Semler Scientific Inc (SMLR) 2024 Q1 法說會逐字稿

Good afternoon, and welcome to the Semler Scientific 2024 First Quarter Financial Results Conference Call. (Operator Instructions) Please note this event is being recorded.

下午好，歡迎參加 Semler Scientific 2024 年第一季財務業績電話會議。（操作員說明）請注意此事件正在被記錄。

Before we begin, Semler Scientific needs to remind you that certain comments made during this call may constitute forward-looking statements and are made pursuant to and within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 as amended. These include statements regarding the expectations for expansion of the business and the development and marketing of additional products, including receipt and time of an additional 501(k) clearance for QuantaFlo and investment in emerging growth opportunities.

在我們開始之前，Semler Scientific 需要提醒您，在本次電話會議中發表的某些評論可能構成前瞻性陳述，並且是根據1995 年《私人證券訴訟改革法案》修訂版的安全港條款並在其含義範圍內發表的。其中包括有關業務擴展以及其他產品的開發和行銷的預期的聲明，包括 QuantaFlo 額外 501(k) 許可的接收和時間以及對新興成長機會的投資。

Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in the press release and our SEC filings. The forward-looking statements made today are as of the date of this call, and the company does not undertake any obligation to update the forward-looking statements.

此類前瞻性陳述受到已知和未知的風險和不確定性的影響，可能導致實際結果與此類陳述有重大差異。這些風險和不確定性在新聞稿和我們向 SEC 提交的文件中進行了描述。今天所做的前瞻性陳述截至本次電話會議之日，本公司不承擔任何更新前瞻性陳述的義務。

If you do not have a copy of today's release, you may obtain one by visiting the Investor Relations page of the website, semlerscientific.com. Now I would like to introduce Douglas Murphy-Chutorian, CEO of Semler Scientific.

如果您沒有今天新聞稿的副本，您可以透過造訪 semlerscientific.com 網站的投資者關係頁面取得一份。現在我想介紹一下 Semler Scientific 執行長 Douglas Murphy-Cutorian。

Afternoon, everybody. Thank you for joining us on our first quarter 2024 results call. We achieved year-over-year earnings growth and ended the quarter with the highest cash position in the history of the company.

下午好，大家好。感謝您參加我們的 2024 年第一季業績電話會議。我們實現了同比盈利增長，並以公司歷史上最高的現金狀況結束了本季。

Now I'm pleased to introduce our CFO, Renae Cormier, to provide further details. Renae?

現在我很高興介紹我們的財務長 Renae Cormier，以提供更多詳細資訊。蕾娜？

Thank you, Doug. Good afternoon, everyone, and thank you for being part of today's conference call. Today I'll be presenting an overview of our first quarter 2024 financial results and discussing recent corporate development. Jennifer Oliva Herrington, our COO, will be providing information about our market developments and opportunities. Following our remarks, Doug, Jennifer and I will be available to address any questions you may have.

謝謝你，道格。大家下午好，感謝您參加今天的電話會議。今天，我將概述 2024 年第一季的財務業績，並討論最近的公司發展。我們的營運長 Jennifer Oliva Herrington 將提供有關我們的市場發展和機會的資訊。在我們的演講之後，道格、珍妮佛和我將隨時回答您可能提出的任何問題。

As mentioned in today's earnings release, we had a very strong quarter of cash generation despite the regulatory-driven, year-over-year revenue decline from our PAD product. Even with the decline in year-over-year quarterly revenues, we achieved year-over-year earnings growth in the first quarter 2024 compared to the first quarter of 2023. This achievement is a testament to the hard work of our team, who adjusted spending accordingly to changes in market conditions. We expect that our revenues will reaccelerate if we are successful in our efforts to obtain a new 510(k) clearance from the FDA that would allow us to market our heart dysfunction product.

