Semler Scientific® Reports Second Quarter 2024 Financial Results and Additional Bitcoin Purchases

Rhea-AI Summary

Semler Scientific (NASDAQ: SMLR) reported Q2 2024 financial results and additional Bitcoin purchases. Key points:

• Revenues decreased 22% to $14.5 million
• Income from operations fell 25% to $5.4 million
• Net income dropped to $11,000 from $5.9 million in Q2 2023
• Purchased 929 bitcoins for $63 million total
• Bitcoin holdings fair value of $54.9 million as of June 30, reflecting $5.1 million reduction

The company remains focused on acquiring Bitcoin while supporting its healthcare business. Semler plans to purchase more Bitcoin using cash from operations and potentially from selling securities under a $150 million shelf registration statement.

Positive

• Strong income from operations of $5.4 million in Q2
• Continued focus on Bitcoin acquisition strategy
• Potential for additional Bitcoin purchases using cash from operations
• Significant Bitcoin holdings of 929 bitcoins worth $54.9 million

Negative

• 22% decrease in revenues to $14.5 million compared to Q2 2023
• 25% decrease in income from operations to $5.4 million
• Net income dropped to $11,000 from $5.9 million in Q2 2023
• $5.1 million reduction in fair value of Bitcoin holdings
• Increased concentration risk with top three customers comprising 82% of Q2 2024 revenues

Financial Analyst

Semler Scientific's Q2 2024 results show a significant decline in financial performance. Revenues decreased by 22% to $14.5 million, while income from operations fell by 25% to $5.4 million. The most striking figure is the 85% drop in pre-tax net income to $1.1 million, largely due to a $5.1 million negative change in fair value of bitcoin holdings.

The company's pivot to a bitcoin treasury strategy is highly risky. They've invested $63 million in bitcoin, which has already resulted in a $5.1 million reduction in fair value. This volatility could significantly impact future earnings. The effective tax rate skyrocketed to 99%, resulting in negligible net income of $11,000, compared to $5.9 million in Q2 2023.

Market Research Analyst

Semler's strategic shift towards bitcoin is a bold move in the healthcare technology sector. While it's garnered attention, it's also introduced significant volatility to their financials. The company's core business appears to be losing ground, with revenues from their top three customers now comprising 82% of total revenue, up from 71% last year. This increased customer concentration is concerning.

The planned sale of securities under a $150 million shelf registration to fund more bitcoin purchases signals a potential dilution for existing shareholders. This strategy seems to be overshadowing their healthcare technology focus, which could alienate traditional investors and potentially impact long-term growth in their core business.

Tech Expert

Semler's QuantaFlo product, which aids in diagnosing cardiovascular diseases, remains their flagship offering. However, the lack of discussion about product development or market expansion in the report is concerning. The company's focus seems to have shifted dramatically towards bitcoin investment, potentially at the expense of innovation in their core technology.

The mention of seeking a new 510(k) clearance for expanded indications for QuantaFlo is positive, but details are sparse. This lack of emphasis on technological advancement in a rapidly evolving healthcare tech market could put Semler at risk of falling behind competitors. The bitcoin strategy, while innovative for the sector, doesn't appear to leverage or enhance their technological capabilities in healthcare.

SANTA CLARA, Calif., Aug. 5, 2024 /PRNewswire/ -- Semler Scientific, Inc. (Nasdaq: SMLR), a pioneer in developing and marketing technology products and services to healthcare providers to combat chronic diseases, today reported financial results for the second quarter ended June 30, 2024. In addition, the Company announced the purchase of an additional 101 bitcoins for an aggregate amount of $6.0 million. Since announcing the adoption of a bitcoin treasury strategy on May 28, 2024, the Company has purchased 929 bitcoins for a total of $63.0 million.

"We are pleased to report strong income from operations of $5.4 million in the second quarter," said Doug Murphy-Chutorian, MD, chief executive officer of Semler Scientific. "We remain laser focused on acquiring and holding bitcoin, while supporting and expanding our healthcare business."

"We are very encouraged by the strong positive reaction to our recent announcement of a bitcoin treasury strategy," said Eric Semler, chairman of Semler Scientific. "We continue to firmly believe that bitcoin is a compelling investment and plan on acquiring additional bitcoins with our cash from operations, as well as with cash generated from the sale of securities under our $150.0 million shelf registration statement, once effective."

