MEDTOX Scientific (Nasdaq: MTOX) provides "drugs-of-abuse" tests that certainly have kept many substance abusers from gainful employment. Unfortunately, its newest competition, the weakening job market, seems to be keeping people unemployed without the company's tests. That led to failed sales and earnings projections for its first quarter, and its near-term prospects remain as hazy as the job prospects of those who can't stay off the sauce.

Revenues were up 8.8% for the quarter to $20.7 million, but fell almost $1 million below what analysts were expecting. Earnings of $0.18 came in two pennies below the analysts' mark and were flat year over year, due mostly to a 3% dip in sales to existing clients on more challenging "economic conditions affecting hiring decisions." Lab services make up about three-quarters of total revenues, with drugs-of-abuse workplace tests accounting for the bulk of sales in this segment.

MEDTOX's other segment sells diagnostic and other equipment to help clients screen for drugs on-site, versus the laboratory-based solution it specializes in. The diagnostic biz posted an impressive 28% boost in revenue, but wasn't enough to offset the larger segment and a higher tax rate for the quarter.

Management was quick to point out that the higher reported taxes won't hurt cash flow generation, as it has a store of nonoperating loss carryforwards on the balance sheet to save the funds from going to Uncle Sam. Overall though, the quarter was unexpectedly weak, and conditions may not get any easier for MEDTOX, as the economy is slowing and employment trends will likely stay difficult.

As it stands currently, shares of MEDTOX are trading at less than 15 times projected earnings this year. The earnings multiple is right in line with much-larger archrivals like LabCorp (NYSE: LH) and Quest Diagnostics (NYSE: DGX), though things could change quickly, as business trends remain challenging. Bio-Reference Labs (Nasdaq: BRLI) is much closer in size to MEDTOX but is trading at more than 20 times earnings, and though all companies in the space generate strong and stable cash flow, sticking with the big guys may be the smartest move right now, given these companies' larger geographical reach, diversified customer mix, and subsequent ability to better withstand difficult economic conditions.

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LabCorp is a Stock Advisor selection, while Quest Diagnostics is an Inside Value recommendation.

Fool contributor Ryan Fuhrmann is long shares of Quest Diagnostics, but has no financial interest in any other company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.