正如今天的財報中所提到的，儘管我們的 PAD 產品的收入在監管驅動下同比下降，但我們的季度現金產生能力非常強勁。儘管季度營收年減，但與 2023 年第一季相比，我們在 2024 年第一季實現了同比盈利增長。這項成績是我們團隊辛勤工作的證明，他們根據市場狀況的變化調整了支出。如果我們成功獲得 FDA 的新 510(k) 許可，允許我們行銷我們的心臟功能障礙產品，我們預計我們的收入將重新加速。

Now to the details of our first quarter results. Total revenues in Q1 2024 were $15.9 million, a decrease of 13% compared to the first quarter of 2023. Our revenues are driven by continued sales of QuantaFlo to existing and new customers to test for peripheral arterial disease or PAD. Fixed fee revenues were $7.1 million, a decrease of 24% year-over-year. Variable fee revenues were $8 million, a decrease of 6% year-over-year. Equipment and other revenues were $0.8 million, an increase of 140% year-over-year. Equipment revenues are primarily sales to variable fee customers, and they remain strong versus historical levels.

現在詳細介紹我們第一季的業績。2024 年第一季的總營收為 1,590 萬美元，較 2023 年第一季下降 13%。我們的收入主要來自於持續向現有和新客戶銷售 QuantaFlo，用於檢測週邊動脈疾病或 PAD。固定費用收入為 710 萬美元，年減 24%。變動費用收入為 800 萬美元，年減 6%。設備和其他收入為 80 萬美元，年增 140%。設備收入主要是對可變費用客戶的銷售，與歷史水平相比仍保持強勁。

In March 2023, the Centers for Medicare and Medicaid Services, or CMS, announced the 3-year phase-in of the removal of the HCC code relating to PAD without complications from the Medicare Advantage risk adjustment model. 2024 marks the first year of the 3-year phase-in of the decreased economics to our managed care customers. For the remainder of 2024, we anticipate our revenues could follow a similar cadence that we saw in 2023, with H1 more heavily weighted versus H2. We are encouraged by the continued testing for PAD, given the importance of early diagnosis and treatment that can lead to improved long-term clinical outcomes for patients.

2023 年 3 月，醫療保險和醫療補助服務中心 (CMS) 宣布用 3 年時間逐步刪除與 PAD 相關的 HCC 代碼，且不會出現 Medicare Advantage 風險調整模型的併發症。 2024 年是我們的管理式醫療客戶經濟逐步下降的三年階段的第一年。在 2024 年剩餘時間內，我們預期我們的收入可能會遵循與 2023 年類似的節奏，上半年的權重高於下半年。鑑於早期診斷和治療的重要性，可以改善患者的長期臨床結果，我們對 PAD 的持續檢測感到鼓舞。

In the first quarter of 2024, our 3 largest customers, including their related affiliates, comprised 45%, 25% and 11% of quarterly revenue. Operating expenses in Q1 2024, which includes cost of revenues, were $8.9 million, a decrease of 25% year-over-year. As a percentage of revenues, operating expenses decreased to 56% compared to 66% in 2023 due to continued expense control after our strategic corporate streamlining announced in July last year.

2024 年第一季度，我們的 3 大客戶（包括其相關附屬公司）分別佔季度營收的 45%、25% 和 11%。2024 年第一季的營運費用（包括收入成本）為 890 萬美元，年減 25%。由於去年 7 月宣布的策略性公司精簡後持續進行費用控制，營運費用佔收入的比例從 2023 年的 66% 下降至 56%。

We have an outstanding group of leaders and employees here at Semler, that remain diligent in ensuring we're focused on cost discipline without sacrificing the high service our customers have come to expect. We anticipate we could experience a slight uptick in expenses throughout the year as we prepare for the next phase of launching QuantaFlo with expanded use as an aid in the diagnosis of other cardiovascular diseases that is subject to FDA clearance, which we hope to achieve in the second half of 2024.

