Semler Scientific Stock Plunges Following Dismal Q1 Earnings

Semler Scientific, a medical device company that recently made headlines for its significant Bitcoin purchases, saw its stock price drop after reporting its first-quarter financial results. While the company continues to build its substantial Bitcoin holdings, its core business performance in Q1 disappointed investors, leading to an after-hours slump for SMLR stock.

Semler Scientific’s Q1 Performance: A Closer Look

The first quarter of 2024 presented significant challenges for Semler Scientific’s traditional business operations. The company’s Q1 earnings report, released on May 13, revealed a sharp decline in revenue and a substantial increase in net losses compared to the same period last year.

• Total revenues for Q1 2024 were $8.8 million, marking a 44% decrease from the year-ago quarter.
• Net losses reached $64.7 million, a stark contrast to the net income of $6.1 million reported in the first quarter of 2023.

This downturn in core business financials appears to be the primary driver behind the negative market reaction despite the company’s parallel efforts in accumulating digital assets.

SMLR Stock Reacts to Q1 Earnings

Despite closing the regular trading session on May 13 with a gain of over 5%, shares in Semler Scientific (SMLR) experienced a downturn after the earnings announcement. According to Google Finance data, the stock fell 1.91% to $36 in after-hours trading.

This after-hours drop adds to the stock’s performance trend this year. Semler’s stock is currently down over 32% year-to-date, indicating ongoing pressure on its market valuation.

Semler Scientific’s Growing Bitcoin Holdings

In contrast to its struggling core business, Semler Scientific has been actively expanding its Bitcoin holdings. The company views Bitcoin as a treasury reserve asset, a strategy that has gained traction among a growing number of public companies.

Key details about Semler’s Bitcoin strategy and holdings include:

• During Q1, the company purchased 894 Bitcoin (BTC).
• At the end of Q1, Semler held 3,192 BTC with a fair value of $263.5 million.
• Between the end of Q1 and May 12, Semler purchased an additional 616 BTC for $59.6 million.
• As of May 12, total holdings stood at 3,808 BTC, acquired at a total cost of $340 million and holding a fair value of $387.9 million.

The company reported an unrealized gain of $41.6 million on its Bitcoin holdings over Q1, with paper gains continuing to climb to $52 million year-to-date as of May 12. Semler also noted its Debt to Bitcoin net asset value is currently 25.3%.

The Trend of Corporate Bitcoin Adoption

Semler Scientific’s move to embrace Bitcoin as a treasury asset is part of a larger trend. Reports indicate that corporations are becoming significant net buyers of Bitcoin, sometimes outpacing other investor types.

Data suggests over 100 public companies collectively hold nearly 787,000 BTC. MicroStrategy remains the largest corporate holder by a significant margin, possessing over 568,000 BTC.

This increasing corporate Bitcoin adoption highlights a shift in how some companies view digital assets, seeing them as potential long-term stores of value or hedges.

Navigating Q1 Earnings Amidst a Bullish Bitcoin Strategy

The Semler Scientific Q1 earnings report presents a complex picture for investors. While the core medical device business faced significant headwinds, resulting in decreased revenue and increased losses, the company’s aggressive Bitcoin strategy has generated substantial unrealized gains on paper.

Semler’s plan to potentially sell $500 million of its own shares, with part of the proceeds earmarked for bolstering its Bitcoin treasury, signals a continued commitment to this digital asset strategy despite the current struggles in its traditional operations. The market’s reaction, with the stock dipping after earnings, suggests that for now, the core business performance is weighing more heavily on investor sentiment than the gains from Bitcoin holdings.

Summary

Semler Scientific’s Q1 2024 results show a significant drop in revenue and a move from profit to substantial loss, causing its stock to slump after hours. This performance overshadows the company’s continued accumulation of Bitcoin, which has resulted in notable unrealized gains. Semler’s strategy highlights the growing trend of corporate Bitcoin adoption, but its financial report underscores the challenges faced by its core business, creating a mixed outlook for the company’s immediate future.