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Semler Scientific, Inc. (SMLR)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 healthcare revenue deteriorated: revenue was $7.491M, down 45% year-over-year and down 9% sequentially; revenue missed Wall Street consensus of $7.865M and “Primary EPS” missed at -$0.30 vs -$0.15 estimate, while GAAP diluted EPS printed $1.07 driven by bitcoin revaluation gains .*
  • Management warned Q4 2025 revenue will be at least 60% lower than Q3 as a >10% customer in both Q2–Q3 ceased use of QuantaFlo and broader usage declines accelerate given CMS changes and the DOJ settlement .
  • Net income was $16.9M in Q3, entirely driven by other income from bitcoin fair value changes ($28.5M) and bitcoin collateral remeasurement ($1.47M), offsetting an operating loss of $5.39M; operating expenses rose 52% YoY to $12.9M .
  • Bitcoin holdings reached 5,048 BTC at quarter-end with an estimated fair value of $575.8M; cash and equivalents were $10.2M; basic shares outstanding were ~15.14M (assumed diluted ~17.30M) .
  • The company did not host a Q3 call or slides due to the pending merger with Strive; the Q3 10-Q was filed Nov 12, 2025 .

What Went Well and What Went Wrong

What Went Well

  • Significant mark-to-market gains from bitcoin drove other income (+$28.49M) and net income (+$16.90M) despite an operating loss, with diluted GAAP EPS of $1.07 .
  • Capital access remained available: company progressed ATM issuance and noted 5,207,036 shares sold for ~$203.8M net proceeds under the April 2025 $500M ATM program by quarter-end .
  • Strategic narrative reinforced around bitcoin treasury strategy and intelligent leverage: “Our top priority is to provide stockholders with amplified exposure to Bitcoin using intelligent leverage” (Executive Chairman) .

What Went Wrong

  • Healthcare revenue declined sharply (Q3 revenue $7.491M vs $13.512M last year), with management citing CMS changes and DOJ settlement pressures; a >10% revenue customer ceased QuantaFlo usage in Q2–Q3 .
  • Operating expenses grew 52% YoY to $12.881M; G&A up 154% YoY to $8.013M due to legal/merger activities and stock-based comp; operating margin flipped to a -$5.390M loss .
  • Q4 outlook shocking: management expects Q4 revenue to be at least 60% lower than Q3, reflecting accelerating customer cessation given CMS and DOJ settlement context .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD)$13.512M $8.835M $8.217M $7.491M
Operating Income (Loss) ($USD)$5.065M $(31.101)M $(2.053)M $(5.390)M
Net Income ($USD)$5.609M $(64.702)M $66.933M $16.902M
EPS – Diluted (GAAP) ($)$0.72 $(6.74) $5.04 $1.07

Estimate vs Actual (S&P Global consensus and “Primary EPS” measure):

MetricQ2 2025 EstimateQ2 2025 ActualQ3 2025 EstimateQ3 2025 Actual
Revenue ($USD)$8.4007M$8.217M$7.8653M$7.491M
Primary EPS ($)-0.27-0.2266-0.145-0.2987

*Values retrieved from S&P Global.

KPIs and balance items:

KPI / BalanceQ3 2025
Bitcoin holdings (BTC)5,048 BTC; fair value $575.8M at 9/30/25
BTC Yield (YTD through 9/30/25)30.1%
Cash, restricted cash and cash equivalents~$10.3M
Receivable for Bitcoin collateral$35.928M
Basic shares outstanding / Assumed diluted15,142,195 / 17,296,094

Note: Company reports one operating segment (QuantaFlo and related healthcare), no segment breakdown is applicable .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ4 2025None disclosedAt least 60% lower vs Q3 expected revenueLowered