Semler 擁有一支優秀的領導者和員工團隊，他們始終努力確保我們專注於成本控制，同時又不犧牲客戶所期望的優質服務。我們預計，隨著我們為下一階段推出QuantaFlo 做準備，擴大其用途，幫助診斷其他需要FDA 批准的心血管疾病，我們預計全年費用可能會略有上升，我們希望在2020 年實現這一目標。

Pretax net income was $7.8 million compared to $6.6 million in the prior year. Net income was $6.1 million or $0.88 per basic share and $0.78 per fully diluted share, compared to $5 million or $0.74 per basic share and $0.63 per fully diluted share in Q1 2023. We had a record high cash balance at March 31, 2024, of $62.9 million.

稅前淨利為 780 萬美元，上一年為 660 萬美元。淨利為610 萬美元，即每股基本股0.88 美元，每股完全稀釋股0.78 美元，而2023 年第一季淨利為500 萬美元，即每股基本股0.74 美元，每股完全稀釋股0.63美元。截至 2024 年 3 月 31 日，我們的現金餘額創歷史新高，達 6,290 萬美元。

Now I'd like to turn the call over to Jennifer to provide a more in-depth discussion of our market developments and opportunities.

現在我想將電話轉給 Jennifer，以更深入地討論我們的市場發展和機會。

Thank you, Renae. Looking ahead, I'm enthusiastic about Semler's potential to support the identification of chronic diseases by our customers, which continues to burden our health care system. Cardiovascular disease ranks as a top concern in health care expenditures and global mortality, underscoring the imperative need for early identification of cardiac conditions.

謝謝你，蕾娜。展望未來，我對 Semler 在支持客戶識別慢性病方面的潛力充滿熱情，這些疾病繼續給我們的醫療保健系統帶來負擔。心血管疾病是醫療保健支出和全球死亡率中最受關注的問題，這凸顯了早期識別心臟病的迫切需求。

Our recent announcement in January marked our intent to pursue an additional 510(k) clearance from the FDA for QuantaFlo, seeking to broaden its utility to encompass a wider array of cardiovascular diseases. We anticipate we may receive clearance for the expanded label in the second half of 2024. Upon achieving this regulatory milestone, our strategic focus will expand to effectively showcase this enhanced offering to our existing customer base.

我們最近在 1 月發布的聲明標誌著我們打算為 QuantaFlo 尋求 FDA 的額​​外 510(k) 批准，尋求擴大其用途以涵蓋更廣泛的心血管疾病。我們預計我們可能會在 2024 年下半年獲得擴展標籤的許可。在實現這一監管里程碑後，我們的策略重點將擴大，以有效地向我們現有的客戶群展示這項增強的產品。

In the interim, our commitment remains dedicated to the promotion and selling of QuantaFlo as a valuable aid in the diagnosis of PAD. This proactive approach ensures continuity, providing our customers with a trusted solution while positioning us for potential future success in the broader cardiovascular diagnostic market.

在此期間，我們仍然致力於推廣和銷售 QuantaFlo，將其作為 PAD 診斷的寶貴輔助工具。這種積極主動的方法確保了連續性，為我們的客戶提供值得信賴的解決方案，同時使我們在更廣泛的心血管診斷市場上取得潛在的未來成功。

Through enabling early detection of peripheral arterial disease, we are hopeful that health care providers will continue to initiate preventative management programs in chronic cardiovascular disease. We believe that this approach holds the potential to not only save lives, but also lower health care expenditures. We continue to envision a health care landscape where our technology assumes a central role in delivering healthier outcomes for patients while concurrently delivering substantial economic value to our customers.

透過早期發現週邊動脈疾病，我們希望醫療保健提供者能夠繼續啟動慢性心血管疾病的預防性管理計畫。我們相信，這種方法不僅有可能挽救生命，而且有可能降低醫療支出。我們繼續展望醫療保健領域，我們的技術在為患者提供更健康的結果方面發揮核心作用，同時為我們的客戶提供可觀的經濟價值。

Our sales and marketing goals remain focused: on further establishing QuantaFlo as the standard of care for PAD diagnosis; leveraging the demonstrated clinical benefits of early detection and preventative care; and to continue diversifying our customer base by adding new medical centers, expanding our reach within value-based care providers, fortifying our presence in the VA system and growing opportunities within additional markets that will benefit from PAD testing. And now Renae will conclude with remarks.

