Semler Scientific(SMLR) - 2023 Q4 - Annual Results

Executive Summary & Business Update This section provides an executive summary of Semler Scientific's business, product focus, and key financial highlights for Q4 and full-year 2023 Company Profile & Product Focus Semler Scientific develops innovative medical products for chronic diseases, featuring FDA-approved QuantaFlo® for arterial blood flow measurement, and is pursuing expanded indications and strategic investments - Semler Scientific focuses on innovative medical products and services for chronic diseases, with its flagship product QuantaFlo®, an FDA-approved patented point-of-care device, measuring arterial blood flow to aid in cardiovascular disease diagnosis[1][17] - QuantaFlo® aids in diagnosing cardiovascular diseases like Peripheral Artery Disease (PAD), and the company is seeking new 510(k) clearance to expand its diagnostic applications for other cardiovascular conditions[2][17][18] - Semler Scientific made minority equity investments in Mellitus, SYNAPS Dx, and Monarch Medical Technologies LLC, whose product EndoTool® is used for inpatient glucose management[17] 2023 Q4 and Full Year Highlights Semler Scientific achieved consistent year-over-year revenue and net income growth in Q4 and FY2023, driven by QuantaFlo® sales, reaching a record high cash balance - Revenue for both Q4 and full-year 2023 achieved year-over-year growth[1][10] - Net income for both Q4 and full-year 2023 achieved year-over-year growth[1][10] - Cash balance increased to $57.3 million, marking a record high for cash and cash equivalents[3][10] Detailed Financial Results This section presents a detailed analysis of Semler Scientific's financial performance for FY2023 and Q4 2023, including income statements, balance sheets, and cash flow FY2023 Performance FY2023 saw strong financial growth for Semler Scientific, with total revenue up 20% and net income up 44%, primarily from variable fee software license revenue, alongside improved operating efficiency despite increased cost of revenue FY2023 Key Financial Data (Y-o-Y) | Metric | 2023 (million USD) | 2022 (million USD) | Y-o-Y Growth (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Revenue | $68.2 | $56.7 | 20% | | Fixed Fee Software License Revenue | $37.3 | $34.0 | 9% | | Variable Fee Software License Revenue | $29.0 | $21.3 | 36% | | Other Product Sales | $1.9 | $1.4 | 42% | | Cost of Revenue | $7.0 | $4.3 | 64% | | Total Operating Expenses | $45.9 | $39.5 | 16% | | Income Before Income Taxes | $24.1 | $17.7 | 36% | | Net Income | $20.6 | $14.3 | 44% | | Basic Earnings Per Share | $3.06 | $2.13 | 44% | | Diluted Earnings Per Share | $2.63 | $1.79 | 47% | - FY2023 cost of revenue included a $2.5 million write-off of prepaid software licenses for Insulin Insights, contributing to a 64% year-over-year increase in cost of revenue[3][4] - Operating expenses as a percentage of revenue decreased from 70% in 2022 to 67% in 2023[4] Q4 2023 Performance Q4 2023 revenue grew 9% and net income increased 31%, driven by variable fee software licenses and other product sales, despite a 29% decline in pre-tax income due to higher costs Q4 2023 Key Financial Data (Y-o-Y) | Metric | Q4 2023 (million USD) | Q4 2022 (million USD) | Y-o-Y Growth (%) | | :-------------------------------- | :------------------------ | :------------------------ | :--------- | | Revenue | $15.1 | $13.8 | 9% | | Fixed Fee Software License Revenue | $8.8 | $9.0 | -2% | | Variable Fee Software License Revenue | $5.8 | $4.5 | 28% | | Other Product Sales | $0.5 | $0.3 | 71% | | Cost of Revenue | $3.4 | $1.2 | 186% | | Total Operating Expenses | $12.5 | $10.2 | 23% | | Income Before Income Taxes | $2.8 | $4.0 | -29% | | Net Income | $4.2 | $3.2 | 31% | | Basic Earnings Per Share | $0.62 | $0.48 | 29% | | Diluted Earnings Per Share | $0.55 | $0.41 | 34% | - Q4 2023 cost of revenue included a $2.5 million write-off of prepaid software licenses for Insulin Insights, leading to a 186% year-over-year increase in cost of revenue[5][9] - Operating expenses as a percentage of revenue increased from 74% in Q4 2022 to 83% in Q4 2023[9] Customer Concentration Semler Scientific maintains significant customer concentration, with its top two clients contributing 71% of FY2023 revenue and top three clients 80% of Q4 2023 revenue - In FY2023, Semler Scientific's two largest customers (including affiliates) accounted for 36% and 35% of total revenue, respectively, totaling 71%[5] - In Q4 2023, the top three customers (including affiliates) accounted for 37%, 32%, and 11% of total revenue, respectively, totaling 80%[6] Statements