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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 8-K
_________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 11, 2023
_______________________________
PSYCHEMEDICS CORPORATION
(Exact name of registrant as specified in its charter)
_______________________________
| Delaware | 1-13738 | 58-1701987 |
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
289 Great Road
Acton, Massachusetts 01720
(Address of Principal Executive Offices) (Zip Code)
(978) 206-8220
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
_______________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common stock. $0.005 par value | PMD | The NASDAQ Stock Market, LLC. |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
On August 11, 2023, Psychemedics Corporation (the “Company”) issued a press release announcing, among other things, its results for the second quarter June 30, 2023. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein in its entirety by reference.
Limitation on Incorporation by Reference. The information furnished in this Item 2.02, including the press release attached hereto as Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Cautionary Note Regarding Forward-Looking Statements. Except for historical information contained in the press release attached as an exhibit hereto, the press release contains forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. Please refer to the cautionary note in the press release regarding these forward-looking statements.
(d) Exhibits
The following exhibits are filed herewith:
| 99.1 | Press release of the Company dated August 11, 2023, announcing, among other things, its results for the second quarter June 30, 2023. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PSYCHEMEDICS CORPORATION | ||
| Date: August 11, 2023 | By: | /s/ Michael S. Weisenhoff |
| Michael S. Weisenhoff | ||
| Assistant Controller | ||
EXHIBIT 99.1
Psychemedics Corporation Reports Second Quarter 2023 Financial Results
ACTON, Mass., Aug. 11, 2023 (GLOBE NEWSWIRE) -- Psychemedics Corporation (NASDAQ: PMD), the world’s largest provider of hair testing for drugs of abuse, today announced financial results for the second quarter ended June 30, 2023.
The Company’s revenue for the quarter ended June 30, 2023, was $5.5 million versus $6.5 million for the quarter ended June 30, 2022, a decrease of 15%. Net loss for the quarter ended June 30, 2023, was $(726,000) or $(0.13) per diluted share, versus net loss of $(338,000) or $(0.06) per diluted share, for the comparable period last year.
In the second quarter, the labor shortage continued to have an adverse impact on our clients’ use of hair testing in hiring. This offset the positive impact of the growth in our add-on tests for fentanyl and benzodiazepines, as well as our 4Q 2022 price increase.
Gross margin improved to 37% compared to 35% in 2Q last year, as our cost reduction programs were able to offset part of the revenue decline. Operating expenses also were held in check, declining 5%.
Also impacting the second quarter, Psychemedics settled a lawsuit on July 17th, 2023, with a consultant related to a contract dispute. Without admitting wrongdoing, Psychemedics agreed to a monetary sum, which is reflected as a non-recurring expense for the 2nd quarter, in exchange for the dismissal of the lawsuit, including dismissal of Psychemedics’ counterclaims. This sum is payable over the next 18 months.
As previously announced on July 12th, the Board of Directors approved a transition plan for the Company’s President and CEO position. Effective August 17th, current Chairman of the Board, President and CEO, Ray Kubacki will retire from the positions he holds and be succeeded by Brian Hullinger as President and CEO. Subject to shareholder approval, Mr. Hullinger will also join the Company’s Board of Directors.
The Company had approximately $2.4 million of cash and cash equivalents as of June 30, 2023. The total equipment financing outstanding was less than $0.5 million as of June 30, 2023.
The Board has determined to eliminate the dividend in order to maximize capital for new growth initiatives.
Psychemedics Corporation is the world’s largest provider of hair testing for the detection of drugs of abuse. The Company’s patented process is used by thousands of U.S. and international clients, including over 10% of the Fortune 500 companies, for pre-employment and random drug testing. Major police departments, Federal Reserve Banks, schools, and other public entities also rely on our unique patented drug testing process. We strongly believe our drug testing method to be superior to any other product currently in use, including traditional urine testing and other hair testing methods.
Cautionary Statement for purposes of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995: From time to time, information provided by Psychemedics may contain forward-looking information that involves risks and uncertainties. In particular, statements contained in this release that are not historical facts (including but not limited to statements concerning future dividends) may be “forward looking” statements. Actual results may differ from those stated in any forward-looking statements. Factors to be taken into account in connection with such forward-looking statements include, but are not limited to, revenues, earnings, collections of receivables, competition (including, without limitation, competition from other companies pursuing the same growth opportunities), the Company’s ability to maintain its reputation and brand image, the ability of the Company to achieve its business plans, cost controls, leveraging of its global operating platform, risks of information technology system failures and data security breaches, the uncertain global economy, the Company’s ability to attract, develop and retain executives and other qualified employees and independent contractors, including distributors, the Company’s ability to obtain and protect intellectual property rights, litigation risks, including acceptance by the court of our wage/break settlement arrangement, general economic conditions, current and anticipated cash flows, available surplus, capital expenditure reserves required, debt service obligations, regulatory requirements, requirements under our bank loan agreements, and other factors that the Board of Directors of the Company may take into account. The forward-looking statements contained herein speak only of the Company's expectations as of the date of this press release. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statement to reflect any change in the Company's expectations or any change in events, conditions, or circumstances on which any such statement is based.