FINANCIAL RESULTS

For the second quarter ended June 30, 2024, compared to the corresponding period of 2023, Semler Scientific reported:

• Revenues of $14.5 million, a decrease of $4.1 million, or 22%, compared to $18.6 million.
• Cost of revenues of $1.3 million, an increase of $0.1 million, or 3%, compared to $1.2 million
• Total operating expenses, which include cost of revenues, of $9.1 million, a decrease of $2.3 million, or 20%, compared to $11.4 million.
• Income from operations of $5.4 million, a decrease of $1.8 million, or 25%, compared to $7.2 million.
• Pre-tax net income of $1.1 million (which includes the change in fair value on our bitcoin holdings of negative $5.1 million), a decrease of $6.6 million, or 85%, compared to $7.7 million.
• Income tax expense of $1.1 million, or an effective tax rate of 99%, compared to $1.8 million, or an effective tax rate of 23%.
• Net income of $11 thousand, or breakeven, a decrease of $5.9 million, or 100%, compared to net income of $5.9 million, or $0.88 per basic share and $0.75 per diluted share.

Semler Scientific's three largest customers (including their affiliates) comprised 44%, 27% and 11% of second quarter 2024 revenues, respectively, and its two largest customers comprised 37% and 34% of second quarter 2023 revenues, respectively.

BITCOIN HOLDINGS

On May 28, 2024, Semler Scientific announced the initial purchase of 581 bitcoins for an aggregate amount of $40.0 million. On June 6, 2024, the Company announced the purchase of an additional 247 bitcoins for an aggregate amount of $17.0 million. On June 28, 2024, the Company purchased an additional 49 bitcoins for an aggregate cost of $3.0 million. As of June 30, 2024, the Company held 877 bitcoins with a fair value of $54.9 million, which reflects a cumulative reduction in fair value of $5.1 million.

Subsequently through August 5, 2024, the Company has purchased an additional 52 bitcoins for an aggregate cost of $3.0 million. Semler Scientific's total holdings as of August 5, 2024 are 929 bitcoins for an aggregate purchase amount of $63.0 million. All purchase amounts include fees and expenses.

Notice of Conference Call

Semler Scientific will host a conference call today at 4:30 p.m. ET. The call will address results of the second quarter ended June 30, 2024, as well as provide a business update on Semler Scientific's strategies for the near-term future. Questions can be submitted prior to the start of the call to ir@semlerscientific.com.

Participants are encouraged to pre-register for the conference call using the following link: https://dpregister.com/sreg/10190580/fcfdde76dc. Callers who pre-register will be given a conference passcode and unique PIN to gain immediate access to the call and bypass the live operator. Participants may pre-register at any time, including up to and after the call start time. Those without internet access or who are unable to pre-register may dial in by calling:

Domestic callers: (833) 816‑1161
International callers: (412) 317‑0717

Please specify to the operator that you would like to join the "Semler Scientific Call." The conference call will be archived on Semler Scientific's website at www.semlerscientific.com.

 

Semler Scientific, Inc.
Condensed Statements of Income
Unaudited
(In thousands of U.S. Dollars, except share and per share data)
		For the three months ended June 30,						For the six months ended June 30,
		2024			2023			2024			2023
Revenues		$	14,465		$	18,605		$	30,368		$	36,811
Operating expenses:
Cost of revenues			1,255			1,219			2,501			2,488
Engineering and product development			1,440			1,762			2,578			3,392
Sales and marketing			3,456			4,985			7,131			10,177
General and administrative			2,964			3,459			5,832			7,318
Total operating expenses			9,115			11,425			18,042			23,375
Income from operations			5,350			7,180			12,326			13,436
Interest and dividend income			714			597			1,534			1,080
Change in fair value of notes held for investment			128			(111)			128			(217)
Change in fair value of digital assets			(5,055)			—			(5,055)			—
Other (expense) income, net			(4,213)			486			(3,393)			863
Pre-tax income			1,137			7,666			8,933			14,299
Income tax provision			1,126			1,787			2,849			3,451
Net income		$	11		$	5,879		$	6,084		$	10,848
Net income per share, basic		$	0.00		$	0.88		$	0.88		$	1.62
Weighted average number of shares used in computing basic net income per share			6,944,664			6,707,341			6,918,709			6,704,306
Net income per share, diluted		$	0.00		$	0.75		$	0.78		$	1.38
Weighted average number of shares used in computing diluted net income per share			7,795,149			7,867,001			7,789,101			7,887,584

