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Semler Scientific Reports Fourth Quarter and Full Year 2023 Financial Results

March 5, 2024
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2023 Q4 and full year highlights compared to the corresponding period of 2022:

  • Fourth quarter revenues were $15.1 million, an increase of 9%
  • Fourth quarter net income was $4.2 million, an increase of 31%
  • Full year revenues were $68.2 million, an increase of 20%
  • Full year net income was $20.6 million, an increase of 44%
  • Cash balance increased to $57.3 million

SANTA CLARA, Calif., March 5, 2024 /PRNewswire/ -- Semler Scientific, Inc. (Nasdaq: SMLR), a company that develops, manufactures and markets innovative medical products and services that assist in evaluating and treating chronic diseases, today reported financial results for the fourth quarter and full year ended December 31, 2023.

"We are pleased to report continued growth in year-over-year quarterly and full year revenues and net income, predominately from sales of QuantaFlo® for peripheral arterial disease testing," said Doug Murphy-Chutorian, MD, chief executive officer of Semler Scientific. "We remain focused on continuing to market our product while seeking a new 510(k) clearance from the FDA with expanded labeling for use as an aid in the diagnosis of other cardiovascular diseases."

FINANCIAL RESULTS

For the year ended December 31, 2023, compared to the corresponding period of 2022, Semler Scientific reported:

  • Revenues of $68.2 million, an increase of $11.5 million, or 20%, compared to $56.7 million.
    • Fixed fee software license revenues of $37.3 million, an increase of $3.3 million, or 9%, compared to $34.0 million.
    • Variable fee software license revenues of $29.0 million, an increase of $7.7 million, or 36%, compared to $21.3 million.
    • Sales of other products of $1.9 million, an increase of $0.5 million, or 42%, compared to $1.4 million.
  • Cost of revenues of $7.0 million, an increase of $2.7 million or 64% compared to $4.3 million. As a percentage of revenues, cost of revenues increased to 10%, compared to 8% in the prior year period.
  • Total operating expenses of $45.9 million, which includes cost of revenues, an increase of $6.4 million, or 16%, compared to $39.5 million. As a percentage of revenues, operating expenses decreased to 67% compared to 70%.
  • Pre-tax income of $24.1 million, an increase of $6.4 million, or 36%, compared to $17.7 million.
  • Income tax expense of $3.5 million, or an effective tax rate of 15%, compared to $3.4 million, or an effective tax rate of 19%.
  • Net income of $20.6 million, or $3.06 per basic share and $2.63 per diluted share, an increase of $6.3 million, or 44%, compared to $14.3 million, or $2.13 per basic share and $1.79 per diluted share.

Note: Cost of revenues for the full year ended December 31, 2023 includes a $2.5 million write-off of prepaid software licenses for Insulin Insights.

Semler Scientific's two largest customers (including their affiliates) comprised 36% and 35% of full year revenues in 2023 and 40.4% and 29.0% of annual revenues in 2022.

For the fourth quarter ended December 31, 2023, compared to the corresponding period of 2022, Semler Scientific reported:

  • Revenues of $15.1 million, an increase of $1.3 million, or 9%, compared to $13.8 million.
    • Fixed fee software license revenues of $8.8 million, a decrease of $0.2 million, or 2%, compared to $9.0 million.
    • Variable fee software license revenues of $5.8 million, an increase of $1.3 million, or 28% compared to $4.5 million.
    • Sales of other products of $0.5 million, an increase of $0.2 million, or 71%, compared to $0.3 million.
  • Cost of revenues of $3.4 million, an increase of $2.2 million, or 186%, compared to $1.2 million. As a percentage of revenues, cost of revenues was 22% compared to 9%.
  • Total operating expenses of $12.5 million, which includes cost of revenues, an increase of $2.3 million, or 23%, compared to $10.2 million. As a percentage of revenues, operating expenses increased to 83%, compared to 74%.
  • Pre-tax income of $2.8 million, a decrease of $1.2 million, or 29%, compared to $4.0 million.
  • Income tax benefit of $1.4 million, or an effective tax benefit rate of 50% compared to income tax expense of $0.7 million, or an effective tax rate of 19%.
  • Net income of $4.2 million, or $0.62 per basic share and $0.55 per diluted share, an increase of $1.0 million, or 31%, compared to $3.2 million, or $0.48 per basic share and $0.41 per diluted share.

