Q3 2024 Semler Scientific Inc Earnings Call
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Speaker Change: Good afternoon everyone and welcome to the Semler Scientific Third Quarter 2024 financial results conference call.
All participants will be in on the show. After today's prepared remarks, as time permits, Amanda will take questions submitted prior to this call, the email.
Please note the surveillance being an echo in it.
Before we begin, Semler Scientific meets Suramiju, that's certain comments made during this call may constitute forward-looking statements that are made pursuant to and within the meaning of the Safe Harbour provisions of the private securities litigation reform act of 1995 as amended.
These include statements regarding the expectations for expansion of the business.
and the development and marketing of additional products including receipt and timing of an additional
510K clearance for quantum flow and are recently adopted Bitcoin Treasury strategy that plans to acquire additional Bitcoin.
Let's look at the statements, our subject to both known and unknown risks, and uncertainties that could cause actual results that are from materialy from such statements.
has written in uncertainties our describing the press release and our SEC violence.
Before we look at the stainless steel today, are as of the date of this call, the company does not undertake any obligations to update or avoid looking statements.
If you do not have a copy of today's release, then it's pain one by visiting the Best Relations page of the website at lasheignetifix.com
Speaker Change: Now I'd like to introduce the Murphy Turian CEO of Semler Science with AX.
Murphy Turian: Good afternoon, everyone.
Murphy Turian: Thank you for joining us for our third quarter, 2024 results call. Once again, we'd freeze the strong.
Murphy Turian: Welcome from Operations and UseMost of our Cash and Cash Christmas to buy Bitcoin. I just November.
Murphy Turian: for third, I don't know, the November test in 2024, we held 158 big coins. And now I will turn the call over to Eric Semler, our chairman, who will provide you with a update on our Bitcoin strategy.
Eric Semler: Thank you, Doug, and thank you to all our shareholders for listening in today.
Eric Semler: With our third corner results, we are very pleased to announce the excellent progress we are making with our strategy of accumulating Bitcoin using both our strong operating cash flow and our ATM program.
Murphy Turian: We have added meaningfully to our Bitcoin Persher, as an operating business, we're able to use cash flows as well as proceeds from equity issuances to acquire Bitcoin, which serves as our primary Treasury Reserve asset.
Murphy Turian: We view our $71 million of Bitcoin purchases to date as highly accretive to our equity.
Murphy Turian: Since announcing our Bitcoin Treasury Reserve strategy in May, we have even greater confidence today in the investment upside of Bitcoin. And the unique opportunity we have to use our balance sheet to drive outside returns in our stock.
Murphy Turian: We intend to continue to use our operating cash and ATM to buy more Bitcoin. We will ask prudently and use our ATM when we believe it is a treatives to do so.
Murphy Turian: Furthermore, we are exploring a wide range of additional financing options to raise more crash to acquire more Bitcoin. All financing options will be thoroughly evaluated and pursued methodically and responsibly.
Speaker Change: Now, I'm pleased to introduce our COO, Jennifer Aleva Herrington, to provide an overview and update of our Corm Medical Products and Services Business.
Speaker Change: Jim. Thank you, Eric. Today I'll be presenting an overview of our market developments and opportunities. Renae Cormier, our CSO, will be providing information about third quarter, 2024 financial results.
Speaker Change: and developing and marketing technology products and services to healthcare providers to combat chronic diseases.
Murphy Turian: In conjunction with our Bitcoin Treasury strategy, we will continue to focus on our core medical products and service as business.
Speaker Change: Our core product, Quantaflow, is a non-invasive point of care device that aids clinicians in the early diagnosis of peripheral arterial disease or PAD.
Speaker Change: With a fast-paced model, we generate recurring revenue from a large under-penetrated market.
Speaker Change: Semler's mission is to improve healthcare outcomes by supporting early detection of cardiovascular diseases, a major global burden to the healthcare system.
Murphy Turian: Cardiovascular disease ranks as a top concern in healthcare expenditures and global mortality, underscoring the imperative for early identification of cardiac conditions.
Murphy Turian: We are committed to expanding our product offerings and advancing research to stay at the forefront of medical innovation. Our long-term vision includes extending our reach to encompass additional cardiovascular applications, reflecting our dedication to continuous expansion.
Murphy Turian: As we continue to innovate, we announced earlier this year that we are seeking a new 510K clearance for an extension to our quantum flow product. We hope that we will obtain the 510K clearance for this extension in the first half of 2025.
Murphy Turian: In the meantime, we continue to promote Quantaflow as a valuable tool as an aid in the diagnosis of P.A.D. and work to establish it as the standard of care.
Murphy Turian: Our strategy includes expanding our customer base by adding new medical centers, growing within value-based care providers and growing new markets that will benefit from PAD testing.
Speaker Change: I will now turn the call over to Renee to discuss our financial highlights. Renee?
Renee: Thank you Jen. I will cover our third quarter financial results and then speak more about our Bitcoin holdings and use of APN under our effective S3 registration statement. Following our remarks and as time permits, we will answer questions that have been submitted via email.
Murphy Turian: Total revenues in Q3 2024 were $13.5 million, which was down about 17% compared to the third quarter of 2023.
Murphy Turian: We expect revenues in the fourth quarter to follow a similar cadence we saw in 2023.
Murphy Turian: In the third quarter of 2024, our two largest customers, including their related affiliates, comprised 44% and 29% of quarterly revenues, respectively.
