Semler Scientific (SMLR) Q1 2025 Earnings Call May 13, 2025 04:30 PM ET Company Participants Douglas Murphy-Chutorian - CEOEric Semler - ChairmanJennifer Herrington - Chief Operating OfficerRenae Cormier - CFO Operator Good afternoon, and welcome to the Semler Scientific First Quarter twenty twenty five Financial Results Conference Call. All participants will be in a listen only mode. After today's prepared remarks, as time permits, management will take questions submitted prior to this call via email. Plea ...

Semler Scientific (SMLR) Q1 2025 Earnings Call May 13, 2025 04:30 PM ET Speaker0 Good afternoon, and welcome to the Semler Scientific First Quarter twenty twenty five Financial Results Conference Call. All participants will be in a listen only mode. After today's prepared remarks, as time permits, management will take questions submitted prior to this call via email. Please note this event is being recorded. Before we begin, Seminole Scientific needs to remind you that certain comments made during this call ...

The Semler Vision: Medical and Monetary Freedom Empowering Early Detection. Backed by Bitcoin. May 13, 2025 Forward-Looking Statements This presentation includes statements that are, or may be deemed, "forward-looking statements." In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believe," "estimate," "anticipate," "expect," "plan," "intend," "may," "could," "might," "will," "should," or, in each case, their negative or other va ...

Financial Performance - Revenues for Q1 2025 were $8,835,000, a decrease of 44% compared to $15,903,000 in Q1 2024[23] - Net loss for Q1 2025 was $64,702,000, compared to a net income of $6,073,000 in Q1 2024, resulting in a basic net loss per share of $6.74[23] - Total operating expenses surged to $39,936,000 in Q1 2025, compared to $8,927,000 in Q1 2024, primarily due to a litigation contingency of $29,750,000[23] - For the three months ended March 31, 2025, total revenues were $8.8 million, a decrease of 44.2% compared to $15.9 million in the same period in 2024[128] - The net loss for the three months ended March 31, 2025, was $64.7 million, compared to a net income of $6.1 million in the same period in 2024[128] - Total operating expenses for the same period were $39.9 million, an increase of $31.0 million or 347% compared to $8.9 million in the prior year, with operating expenses as a percentage of revenues rising to 452%[138][139] Cash and Assets - Cash and cash equivalents increased to $9,737,000 as of March 31, 2025, up from $8,819,000 at the end of 2024[25] - Total assets rose to $293,445,000 as of March 31, 2025, compared to $239,828,000 at the end of 2024[25] - As of March 31, 2025, the Company held cash deposits of $6,195, which increased from $5,314 as of December 31, 2024[69] - The Company’s intangible digital assets increased to $263,504,000 as of March 31, 2025, compared to $214,633,000 at the end of 2024[25] - The fair value of the Company's intangible digital assets increased from $214,633 to $263,504 during the three months ended March 31, 2025, despite an unrealized loss of $41,829[65] Liabilities and Contingencies - Current liabilities increased significantly to $35,667,000 in Q1 2025, compared to $6,313,000 in Q4 2024[25] - The Company has a litigation contingency liability of $29,750 booked as of March 31, 2025, related to settlement discussions with the U.S. Department of Justice[97] - The company recorded a contingent liability of $29.8 million related to a proposed settlement with the DOJ as of March 31, 2025[135] - The company had negative working capital of approximately $17.2 million due to the contingent liability related to the DOJ settlement[147] Investments and Financing Activities - The company purchased digital assets worth $90,700,000 in Q1 2025, indicating a strategic investment in cryptocurrencies[30] - Proceeds from the issuance of debt amounted to $100,000,000 in Q1 2025, reflecting a significant financing activity[30] - The company generated $90.1 million of net cash from financing activities during the three months ended March 31, 2025, primarily from the issuance of 4.25% convertible senior notes[154] - The Company entered into a purchase agreement for the sale of $100,000 aggregate principal amount of 4.25% convertible senior notes due 2030 on January 28, 2025[77] - The Company issued 2030 Senior Notes with proceeds of approximately $95,984, net of debt issuance costs of $4,016[88] Stock and Shareholder Information - The Company has authorized 50,000,000 shares of common stock, with each share entitled to one vote[98] - As of March 31, 2025, the Company had issued and sold a total of 2,237,988 shares of common stock for aggregate gross proceeds of approximately $119,715[100] - The Company matched $97 and $64 for employee 401(k) deferrals for the three-month periods ended March 31, 2025, and 2024, respectively[95] - The initial conversion price of the 2030 Senior Notes is approximately $76.44 per share, representing a premium of about 25.0% over the last reported sale price of the Company's common stock on January 23, 2025[79] Bitcoin Holdings and Strategy - The Company held approximately 3,192 bitcoins with a cost basis of $280,400 and a fair value of $263,504 as of March 31, 2025[64] - The company reported a fair value of 2,298 bitcoins at $214.6 million as of December 31, 2024, compared to the current holdings[196] - The company anticipates that the proportion of total assets represented by bitcoin holdings will increase in the future, leading to greater earnings volatility[197] - The company's bitcoin treasury strategy exposes it to significant volatility, with bitcoin trading between $50,000 and $109,000 in the past year[173] - The company faces significant risks due to the concentration of its bitcoin holdings, which limits risk mitigation opportunities and could lead to pronounced impacts on financial condition with any significant declines in bitcoin prices[211] Regulatory and Compliance Issues - The company is subject to enhanced regulatory scrutiny regarding bitcoin-related transactions, which may impose additional compliance requirements[205] - The company faces risks from potential regulatory actions that could impact the price and transferability of bitcoin[186] - The emergence of alternative digital assets, including stablecoins and central bank digital currencies (CBDCs), could negatively impact the price of bitcoin and adversely affect the company's financial condition[215] - The company has not registered the notes or shares of common stock issuable upon conversion under the Securities Act, limiting their offer and sale in the U.S.[163] Accounting and Disclosure - The Company adopted ASU 2023-09 effective January 1, 2025, which requires enhanced disclosures surrounding income taxes[43] - The Company is currently evaluating the impact of new accounting guidance issued by FASB in November 2024 on its disclosures[41] - The adoption of ASU 2023-08 is expected to materially impact the company's financial results, increasing volatility and affecting the carrying value of bitcoin on the balance sheet[181] - The company maintains effective disclosure controls and procedures as of March 31, 2025, ensuring timely financial reporting[168]

