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Semler Scientific, Inc. (SMLR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue declined 18% year over year to $12.4M amid ongoing reimbursement headwinds; income from operations improved 40% YoY to $3.5M on lower OpEx, while GAAP net income surged to $29.2M driven by a $28.9M unrealized gain from bitcoin fair value under the new crypto accounting standard .
  • The company intensified its bitcoin treasury strategy: 1,280 BTC were purchased in Q4 ($121.3M cost), and holdings rose to 2,298 BTC at year-end (fair value $214.6M); post-quarter, holdings reached 3,192 BTC after an additional 894 BTC purchase for $90.7M .
  • Capital raises expanded firepower for BTC: the ATM program generated ~$119.6M net proceeds by 12/31/24 and SMLR issued $100M of 4.25% 2030 convertible notes with capped calls (initial cap ~$107/share) in January 2025 .
  • Management flagged potential further revenue pressure in 2025 due to the additional phase-in of CMS 2024 rate changes, but reiterated focus on QuantaFlo adoption, a new 510(k) product extension in 2025, and adjacent cardiovascular offerings .
  • Key stock catalysts: sizable non-operating bitcoin gains (ASU 2023-08), accelerated BTC accumulation funded by ATM/convert, and regulatory/commercial clarity around risk-adjustment reimbursement and QuantaFlo’s expanded indications .

What Went Well and What Went Wrong

What Went Well

  • Operating leverage despite revenue decline: income from operations rose 40% YoY to $3.5M as total OpEx fell 29% YoY in Q4; FY operating income was $20.9M, underscoring core healthcare profitability resilience .
  • Balance sheet transformation via BTC strategy and financing: BTC holdings reached 2,298 at YE (fair value $214.6M) and 3,192 post-quarter; ATM raised ~$119.6M net through year-end and $100M converts priced at 4.25% with capped calls at ~$107/share to mitigate dilution .
  • Clear strategic messaging: “While we continue to support innovation and growth in our healthcare business, our main use of cash is to acquire and hold bitcoin.” — CEO; “We remain committed to significantly expanding our bitcoin holdings.” — Chairman .

What Went Wrong

  • Top-line pressure: Q4 revenue fell 18% YoY to $12.4M; management expects “further pressure on revenues in 2025” from the added phase-in of the 2024 CMS rate announcement .
  • Customer concentration remains elevated: two largest customers represented 39% and 31% of Q4 revenue (vs. 44% and 29% in Q3), highlighting concentration risk amid reimbursement changes .
  • GAAP earnings volatility from crypto fair-value accounting: early adoption of ASU 2023-08 drives significant non-operating gains/losses through net income, increasing earnings volatility unrelated to operating cash flow .

Financial Results

Headline P&L (quarterly; oldest → newest)

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenues ($M)$15.06 $14.47 $13.51 $12.41
Income from Operations ($M)$2.52 $5.35 $5.07 $3.54
EBIT Margin % (calc.)16.8% (2.52/15.06) 37.0% (5.35/14.47) 37.5% (5.07/13.51) 28.5% (3.54/12.41)
Diluted EPS ($)$0.55 $0.00 $0.72 $3.41

Notes: Q4 2024 net income includes an unrealized bitcoin fair value gain of $28.85M under ASU 2023-08, reported in other income .

Gross Margin (calc.; revenue – cost of revenue)

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Cost of Revenues ($M)$3.38 (includes $2.5M Insulin Insights write-off) $1.26 $1.16 $1.10
Gross Margin % (calc.)77.5% ((15.06–3.38)/15.06) 91.3% ((14.47–1.26)/14.47) 91.4% ((13.51–1.16)/13.51) 91.1% ((12.41–1.10)/12.41)

Q4 2024 vs Prior Periods and vs Estimates

MetricQ4 2024YoYSeqS&P Global Consensus
Revenue ($M)$12.41 −18% YoY −8% vs Q3 (calc.) N/A – unavailable at time of query
Diluted EPS ($)$3.41 +$2.86 YoY (boosted by BTC fair value) +$2.69 vs Q3 (boosted by BTC fair value) N/A – unavailable at time of query

Estimates context: S&P Global consensus estimates were unavailable at time of query; therefore no beat/miss assessment can be made.

Additional Disclosures (Q4 and FY)

  • Other Income: Q4 included $28.85M gain from change in fair value of bitcoin holdings; FY included $24.93M gain .
  • Customer Concentration: Q4 top-two customers 39% and 31% of revenue; FY top-two 43% and 28% .
  • FY Operating Cash Flow: $24.41M (record cash generation) .

