Semler Scientific Inc (SMLR) 2019 Q4 法說會逐字稿

Good day, and welcome to the Semler Scientific Fourth Quarter 2019 Financial Results Conference Call. (Operator Instructions)

美好的一天，歡迎參加 Semler Scientific 2019 年第四季財務業績電話會議。 （操作員說明）

Before we begin, Semler Scientific would like to remind you that this conference call may contain forward-looking statements. Such statements can be identified by words such as may, will, expect, anticipate, estimate or words similar with meaning. And such statements involve a number of risks and uncertainties that could cause Semler Scientific's actual results to differ materially from those discussed here.

在我們開始之前，塞姆勒科學公司想提醒您，本次電話會議可能包含前瞻性陳述。此類陳述可以透過「可能」、「將」、「期望」、「預期」、「估計」等詞語或類似含義的詞語來識別。此類陳述涉及許多風險和不確定性，可能導致 Semler Scientific 的實際結果與此處討論的結果有重大差異。

Please note that these forward-looking statements reflect Semler Scientific's opinions only as of the date of this presentation and it undertakes no obligation to revise or publicly release the result of any revision to these forward-looking statements in the light of new information or future events. Please refer to Semler Scientific's SEC filings for a more detailed description of the risk factors that may affect Semler Scientific's results and forward-looking statements. Please note this event is being recorded.

請注意，這些前瞻性聲明僅反映 Semler Scientific 截至本簡報發布之日的觀點，並且沒有義務根據新資訊或未來事件修改或公開發布對這些前瞻性陳述的任何修改結果。請參閱 Semler Scientific 向 SEC 提交的文件，以了解可能影響 Semler Scientific 績效和前瞻性陳述的風險因素的更詳細描述。請注意此事件正在被記錄。

I would now like to turn the conference over to Doug Murphy-Chutorian, CEO of Semler Scientific. Please go ahead.

現在我想將會議交給 Semler Scientific 執行長 Doug Murphy-Chutorian。請繼續。

Good afternoon, everybody, and thank you for joining the Semler Scientific fourth quarter and year-end financial results call. I would like to introduce you to Dennis Rosenberg, our Chief Marketing Officer, who will begin the presentation today. Dennis?

大家下午好，感謝您參加 Semler Scientific 第四季和年終財務業績電話會議。我想向您介紹我們的首席行銷長 Dennis Rosenberg，他今天將開始演講。丹尼斯？

Thanks, Doug. We always like to begin our calls with a reminder about Semler strategy. Semler is a company that provides technology solutions to improve the clinical effectiveness and efficiency of health care providers. Our mission is to develop, manufacture and market innovative products that assist our customers in evaluating and treating chronic diseases. We believe that our technology and software solutions enable our customers to identify when preventive care options are appropriate and to intervene before events like heart attacks and strokes occur.

謝謝，道格。我們總是喜歡在通話開始時提醒我們塞姆勒的策略。 Semler 是一家提供技術解決方案以提高醫療保健提供者的臨床效果和效率的公司。我們的使命是開發、製造和行銷創新產品，幫助我們的客戶評估和治療慢性病。我們相信，我們的技術和軟體解決方案使我們的客戶能夠確定何時採取適當的預防性護理方案，並在心臟病發作和中風等事件發生之前進行幹預。

We're pleased to report that the company's financial performance in 2019 based on revenue and net income was the best year in our company's history. Comparing 2019 to 2018 results, the highlights of today's report are as follows: Number one, annual revenue grew 52% or $11.3 million. Number two, annual net income was $15.1 million compared with $5.0 million. Number three, annual earnings were $2.34 per basic share and $1.88 per diluted share, which compares to $0.82 per basic share and $0.66 per diluted share. And number four, cash was $7.7 million at year-end compared to $3.3 million 1 year ago. Please note that in the third quarter of 2019, we released a tax valuation allowance that resulted in an income tax benefit of $4.4 million for the full fiscal year.

