MEDTOX Scientific second-quarter total revenues increase 18.1% to $25.2 million

MEDTOX Scientific, Inc. (Nasdaq:MTOX) today announced results for the second quarter ended June 30, 2010. MEDTOX achieved a significant increase in new clinical laboratory business for the quarter ended June 30, 2010, and laboratory drugs-of-abuse testing showed a net positive increase in revenues of 5.6% for the second quarter of 2010, compared to a decrease of 10.6% in the prior year quarter:

• Total revenues for the quarter increased $3.9 million to $25.2 million, or 18.1%
• Clinical Laboratory Services revenues for the quarter increased $2.2 million to $7.6 million, or 41%
• Clinical Trial Services revenues for the quarter increased $445,000 to $2.0 million, or 28%
• Gross profit for the quarter increased $2.7 million to $10.3 million, or 35%
• Operating income for the quarter increased $981,000 to $1.5 million, or 176%
• Net income for the quarter increased $701,000 to $1.0 million, or 225%
• Diluted earnings per share for the quarter were $0.11, compared to $0.04 for the prior-year period

For the three-month period ended June 30, 2010, revenues were $25.2 million, compared to $21.3 million for the prior-year period. The Company recorded operating income of $1.5 million for the three-month period, compared to $0.6 million for the prior-year period. The Company recorded net income of $1.0 million for the three-month period, compared to $0.3 million for the prior-year period. Diluted earnings per share were $0.11, compared to $0.04 in the second quarter of 2009.

For the six-month period ended June 30, 2010, revenues were $46.3 million, compared to $42.0 million for the prior-year period. Operating income was $1.7 million, compared to $1.4 million for the prior-year period. The Company recorded net income of $1.1 million, compared to $0.7 million for the prior-year period. Earnings per diluted share were $0.12, compared to $0.08 for the prior-year period.

In our Laboratory Segment, revenues from drugs-of-abuse testing in the quarter increased 5.6%, to $10.2 million, from $9.6 million in the prior-year period.  The increase is a result of more stable testing volumes from our existing workplace clients and an increase in revenues from new clients. Our clinical laboratory expansion initiated in 2008 continues to gain momentum with revenues increasing 41% to $7.6 million, compared to $5.4 million for the prior-year period. Clinical Trial Services (CTS) revenues increased to $2.0 million for the quarter, compared to $1.6 million for the prior-year period. This increase is consistent with both our expectations and with comments made in first quarter conference call.  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.

In the Diagnostic Segment, revenues were up 14% for the quarter. The increase is attributable to strong sales in the workplace drugs-of-abuse market with our Profile®-II A and Profile®-III A products, and increased sales of Profile®-V sold into the hospital market with our MEDTOXScan® Reader.

Revenue increases in Drug Testing, Clinical Laboratory and Diagnostic Product Sales validate our strategy of adding to our sales group, expanding clinical laboratory capabilities, and continued pursuit of market share gains in the drugs-of-abuse testing market. Cash on hand at quarter end was a record $4.9 million and the Company has no long term debt.