我們的銷售和行銷目標仍然集中在：進一步將 QuantaFlo 確立為 PAD 診斷的護理標準；利用早期檢測和預防性護理已證實的臨床益處；透過增加新的醫療中心、擴大我們在基於價值的護理提供者中的影響力、加強我們在VA 系統中的影響力以及在其他市場中增加從PAD 測試中受益的機會，繼續使我們的客戶群多樣化。現在蕾娜將發表演說作為結束語。

To achieve this plan, we are reinvesting in emerging growth opportunities with a focus on expanding our customer base for PAD. We believe that these opportunities may hold promise and represent an exciting aspect of our company's future.

為了實現這項計劃，我們正在對新興成長機會進行再投資，重點是擴大 PAD 的客戶群。我們相信，這些機會可能會帶來希望，並代表我們公司未來的一個令人興奮的方面。

Additionally, our commitment to research and development remains unwavering as we prioritize the enhancement of existing products and data services to stay in the forefront of innovation and consistently deliver cutting-edge solutions to our customers. Our long-term vision includes extending our reach to encompass additional cardiovascular applications, reflecting our dedication to continuous expansion.

此外，我們對研發的承諾仍然堅定不移，我們優先考慮增強現有產品和數據服務，以保持創新的前沿，並始終如一地為客戶提供尖端的解決方案。我們的長期願景包括擴大我們的業務範圍以涵蓋更多心血管應用，這反映了我們對持續擴張的奉獻精神。

A key strength of our technology lies in its portability and accessibility, allowing us to actively contribute to addressing health inequities prevalent in cardiovascular disease. By providing tools that can be utilized in diverse settings, we play a role in breaking down barriers, ensuring that more individuals have access to early detection and intervention.

我們技術的關鍵優勢在於其便攜性和可獲取性，使我們能夠積極為解決心血管疾病中常見的健康不平等問題做出貢獻。透過提供可在不同環境中使用的工具，我們在打破障礙方面發揮作用，確保更多的人能夠獲得早期檢測和介入。

As part of our growth strategy, we are exploring inorganic growth initiatives to further diversify our product portfolio. Through strategic partnerships and exploring new opportunities, we aim to broaden our impact on the market and expand our offerings. We extend our appreciation for your interest in our company and for your continued support as we embark on its journey of innovation.

作為我們成長策略的一部分，我們正在探索無機成長計劃，以進一步豐富我們的產品組合。透過策略合作夥伴關係和探索新機遇，我們的目標是擴大我們對市場的影響並擴大我們的產品範圍。我們感謝您對我們公司的關注以及您在我們踏上創新之旅時給予的持續支持。

Now operator, if you could please open the line, Doug, Jen and I will be happy to address your questions.

現在接線員，如果您可以接通電話，Doug、Jen 和我將很樂意解答您的問題。

(Operator Instructions) And our first question comes from Brooks O'Neil of 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。

This is Aaron on the line for Brooks. I'm interested in the timing and sort of the process to receive the 510(k) clearance. Obviously, you guys mentioned the second half of this year. But assuming approval, what are sort of the next steps taken after that process?

我是亞倫，正在接聽布魯克斯的電話。我對獲得 510(k) 許可的時間和流程類型感興趣。顯然，你們提到了今年下半年。但假設獲得批准，流程之後接下來要採取哪些步驟？

Sure. Aaron, thanks for the question. So as we had released earlier in the year in January, we did announce our attention to file for the 510(k) clearance. At this point, it's kind of out of our hands on timing, so it's up to the FDA and their approval process.

