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Semler Scientific® Reports Third Quarter 2024 Financial Results and Additional Bitcoin Purchases

SMLR 11.04.2024

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SANTA CLARA, Calif.,Nov. 4, 2024/PRNewswire/ --Semler Scientific, Inc.(Nasdaq: SMLR), a pioneer in developing and marketing technology products and services to healthcare providers to combat chronic diseases, today reported financial results for the third quarter endedSeptember 30, 2024. In addition,Semler Scientificannounced the purchase of an additional 47 bitcoins for an aggregate amount of$3.0 millionfrom operating cash flow sinceAugust 26, 2024.Semler Scientificnow holds 1,058 bitcoins for a total purchase amount of$71.0 millionas ofNovember 4, 2024.

"We are pleased to report strong performance from our healthcare business with income from operations of$5.1 millionin the third quarter," saidDoug Murphy-Chutorian, MD, chief executive officer ofSemler Scientific. "We remain laser focused on acquiring and holdingbitcoin, while supporting innovation and growth in our healthcare business."

"We are capitalizing on the opportunity to maximize stakeholder value by accumulatingbitcoin," saidEric Semler, chairman ofSemler Scientific. "We plan to continue to purchasebitcoinwith cash from operations and with cash proceeds from our sales under our ATM program. In addition, we are exploring additional financing opportunities that will enable us to acquire even morebitcoin."

FINANCIAL RESULTS

For the third quarter endedSeptember 30, 2024, compared to the corresponding period of 2023,Semler Scientificreported:

Revenues of$13.5 million, a decrease of$2.8 million, or 17%, compared to$16.3 million.
Cost of revenues of$1.2 million, an increase of$0.1 million, or 4%, compared to$1.1 million.
Total operating expenses, which include cost of revenues, of$8.4 million, a decrease of$1.6 million, or 16%, compared to$10.0 million.
Income from operations of$5.1 million, a decrease of$1.2 million, or 20%, compared to$6.3 million.
Pre-tax income of$6.4 million(which includes an unrealized gain from the change in fair value ofSemler Scientific'sbitcoinholdings of$1.1 million), a decrease of$0.6 million, or 9%, compared to$7.0 million.
Income tax expense of$0.8 million, or an effective tax rate of 12%, compared to$1.5 million, or an effective tax rate of 21%.
Net income of$5.6 millionor$0.80per basic share and$0.72per diluted share, an increase of$0.1 million, or 2%, compared to net income of$5.5 million, or$0.82per basic share and$0.71per diluted share.

Semler Scientific'stwo largest customers (including their affiliates) comprised 44% and 29% of third quarter 2024 revenues, respectively, and its three largest customers comprised 36%, 28% and 11% of third quarter 2023 revenues, respectively.

BITCOINHOLDINGS

As ofSeptember 30, 2024,Semler Scientificheld 1,018 bitcoins with a fair value of$64.5 million, which reflects a cumulative reduction in fair value of$3.9 million. During the third quarter endedSeptember 30, 2024,Semler Scientificpurchased 141 bitcoins for an aggregate cost of$8.4 million.

Subsequently throughNovember 4, 2024,Semler Scientificpurchased an additional 40 bitcoins for an aggregate cost of$2.6 million.Semler Scientific'stotal holdings as ofNovember 4, 2024are 1,058 bitcoins for an aggregate purchase amount of$71.0 millionfrom operating cashflow. All purchase amounts include fees and expenses.

ATM Update

As previously disclosed inSemler Scientific'sregistration statement on Form S-3 that became effective onAugust 13, 2024,Semler Scientificentered into a Controlled Equity Offering^smSales Agreement (the Sales Agreement) withCantor Fitzgerald & Co., pursuant to which the Company may issue and sell from time to time up to$50.0 millionof its common stock in an at-the-market (ATM) offering. As ofSeptember 30, 2024,Semler Scientifichad sold an aggregate of 86,734 shares under the Sales Agreement for aggregate net proceeds (less sales commissions) of approximately$2.5 million.

Notice of Conference Call

Semler Scientificwill host a conference call today at4:30 p.m. ET. The call will address results of the third quarter endedSeptember 30, 2024, as well as provide a business update onSemler Scientific'sstrategies for the near-term future. Questions can be submitted prior to the start of the call toir@semlerscientific.com.

Participants are encouraged to pre-register for the conference call using the following link:https://dpregister.com/sreg/10193272/fda6de9798. Callers who pre-register will be given a conference passcode and unique PIN to gain immediate access to the call and bypass the live operator. Participants may pre-register at any time, including up to and after the call start time. Those without internet access or who are unable to pre-register may dial in by calling:

Domestic callers: (833) 816–1161International callers: (412) 317–0717

Please specify to the operator that you would like to join the "Semler Scientific Call." The conference call will be archived onSemler Scientific'swebsite atwww.semlerscientific.com.