Exhibit 99.1 "We continue to accretively grow our bitcoin arsenal using operating cash flow and proceeds from debt and equity financings," said Eric Semler, chairman of Semler Scientific. "And we are excited to launch the Semler Scientific dashboard today on our website to provide the public with regularly updated information on our bitcoin holdings and other key metrics." "Our healthcare business is seeing green shoots from the cardiovascular product line that we introduced to our large enterprise customer ...

SANTA CLARA, Calif., April 25, 2025 /PRNewswire/ -- Semler Scientific, Inc. (Nasdaq: SMLR), a pioneer in developing and marketing technology products and services to assist its customers in evaluating and treating chronic diseases, today announced updates regarding its bitcoin (BTC) activity, holdings and yield, as well as its at-the-market equity offering (ATM) programs. BTC Update Between February 14, 2025 and April 24, 2025, Semler Scientific acquired 111 bitcoins for $10.0 million with an average purcha ...

Financial Performance - Total revenues for the year ended December 31, 2024, were $56.3 million, a decrease of 17.5% from $68.2 million in 2023[26]. - Net income for 2024 was $40.9 million, compared to $20.6 million in 2023, representing a significant increase of 98.5%[26]. - In the year ended December 31, 2024, the two largest customers accounted for 43.1% and 27.6% of revenues, compared to 36.0% and 34.9% in the prior year[74]. - Two customers accounted for 43.1% and 27.6% of revenues for the year ended December 31, 2024, indicating a significant revenue concentration risk[194]. - The company is experiencing decreased usage of its products due to the current CMS reimbursement landscape, negatively impacting revenues[173]. - The company needs to generate significant revenues to maintain profitability in its healthcare solutions business, with potential declines in sales adversely affecting financial performance[197]. Bitcoin Holdings and Strategy - As of December 31, 2024, the company held approximately 2,298 bitcoins at an average purchase price of $82,538 per bitcoin, totaling approximately $189.7 million[32]. - By February 14, 2025, the company had acquired a total of approximately 3,192 bitcoins at an aggregate purchase price of $280.4 million, with an average purchase price of approximately $87,854 per bitcoin[33]. - The company adopted bitcoin as its primary treasury reserve asset in May 2024, utilizing cash flows from operations and capital raising transactions to acquire bitcoin[27]. - The company did not sell any bitcoin during 2024, indicating a long-term holding strategy[32]. - The company holds all Bitcoin in custodial accounts with U.S.-based custodians, including Coinbase Custody and NYDIG, as of December 31, 2024[57]. - The company intends to diversify its custodial arrangements to mitigate counterparty risk associated with Bitcoin holdings[60]. - The emergence of other digital assets, including CBDCs, poses risks to Bitcoin's price and the company's financial condition[52]. - Ongoing regulatory scrutiny of digital assets may impact the company's bitcoin acquisition strategy and market participation[115]. Regulatory Environment - The company is subject to extensive regulation by the FDA, governing various aspects of product development and safety[122]. - To commercially distribute QuantaFlo or any future medical device, prior 510(k) clearance or PMA application approval is required from the FDA[124]. - The 510(k) clearance pathway typically takes between three to 12 months, but can take significantly longer, and clearance is not guaranteed[125]. - A PMA application must be supported by extensive data, including technical information, preclinical studies, and clinical trials, and the review process generally takes between one to three years[126][127]. - The FDA is required to classify de novo classification requests within 120 days, although actual review times may be longer[129]. - After a device is marketed, it is subject to numerous regulatory requirements, including establishment registration and device listings with the FDA[137]. - Non-compliance with FDA regulations can result in severe enforcement actions, including fines, recalls, and withdrawal of approvals[142]. - The company is at risk of civil suit by the DOJ related to claims for reimbursement concerning