BTC Treasury KPIs

KPIQ2 2024Q3 2024Q4 2024Post Q4 (2/14/25)
BTC Purchased (period)877 BTC inception YTD; 52 BTC post-Q2 through 8/5 141 BTC (Q3) 1,280 BTC (Q4) 894 BTC subsequent
Total BTC Held (end)877 (6/30) 1,018 (9/30) 2,298 (12/31) 3,192 (2/14)
BTC Cost Basis ($M, cum.)$60.0 $68.4 $189.7 $280.4
BTC Fair Value ($M, end)$54.9 $64.5 $214.6 ~“> $300” (management)
Change in BTC Fair Value (period, $M)$(5.06) (Q2) +$1.14 (Q3) +$28.85 (Q4) —

BTC Yield KPI: 107% for FY 2024; management highlights BTC Yield as a non-financial KPI with limitations (not a measure of operating performance) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/CommentaryChange
Revenue2025None“May see some further pressure on revenues in 2025, following the additional phase-in of the 2024 CMS rate announcement.” New directional (Negative)
QuantaFlo 510(k) extension2025Prior intent to seek expanded indications “Pursuing a new 510(k) clearance... hopes of obtaining in 2025.” Maintained timeline emphasis
Capital allocationOngoingAcquire BTC via cash/ATM Continue acquiring BTC; ATM ~$119.6M net by YE; $100M converts issued Jan-25 with capped call (cap ~$107) Expanded capacity
Tax/OpEx/GM/Segment—NoneNo quantitative guidance providedNo change

Earnings Call Themes & Trends

TopicQ2 2024 (Aug 5)Q3 2024 (Nov 4)Q4 2024 (Feb 18)Trend
Bitcoin TreasuryInitial adoption; 877 BTC at 6/30; fair value losses through P&L noted Continued buys; 1,018 BTC at 9/30; ATM activation Aggressive accumulation: +1,280 BTC in Q4; 2,298 at YE; 3,192 by 2/14; convert funding; BTC Yield discussed Sharply increasing commitment and scale
Reimbursement/CMS——2025 revenue may face further pressure from 2024 CMS rate phase-in Headwind intensifies
Product Pipeline—Seeking expanded 510(k) for QuantaFlo Aiming for 2025 clearance; testing other cardiovascular products with customers Execution progressing
Customer Concentration—Top two: 44%, 29% of revenue Top two: 39%, 31%; FY two largest 43%, 28% Persistently high
Capital Markets—ATM up to $50M effective ATM ~$119.6M net by YE; $100M converts; capped call cap ~$107 Expanded toolkit
Accounting for Crypto——Early adoption of ASU 2023-08; fair value gains/losses flow through net income Adds earnings volatility
Regulatory (crypto)——Positive on SAB 121 repeal enabling bank custody; potential corporate adoption tailwind (management view) Supportive narrative (management)

Management Commentary

  • “While we continue to support innovation and growth in our healthcare business, our main use of cash is to acquire and hold bitcoin.” — CEO .
  • “We have unwavering confidence in bitcoin’s long-term potential and view it as digital gold. With this conviction, we remain committed to significantly expanding our bitcoin holdings.” — Chairman .
  • “We have elected to early adopt ASU 2023-08… bitcoin assets [are] measured at fair value with gains and losses… recognized in net income… [which] may introduce volatility… [but] will not impact our cash flow from operations, which we intend to invest in additional bitcoin purchases.” — CFO .
  • “We are pursuing a new 510(k) clearance for an extension to our QuantaFlo product line with hopes of obtaining this clearance sometime in 2025… [and] test marketing other established FDA-cleared products in the cardiovascular care space.” — COO .

Q&A Highlights

  • Why the convertible notes? Management cited lower cost of capital, speed, and reduced dilution with capped call; upsized to $100M amid strong demand; 75% conversion premium with capped call cap ~$107/share .
  • Underlying business trends/2025 setup: Despite payment changes for risk adjustment (PAD), SMLR continues to add clients and expand beyond managed care; priority is to minimize QuantaFlo declines while funding innovation in broader cardiovascular testing .
  • Crypto regulatory outlook: Management is encouraged by the repeal of SAB 121 and potential for major banks to custody BTC, which they believe could catalyze broader corporate adoption (management view) .

Estimates Context

  • S&P Global consensus (revenue and EPS) for Q4 2024 was unavailable at time of query; therefore, no beat/miss determination can be provided. The company gave no formal numerical guidance, but noted directional revenue pressure in 2025 from the CMS rate phase-in .

Key Takeaways for Investors

  • Core healthcare business remains profitable (Q4 operating income up 40% YoY) despite top-line pressure; FY operating cash flow was robust at $24.4M, supporting ongoing BTC purchases .
  • GAAP EPS is currently dominated by bitcoin fair-value swings from early adoption of ASU 2023-08; focus on operating metrics (revenue, OpEx discipline, income from operations) to gauge core performance quality .
  • Elevated customer concentration and reimbursement headwinds (CMS risk-adjustment) are the key near-term risks; management expects some additional revenue pressure in 2025 .
  • The BTC strategy and capital markets execution (ATM + converts with capped calls) materially expand balance sheet optionality for further BTC accumulation; this can be a significant stock narrative driver independent of healthcare fundamentals .
  • Pipeline milestones (QuantaFlo 510(k) extension in 2025; adjacent cardiovascular products) are important to stabilize and reignite healthcare growth while BTC strategy evolves .
  • For modeling, assume continued sequential revenue pressure near term with operating discipline; treat BTC gains/losses below the operating line as non-operating volatility and monitor OCF and income from operations as quality indicators .
  • Watch for: CMS/risk-adjustment updates, 510(k) timeline, BTC treasury pace, any changes to ATM/convert utilization, and customer concentration trends .

References:

  • Q4 2024 8-K earnings press release, financial statements, and BTC disclosures .
  • Q4 2024 earnings call transcripts (prepared remarks, Q&A) -.
  • Q3 2024 8-K and press release - -.
  • Q2 2024 8-K and press release -.
  • BTC/ATM update press releases across Q4 and January 2025 for activity/capital updates - - - - - -.