Clinical Lab Revenue Increases 30.0% for the Quarter and 15.3% for the Year
ST. PAUL, Minn., Feb. 11, 2009 (GLOBE NEWSWIRE) -- MEDTOX Scientific, Inc. (Nasdaq:MTOX) today announced fourth quarter and year-end results for the periods ended December 31, 2008. MEDTOX achieved record revenues for the quarter and year-ended December 31, 2008.
For the three-month period, revenues were $20.8 million, compared to $19.7 million from the prior-year period. The Company recorded operating income of $1.1 million for the three-month period, compared to $1.9 million for the prior-year period. The Company recorded net income of $0.4 million for the three-month period, compared to $1.4 million for the prior-year period. Earnings per diluted share were $0.05, compared to $0.16 in the fourth quarter of 2007.
For the twelve month period, revenues were $85.8 million compared to $80.3 million for the prior-year period. The Company recorded operating income of $9.6 million for the twelve-month period, compared to $10.0 million for the prior-year period. The effective income tax rate for 2008 was 35.6% compared to an effective tax rate of 28.1% in 2007. The lower rate in 2007 equates to $0.08 per diluted share and was primarily due to a tax benefit from a favorable resolution of a state tax examination. The Company recorded net income of $5.6 million for 2008, compared to $6.7 million for the prior-year period. Earnings per diluted share were $0.62, compared to 2007 earnings per diluted share of $0.75.
Gross margin for the year was 42.3%, compared to 45.3% for the prior year. Margins were negatively impacted by reduced revenue from existing clients in lab based drugs-of-abuse testing due to economic conditions affecting reduced hiring, and the Company's increased investment related to clinical laboratory expansion. Total operating expenses as a percentage of sales improved to 31.1% for the year, compared to 32.8% for the prior year. The Company's balance sheet also continues to improve. At December 31, 2008, the revolving line of credit had no outstanding balance, and continued repayment of long-term debt has reduced the balance from $1.0 million at December 31, 2007 to $0.3 million at December 31, 2008. Also, the Company made capital expenditures of $8.5 million during the year, financed from internally generated cash, down from $9.0 million in the prior year. Operating cash flows for the year were a record $12.3 million.
In our Laboratory Segment, revenues from drugs-of-abuse testing increased 3.5%, to $40.0 million from $38.7 million in the prior year. The increase is a result of strong new business activity. Revenues from existing clients were down 18% for the quarter and 11.1%, or $4.2 million, for the year, due to economic conditions in the employment market. Our clinical laboratory expansion initiated in 2008 continues to gain momentum with record revenues of $7.4 million for the quarter and $26.1 million for the year, compared to $5.7 million and $22.6 million, respectively, for the prior periods. This is a quarterly increase of 30.0% and annual increase of 15.3%. Within the clinical laboratory, Clinical Trial Services (CTS) revenues increased to a record $2.1 million for the quarter and to $6.8 million for the year. This represents 85% and 50% increases, respectively. The CTS backlog consists of signed protocols and awarded business expected to be in excess of $10 million going into 2009.
In the Diagnostic Segment, revenues were up 3.7% year over year. While we experienced growth in both the hospital and government market segments, revenues from our workplace drugs-of-abuse clients were down 8.2% year over year. We also experienced lower revenues from other diagnostic products due to the phase-out of agricultural testing products in late 2007.
Notwithstanding the negative revenue impact from existing clients in workplace drugs-of-abuse testing, we achieved a positive growth number in our forensic lab as a result of strong new business activity. Results for the quarter and the year in our clinical lab were very strong, and we gained momentum in the second half of the year as we had expected. We are maintaining effective expense control. Total selling, general and administrative expenses for the year were 28.3% of revenues, down from 29.6% for the prior year. New account activity in the clinical laboratory for the quarter was encouraging and continues to strengthen our long term view of clinical laboratory diversification efforts.
There will be a continuing negative impact on our drugs-of-abuse testing revenues caused by economic conditions affecting hiring in 2009.
