Q2 2022 Semler Scientific Inc Earnings Call

And followed by the pound key or press star zero for operator assistance.

Welcome to the Conference Center. Please enter your pin followed by the pound key or press star zero for operator assistance.

Yeah.

Okay.

Okay.

Yeah.

Okay.

Okay.

Got it.

Yes.

Advantage has been confirmed please standby and you will be joined to the conference fixed annual best ideas growth conference on September 14th.

Thank you for your interest in the company and your continued support now operator, please open the lines, Doug Andy and I will be happy to address your questions.

Thank you we will now begin the question and answer session Task. A question you May Press Star then one on your Touchtone phone for using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at.

At this time, we will pause momentarily to assemble our roster.

Our first question comes from Brooks O'neil from Lake Street Capital markets. Please go ahead.

Thank you good afternoon, Doug and Andy and welcome Renee I, just wanted to say Renee you've already given us more information by far than these other two guys have given us and all of the time I've covered the company. So I'm excited to have you here.

Thanks Brooks.

Yeah. So I have a few questions for you, obviously, a pretty strong quarter, which is great.

Do you see the.

The seasonality last year I know ones.

Right extreme and obviously in response to the very unprecedented impact of Covid, but.

Do you see any indication at all that either your.

Deeper test clients or your.

Fixed fee clients have lost any enthusiasm for using quantum flow to test their patients.

No we haven't I would say that it's quite the opposite we are.

<unk> seen increased interest from new customers and existing customers in the product.

And one of the things in particular that we highlighted in our remarks was that the sales for equipment revenue to our HRA customers did increase 40% during the second quarter, which is one of the reasons that it gives us confidence in both our revenue guidance and in thinking.

The seasonality this year will be less severe than it was last year.

Yes, that's great.

Let me ask you. Another question then.

Just struggle with all the time, obviously in my view the user quanta flow by Medicare advantage health plans is both clinically.

Appropriate.

<unk> is a complete another no brainer from a business perspective in my view.

Are you seeing additional health plans begin to recognize what your two largest customers have perhaps seen a known.

For several years now I mean, or maybe I should ask you also what do you think it is that's causing some of these other health plans that are really stepping up to the party.

To stay away at this time, because it's such a both a political no brainer in it.

Financial no brainer from my perspective.

Right, Yes, no I think yeah.

We are seeing interest from other customers and one of the things that I think has.

You know maybe prohibited or pause some people in the past is that they don't have access to the data that our largest customers have.

And one of the things that we're really excited about this Nevada paper is it actually is from one of our largest customers. It's spans a multi year period. So from data starting in 2016. So it really provides the market and others out there with some <unk>.

<unk> data on the results and certainly the results that they've seen and what's published and there should be compelling.

To have more customers adopt it.

Mhm, Okay. That's good let me ask just one more and I appreciate it and.

I don't know, if Andy or Doug wants to say anything about this one but I'm just curious if your initial efforts to sell this line extension or making available to your customers are you actually selling the product to your customers today I mean have you seen any willingness to pay.

Incremental dollars to buy this product and if so can you give us any feel for sort of the pricing.

Dynamics and how it might affect the business when it when it does begin to contribute revenue to the company.

Yes.

Sure why don't I start and then Doug you Ken can add some in here on this so.

As we mentioned we are far along in speaking with customers.

So we havent signed contracts, yet, we arent disclosing our pricing yet on this but we do see that customers are excited about this product and obviously, it's news today, they want to see how it's going to fit within.

Their current business and so we will expect also to update you guys on what this is as soon as this publication.

Is out there.

So Doug do you have anything else to add or Randy.

I think we are.

Feel that it's got a.

Value creation that is going to be exciting to us.

But we have to get the first contract signed in.

Tony.

The reality so.

And then later on in the quarter.

Okay. Thank you very much for taking my questions.

The next question comes from Mark Weisenberger from B Riley Securities. Please go ahead.