我們很高興地報告，根據收入和淨利潤計算，公司 2019 年的財務表現是我們公司歷史上最好的一年。比較 2019 年和 2018 年的業績，今天的報告要點如下：第一，年收入成長 52%，即 1,130 萬美元。第二，年淨利為 1,510 萬美元，而去年淨利為 500 萬美元。第三，年度收益為每股基本股 2.34 美元和每股稀釋股 1.88 美元，而每股基本股為 0.82 美元，每股稀釋股為 0.66 美元。第四，年底現金為 770 萬美元，而一年前為 330 萬美元。請注意，我們在 2019 年第三季發布了一項稅收估價津貼，為整個財年帶來了 440 萬美元的所得稅優惠。

During the year, we saw increased orders and usage for our QuantaFlo product from our current insurance company customers and from our home risk assessment customers. We also received orders from new customers.

在這一年中，我們看到現有保險公司客戶和家庭風險評估客戶對 QuantaFlo 產品的訂單和使用量增加。我們也收到了新客戶的訂單。

Now I'd like to turn the call over to Andy Weinstein, our Senior Vice President of Finance and Accounting, to describe in more detail the ongoing improvement in financial performance. Andy?

現在我想將電話轉給我們的財務和會計高級副總裁安迪·韋恩斯坦 (Andy Weinstein)，他將更詳細地描述財務業績的持續改善。安迪？

Thanks, Dennis. Please refer to the financial results described in the press release that was distributed at market close today. For the year of 2019 compared to 2018, annual revenue amounted to $32.8 million, which is an increase of $11.3 million compared to $21.5 million last year.

謝謝，丹尼斯。請參閱今天收盤時發布的新聞稿中所述的財務表現。與2018年相比，2019年的年收入為3,280萬美元，比去年的2,150萬美元增加了1,130萬美元。

Operating expense, which includes cost of revenue, was $22.1 million, an increase of $6 million compared to $16.1 million. Net income reflecting the income tax benefit was $15.1 million compared to $5 million last year.

營運費用（包括收入成本）為 2,210 萬美元，比 1,610 萬美元增加了 600 萬美元。反映所得稅優惠的淨利潤為 1,510 萬美元，而去年為 500 萬美元。

Comparing the annual results for 2019 to 2018, revenue increased 52% and operating expense increased 37%. Earnings improved as net income increased to $2.34 per basic share and $1.88 per diluted share compared to $0.82 per share and 66% -- $0.66 per diluted share last year.

比較2019年和2018年的年度業績，營收成長52%，營運費用成長37%。盈餘改善，淨利潤增加至每股基本股 2.34 美元和每股稀釋股 1.88 美元，而去年每股淨利潤為 0.82 美元，淨利潤為 66% - 每股稀釋股 0.66 美元。

In 2019, earnings per share was calculated using a basic share count of 6,440,724 shares and a diluted share count of 8,029,909 shares. Analyzing expense categories and 2019 earnings as a percentage of annual revenue, the cost of revenue was 11% of annual revenue.

2019年，每股盈餘依基本股數6,440,724股和稀釋股數8,029,909股計算。分析費用類別和 2019 年收益佔年收入的百分比，收入成本佔年收入的 11%。

Engineering and product development expense was 8%, sales and marketing was 27%, general and administrative expense was 21% of annual revenue, and net income was 46% of annual revenue or 33% on a pretax basis.

工程和產品開發費用佔年收入的 8%，銷售和行銷費用佔 27%，一般和管理費用佔年收入的 21%，淨利潤佔年收入的 46% 或稅前 33%。

For the quarter ended December 31, 2019, compared to a corresponding period in 2018, revenue was $9.2 million, which was an increase of $3.2 million or 53% from $6 million last year. Operating expense, which includes cost of revenue was $6.1 million, an increase of $1.6 million or 35% from $4.5 million.

截至2019年12月31日的季度，與2018年同期相比，營收為920萬美元，比去年的600萬美元增加了320萬美元，增幅為53%。營運費用（包括收入成本）為 610 萬美元，比 450 萬美元增加了 160 萬美元，即 35%。

Net income was $2.8 million, an increase of $1.4 million or 104% of $1.4 million last year. Net income per share was $0.43 per basic share and $0.35 per diluted share, and that compares to $0.22 per basic share, $0.17 per diluted share for the same period last year.

