Psychemedics Corp has a market cap of $43 million; its shares were traded at around $8.29 with a P/E ratio of 28.5 and P/S ratio of 2.5. The dividend yield of Psychemedics Corp stocks is 5.8%. Psychemedics Corp had an annual average earning growth of 20.4% over the past 10 years.PMD is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:Revenue for the first quarter of 2010 was $4.5 million, an increase of 9% from first quarter 2009 revenue of $4.1 million. The Company reported net income of $0.10 and $0.01 per diluted share for the three months ended March 31, 2010 and 2009, respectively. At March 31, 2010, the Company had $5.2 million of cash, cash equivalents and short-term investments. The Company distributed $624 thousand or $0.12 per share of cash dividends to its shareholders in the three months ended March 31, 2010. Through March 31, 2010 the Company has paid fifty-four consecutive quarterly cash dividends.
Gross profit increased $462,000 to $2.6 million for the three months ended March 31, 2010, compared to $2.1 million for the three months ended March 31, 2009. Cost of revenues fell by $76 thousand or 4% for the three months ended March 31, 2010 compared to the same period in 2009, mainly due to decreased labor and associated costs. The gross profit margin increased to 57% for the three months ended March 31, 2010 compared to 51% for the comparable period of 2009.
Interest income for the three months ended March 31, 2009 of $8,000 decreased by $7,000 when compared to the same period of 2009 in which interest income was $15,000. Interest income represented interest and dividends earned on cash, cash equivalents and short-term investments. Decreasing interest rates on our mix of cash, cash equivalents and short-term investments caused the decrease in interest income for the three month period ended March 31, 2010.
At March 31, 2010, the Company had approximately $5.2 million of cash, cash equivalents and short-term investments. The Company's operating activities provided net cash of $167,000 for the three months ended March 31, 2010. Cash used in investing activities included a small amount of equipment and leasehold improvements which were purchased during the first three months of 2010. The Company also used approximately $1.0 million in the purchase of a certificate of deposit which had a maturity of over 90 days. Investing activities used $1.2 million in the three month period while financing activities used a net amount of $624,000 during the period.
Cash provided by operating activities of $167,000 reflected net income of $506,000 adjusted for depreciation and amortization of $64,000, stock based compensation of $94,000 and an increase in accounts payable of $102,000 offset by an increase in receivables of $200,000, an increase in prepaid expenses and other current assets (primarily insurance) of $219,000, a decrease in accrued income taxes of $127,000 and an increase in deferred tax assets of $38,000.
The Company has a supply agreement with a vendor which requires the Company to purchase isotopes used in its drug testing procedures from this sole supplier in exchange for variable annual payments based upon prior year purchases. Purchases amounted to $118,000 for the three months ended March 31, 2010 as compared to $145,000 for the comparable period of 2009. The Company expects to purchase approximately $353,000 for the remainder of 2010. In exchange for exclusivity, among other things, the supplier has provided the Company with the right to purchase the isotope technology at fair market value under certain conditions, including the failure to meet the Company s purchase commitments. This agreement does not include a fixed termination date; however, it is cancelable upon mutual agreement by the parties or six months after termination notice by the Company of its intent to use a different technology in connection with its drug testing procedures.
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