of Income (Unaudited) The unaudited statements of income detail Q4 and full-year 2023 revenue, operating expenses, and net income, noting a $2.5 million cost of revenue write-off and a shift to income tax benefit in Q4 Statements of Income Summary (Unaudited, in thousand USD) | Metric | Q4 2023 | Q4 2022 | FY2023 | FY2022 | | :-------------------------------- | :------------- | :------------- | :--------- | :--------- | | Revenue | $15,056 | $13,794 | $68,184 | $56,686 | | Cost of Revenue | $3,384 | $1,182 | $6,984 | $4,252 | | Total Operating Expenses | $12,534 | $10,178 | $45,928 | $39,483 | | Operating Income | $2,522 | $3,616 | $22,256 | $17,203 | | Income Before Income Taxes | $2,814 | $3,956 | $24,100 | $17,692 | | Income Tax Expense (Benefit) | $(1,407) | $740 | $3,517 | $3,367 | | Net Income | $4,221 | $3,216 | $20,583 | $14,325 | | Basic Earnings Per Share | $0.62 | $0.48 | $3.06 | $2.13 | | Diluted Earnings Per Share | $0.55 | $0.41 | $2.63 | $1.79 | Balance Sheets (Unaudited) As of December 31, 2023, Semler Scientific's balance sheet shows significant total asset growth, driven by increased cash and equivalents, alongside reduced total liabilities and a substantial rise in stockholders' equity Balance Sheet Summary (Unaudited, in thousand USD) | Metric | December 31, 2023 | December 31, 2022 | Change | | :-------------------------------- | :------------- | :------------- | :----- | | Cash and Cash Equivalents | $57,200 | $23,014 | +$34,186 | | Short-Term Investments | $0 | $20,073 | -$20,073 | | Accounts Receivable, Net | $6,125 | $3,884 | +$2,241 | | Total Current Assets | $65,944 | $48,908 | +$17,036 | | Total Assets | $78,065 | $62,693 | +$15,372 | | Total Current Liabilities | $6,200 | $6,857 | -$657 | | Total Stockholders' Equity | $71,795 | $55,676 | +$16,119 | Statements of Cash Flows (Unaudited) FY2023 saw strong $21.3 million net cash inflow from operations and a positive shift in investing activities, leading to a $34.3 million increase in cash and equivalents, reaching $57.3 million at year-end Statements of Cash Flows Summary (Unaudited, in thousand USD) | Metric | FY2023 | FY2022 | | :-------------------------------- | :--------- | :--------- | | Net Income | $20,583 | $14,325 | | Net Cash Provided by Operating Activities | $21,330 | $17,463 | | Net Cash Provided by (Used in) Investing Activities | $18,396 | $(26,835) | | Net Cash Used in Financing Activities | $(5,408) | $(4,937) | | Net Increase (Decrease) in Cash | $34,318 | $(14,309) | | Cash, Cash Equivalents, and Restricted Cash at End of Period | $57,332 | $23,014 | - Investing activities shifted from a net cash outflow of $26.8 million in 2022 to a net cash inflow of $18.4 million in 2023, primarily due to proceeds from maturities of short-term investments[16] - Taxes paid increased to $4.06 million in 2023, up from $2.40 million in 2022[16] Corporate Information This section provides corporate information, including conference call details, forward-looking statements, and investor contact information Conference Call Details Semler Scientific held a conference call on March 5, 2024, to discuss Q4 and full-year 2023 financial results and provide business updates, with details for participation - The company held a conference call on March 5, 2024, at 4:30 PM ET, to discuss Q4 and full-year 2023 results and recent strategies[7] - Participants can join the conference call via online pre-registration or by dialing the provided domestic and international phone numbers[8][11] - A replay of the conference call will be archived on Semler Scientific's website[11] Forward-Looking Statements This section contains standard forward-looking statements, including intentions to seek new FDA 510(k) clearances for QuantaFlo®, subject to risks like reimbursement policy changes and regulatory approvals - The press release contains forward-looking statements, including explicit or implicit statements about seeking new 510(k) clearance for QuantaFlo® to expand its indications for use[18] - These forward-looking statements are subject to various risks and uncertainties, such as whether insurance plans and customers will continue to license its cardiovascular testing products, changes in reimbursement policies, and the ability to successfully obtain FDA expanded indication clearance[18] - Semler Scientific undertakes no obligation to update or revise these statements unless required by law[18] Investor Contact Renae Cormier, Chief Financial Officer, serves as Semler Scientific's designated investor contact - Investor Contact: Renae Cormier, Chief Financial Officer, reachable at ir@semlerscientific.com[19]