淨利潤為 280 萬美元，比去年的 140 萬美元增加了 140 萬美元，即 104%。每股淨利為每股基本股 0.43 美元，每股稀釋股 0.35 美元，去年同期為每股基本股 0.22 美元，每股稀釋股 0.17 美元。

For the quarter ended December 31, 2019, the basic share count was 6,529,831, and the diluted share count was 8,055,675. Analyzing the expense categories and earnings in the fourth quarter of 2019, as a percentage of quarterly revenue, the cost of revenue was 10% of quarterly revenue, engineering and product development expense was 8%, sales and marketing 26%, general and administrative expense amounted to 24% of quarterly revenue, and net income was 31% of quarterly revenue.

截至2019年12月31日的季度，基本股數為6,529,831股，稀釋股數為8,055,675股。分析2019年第四季的費用類別和收益，佔季度收入的百分比，收入成本佔季度收入的10%，工程和產品開發費用為8%，銷售和行銷費用為26%，一般和管理費用佔季度營收的24%，淨利佔季度收入的31%。

As of December 31, 2019, Semler had cash of $7.7 million, which is an increase of $4.4 million that being compared to $3.3 million at December 31, 2018. The change was primarily due to the cash provided by operations from net income and adjusted for accrued expenses and deferred revenue, was also partially offset by cash used for the reconciliation of net income to net cash provided by operations, which decreased cash by $3.2 million; warrant purchases and option exercises, which had a net cash usage of $6.5 million; the purchase of inventory and capital expenditures amounting to $1.7 million; and accounts receivable with cash usage of $734,000.

截至 2019 年 12 月 31 日，Semler 擁有現金 770 萬美元，比 2018 年 12 月 31 日的 330 萬美元增加了 440 萬美元。費用和遞延收入也被用於調節淨利潤與業務提供的淨現金的現金部分抵消，從而減少了320 萬美元的現金；認股權證購買和選擇權行使，淨現金使用量為 650 萬美元；庫存採購和資本支出達 170 萬美元；現金使用額為 734,000 美元的應收帳款。

As a result of these items, our stockholders' equity is now $13.1 million at the end of 2019. Our annual report on Form 10-K will be filed on or before March 16, 2020, and that will include our cash flow statement and more discussion of our cash and liquidity.

由於這些項目，截至 2019 年底，我們的股東權益目前為 1,310 萬美元。現金和流動性。

Our 3 major customers comprised 49.4%, 13.2% and 12.5% of annual revenues. Fixed price license revenues were approximately $22.9 million. Our variable price license revenues was approximately $8.9 million, and equipment and other sales were $927,000. Although we do not provide formal guidance, we are intent on continuing annual revenue growth, continuing profitability and generating cash during 2020.

我們的三大客戶佔年收入的49.4%、13.2%和12.5%。固定價格授權收入約 2,290 萬美元。我們的可變價格授權收入約為 890 萬美元，設備和其他銷售額為 927,000 美元。儘管我們沒有提供正式的指導，但我們打算在 2020 年繼續實現年度收入成長、持續獲利和產生現金。

It is the opinion of the management team that customer interest in our products and services is continuing to increase.

管理團隊認為客戶對我們產品和服務的興趣持續增加。

Now I will ask Dennis to continue the discussion and provide concluding remarks. Dennis?

現在我請丹尼斯繼續討論並作總結發言。丹尼斯？

We believe annual revenue will continue to grow in 2020 as a result of increased numbers of installations of our product, more usage of our product and recurring revenue from the licensing business. Our goal is to both make new additions to our customer base and to expand orders from existing customers.

我們相信，由於我們產品的安裝數量增加、產品使用量增加以及來自授權業務的經常性收入，2020 年年收入將持續成長。我們的目標是增加新的客戶群並擴大現有客戶的訂單。

In 2019, Semler again expanded its infrastructure and head count. We now have 67 employees. Operating expenses are expected to increase from quarter-to-quarter during 2020. It is our intent to expand our infrastructure to accommodate anticipated future growth of the business.

