Semler Scientific(SMLR) - 2019 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a record financial performance for Q3 2019, with revenue increasing by 60% to $8.9 million compared to $5.6 million in Q3 2018 [10][12] - Pre-tax income grew by 112% to $3.1 million from $1.5 million year-over-year [13] - Net income reached $7.8 million, a significant increase of $6.3 million from $1.5 million in the same quarter last year [13] - Earnings per share (EPS) inclusive of a tax benefit were $1.20 per basic share and $0.96 per diluted share, compared to $0.24 and $0.19 respectively in Q3 2018 [14] - Cash as of September 30, 2019, was $8.5 million, up from $3.1 million a year prior [11][16] Business Line Data and Key Metrics Changes - Increased orders and usage for the QuantaFlo product were noted from both existing insurance company customers and new home-risk assessment customers [11] - The company’s three largest customers accounted for 47%, 15.7%, and 12.4% of quarterly revenues [18] Market Data and Key Metrics Changes - The company is optimistic about the market for vascular disease testing, indicating significant room for growth relative to current market penetration [25] - Management believes that customer interest in their products and services is continuing to increase [19] Company Strategy and Development Direction - The company aims to grow annual revenue and establish the QuantaFlo product as a standard of care in the industry [25] - Plans to expand infrastructure and headcount to accommodate anticipated future growth were discussed, with operating expenses expected to increase [22] - The company is focused on investing in R&D to enhance customer value [25] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the company’s position within the healthcare market, emphasizing the delivery of cost-effective wellness solutions for chronic disease care [26] - The management team indicated that they do not plan to pursue an up-listing to NASDAQ in 2019 and have no current plans to raise additional capital [24] Other Important Information - The release of the income tax benefit was attributed to a history of positive earnings before income taxes over the past eight quarters [18] - The company continues to add to its asset base through inventory purchases, reflecting management's optimism for future growth [23] Q&A Session Summary Question: Growth within largest customers - The company continues to see growth within its largest accounts, with an emphasis on maintaining and expanding its presence [35] Question: New large customer and licensing options - Management believes that new customers will likely create additional growth opportunities, whether through HRAs or direct implementation [37] Question: Sales and marketing strategy across channels - The company is developing strategies tailored to different market segments, including large payers and individual practices [39] Question: Contract manufacturers and capacity - The company has sufficient capacity with existing contract manufacturers to meet foreseeable demand [41] Question: Long-term growth and installed base - Management believes that maintaining effective sales and hiring the right personnel will be key to doubling or tripling the installed base [47] Question: Use of excess cash - The company plans to invest excess cash in R&D and current products rather than pursuing additional financing [50] Question: Seasonality of the business - Management noted that while there is potential for seasonality, they have not observed it yet due to an increase in customer base [58] Question: Competitive threats - The company is primarily facing competition from traditional PAD systems, with no significant new threats identified [59] Question: Capital expenditures (CapEx) expectations - CapEx is expected to grow, with considerations for the age of existing equipment and the need for new sensors [61]