these protocols is estimated at
$1,000,000."
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MEDTOX Scientific, Inc.
October 17, 2002
Page 3
"As the economy strengthens we anticipate built-in growth and operating leverage
from existing workplace clients as they again add employees," Braun said. "In
addition, we are continuing to increase our higher-margin POC business as a
percent of total revenues and to successfully diversify into other specialty
laboratory services that are higher margin and not directly affected by national
employment hiring levels. The slower economy continues to impact certain markets
but new sales efforts in those markets are mitigating the current lower testing
volumes from clients in those sectors. Entering the fourth quarter we have
momentum for continued profitable growth and have made solid progress in laying
the groundwork for a successful year in 2003."
MEDTOX will hold a teleconference to discuss third quarter results on Thursday,
Oct. 17, at 9:30 a.m. Central Time (10:30 a.m. Eastern). Dialing 877-381-6503 a
few minutes prior to the scheduled start time on Oct. 17 will access a
listen-only broadcast of the teleconference. 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 October 24 at 800-642-1687,
reservation code # 6028604. International callers may access the replay at
706-645-9291, reservation code # 6028604.
MEDTOX Scientific, Inc., headquartered in St. Paul, Minn., is a provider of high
quality specialized laboratory and on-site/point-of-collection (POC) devices.
The company also supports customers with complete logistics, data and program
management services. 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. 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. To be automatically alerted by e-mail about
company information, please go to http://www.corporate-ir.net/ireye/
ir_site.zhtml?ticker=tox&script=1900 and follow the directions on the page. For
more information see http://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. Fuller discussions of factors that may cause such
results to differ are identified on page three of the company's 2001 annual
report on Form 10-K and incorporated herein by reference.
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MEDTOX Scientific, Inc.
October 17, 2002
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MEDTOX SCIENTIFIC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
------------------ ----------------- ----------------- ------------------
REVENUES:
Laboratory services $10,562 $9,446 $30,439 $28,741
Product sales 3,070 3,135 9,462 8,007
------------------ ----------------- ----------------- ------------------
13,632 12,581 39,901 36,748
COST OF REVENUES:
Cost of services 7,104 6,711 20,184 19,681
Cost of sales 1,178 876 3,539 2,879
------------------ ----------------- ----------------- ------------------
8,282 7,587 23,723 22,560
------------------ ----------------- ----------------- ------------------
GROSS PROFIT 5,350 4,994 16,178 14,188
OPERATING EXPENSES:
Selling, general and administrative 4,137 3,587 12,152 10,178
Research and development 327 323 905 956
------------------ ----------------- ----------------- ------------------
4,464 3,910 13,057 11,134
------------------ ----------------- ----------------- ------------------
INCOME FROM OPERATIONS 886 1,084 3,121 3,054
OTHER INCOME (EXPENSE):
Interest expense, net (332) (263) (1,025) (791)
Other expense, net (17) (31) (66) (75)
------------------ ----------------- ----------------- ------------------
(349) (294) (1,091) (866)
------------------ ----------------- ----------------- ------------------
INCOME BEFORE INCOME TAX BENEFIT 537 790 2,030 2,188
INCOME TAX BENEFIT 10,783 - 10,783 -
------------------ ----------------- ----------------- ------------------
NET INCOME $11,320 $ 790 $12,813 $ 2,188
================== ================= ================= ==================
BASIC EARNINGS PER COMMON
SHARE (1) $ 2.36 $ 0.18 $ 2.67 $ 0.51
================== ================= ================= ==================
DILUTED EARNINGS PER COMMON
SHARE (1) $ 2.27 $ 0.17 $ 2.55 $ 0.48
================== ================= ================= ==================
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic (1) 4,804,106 4,331,655 4,793,793 4,289,791
Diluted (1) 4,988,958 4,718,635 5,029,818 4,544,077
(1) Share and per share amounts for the three and nine months ended September 30, 2001 have been restated for
the ten percent stock dividend paid on July 5, 2002