Semler Scientific, Inc. Condensed Statements of Income Unaudited (In thousands ofU.S.Dollars, except share and per share data)

	For the three months endedSeptember 30,				For the nine months endedSeptember 30,
	2024		2023		2024		2023

Revenues	$	13,512	$	16,316	$	43,881	$	53,127
Operating expenses:
Cost of revenues		1,156		1,111		3,657		3,599
Engineering and product development		1,186		1,174		3,764		4,566
Sales and marketing		2,976		3,423		10,107		13,601
General and administrative		3,129		3,710		8,962		11,028
Strategic streamlining		—		599		—		599
Total operating expenses		8,447		10,017		26,490		33,393
Income from operations		5,065		6,299		17,391		19,734
Interest and dividend income		168		692		1,699		1,772
Change in fair value of notes held for investment		—		—		128		(217)
Change in fair value of digital assets		1,137		—		(3,918)		—
Other income (expense)		5		(3)		8		(3)
Other income (expense), net		1,310		689		(2,083)		1,552
Pre-tax income		6,375		6,988		15,308		21,286
Income tax provision		766		1,474		3,615		4,924
Net income	$	5,609	$	5,514	$	11,693	$	16,362
Net income per share, basic	$	0.80	$	0.82	$	1.68	$	2.44
Weighted average number of shares used in computing basic net income per share		7,045,108		6,717,301		6,961,095		6,708,675
Net income per share, diluted	$	0.72	$	0.71	$	1.50	$	2.09
Weighted average number of shares used in computing diluted net income per share		7,771,088		7,818,236		7,783,350		7,847,390

Semler Scientific, Inc. Condensed Balance Sheets (In thousands ofU.S.Dollars, except share and per share data)

	September 30,		December 31,
	2024		2023
		Unaudited
Assets
Current Assets:
Cash and cash equivalents	$	6,568	$	57,200
Restricted cash		133		132
Trade accounts receivable, net of allowance for credit losses of$266and$287, respectively		6,667		6,125
Short-term notes held for investment		6,100		—
Inventory, net		380		445
Prepaid expenses and other current assets		1,646		2,042
Total current assets		21,494		65,944
Assets for lease, net		1,737		2,285
Property and equipment, net		548		720
Long-term investments		512		512
Notes held for investment		—		5,372
Intangible digital assets		64,482		—
Other non-current assets		106		270
Deferred tax assets, net of valuation allowance of$936and$0, respectively		3,315		2,962
Total assets	$	92,194	$	78,065

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	545	$	402
Accrued expenses		5,258		4,502
Deferred revenue		805		1,120
Other short-term liabilities		231		176
Total current liabilities		6,839		6,200

Long-term liabilities:
Other long-term liabilities		—		70
Total long-term liabilities		—		70
Commitments and contingencies
Stockholders' equity:
Common stock,$0.001par value; 50,000,000 shares authorized; 7,334,600 and 7,099,441 shares issued, and 7,120,178 and 6,885,019 shares outstanding (treasury shares of 214,422 and 214,422), respectively		7		7
Additional paid-in capital		13,852		11,985
Retained earnings		71,496		59,803
Total stockholders' equity		85,355		71,795

Total liabilities and stockholders' equity	$	92,194	$	78,065

Semler Scientific, Inc. Condensed Statements of Cash Flows Unaudited (In thousands ofU.S.Dollars)

	Nine months endedSeptember 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	11,693	$	16,362

Reconciliation of Net Income to Net Cash Provided by Operating Activities:
Depreciation		480		439
Deferred tax expense		(353)		(478)
Loss on disposal of assets for lease		323		355
Loss on disposal of inventory		—		171
Gain on short-term investments		—		(307)
Allowance for credit losses		(21)		203
Change in fair value of notes held for investment		(128)		217
Change in fair value of digital assets		3,918		—
Stock-based compensation		498		907
Changes in Operating Assets and Liabilities:
Trade accounts receivable		(512)		(2,284)
Inventory		65		30
Prepaid expenses and other current assets		388		(478)
Other non-current assets		64		98
Accounts payable		143		(535)
Accrued expenses		756		2,250
Other current and non-current liabilities		(16)		(22)
Deferred revenue		(315)		(40)
Net Cash Provided by Operating Activities		16,983		16,888