當然。亞倫，謝謝你的提問。因此，正如我們在今年 1 月早些時候發布的那樣，我們確實宣布了我們關注申請 510(k) 許可。目前，我們無法控制時間，因此這取決於 FDA 及其審批流程。

As we said, we do anticipate that we will receive approval in the second half of this year. And once we do that, we can start marketing it to our customers. We can't market it before then. And we do anticipate that it will take time for the product to gain traction and that we don't anticipate significant revenues in 2024.

正如我們所說，我們確實預計將在今年下半年獲得批准。一旦我們這樣做了，我們就可以開始向我們的客戶行銷它。在那之前我們不能推銷它。我們確實預計該產品需要一段時間才能獲得關注，而且我們預計 2024 年不會有可觀的收入。

We will start to market this to our existing customers. So they've already are familiar with our products. It's the same unit. It's just a software push and upgrade to the unit, and our customers have worked with us for many years and they're familiar with us.

我們將開始向現有客戶推銷此產品。所以他們已經熟悉我們的產品了。是同一個單位。這只是對設備的軟體推送和升級，我們的客戶已經與我們合作多年，他們對我們很熟悉。

Okay. That makes sense. And then do you have any additional color regarding what specific conditions that QuantaFlo might identify in reference to the 510 clearance? Or is it still a little bit too early to speak on that?

好的。這就說得通了。那麼，關於 QuantaFlo 可能會根據 510 許可確定哪些具體條件，您還有什麼其他意見嗎？或者說現在談論這一點還為時過早嗎？

And so it will be surrounding heart dysfunction. The specific wording will come out once we get the actual clearance.

因此，它將圍繞心臟功能障礙。具體措辭待我們獲得實際許可後才會推出。

Okay. Got you. Understood. And then, Renae, how would you classify the current demand environment? And I guess as just sort of a follow-up to that, have you lost customers or, I mean, expect to lose a significant amount of customers in relation to the PAD product?

好的。明白你了。明白了。那麼，Renae，您如何看待當前的需求環境？我想作為後續行動，您是否失去了客戶，或者我的意思是，預計會失去與 PAD 產品相關的大量客戶？

I would say that we still do have demand for our products. So the reaction from our customers has been somewhat mixed. So with 2023 being the first year of the phase-in -- or sorry, with 2024 being the first year of the phase-in of the new CMS rate announcement, the economics have changed to some of our managed care customers. So the extra reimbursement is being reduced only for the asymptomatic PAD, but this reimbursement was cut in 2024 by about 33%. And while our revenues are not directly linked to the CMS payments to our customers, some of the largest customers were offered additional volume pricing tiers.

我想說，我們的產品仍然有需求。因此，我們客戶的反應有些複雜。因此，隨著2023 年是逐步實施新CMS 費率公告的第一年，或者抱歉，2024 年是逐步實施新CMS 費率公告的第一年，我們的一些管理式醫療客戶的經濟狀況已經發生了變化。因此，僅針對無症狀 PAD 的額外報銷被減少，但這項報銷在 2024 年被削減了約 33%。雖然我們的收入與向客戶支付的 CMS 付款沒有直接關係，但一些最大的客戶獲得了額外的批量定價等級。

So we are seeing continued testing, but we also did see some cleanup of underutilized units. We are still getting new customers, and the clinical value of testing remains the same. And we think it's unfortunate that CMS did not recognize this. That the clinical benefit of early detection by putting preventative measures really supports better outcomes.

因此，我們看到了持續的測試，但我們也確實看到了對未充分利用的單元的一些清理。我們仍在吸引新客戶，測試的臨床價值保持不變。我們認為 CMS 沒有認識到這一點是不幸的。透過採取預防措施進行早期檢測的臨床益處確實支持更好的結果。

Okay. Understood. Appreciate all that color. And then obviously, you guys have developed and maintained a healthy balance sheet with a record cash balance this quarter. And you might have mentioned this a little bit in your prepared remarks, but have you had any conversations on any inorganic opportunities? I'd just love to get some more thoughts on potential uses of cash as we move forward throughout the year here.