 

Semler Scientific, Inc.
Condensed Balance Sheets
(In thousands of U.S. Dollars, except share and per share data)
		June 30,			December 31,
		2024			2023
		Unaudited
Assets
Current Assets:
Cash and cash equivalents		$	7,332		$	57,200
Restricted cash			132			132
Trade accounts receivable, net of allowance for credit losses of $243 and $287, respectively			7,470			6,125
Short-term notes held for investments			6,100			—
Inventory, net			385			445
Prepaid expenses and other current assets			2,271			2,042
Total current assets			23,690			65,944
Assets for lease, net			1,768			2,285
Property and equipment, net			620			720
Long-term investments			512			512
Notes held for investment			—			5,372
Intangible digital assets			54,945			—
Other non-current assets			127			270
Deferred tax assets, net of valuation allowance of $1,207 and $0, respectively			3,124			2,962
Total assets		$	84,786		$	78,065
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable		$	227		$	402
Accrued expenses			5,086			4,502
Deferred revenue			840			1,120
Other short-term liabilities			211			176
Total current liabilities			6,364			6,200
Long-term liabilities:
Other long-term liabilities			24			70
Total long-term liabilities			24			70
Commitments and contingencies (Note 15)
Stockholders' equity:
Common stock, $0.001 par value; 50,000,000 shares authorized; 7,202,146 and 7,099,441 shares issued, and 6,987,724 and 6,885,019 shares outstanding (treasury shares of 214,422 and 214,422), respectively			7			7
Additional paid-in capital			12,504			11,985
Retained earnings			65,887			59,803
Total stockholders' equity			78,398			71,795
Total liabilities and stockholders' equity		$	84,786		$	78,065

 

Semler Scientific, Inc.
Condensed Statements of Cash Flows
Unaudited
(In thousands of U.S. Dollars)
		Six months ended June 30,
		2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	6,084		$	10,848
Reconciliation of Net Income to Net Cash Provided by Operating Activities:
Depreciation			346			279
Deferred tax expense			(163)			(207)
Loss on disposal of assets for lease			319			114
Gain on short-term investments			—			(237)
Allowance for credit losses			(44)			92
Change in fair value of notes held for investment			(128)			217
Change in fair value of digital assets			5,055			—
Stock-based compensation			295			860
Changes in Operating Assets and Liabilities:
Trade accounts receivable			(1,292)			(2,240)
Inventory			60			(7)
Prepaid expenses and other current assets			(135)			(950)
Other non-current assets			43			106
Accounts payable			(175)			(326)
Accrued expenses			584			3,495
Other current and non-current liabilities			(291)			13
Net Cash Provided by Operating Activities			10,558			12,057
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment			(48)			(260)
Purchase of notes held for investment			(500)			(500)
Purchase of digital assets			(60,000)			—
Proceeds from maturities of short-term investments			—			57,707
Purchase of short-term investments			—			(49,728)
Purchase of assets for lease						(674)
Net Cash (Used in) Provided by Investing Activities			(60,548)			6,545
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of warrants			—			(1,949)
Taxes paid related to net settlement of equity awards			(45)			(172)
Stock issuance expenses			(102)			—
Proceeds from exercise of stock options			269			—
Net Cash Provided by (Used in) Financing Activities			122			(2,121)
(DECREASE) INCREASE  IN CASH			(49,868)			16,481
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD			57,332			23,014
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD		$	7,464		$	39,495

 

