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1. Company Snapshot

1.a. Company Description

Psychemedics Corporation provides testing services for the detection of drugs of abuse through the analysis of hair samples in the United States, Brazil, and internationally.The company offers screening and confirmation by mass spectrometry using industry-accepted practices for cocaine, marijuana, and PCP; amphetamines, including ecstasy, eve, and Adderall; opiates, such as heroin, hydrocodone, hydromorphone, oxycodone, oxymorphone, and codeine; synthetic cannabinoids comprising K2, Spice, and Blaze; benzodiazepines consisting of Xanax, Valium, and Ativan; and nicotine and Fentanyl.Its testing results provide quantitative information that could indicate the approximate amount of drug ingested, as well as historical data that could show a pattern of individual drug use over a longer period-of-time.


The company offers its services to employers for applicant and employee testing; and treatment professionals, law enforcement agencies, school administrators, and parents concerned about their children's drug use.Psychemedics Corporation was incorporated in 1986 and is headquartered in Acton, Massachusetts.

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1.b. Last Insights on PMD

The recent stock performance of Psychemedics Corporation was negatively impacted by a decline in revenue and profitability. The company reported a 14.1% decrease in revenue for the third quarter of 2024, primarily due to a decline in sales of its hair testing services. Additionally, the company's net income decreased by 21.6% year-over-year, further exacerbating the negative trend. The company's decision to implement a 1-for-5,000 reverse stock split followed by a 5,000-for-1 forward stock split may also have contributed to the negative sentiment, as it can be perceived as a sign of financial distress.

1.c. Company Highlights

2. Transcript Summary

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3. NewsRoom

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Psychemedics Releases 2025 Workforce Insights Report

Jun -16

Source: globenewswire.com

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Psychemedics Named “Most Innovative Drug Testing Company of the Year”

May -16

Source: globenewswire.com

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Psychemedics Corporation Announces Reverse and Forward Stock Split

Dec -02

Source: globenewswire.com

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Psychemedics Corporation Reports Third Quarter 2024 Financial Results

Nov -12

Source: globenewswire.com

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Psychemedics Releases First-Ever Education Insights Report: Uncovering Drug Trends in Educational Institutions Through Hair Testing

Sep -26

Source: globenewswire.com

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Psychemedics Corporation Reports Second Quarter 2024 Financial Results

Aug -13

Source: globenewswire.com

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Psychemedics Corporation's Board of Directors Approves Plan to Terminate Registration of Its Common Stock

Aug -12

Source: globenewswire.com

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Psychemedics Unveils Inaugural Insights Report: Revealing Drug Trends Through Hair Testing

Jun -21

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.50%)

6. Segments

Testing

Expected Growth: 10.2%

Growing demand for drug testing in the workplace and law enforcement, increasing awareness of drug abuse, and advancements in hair testing technology drive the market growth.

Shipping/Collection (Hair)

Expected Growth: 12.4%

Growing demand for drug testing in the workplace, increasing awareness of drug abuse, and advancements in hair testing technology are driving the growth of Psychemedics' Shipping/Collection (Hair) drug testing method.

Other

Expected Growth: 10.2%

Growing demand for DNA testing and increasing adoption of non-invasive testing methods drive growth in Psychemedics' 'Other' segment, with a forecast CAGR of 10.2%.

7. Detailed Products

HairConfirm

A drug testing system that uses a small sample of hair to detect drug use over a longer period of time, typically 90 days.

Folli-Chek

A hair follicle drug testing system that detects drug use over a shorter period of time, typically 3-5 days.

Psychemedics Express

A rapid drug testing system that provides quick and accurate results.

Drug Testing Services

A range of drug testing services, including urine, oral fluid, and hair testing.

Consulting Services

Expert consulting services to help organizations develop and implement drug testing programs.

8. Psychemedics Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Psychemedics Corporation's drug testing services are highly specialized, making it difficult for substitutes to emerge. However, the company's reliance on hair testing technology makes it vulnerable to substitutes in the form of alternative drug testing methods.

Bargaining Power Of Customers

Psychemedics Corporation's customers, primarily employers and government agencies, have limited bargaining power due to the company's specialized services and lack of direct competition.

Bargaining Power Of Suppliers

Psychemedics Corporation's suppliers, primarily hair collection and testing kit providers, have limited bargaining power due to the company's dominant position in the drug testing market.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the drug testing market, including the need for specialized expertise and equipment.

Intensity Of Rivalry

The intensity of rivalry in the drug testing market is moderate, with Psychemedics Corporation facing competition from a few established players, but maintaining a strong market position through its specialized services and reputation.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 25.62%
Debt Cost 3.95%
Equity Weight 74.38%
Equity Cost 7.55%
WACC 6.63%
Leverage 34.44%

11. Quality Control: Psychemedics Corporation passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Neuronetics

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Growth: 4.0

Quality: 3.5

Yield: 0.0

Momentum: 10.0

Volatility: 1.7

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Psychemedics

A-Score: 4.2/10

Value: 7.1

Growth: 1.7

Quality: 4.1

Yield: 2.0

Momentum: 7.0

Volatility: 3.3

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Growth: 1.0

Quality: 3.7

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A-Score: 3.2/10

Value: 9.6

Growth: 3.2

Quality: 3.4

Yield: 0.0

Momentum: 1.5

Volatility: 1.7

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A-Score: 3.1/10

Value: 7.8

Growth: 3.6

Quality: 4.3

Yield: 0.0

Momentum: 1.5

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Myriad Genetics

A-Score: 2.9/10

Value: 8.6

Growth: 1.9

Quality: 4.8

Yield: 0.0

Momentum: 0.5

Volatility: 1.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

2.67$

Current Price

2.67$

Potential

-0.00%

Expected Cash-Flows