Murphy Turian: Operating expenses in Q3 2024, which includes cost of revenue, were $8.4 million, a decrease of 16% year-over-year.
Murphy Turian: Income from operations was at $5.1 million compared to $6.3 million in the prior year.
Murphy Turian: For the remainder of the year, we'll focus on tight expense control as we continue to implement our Bitcoin Treasury Strategy.
Murphy Turian: Other income net was $1.3 million and included a gain of $1.1 million from the change in fair value of our Bitcoin holdings.
Murphy Turian: We have elected to early adopt ASU 2023-08, which is the new standard issued by the FEDS before accounting for and disclosure of crypto assets.
Murphy Turian: ASU 2023-08 requires Bitcoin assets to be measured at fair value with gains and losses from changes in the fair value to be recognized in net income in each reporting period.
Murphy Turian: While this may introduce volatility into our reported net income, it will not impact our cash flow from operations, which we intend to invest in additional Bitcoin purchases.
Murphy Turian: Net income was $5.6 million or $0.80 per basic share and $0.72 per fully diluted share.
Murphy Turian: compared to net income of $5.5 million, or $0.82 per basic share and $0.71 per fully diluted share in Q3 2023.
Murphy Turian: Outside of working capital needs, we intend to use our liquid assets, including operating cash generation, to acquire more bitcoins.
Murphy Turian: In August, our self-registration statement on Form S-3 became effective.
Murphy Turian: under which we may, from time to time, offer, issue, and sell debt securities, common stock, and our warrants with a total value of up to $150 million.
Murphy Turian: covering the offering, issuance, and sale of common stock.
Murphy Turian: We intend to utilize the ATM when market conditions are favorable, and will use the proceeds primarily for general corporate purposes, including the acquisition of Bitcoin.
Murphy Turian: During the third quarter of 2024, we sold approximately 87,000 shares under the ATM for an aggregate net proceeds led sales commission of approximately $2.5 million.
Murphy Turian: We utilize these proceeds, as well as cash from operations, to purchase additional bitcoins.
Murphy Turian: During the third quarter of 2024, we purchased 142 bitcoins for an aggregate cost of $8.4 million.
Murphy Turian: Subsequent to quarter end, we purchased an additional 40 bitcoins for an aggregate cost of 2.6 million dollars and now hold a total of 1058 bitcoins.
Murphy Turian: Now we'll begin our Q&A.
Murphy Turian: We received some questions ahead of release that we tried to address in the prepared remarks. We do have some time for additional questions.
Murphy Turian: The first one is, does the company have an imminent pathway to becoming registered for the trading of options of its shares which could be accretive for shareholders?
Speaker Change: So the process of listing options comes at the request of a broker-dealer to an exchange.
Murphy Turian: The exchange will look at several different criteria that the stock must satisfy in order for options to be traded. We believe that the only criteria we do not meet is a public float of 7 million freely tradable shares given our high insider ownership.
Murphy Turian: We can continue to increase our shares outstanding as we execute on our ATM and believe we can eventually satisfy all requirements in order for the exchange to list options for our stock.
Speaker Change: Our next question is for Eric. Can you give an update on your capital market strategy? Does the company have any plans to issue bonds or convertible debt to acquire more Bitcoin per share?
Eric Semler: Thanks, Renae.
Eric Semler: As we mentioned earlier, we plan to continue purchasing Bitcoin with cash generated from operations and from our ATM program, and we are also exploring additional financing options to raise more cash, to acquire more Bitcoin, and we fully understand the wisdom and benefits of sourcing cash from straight debt and convertible bonds, as long as they are executed on reasonable terms.
Murphy Turian: Renae.
Renae Cormier: Thanks Eric. I can take the next question. So what's driving the underlying trends in the business and what do you expect for the remainder of the year?
Renae Cormier: So we continue to see demand for software licenses relating to our QuantFlow product.
Renae Cormier: We do see continued testing and we're expanding our customer base beyond managed care, reaching clinics and value-based care providers, as the clinical importance of testing is still recognized.
Renae Cormier: Our priority for the rest of the year is to maximize operating income.
Renae Cormier: Beyond maintaining sufficient working capital to support, innovate, and grow our operations, we plan to allocate the remainder of our operating cash generation into additional Bitcoin purchases.
Speaker Change: So this final question Eric you can take is Semler going to release Bitcoin yield metrics?
Eric Semler: Thanks, Renae.
Eric Semler: We believe that BTC yield is an excellent KPI for tracking the performance of our strategy to acquire Bitcoin in an accretive way for our stakeholders.
Eric Semler: Bitcoin yield represents the percentage change, period to period, of the ratio between the company's Bitcoin holdings and its assumed diluted shares outstanding.
Eric Semler: We closely monitor our Bitcoin yield internally and we were very pleased with our high teen positive Bitcoin yield in the third quarter. This was driven by a 16% increase in our total Bitcoin holdings, while at the same time our assumed diluted shares outstanding remained flat.
Renae Cormier: Assumed eluded shares outstanding are based on the assumed exercise of all outstanding stock option awards, not taking into account any vesting conditions or exercise price. This is a relatively straightforward calculation that can be done based on our public disclosures.
Renae Cormier: As we get more experience with this KPI, Bitcoin Yield, we will consider including it in our press releases in the future. Renae?
Renae Cormier: We appreciate your participation in today's discussion and thank you for your ongoing support. Operator?
Speaker Change: Ladies and gentlemen, with that we'll be concluding today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.