Yes. Good afternoon. Thanks for taking the questions just following up on Brooks question in terms of maybe additional payers in the Nevada paper.

Previously some of these other payers have considered.

Consider quanta flow experimental has this Nevada paper cheer knowledge changed that classification from any of these payors so far.

I I can't comment on that they've changed their classification and I know that you know a lot of them come out once a year and you know what's quantify whats qualified as experimental or not.

But I do know that they are receiving this well.

Doug I don't know if you have any other comments.

I think you said it all I think we are.

The anticipated.

Nevada paper and the definition of <unk>.

Symptomatic patients.

Need testing.

To maintain that they have.

Increased risk for anything they have a positive test it's important to understand.

I guess it justifies.

Payments from CMS and justify the additional risk.

Sure.

Apparently can do something about it even though if you don't know what we can't do anything so I think it's going to be convincing to anybody.

So there are a few or maybe Oh these guys.

Metro is going to be a very confusing.

Understood. Thank you and then you.

You guys talked about the strength in the equipment sales that provide confidence in your HRA and variable fee business I'm wondering if you could give us any indication on how many quanta flow units, maybe hadn't been shipped out but not yet activated and I think.

I'm, specifically, referring to kind of the fixed feed channel and maybe if you could kind of put that in context relative to the units that are actually in.

In the field and generating revenue.

Yeah. So Mike I think you know in the past that we haven't really talked about the units that we have out there nor the units. We ship. So at this time I think we're going to remain you know not talking about our unit numbers.

Would you say that you have the same level of confidence in the fixed fee business that you have talked about in terms of the variability in the back half and going forward.

Yeah. So we're seeing momentum in both of them are and obviously the fixed fee.

Those two are fixed fee customers and sell them, so you're not seeing that on the revenue line.

Okay, and then any sense, if the target patient populations for testing has changed or or the frequency that your customers are looking to test their patient populations.

No we have not seen anything in terms of changes of you know the the age or the difference in the population and so I think.

With that the past two years as far as you know the the disruption, especially in the HRA market and some of the tests being.

Performed virtually instead of.

Our in person there was some disruption in there and so while we're suggesting that all of our patients should be tested every year in practice you know it's it could be every year. It could be every other year it could be longer and it's it's really dependent upon the direction of the HRA is and then also.

Their payer clients.

Understood just a few more for me.

You mentioned, the insulin enzymes product, but I didn't hear anything about your discern a alzheimers test that I think there was a recent press release talking about a commercial launch in Texas I'm wondering if you could expand on that and maybe potential revenue opportunities this year and maybe into next year.

Yeah sure. So from our perspective, you know, we really didn't have an update so we are an equity investment.

In synapse, which is discerns parent company. So we don't have a distribution agreement. So at this time.

We won't be recording any revenue from them since it's only an equity investment.

Got it understood and then just a final two for me what are your expectations for head count growth in the back half of the year. If at all and then I think there was a 2 million dollar increase in your.

Non current assets that I don't think you addressed either in the prepared remarks or the press release and what was that for thank you very much.

Sure. So on the expense and said head count side. So you know as you know we did ramp up our hiring in 2021 are you now in anticipation of this Nevada paper and then also the new product launch and we.

We are fairly set on our head count, but we do have some open positions. So if you look at our expenses for each one to each too they are expected to ramp a bit but that's all within our plans. So.

So you might see some some head count go up.

And then for the Oh, My Gosh I can't believe you did this the the second question.

The $2 million increase in Oh, yeah.

Sure. So that was just a re class from current assets and that was related.

Related to insulin insights and prepaid license fees for our distribution agreement.

Great. Thank you very much.

Okay.

This concludes our question and answer session.

I'd like to turn the conference back over to Renee Cormier for any closing remarks.

Thank you everyone for joining us today, we remain optimistic about our future and look forward to updating you soon on our continued progress have a good night.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Yeah.

[music].

The.