the QuantaFlo device, which could adversely affect its business[149]. - The company has been cooperating with civil investigative demands from the DOJ since 2017, which may lead to significant legal and financial repercussions[149]. - The Department of Justice (DOJ) is investigating improper reimbursement claims related to the company's QuantaFlo device, which could result in civil lawsuits and financial damages[217]. - The company faces ongoing scrutiny from government regulators, which has led to increased investigations and potential penalties in the medical device industry[156]. Product Development and Market Strategy - The company is seeking a new 510(k) clearance from the FDA for expanded use of its product QuantaFlo, aimed at diagnosing additional cardiovascular diseases[25]. - QuantaFlo is a patented and FDA-cleared vascular testing product that provides a four-minute in-office blood flow test, primarily marketed to healthcare providers and insurance plans[71]. - The average routine usage of QuantaFlo ranges from a few tests per week to 10 tests per day, with an expected average lifetime of at least three years[73]. - QuantaFlo aims to provide a cost-effective solution for healthcare providers, with a focus on recurrent revenue models targeting insurance plans and medical personnel[88]. - The company is exploring additional product offerings through marketing, distribution, and licensing arrangements to expand its chronic disease management solutions[88]. - The company is developing several updates and modifications to QuantaFlo, focusing on cost-effective wellness solutions for its growing customer base[95]. - The company is exploring potential new product and service offerings that may incorporate current or new technology[95]. - The company has invested in complementary products, including a test for early Alzheimer's disease and a technology-enabled approach to inpatient glycemic management[84]. Competitive Landscape - The principal competitor for QuantaFlo is the standard blood pressure cuff ABI device, which ranges in price from $2,500 to $20,000[92]. - QuantaFlo is the only actively marketed vascular testing product, expected to account for the vast majority of revenues for the next several years[175]. - The company may not achieve broad market acceptance for QuantaFlo unless it successfully educates healthcare providers on its benefits[176]. - The company faces risks related to reimbursement from third-party payors, which is crucial for the acceptance of QuantaFlo and future products[181]. Compliance and Internal Controls - The company has experienced material weaknesses in its internal control over financial reporting, which could have adverse effects if additional weaknesses are identified in the future[219]. - The company has remediated prior material weaknesses but cannot assure that new weaknesses will not arise, which could negatively impact its financial reporting[220]. - Increased government enforcement actions may lead to heightened scrutiny of the company's practices and those of its customers, potentially affecting revenue[217]. - The company is at risk of reputational harm and diminished profits due to potential legal actions and compliance issues related to healthcare regulations[216]. Market Dynamics - The total market capitalization of bitcoin was approximately $1.9 trillion as of December 31, 2024, compared to approximately $18.0 trillion for gold[28]. - Bitcoin remains the largest digital asset by market capitalization, with Ethereum being the second largest as of the report date[51]. - Stablecoins have rapidly grown as an alternative to Bitcoin, serving as a medium of exchange and store of value, particularly on trading platforms[51]. - The annual cost of care for heart failure in the U.S. exceeds $30 billion, with over one million hospitalizations per year[78]. - The percentage of individuals covered by managed care programs is expected to grow in the United States over the next decade, impacting reimbursement dynamics[145]. - Changes in the Health Care Reform Law could negatively affect business prospects, particularly if incentives for identifying sicker patients are removed[214]. - The Health Care Reform Law encourages collaborative efforts among healthcare providers, which may lead to reduced medical device acquisitions and consolidation of suppliers[215].

