On Friday, Lake Street Capital Markets updated its outlook on Semler Scientific (NASDAQ:SMLR), considerably increasing the price target to $71 from the previous $40, while sustaining a Buy rating on the stock. The revised target follows Semler's preliminary fourth-quarter results, which were in line with expectations. The company maintains impressive gross profit margins of 88% and has demonstrated strong financial health according to InvestingPro metrics. Lake Street is currently the sole firm providing analysis on Semler Scientific.
Semler's strategic decision to integrate Bitcoin into its treasury has been acknowledged as a central component of the company's future by both management and the board. However, the analyst advised that investors who are not in favor of the Bitcoin strategy should consider exiting their positions. Despite facing repercussions from the Centers for Medicare & Medicaid Services' (CMS) move to phase out risk payments for asymptomatic peripheral artery disease (PAD) testing over a three-year period, Semler has not lost any significant PAD customers.
The company is also in the process of seeking a new 510(k) clearance from the Food and Drug Administration (FDA), which would enable Semler to market a new heart dysfunction (HD) product. Although the clearance is anticipated in the second half of the year, Lake Street has not factored any potential revenue from this product into their 2025 model.
Semler's financial health appears robust, with the company generating significant positive free cash flow and reporting a cash reserve of $9 million as of December 31, with no outstanding debt. As of January 17, 2025, Semler held a substantial Bitcoin portfolio, consisting of 2,321 Bitcoins purchased at an average price of $82,689 per Bitcoin, totaling an investment of $191.9 million. The company plans to report any fluctuations in the fair value of its digital assets, which amounted to $28.9 million in the fourth quarter, in its quarterly income statements.
Lake Street acknowledges the inherent volatility of Bitcoin as a risk factor for investors but maintains its positive stance on Semler Scientific. The firm's forecast will continue to concentrate on the company's operational results rather than attempting to predict the fair value changes of Bitcoin. While the stock has shown remarkable momentum with an 85.7% return over the past six months, InvestingPro's Fair Value analysis suggests the stock is currently trading above its intrinsic value. Investors seeking deeper insights can access the comprehensive Pro Research Report, available exclusively to subscribers, which provides detailed analysis of Semler's financials, valuation, and growth prospects.
In other recent news, Semler Scientific has upsized its private offering to $85 million in convertible senior notes, a jump from the initially proposed $75 million. The healthcare technology company plans to use the proceeds for general corporate purposes, including the acquisition of bitcoin. The notes, due in 2030, carry a 4.25% interest rate and are aimed at qualified institutional buyers. The net proceeds from the offering are estimated to be approximately $81.4 million, or about $95.8 million if the additional notes option is fully exercised. The company also revealed preliminary unaudited financial results for the fourth quarter of 2024, reporting revenues between $12.1 million and $12.5 million, and income from operations between $3.4 million and $3.7 million. Semler's Bitcoin investment includes 2,321 bitcoins, purchased at an average price of $82,689 per bitcoin, totaling an investment of $191.9 million. Despite a decrease in revenues by 17% year-over-year to $13.5 million in the third quarter of 2024, the company has seen a gain from the change in fair value of its Bitcoin holdings. These recent developments indicate a dual focus for the company, balancing its core medical technology business with an assertive Bitcoin investment strategy.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.