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In late 2021, Semler Scientific, a promising Santa Clara-based medical technology company, was facing a world of trouble. Growth was slowing and the tiny company had just missed its Q3 revenue and earnings targets. Wall Street punished the stock, sending it 80% lower, as it was caught in the Nasdaq downdraft of early 2022 over inflationary fears and Fed tightening. Then in 2023, after $800 million of its $1 billion market cap had already evaporated, Medicare Advantage announced changes threatening reimbursement for its core product, QuantaFlo, software sold to doctors that detects signs of peripheral arterial disease during a five minute office visit. QuantFlo accounts for more than 80% of Semler’s $68 million in annual revenues.

Semler Scientific’s stock was in a deep rut, so the company brought in Eric Semler, son of the founder and activist hedge fund manager from New York City’s TCS Capital Management, known for rattling the cages of companies like Angie’s List, Yelp and Nielsen/Net Rating. His solution? Use its cash to buy bitcoin.

“We had to figure out how to maximize the value of our cash and stock,”says Semler, 59, now Chairman of the board, who described his family company as a zombie. “There were no promising acquisition targets, and a stock buyback was not preferred because the company already had a small float and was thinly traded, so there was no reason to make the float smaller.”

In May 2024, with software company-turned-bitcoin fund, MicroStrategy, as its model, Semler unveiled its own Bitcoin Treasury Strategy, with a goal of “potential returns, diversification and inflation hedging.” The company would use its $60-plus million in balance sheet cash, plus the proceeds of a stock offering managed by Cantor Fitzgerald to purchase bitcoin.

In the last six months Semler has accumulated 1,570 tokens worth $149 million at an average price of $75,000. Its bitcoin gains amount to $31 million for 2024, which is 50% greater than the company’s net income of $20.6 million for 2023. Like MicroStrategy ‘s billionaire CEO Michael Saylor, Semler has even gone as far as touting his company’s recent BTC Yield of 58.4%, a dubious measure of the percentage change........

© Forbes