Semler Scientific
promising days ahead
Semler Scientific
promising days ahead
By Manuel Maurício
August 04, 2022
New to Semler Scientific? Read my previous posts here.
Just yesterday I was telling one of the subscribers that Semler’s results were kind of meh. A few hours later, Mr. Market was paying 19% more for the stock. What did he see that I didn’t?
Let’s start from the beginning:
The revenue went up by 4% compared to last year…
…mostly driven by the growth in the Fixed Fee segment.
And I am pleased that, after the increased spend in hiring staff to support future growth, the operating margin is slowly getting back to where it was a few quarters ago.
It’s also reassuring that the sale of devices (tablets) increased 40%, showing continued interest in Quantaflo.
What about share repurchases?
Year to date, the company spent $3 million in share repurchases. There are still $17 million remaining on the share repurchase program. I would’ve liked to see a stronger conviction on the buybacks.
So far, I can’t find any strong reason for an 18% rise in the share price.
Quantaflo New Product
The management is still guiding no material revenue this year for the new product. It’s basically a software upgrade that they will be looking to sell to their existing customers. And from the management’s comments, the initial feedback has been great. They believe it can be as big as Quantaflo. That’s probably the reason why the stock price was up so much yesterday.
One of those customers will be releasing a publication later in the quarter and that’s when we should know what medical condition this new product will address.
Regarding the Insulin Insights, there were no material developments this quarter.
Conclusion
The management is guiding revenue for the full year in the range of $58 million to $60 million and expenses of $42.5 to $44 million. This means operating profit of around $16 million or a PE ratio of about 20x. If the new products are as attractive for customers as Quantaflo, this could turn out to be a great time to buy the stock.
Semler Scientific will remain in the Portfolio.
If you want to discuss Semler, head over to the forum and tell me all about it.
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