Note: Cost of revenues for the fourth quarter and full year ended December 31, 2023 includes a $2.5 million write-off of prepaid software licenses for Insulin Insights.

Semler Scientific's three largest customers (including their affiliates) comprised 37%, 32% and 11% of the fourth quarter revenues in 2023 and two largest customers (including their affiliates) comprised 43.3% and 25.8% of fourth quarter revenues in 2022.

MAJOR ACCOMPLISHMENTS IN 2023

  1. Continued year-over-year revenue growth.
  2. Continued year-over-year net income growth.
  3. Record balance of cash and cash equivalents.

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 fourth quarter and year ended December 31, 2023, as well as provide a business update on Semler Scientific's strategies for the near-term future.

Participants are encouraged to pre-register for the conference call using the following link: https://dpregister.com/sreg/10185342/fb4eeec618. 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.

Statements of Income

Unaudited

(In thousands of U.S. Dollars, except share and per share data)
                         
   

For the three months ended December 31, 

  

For the year ended December 31, 

   

2023

  

2022

  

2023

    

2022
                         

Revenues

  

$

15,056

  

$

13,794

  

$

68,184

  

$

56,686

Operating expenses:

                        

Cost of revenues

    

3,384

    

1,182

    

6,984

    

4,252

Engineering and product development

    

1,207

    

1,365

    

5,773

    

4,809

Sales and marketing

    

4,546

    

4,654

    

18,147

    

17,685

General and administrative

    

3,262

    

2,977

    

14,290

    

12,737

Strategic streamlining

   

135

    

—

    

734

    

—

  Total operating expenses

    

12,534

    

10,178

    

45,928

    

39,483

Income from operations

    

2,522

    

3,616

    

22,256

    

17,203

Interest and dividend income

    

699

    

343

    

2,471

    

494

Impairment of investments

    

(337)

    

—

    

(337)

    

—

Change in fair value of notes held for investment

    

(90)

    

—

    

(307)

    

—

Other income (expenses)

    

20

    

(3)

    

17

    

(5)

  Other income, net

    

292

    

340

    

1,844

    

489

Pre-tax income

    

2,814

    

3,956

    

24,100

    

17,692

Income tax provision

    

(1,407)

    

740

    

3,517

    

3,367

Net income

  

$

4,221

  

$

3,216

  

$

20,583

  

$

14,325

Net income per share, basic

  

$

0.62

  

$

0.48

  

$

3.06

  

$

2.13

Weighted average number of shares used in computing basic net
income per share

    

6,804,998

    

6,691,406

    

6,732,806

    

6,726,687

Net income per share, diluted

  

$

0.55

  

$

0.41

  

$

2.63

  

$

1.79

Weighted average number of shares used in computing diluted
net income per share

    

7,734,263

    

7,917,991

    

7,819,159

    

7,999,750

 

Semler Scientific, Inc.

Balance Sheets

Unaudited

(In thousands of U.S. Dollars, except share and per share data)
 
   

December 31, 

  

December 31, 
   

2023

  

2022
             

Assets

            

Current Assets:

            

 Cash and cash equivalents

  

$

57,200

  

$

23,014

 Restricted cash

    

132

    

—

 Short-term investments

    

—

    

20,073

 Trade accounts receivable, net of allowance for credit losses of $287 and $109, respectively

    

6,125

    

3,884

 Inventory, net

    

445

    

469

 Prepaid expenses and other current assets

    

2,042

    

1,468

 Total current assets

    

65,944

    

48,908

Assets for lease, net

    

2,285

    

2,478

Property and equipment, net

    

720

    

667

Long-term investments

    

512

    

821

Notes held for investment (includes measured at fair value of $4,372 and $3,679, respectively)

    

5,372

    

4,679

Other non-current assets

    

270

    

2,842

Deferred tax assets

    

2,962

    

2,298

Total assets

  

$

78,065

  

$

62,693
             

Liabilities and Stockholders' Equity

            

 Current liabilities:

            

  Accounts payable

  

$

402

  

$

835

  Accrued expenses

    

4,502

    

4,748

  Deferred revenue

    

