Release Date: August 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Semler Scientific Inc (SMLR, Financial) achieved strong interim operations and generated nearly $5 million in cash during Q2 2024.
- The company has adopted bitcoin as its primary treasury reserve asset, holding 929 bitcoins as of August 5, 2024.
- Semler Scientific Inc (SMLR) has a high-margin business with consistent cash generation, allowing for strategic investments.
- The company continues to focus on its core medical products and services, particularly the QuantaFlo device, which aids in the early diagnosis of peripheral arterial disease (PAD).
- Semler Scientific Inc (SMLR) remains committed to research and development, aiming to enhance existing products and expand into additional cardiovascular applications.
Negative Points
- Total revenues in Q2 2024 were $14.5 million, down about 22% compared to the second quarter of 2023.
- Operating expenses in Q2 2024 were $9.1 million, a decrease of 20% year-over-year, indicating cost-cutting measures.
- Income from operations decreased to $5.4 million compared to $7.2 million in the prior year.
- Net income was nil or $0 per basic share and $0 per fully diluted share, compared to net income of $5.9 million or $0.88 per basic share and $0.75 per fully diluted share in Q2 2023.
- The company's bitcoin holdings introduced volatility into reported net income, with a negative $5.1 million change in fair value of bitcoin holdings.
Q & A Highlights
Q: How did you decide to embark on your bitcoin strategy? And do you plan on purchasing cryptocurrency other than bitcoin?
A: (Eric Semler, Independent Chairman of the Board) Our decision was influenced by MicroStrategy's success and the increasing institutional ownership of bitcoin. We believe bitcoin's unique attributes, including its finite supply, discounted value versus gold, decentralized structure, and growing global acceptance, make it a compelling investment. We have no plans to purchase other cryptocurrencies.
Q: What's driving the underlying trends in the business? And what do you expect for the remainder of the year?
A: (Renae Cormier, Chief Financial Officer) We are still experiencing demand for software licenses related to our QuantaFlo product. We are obtaining new customers outside the managed care space, including clinics and value-based care providers. Our focus for the rest of the year will be to tightly control expenses and maximize operating income, with plans to deploy operating cash into additional bitcoin purchases.
Q: Where are we in the S-3 process? And what capital instruments do you intend to use?
A: (Renae Cormier, Chief Financial Officer) We filed our shelf registration on June 6 with the SEC. Once effective, it will allow us to issue up to $150 million in debt securities, common stock, and warrants. We plan to use the ATM proceeds for general corporate purposes, including buying more bitcoin.
Q: Can you talk about your long-term strategy related to bitcoin and initial reaction to your strategy?
A: (Eric Semler, Independent Chairman of the Board) We intend to hold bitcoin for the long term, believing that institutional adoption will drive overwhelming demand. We received strong support at Bitcoin 2024 in Nashville, indicating that our strategy has been embraced by the bitcoin community.
Q: What are the financial highlights for Q2 2024?
A: (Renae Cormier, Chief Financial Officer) Total revenues were $14.5 million, down 22% year-over-year. Operating expenses were $9.1 million, a decrease of 20%. Income from operations was $5.4 million. Net income was nil, compared to $5.9 million in Q2 2023. We ended the quarter with $62.8 million in cash and cash equivalents and acquired 929 bitcoin at an aggregate purchase price of $63 million.
Q: How does the new FASB standard for crypto assets affect your financial reporting?
A: (Renae Cormier, Chief Financial Officer) We have elected to early adopt ASU 2023-08, which requires bitcoin assets to be measured at fair value with gains and losses recognized in net income. This may introduce volatility into our reported net income but will not impact our cash flow from operations.
Q: What is the current status of your QuantaFlo product and its market penetration?
A: (Jennifer Oliva Herrington, Chief Operating Officer) QuantaFlo is a noninvasive point-of-care test for diagnosing peripheral arterial disease (PAD). We continue to promote and sell QuantaFlo, aiming to establish it as the standard of care for PAD diagnosis. We are expanding our customer base and exploring additional markets that will benefit from PAD testing.
Q: How do you plan to use the proceeds from the ATM offering?
A: (Renae Cormier, Chief Financial Officer) We plan to use the ATM proceeds primarily for general corporate purposes, including the acquisition of bitcoin. Given our solid cash generation, we believe we are in a strong position to build our bitcoin holdings over time.
Q: What are your plans for research and development?
A: (Jennifer Oliva Herrington, Chief Operating Officer) We remain committed to R&D, prioritizing the enhancement of existing products and data services. Our long-term vision includes extending our reach to additional cardiovascular applications, reflecting our dedication to continuous expansion and innovation.
Q: How do you view the potential of bitcoin compared to gold?
A: (Eric Semler, Independent Chairman of the Board) We believe bitcoin has unique attributes as a scarce and finite asset, making it a reasonable inflation hedge and safe haven amid global instability. Given its finite supply and growing acceptance, we believe bitcoin could approach or exceed the value of gold over time, potentially generating outsized returns.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