Financial Data and Key Metrics Changes - Total revenues in Q4 2024 were $12.4 million, down approximately 18% compared to Q4 2023 [22] - Operating expenses in Q4 2024 were $8.9 million, a decrease of 29% year-over-year [23] - Net income for Q4 was $29.2 million or $3.64 per basic share, compared to net income of $4.2 million or $0.62 per basic share in Q4 2023 [25] Business Line Data and Key Metrics Changes - The company achieved record cash generation of over $24 million in 2024 from healthcare operations [9] - The two largest customers comprised 39% and 31% of quarterly revenues in Q4 2024 [22] - The company is pursuing a new 510(k) clearance for a product extension of its QuantaFlo technology [10][18] Market Data and Key Metrics Changes - The company is now the tenth largest corporate holder of Bitcoin, owning 3,192 bitcoins valued at over $300 million [8] - The market capitalization has grown by more than 200% since adopting Bitcoin as a treasury strategy [8] Company Strategy and Development Direction - The company adopted Bitcoin as its primary treasury reserve asset in May 2024, becoming the second U.S. public company to do so [6] - The long-term vision includes expanding product offerings to incorporate additional cardiovascular applications [17] - The company aims to minimize declines in QuantaFlo revenue while supporting growth in operations related to other cardiovascular diseases [34] Management's Comments on Operating Environment and Future Outlook - Management expects further pressure on revenues in 2025 due to the phasing of the 2024 CMS rate announcement [22] - There is excitement about strong government support for Bitcoin, particularly the repeal of SAB 121, which may encourage large public companies to add Bitcoin to their balance sheets [36] Other Important Information - The company has invested $280 million in Bitcoin, viewing it as a highly accretive move [12] - The convertible senior notes offering was upsized from $75 million to $100 million due to strong investor demand [11] Q&A Session Summary Question: Why did you decide to do the convertible note offering? - The company decided to raise capital in the convertible market as it is a cheaper source of funding and less dilutive to stockholders, allowing for a large amount of capital to be raised quickly [29] Question: What's driving the underlying trends in the business and what do you expect for 2025? - Despite government decisions affecting PAD payment, the company continues to add new clients for QuantaFlo software licenses and aims to minimize revenue declines while supporting growth in cardiovascular disease operations [32][34] Question: What are your expectations from the new government in Washington, D.C. regarding crypto? - Management is encouraged by the strong government support for Bitcoin and believes that the repeal of SAB 121 may lead to increased custody of Bitcoin by major banks, potentially increasing the likelihood of large public companies adding Bitcoin to their balance sheets [36]

Financial Results - Semler Scientific, Inc. announced preliminary unaudited financial information for Q4 2024, with results still subject to change[5] - The financial closing procedures for Q4 and the year ended December 31, 2024, are not yet complete, indicating potential discrepancies in final results[6] - The preliminary financial information does not provide a complete understanding of Semler Sci's results and should not be viewed as a substitute for full financial statements[6]

Core Viewpoint - Semler Scientific, Inc. has made significant progress in its bitcoin acquisition strategy, reporting substantial holdings and a high BTC Yield as a key performance indicator [1][4]. Group 1: Bitcoin Acquisition and Holdings - Between January 11, 2025, and February 3, 2025, Semler Scientific acquired 871 bitcoins for $88.5 million, with an average purchase price of $101,616 per bitcoin [2]. - As of February 3, 2025, the company holds a total of 3,192 bitcoins, acquired for an aggregate of $280.4 million at an average price of $87,854 per bitcoin [2]. Group 2: BTC Yield Performance - From January 1, 2025, to February 3, 2025, Semler Scientific's BTC Yield was reported at 21.9% [3]. - For the period from July 1, 2024, to February 3, 2025, the BTC Yield was significantly higher at 152.2% [3]. Group 3: Strategic Insights - The company uses BTC Yield as a KPI to evaluate the effectiveness of its bitcoin acquisition strategy, which it believes is beneficial to stockholders [4][8]. - The BTC Yield metric is intended to provide investors with insights into the company's decision to fund bitcoin purchases through the issuance of additional shares [4][8]. Group 4: Company Background - Semler Scientific is recognized for developing technology products and services aimed at evaluating and treating chronic diseases, with its flagship product being QuantaFlo®, a rapid point-of-care test for cardiovascular diseases [18]. - The company has adopted bitcoin as its primary treasury asset, indicating a strategic shift towards cryptocurrency investment [18].