1,120

    

1,160

  Other short-term liabilities

    

176

    

114

 Total current liabilities

    

6,200

    

6,857
             

Long-term liabilities:

            

Other long-term liabilities

    

70

    

160

Total long-term liabilities

    

70

    

160

Commitments and contingencies (Note 13)

            

Stockholders' equity:

           

Common stock, $0.001 par value; 50,000,000 shares authorized; 7,099,441 and 6,906,544 shares
issued, and 6,885,019 and 6,692,122 shares outstanding (treasury shares of 214,422 and
214,422), respectively

    

7

    

7

Additional paid-in capital

    

11,985

    

16,449

Retained earnings

   

59,803

    

39,220
             

Total stockholders' equity

    

71,795

    

55,676
             

Total liabilities and stockholders' equity

  

$

78,065

  

$

62,693

 

Semler Scientific, Inc.

Statements of Cash Flows

Unaudited

(In thousands of U.S. Dollars)
 
   

Year ended December 31,

   

2023

  

2022

CASH FLOWS FROM OPERATING ACTIVITIES:

            

Net income

 

$

20,583

  

$

14,325
             

Reconciliation of Net Income to Net Cash Provided by Operating Activities:

           

 Depreciation

    

599

    

589

 Deferred tax expense

    

(664)

    

(351)

 Loss on disposal of assets for lease

    

369

    

463

 Write off of prepaid software licenses

    

2,476

    

—

 Gain on short-term investments

    

(151)

    

(77)

 Allowance for credit losses

    

268

    

103

 Change in fair value of notes held for investment

    

307

    

—

 Stock-based compensation

    

944

    

741

 Impairment of long term investments

    

337

    

—

Changes in Operating Assets and Liabilities:

            

 Trade accounts receivable

   

(2,508)

    

(367)

 Inventory

    

24

    

81

 Prepaid expenses and other current assets

   

(603)

    

2,576

 Other non-current assets

    

96

    

(2,510)

 Accounts payable

   

(433)

    

392

 Accrued expenses

   

(246)

    

1,310

 Other current and non-current liabilities

    

(68)

    

188

Net Cash Provided by Operating Activities

   

21,330

    

17,463
             

CASH FLOWS FROM INVESTING ACTIVITIES:

           

Additions to property and equipment

   

(345)

    

(476)

Purchase of notes held for investment

    

(1,000)

    

—

Proceeds from maturities of short-term investments

    

78,093

    

(4,679)

Purchase of short-term investments

    

(57,869)

    

(19,996)

Purchase of assets for lease

   

(483)

    

(1,684)

Net Cash Provided by (Used in) Investing Activities

   

18,396

    

(26,835)
             

CASH FLOWS FROM FINANCING ACTIVITIES:

            

Taxes paid related to net settlement of equity awards

    

(3,510)

    

(114)

Common stock warrants acquired

    

(1,949)

    

—

Treasury stock acquired

    

—

    

(4,991)

Proceeds from exercise of stock options

   

51

    

168

Net Cash Used in Financing Activities

   

(5,408)

    

(4,937)

INCREASE (DECREASE) IN CASH

   

34,318

    

(14,309)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

   

23,014

    

37,323

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD

 

$

57,332

  

$

23,014

Supplemental Disclosure of Cash Flow Information:

            

Cash paid for taxes

 

$

4,060

  

$

2,400

About Semler Scientific, Inc.:

Semler Scientific, Inc. develops, manufactures and markets innovative products and services that assist in evaluating and treating 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 has a minority investment in Mellitus, SYNAPS Dx, as well as Monarch Medical Technologies LLC, a privately held company whose product EndoTool® offers a technological solution for inpatient glycemic management. 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 seeking a new 510(k) clearance for QuantaFlo® with expanded indications for use; 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 whether or not insurance plans and other customers will continue to license its cardiovascular testing products, including the risk of changes in the reimbursement landscape for its customers including related to the recent CMS rate announcement; whether or not QuantaFlo® can successfully aid in the diagnosis of PAD or obtain a new 510(k) clearance for expanded indications; along with those 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.

INVESTOR CONTACT:

Renae Cormier
Chief Financial Officer
ir@semlerscientific.com

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SOURCE Semler Scientific, Inc.

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