好的。明白了。欣賞所有這些顏色。顯然，你們已經建立並維持了健康的資產負債表，本季現金餘額創歷史新高。您可能在準備好的發言中提到了這一點，但是您是否就任何無機機會進行過對話？隨著我們全年的進展，我很想對現金的潛在用途有更多的想法。

Sure. So really, when we're looking at our cash, there's kind of 3 areas that we're looking at: First and foremost is reinvesting back into our product. And so an example of this is the heart dysfunction 510(k) clearance that we're going after. The second, as you mentioned, is inorganic growth activities.

當然。所以，實際上，當我們考慮現金時，我們會考慮三個方面：首先也是最重要的是重新投資到我們的產品。一個例子就是我們正在尋求的心臟功能障礙 510(k) 清除。正如您所提到的，第二個是無機成長活動。

We do have a robust pipeline. But as you know, these things take time. So we are going to be very diligent in what we're doing and what we're looking at. Our Board has a lot of experience in capital allocation, and they are closely aligned with management and shareholders in trying to make sure that we carefully approach any acquisition that we may have.

我們確實擁有強大的管道。但如您所知，這些事情需要時間。因此，我們將非常勤奮地做我們正在做的事情和我們正在關注的事情。我們的董事會在資本配置方面擁有豐富的經驗，他們與管理層和股東密切合作，努力確保我們謹慎對待我們可能進行的任何收購。

And then the third piece with our cash could potentially be share buybacks. So we do have a $20 million share buyback that's authorized by the Board. We have bought back $5 million already, so we do have $15 million authorized in share repurchases. So that's something else that the Board will obsess -- will assess looking at with capital allocation and depending on the market circumstances.

然後我們現金的第三部分可能是股票回購。因此，我們確實有董事會授權的 2000 萬美元的股票回購。我們已經回購了 500 萬美元，因此我們確實有 1500 萬美元的股票回購授權。因此，這是董事會關注的另一件事——將根據資本配置並根據市場情況進行評估。

Okay. Understood. Super helpful. And then just a quick one for modeling purposes. I think that I caught this correctly, but you mentioned in terms of revenue cadence, it should follow a sort of similar cadence to 2023. Did I catch that correctly?

好的。明白了。超有幫助。然後只是為了建模目的而快速進行一次。我認為我的理解是正確的，但你提到就收入節奏而言，它應該遵循與 2023 年類似的節奏。我聽對了嗎？

Yes. We think it will follow a similar cadence where H1 will be more heavily weighted than H2.

是的。我們認為它將遵循類似的節奏，其中 H1 的權重將高於 H2。

This concludes our question-and-answer session. I'd like to turn the call back over to Renae Cormier for any closing remarks.

我們的問答環節到此結束。我想將電話轉回給雷娜·科米爾，請其發表結束語。

Thank you. As we wrap up this conference call, we want to emphasize our ongoing commitment to delivering clinical benefits through earlier diagnosis of chronic cardiovascular conditions. The continued recognition of the value of this approach by our customers underscores the crucial role our technology plays for patients, physicians, facilities and payers in an evolving health care landscape.

謝謝。在結束本次電話會議時，我們想強調我們持續致力於透過慢性心血管疾病的早期診斷來提供臨床益處。我們的客戶對這種方法的價值的持續認可強調了我們的技術在不斷發展的醫療保健環境中為患者、醫生、設施和付款人發揮的關鍵作用。

Moving forward, our primary objective remains to preserve and strengthen our current revenue opportunities and profitability within the chronic disease space with a focus on cardiovascular diseases. We appreciate your participation in today's discussion, and thank you for your ongoing support.

展望未來，我們的主要目標仍然是保持和加強我們在慢性病領域當前的收入機會和盈利能力，重點是心血管疾病。我們感謝您參與今天的討論，並感謝您一直以來的支持。

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

會議現已結束。感謝您參加今天的演示，您現在可以斷開連接了。