2019 年，Semler 再次擴大了基礎設施和人員數量。我們現在有 67 名員工。預計 2020 年營運費用將逐季增加。

During 2019, we continued to add to our assets for lease with purchase of inventory. These increases are indicative of management optimism for future growth in installations and may include stocking of key components of the product and/or replacement inventory for sensors sold to licensed customers. The amount of purchases made in the year will be disclosed in the Form 10-K to be filed on or before March 16.

2019年，我們繼續透過購買庫存增加租賃資產。這些成長表明管理層對未來安裝成長的樂觀態度，並可能包括產品關鍵組件的庫存和/或出售給許可客戶的感測器的替換庫存。當年的採購金額將在 3 月 16 日或之前提交的 10-K 表格中揭露。

We often get asked about uplisting to the NASDAQ exchange. Our position has not changed. We will update you if and when our plans are amended. There is also no plan to raise additional capital at this time. We reserve the right to change our financing plans as opportunity or as need arises.

我們經常被問到有關在納斯達克交易所上市的問題。我們的立場沒有改變。如果我們的計劃有修改，我們會及時通知您。目前也沒有籌集額外資金的計畫。我們保留在機會或需要時改變我們的融資計劃的權利。

Our goals for 2020 are to grow annual revenue to be profitable and to further establish our QuantaFlo product as a standard of care in the industry. We believe that the market for vascular disease testing is larger than our current market penetration. So there is room for continued growth. We continue to invest in R&D with the goals of providing new products that enhance value to our customers, now and in the future.

我們 2020 年的目標是增加年收入以實現盈利，並進一步將我們的 QuantaFlo 產品確立為行業護理標準。我們相信血管疾病檢測的市場比我們目前的市場滲透率更大。因此還有持續成長的空間。我們繼續投資研發，目標是提供新產品，為我們的客戶現在和未來提升價值。

We believe Semler Scientific is well positioned in the current health care market environment because we deliver cost-effective wellness solutions for the care of patients with chronic diseases, we may improve health outcomes for patients by identifying those who benefit from preventive health measures. We provide economics that work for the providers, the facilities, the insurance plans, the government and the patients.

我們相信Semler Scientific 在當前的醫療保健市場環境中處於有利地位，因為我們為慢性病患者的護理提供具有成本效益的健康解決方案，我們可以通過識別那些從預防性健康措施中受益的人來改善患者的健康結果。我們提供對服務提供者、設施、保險計劃、政府和患者都有效的經濟。

In conclusion, 2019 was an achievement record for our company in terms of both financial performance and the number of patients being tested with our products. Thank you for your interest in the company and your continued support.

總之，2019 年無論是在財務表現還是使用我們產品進行測試的患者數量方面，都創下了我們公司的成就記錄。感謝您對公司的關注和持續的支持。

Now operator, please open the lines. Doug, Andrew and I will be happy to address your questions.

現在接線員，請開通線路。道格、安德魯和我很樂意回答您的問題。

(Operator Instructions) Our first question is from Brooks O'Neil with Lake Street Capital Markets.

（操作員說明）我們的第一個問題來自 Lake Street Capital Markets 的 Brooks O'Neil。

Thank you for the extensive overview of the business and your performance. I'm hoping you guys might talk a little bit about the infrastructure investment that we see going on around the United States. I'm kind of curious sort of what the strategy is? Or why you feel compelled to hire representatives in various markets across the country? And sort of what you hope to get out of that as you seek to grow the business?

感謝您對業務和業績的全面概述。我希望你們能談談我們在美國各地進行的基礎設施投資。我有點好奇這個策略是什麼？或者為什麼您覺得有必要在全國各市場聘請代表？當您尋求發展業務時，您希望從中獲得什麼？

Thanks, Brooks. This is Dennis. We're hiring in different areas of the country to support continued growth. And the specific areas we're hiring in may or may not apply to exactly what's going on in that particular area. So it's a general increase in our support capabilities throughout the country for people both traveling and in those locations to support continued growth of installations and more testing.