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
CMS reimbursement impact on usageExpecting growth from cardiovascular products; DOJ settlement in principle noted Continued phase-in of 2024 CMS rate announcement driving decreased usage at customers Customer >10% ceased use; further Q4 declines anticipated as others cease use due to CMS and DOJ Deteriorating
DOJ settlementAgreement in principle $29.75M; planned to use Coinbase loan Legal expenses in Q2; contingent liability; process on track Settlement paid $29.75M in Sept; 5-year OIG corporate integrity agreement Resolved; ongoing compliance
Bitcoin treasury strategyDashboard launch; accumulation via financing/cash flow Accretive accumulation; intelligent leverage; BTC holdings and yield emphasized Other income driven by bitcoin FV gains; 5,048 BTC at Q3; collateralized $20M Coinbase loan Expanding
CardioVanta (new healthcare initiatives)Announced; focus on HF/arrhythmia SaaS model Launch highlighted; optionality for future growth Not materially contributing revenue yet; healthcare revenue declines persist Early-stage; neutral-to-negative near term
Capital markets / leverage4.25% converts issued Jan 2025 Expanded ATM activity ATM proceeds; converts outstanding ($100M); bitcoin-backed $20M short-term loan Active
Merger with StriveN/AN/AMerger agreement signed Sept 22; board approvals; conditions, termination fees disclosed New strategic path

Management Commentary

  • “We are super excited about the excellent progress we are making in our Bitcoin operations… Our top priority is to provide stockholders with amplified exposure to Bitcoin using intelligent leverage” (Executive Chairman) .
  • CFO on quarter dynamics: “Operating expenses in Q2 2025 included $1.9M in non-cash stock-based compensation and $0.5M of legal expenses related to the DOJ settlement… We acquired 1,444 Bitcoin in Q2… As of 07/31/2025, we held 5,021 Bitcoin… based on $116,758 price per Bitcoin” .
  • Q3 MD&A tone: “Two significant customers who represented more than 60% of revenue in the third quarter of 2025 have ceased use of their respective QuantaFlo devices… we now currently anticipate fourth quarter 2025 revenues will be at least 60% lower as compared to third quarter 2025 revenue” .
  • DOJ settlement: “Effective September 10, 2025… pay a settlement amount of $29,750… corporate integrity agreement… five-year period” .

Q&A Highlights

  • Bitcoin treasury cohort and market dynamics: management is “not concerned” about supply glut; sees broader monetary premium shifting toward bitcoin over time .
  • Acquisition cadence: announcements may increase in regularity/size but cadence will remain strategic; dashboard provides visibility .
  • MNAV multiple and strategy: distinction between “fast money” premium-driven ATM strategy vs “slow money” leverage-based approach; Semler positioned to “amplify future returns of Bitcoin” with intelligent leverage .

Estimates Context

  • Q3 2025 missed consensus on revenue ($7.491M vs $7.865M) and “Primary EPS” (-$0.30 vs -$0.15), consistent with accelerating QuantaFlo usage declines cited by management .*
  • GAAP diluted EPS ($1.07) diverged materially from “Primary EPS” due to $28.49M unrealized bitcoin fair value gains in other income; Street’s “Primary EPS” likely excludes such volatile non-operational items, underscoring that healthcare operations were loss-making (operating loss -$5.39M) .*
  • With Q4 revenue guided at ≥60% below Q3, we expect downward estimate revisions for Q4 and FY, especially for healthcare revenue and operating margin assumptions .*

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • The healthcare business is weakening rapidly; management’s ≥60% Q4 revenue cut signals material loss of large customers and broader usage headwinds tied to CMS and DOJ compliance obligations—expect estimates to reset lower .
  • GAAP profitability hinges on bitcoin revaluation rather than operations; operating loss and rising G&A suggest near-term healthcare margin pressure despite bitcoin-driven other income .
  • Liquidity/financing levers remain intact (ATM, converts, bitcoin-collateral loan), supporting continued bitcoin accumulation; however, dilution risk and leverage require monitoring vs bitcoin price volatility .
  • The Strive merger introduces strategic optionality and process risk (approvals, conditions, substantial termination fees); watch filings and timelines closely .
  • CardioVanta is early-stage; near-term contribution appears limited while legacy PAD revenue declines—execution on new FDA pathways and product adoption is critical .
  • For trading: stock’s short-term moves likely tethered to (1) bitcoin price, (2) magnitude of Q4 healthcare revenue decline, and (3) merger milestones; volatility expected around 10-Q/8-K updates .
  • Risk management: monitor OIG corporate integrity obligations, customer concentration/attrition, and potential margin calls or terms on bitcoin-collateralized borrowings .