Semler Scientific, Inc.
Digital Assets- Additional Information
Rollforward of bitcoin holdings
Unaudited
	Source of Capital Used to Purchase Bitcoin		Digital Assets at Cost (in thousands)			Change in fair Value (in thousands)			Digital Assets at Fair Value (in thousands)			Approximate Number of Bitcoin Held		Approximate Average Purchase Price Per Bitcoin
Balance as of March 31, 2024			$	—		$	—		$	—		—		$	—
Digital assets purchased	(a)			60,000			—			60,000		877			68,436
Change in fair value of the digital assets				—			(5,055)			(5,055)		—			—
Balance as of June 30, 2024			$	60,000		$	(5,055)		$	54,945		877		$	68,436

(a)	Cash from operations

About Semler Scientific, Inc.:

Semler Scientific, Inc. is a pioneer in developing and marketing technology products and services to healthcare providers to combat chronic diseases. Its flagship product, QuantaFlo®, which is patented and cleared by the U.S. Food and Drug Administration (FDA), is a rapid point-of-care test that measures arterial blood flow in the extremities. The QuantaFlo test aids in the diagnosis of cardiovascular diseases, such as peripheral arterial disease (PAD), and Semler Scientific is seeking a new 510(k) clearance for expanded-indications. QuantaFlo is used by healthcare providers to evaluate their patient's risk of mortality and major adverse cardiovascular events (MACE). Semler Scientific also invests in bitcoin and has adopted bitcoin as its primary treasury asset. Additional information about Semler Scientific can be found at www.semlerscientific.com.

Forward-Looking Statements

This press release contains "forward-looking" statements. Such statements can be identified by, among other things, the use of forward-looking language such as the words "believe," "goal," "may," "will," "intend," "expect," "anticipate," "estimate," "project," "would," "could" or words with similar meaning or the negatives of these terms or by the discussion of strategy or intentions. The forward-looking statements in this release include express or implied statements regarding expansion of the healthcare business; seeking a new 510(k) clearance for QuantaFlo with expanded indications for use; purchase of additional bitcoin; value of bitcoin and ability to execute on the bitcoin treasury strategy; among others. Such forward-looking statements are subject to a number of risks and uncertainties that could cause Semler Scientific's actual results to differ materially from those discussed here, such as such as risks inherent with investing in bitcoin, including bitcoin's volatility; risk of implementing a new bitcoin treasury strategy; risk that insurance plans and other customers will not continue to license its cardiovascular testing products; risk of changes in the reimbursement landscape for its customers including related to the Centers for Medicare and Medicaid Services (CMS) rate announcement; risk of obtaining a new 510(k) clearance for expanded indications; along with those other risk factors detailed in Semler Scientific's filings with the Securities and Exchange Commission. These forward-looking statements involve assumptions, estimates, and uncertainties that reflect current internal projections, expectations or beliefs. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. All forward-looking statements contained in this press release are qualified in their entirety by these cautionary statements and the risk factors described above. Furthermore, all such statements are made as of the date of this release and Semler Scientific assumes no obligation to update or revise these statements unless otherwise required by law.

No Offer or Solicitation

This press release does not and shall not constitute an offer to sell or a solicitation of an offer to buy any securities of Semler Scientific, Inc., nor shall there be any offer, solicitation or sale of such securities, in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

INVESTOR CONTACT:

Renae Cormier
Chief Financial Officer
ir@semlerscientific.com 

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SOURCE Semler Scientific, Inc.

FAQ

What were Semler Scientific's (SMLR) Q2 2024 revenue and net income?

Semler Scientific reported Q2 2024 revenues of $14.5 million, down 22% from $18.6 million in Q2 2023. Net income dropped to $11,000, compared to $5.9 million in Q2 2023.

How many bitcoins does Semler Scientific (SMLR) hold as of August 5, 2024?

As of August 5, 2024, Semler Scientific holds 929 bitcoins, purchased for a total of $63 million.

What is Semler Scientific's (SMLR) strategy regarding Bitcoin?

Semler Scientific plans to continue acquiring Bitcoin using cash from operations and potentially from selling securities under a $150 million shelf registration statement. They view Bitcoin as a compelling investment and have adopted it as their primary treasury asset.

How did Semler Scientific's (SMLR) Bitcoin holdings affect its Q2 2024 financial results?

The change in fair value of Semler Scientific's Bitcoin holdings resulted in a negative $5.1 million impact on pre-tax net income for Q2 2024.