謝謝，布魯克斯。這是丹尼斯。我們正在全國不同地區進行招聘，以支持持續成長。我們正在招募的特定領域可能適用也可能不適用於該特定領域正在發生的情況。因此，我們在全國範圍內為旅行和在這些地點的人們提供支持能力的普遍增強，以支持安裝和更多測試的持續增長。

Are you hiring sales people with the intent of bringing in new customers? Are you hiring trainers with the intent to support customers as they seek to implement more stations, more utilization of your product? How do you guys think about those 2 parameters? And anything else you think is significant as it relates to supporting the growth of the company?

您僱用銷售人員的目的是為了吸引新客戶嗎？您是否正在聘請培訓師，以便在客戶尋求實施更多站點、提高產品利用率時為他們提供支援？大家覺得這兩個參數怎麼樣？您認為還有哪些與支持公司發展相關的重要事項？

Dennis?

丹尼斯？

So we're hiring primarily support people, which would include trainers, IT people, clinical support people in the pursuit of both increasing penetration in our current accounts as well as opening new accounts. So it's not dedicated salespeople that we're hiring, it is support people that we're hiring primarily.

因此，我們主要招募支援人員，其中包括培訓師、IT 人員、臨床支援人員，以提高我們經常帳戶的滲透率以及開設新帳戶。因此，我們僱用的不是專門的銷售人員，而是我們主要雇用的支援人員。

Okay. And then, obviously, you mentioned that your top 3 customers currently compose about 75% of, at least Q4 sales. Would you expect that number to increase in the future? Or do you think you can bring in new customers at a rate fast enough to perhaps grow the new customers into a bigger percentage of your total revenue?

好的。然後，顯然，您提到您的前 3 位客戶目前至少佔第四季度銷售額的 75% 左右。您預計這個數字未來會增加嗎？或者您認為您可以以足夠快的速度引入新客戶，從而使新客戶佔總收入的比例更大？

We don't discuss the future growth because we don't give guidance. We have for many years gotten a stable number. So new customers come in all the time. But the larger customers or [starter] customers are also ordering more product. So I can't predict. [Whether] it changes or not, I don't want to predict now.

我們不討論未來的成長，因為我們不提供指導。多年來我們得到了一個穩定的數字。所以新顧客不斷湧入。但較大的顧客或[新手]顧客也在訂購更多的產品。所以我無法預測。 [無論]它是否改變，我現在不想預測。

Okay, Doug. That's very helpful. As you have grown the company, there's been some speculation that you perhaps might see opportunities for a second product line, do you have any comments on that? And if so, can you tell us anything about what areas they might be in or one or more might be in?

好吧，道格。這非常有幫助。隨著公司的發展，有人猜測您可能會看到第二條產品線的機會，您對此有何評論？如果是這樣，您能否告訴我們他們可能位於哪些區域，或者一個或多個可能位於哪些區域？

Well, we are definitely putting resources to develop a second product or a third product. We may develop it internally or may get to -- get a partnership or other situation with an [external] person. We have tried in our developing -- distribution network. So you have to understand, we're not going to talk about this anymore than I said before because we have many opportunities and we don't want to tip our hand too early. So you have to be patient with us to hear the full answer.

嗯，我們肯定會投入資源來開發第二個產品或第三個產品。我們可能會在內部開發它，或者可能會與[外部]人員建立合作夥伴關係或其他情況。我們已經在發展中的分銷網絡中進行了嘗試。所以你必須明白，我們不會再像我之前所說的那樣談論這個問題，因為我們有很多機會，我們不想太早攤手。所以您必須耐心等待我們才能聽到完整的答案。

(Operator Instructions) Showing no further questions. This concludes our question-and-answer session. I would like to turn the conference back over to Doug Murphy-Chutorian for any closing remarks.

（操作員說明）沒有顯示更多問題。我們的問答環節到此結束。我想將會議轉回給 Doug Murphy-Chutorian 發表閉幕詞。

Okay. Thank you, everybody, for joining us today. We look forward to updating you soon on our continued progress, okay. Have a good day, and I thank you, again. Bye.

好的。謝謝大家今天加入我們。我們期待盡快向您通報我們的持續進展，好嗎？祝你有美好的一天，我再次感謝你。再見。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。