Psychemedics Reports 11% Revenue Decline to $19.7 Million for Fiscal Year 2024

Psychemedics Corporation reported a revenue of $19.7 million for the fiscal year ending December 31, 2024, marking an 11% decline from $22.1 million in 2023. The decrease in revenue was primarily attributed to reduced testing volumes from existing clients, which was influenced by increased employee retention and a general decline in hiring activities due to economic uncertainties. Domestic revenues fell by 12%, while international revenues saw a 22% increase, reflecting successful strategic sales expansion efforts.

The company's gross profit also decreased by 16% to $7.1 million, driven by lower total revenue despite cost reduction initiatives. Operating expenses were reduced by 21% to $9.0 million, with significant decreases in general and administrative expenses, marketing and selling expenses, and research and development costs. The operating loss improved to $1.9 million from a loss of $2.9 million in the previous year, indicating a more favorable operational efficiency.

In a significant organizational change, Psychemedics executed a reverse stock split of 1-for-5,000 followed by a forward stock split of 5,000-for-1, which was approved by shareholders on November 25, 2024. This transaction resulted in the cash-out of 876,238 shares for a total of $2.1 million. Following this, the company filed to delist its stock from Nasdaq and deregister under the Securities Exchange Act, transitioning to trading on the OTC Market. This move is expected to reduce regulatory burdens but may impact stock liquidity.

As of December 31, 2024, Psychemedics employed 101 individuals, a slight decrease from the previous year. The company continues to focus on its core business of drug testing services, utilizing its patented hair analysis technology. The company’s cash position at year-end was $1.4 million, down from $2.0 million in 2023, with management indicating that current cash reserves, along with anticipated operating profits, should suffice for working capital needs over the next 12 months. However, the absence of a fixed source of capital reserves may necessitate seeking additional financing in the future.

Looking ahead, Psychemedics aims to leverage its patented technology to enhance market share and expand its customer base, particularly in international markets. The company remains committed to research and development to improve existing products and explore new service offerings, although it acknowledges the competitive landscape and potential economic challenges that could impact future growth.