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment		(48)		(310)
Purchase of notes held for investment		(500)		(1,000)
Purchase of digital assets		(68,400)		—
Proceeds from maturities of short-term investments		—		59,719
Purchase of short-term investments		—		(57,869)
Purchase of assets for lease		(35)		(773)
Net Cash Usedin Investing Activities		(68,983)		(233)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of warrants		—		(1,949)
Proceeds from issuance of common stock		2,536		—
Taxes paid related to net settlement of equity awards		(874)		(247)
Stock issuance expenses		(588)		—
Proceeds from exercise of stock options		295		24
Net Cash Provided by (Used in) Financing Activities		1,369		(2,172)
(DECREASE) INCREASE IN CASH		(50,631)		14,483
*CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD*		57,332		23,014
*CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD*	$	6,701	$	37,497

Semler Scientific, Inc. Digital Assets- Additional Information Rollforward ofbitcoinholdings Unaudited

	Source of Capital Used to PurchaseBitcoin	Digital Assets at Cost(in thousands)		Change in Fair Value(in thousands)		Digital Assets at Fair Value(in thousands)		Approximate Number ofBitcoinHeld	Approximate Average Purchase Price PerBitcoin
Balance as ofMarch 31, 2024		$	—	$	—	$	—	—	$	—
Digital assets purchased	(a)		60,000				60,000	877		68,436
Change in fair value of the digital assets					(5,055)		(5,055)
Balance as ofJune 30, 2024		$	60,000	$	(5,055)	$	54,945	877	$	68,436
Digital assets purchased	(b)		8,400		—		8,400	141		67,177
Change in fair value of the digital assets			—		1,137		1,137	—		—
Balance as ofSeptember 30, 2024		$	68,400	$	(3,918)	$	64,482	1,018	$	67,177


(a)	Cash from operations
(b)	Cash from operations and proceeds from ATM offering.

About Semler Scientific, Inc.:

Semler Scientific, Inc.is a pioneer in developing and marketing technology products and services to healthcare providers to combat chronic diseases. Its flagship product, QuantaFlo®, which is patented and cleared by theU.S. Food and Drug Administration(FDA), is a rapid point-of-care test that measures arterial blood flow in the extremities. The QuantaFlo test aids in the diagnosis of cardiovascular diseases, such as peripheral arterial disease (PAD), andSemler Scientificis seeking a new 510(k) clearance for expanded-indications. QuantaFlo is used by healthcare providers to evaluate their patient's risk of mortality and major adverse cardiovascular events (MACE).Semler Scientificalso invests inbitcoinand has adoptedBitcoinas its primary treasury asset. Additional information aboutSemler Scientificcan be found atwww.semlerscientific.com.

Forward-Looking Statements

This press release contains "forward-looking" statements. Such statements can be identified by, among other things, the use of forward-looking language such as the words "believe," "goal," "may," "will," "intend," "expect," "anticipate," "estimate," "project," "would," "could" or words with similar meaning or the negatives of these terms or by the discussion of strategy or intentions. The forward-looking statements in this release include express or implied statements regarding acquiring and holdingbitcoin; as well as innovation and growth in its healthcare business; and sales of securities under the Sales Agreement and other financings to support additionalbitcoinpurchases; seeking a new 510(k) clearance for QuantaFlo with expanded indications; among others. Such forward-looking statements are subject to a number of risks and uncertainties that could causeSemler Scientific'sactual results to differ materially from those discussed here, such as risks inherent with investing inbitcoin, includingbitcoin's volatility; risk of implementing a newbitcointreasury strategy; risk that insurance plans and other customers will not continue to license its cardiovascular testing products; risk of changes in the reimbursement landscape for its customers including related to theCenters for Medicare and Medicaid Services(CMS) rate announcement; risk of obtaining a new 510(k) clearance for expanded indications; along with those other risk factors detailed inSemler Scientific'sfilings with theSecurities and Exchange Commission. These forward-looking statements involve assumptions, estimates, and uncertainties that reflect current internal projections, expectations or beliefs. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. All forward-looking statements contained in this press release are qualified in their entirety by these cautionary statements and the risk factors described above. Furthermore, all such statements are made as of the date of this press release andSemler Scientificassumes no obligation to update or revise these statements unless otherwise required by law.

No Offer or Solicitation

This press release does not and shall not constitute an offer to sell or a solicitation of an offer to buy any securities ofSemler Scientific, Inc., nor shall there be any offer, solicitation or sale of such securities, in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

INVESTORCONTACT:

Renae CormierChief Financial Officerir@semlerscientific.com

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Semler Scientific® Reports Third Quarter 2024 Financial Results and Additional Bitcoin Purchases

SMLR 11.04.2024

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