ST. PAUL, Minn., Oct. 16, 2008 (GLOBE NEWSWIRE) -- MEDTOX Scientific, Inc. (Nasdaq:MTOX) announced today results for the third quarter ended September 30, 2008.

For the three-month period ended September 30, 2008, revenues increased to $22,410,000 compared to $20,759,000 from the prior-year period. Operating income was $2,770,000 compared to $3,050,000 from the prior-year period. The Company recorded net income of $1,644,000, or $0.19 per diluted share, compared to net income of $1,939,000, or $0.22 per diluted share, from the comparable period last year.

For the nine-month period ended September 30, 2008, revenues increased by 7% to $64,992,000 compared to $60,561,000 from the prior-year period. Operating income increased to $8,587,000 compared to $8,130,000 from the comparable period last year. Net income was $5,159,000, or $0.58 per diluted share, compared to net income of $5,255,000, or $0.59 per diluted share, from the comparable period last year.

In our Laboratory Segment, revenues from drugs-of-abuse testing increased slightly, primarily as a result of increases from government testing for prison, probation and parole, which is a lower margin business. New business from workplace drugs-of-abuse testing clients was strong in the quarter, but overall, volume was negatively impacted by an 11% reduction in revenues from existing clients. We believe that the reduced testing volume from existing clients is attributable to economic conditions affecting hiring decisions. Our clinical laboratory expansion initiated this year is gaining momentum, with record revenues of $7.0 million for the quarter for an increase of 26% year over year. Within the clinical laboratory, Clinical Trial Services (CTS) revenues increased to a record $2.0 million for the quarter. New signed protocols and awarded business has increased our CTS backlog to over $10.0 million. Additionally, we have entered into a third exclusive preferred provider relationship that should further expand our testing volume in CTS.

While we are seeing positive results from our clinical laboratory expansion, we have incurred over $300,000 of incremental expenses in the quarter due to the expansion. We also incurred $250,000 incremental transportation expense in the quarter due to rising costs. We will be implementing fee adjustments throughout the rest of the year to mitigate the increased transportation cost.

In the Diagnostic Segment, revenues were flat year over year for the quarter. While we experienced growth in both the hospital and government market segments, revenues from our workplace drugs-of-abuse clients were down 9% year over year. We also experienced lower revenues from OEM contract manufacturing, a product line we are phasing out.

Except for the negative revenue impact of workplace hiring in both of our operating segments, results for the quarter were consistent with our expectations. We continue to maintain effective expense control. Total selling, general and administrative expenses for the quarter were 27.0% of revenues, down from 28.2% for the same period last year. New account activity in the clinical laboratory for the quarter was encouraging and strengthens our long term view of our continuing diversification efforts.

MEDTOX will hold a teleconference to discuss third quarter 2008 results today at 9:30 a.m. Central Time (10:30 a.m. Eastern). Dialing (877) 857-6144 a few minutes prior to the scheduled start time on October 16 will access a listen-only broadcast of the teleconference.