The Psychemedics Corporation web site is www.psychemedics.com
Investor Relations:
Phone: 978-206-8220
Email: InvestorRelations@Psychemedics.com
Psychemedics Corporation
Consolidated Statements of Operations
(in thousands, except per share amounts)
(UNAUDITED)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenues | $ | 5,537 | $ | 6,513 | $ | 11,396 | $ | 13,021 | ||||||||
| Cost of revenues | 3,478 | 4,240 | 7,132 | 8,307 | ||||||||||||
| Gross profit | 2,059 | 2,273 | 4,264 | 4,714 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| General & administrative | 1,444 | 1,445 | 3,090 | 2,772 | ||||||||||||
| Marketing & selling | 746 | 813 | 1,535 | 1,619 | ||||||||||||
| Research & development | 286 | 357 | 584 | 675 | ||||||||||||
| Total Operating expenses | 2,476 | 2,615 | 5,209 | 5,066 | ||||||||||||
| Operating loss | (417 | ) | (342 | ) | (945 | ) | (352 | ) | ||||||||
| Other (expense) income: | ||||||||||||||||
| Settlement | (500 | ) | -- | (500 | ) | -- | ||||||||||
| Other | (5 | ) | (9 | ) | (10 | ) | 57 | |||||||||
| Total other (expense) income, net | (505 | ) | (9 | ) | (510 | ) | 57 | |||||||||
| Loss before (benefit from) provision for income taxes | (922 | ) | (351 | ) | (1,455 | ) | (295 | ) | ||||||||
| (Benefit from) provision for income taxes | (196 | ) | (13 | ) | (345 | ) | 4 | |||||||||
| Net loss | $ | (726 | ) | $ | (338 | ) | $ | (1,110 | ) | $ | (299 | ) | ||||
| Diluted net loss per share | $ | (0.13 | ) | $ | (0.06 | ) | $ | (0.19 | ) | $ | (0.05 | ) | ||||
| Dividends declared per share | $ | 0.07 | $ | 0.07 | $ | 0.14 | $ | 0.07 | ||||||||
Psychemedics Corporation
Consolidated Balance Sheets
(in thousands, except par value)
(UNAUDITED)
| June 30, | December 31, | ||||||
| 2023 | 2022 | ||||||
| ASSETS | |||||||
| Current Assets: | |||||||
| Cash and cash equivalents | $ | 2,445 | $ | 4,750 | |||
| Accounts receivable, net of allowance for doubtful accounts | 4,001 | 3,739 | |||||
| Prepaid expenses and other current assets | 1,773 | 1,136 | |||||
| Income tax receivable | 9 | 339 | |||||
| Total Current Assets | 8,228 | 9,964 | |||||
| Fixed assets, net of accumulated amortization and depreciation | 3,757 | 4,573 | |||||
| Other assets | 817 | 823 | |||||
| Net deferred tax assets | 1,284 | 691 | |||||
| Operating lease right-of-use assets | 2,300 | 2,681 | |||||
| Total Assets | $ | 16,386 | $ | 18,732 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
| Current Liabilities: | |||||||
| Accounts payable | $ | 806 | $ | 448 | |||
| Accrued expenses | 3,467 | 3,939 | |||||
| Current portion of long-term debt | 299 | 294 | |||||
| Current portion of operating lease liabilities | 1,067 | 1,037 | |||||
| Total Current Liabilities | 5,639 | 5,718 | |||||
| Long-term debt | 154 | 305 | |||||
| Long-term portion of operating lease liabilities | 1,466 | 1,938 | |||||
| Total Liabilities | 7,259 | 7,961 | |||||
| Shareholders' Equity: | |||||||
| Common stock, $0.005 par value; 50,000 shares authorized; 6,411 and 6,349 shares issued and 5,743 and 5,681 shares outstanding, respectively | 32 | 32 | |||||
| Additional paid-in capital | 34,540 | 34,275 | |||||
| Less - Treasury stock, at cost, 668 shares | (10,082 | ) | (10,082 | ) | |||
| Accumulated deficit | (13,729 | ) | (11,820 | ) | |||
| Accumulated other comprehensive loss | (1,634 | ) | (1,634 | ) | |||
| Total Shareholders' Equity | 9,127 | 10,771 | |||||
| Total Liabilities and Shareholders' Equity | $ | 16,386 | $ | 18,732 | |||