Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 05, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-36305 | |
Entity Registrant Name | Semler Scientific, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 26-1367393 | |
Entity Address, Address Line One | 911 Bern Court, Suite 110 | |
Entity Address, City or Town | San Jose | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 95112 | |
City Area Code | 877 | |
Local Phone Number | 774-4211 | |
Title of 12(b) Security | N/A | |
Trading Symbol | smlr | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 6,563,176 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001554859 | |
Amendment Flag | false |
Condensed Statements of Income
Condensed Statements of Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Condensed Statements of Income | ||||
Revenue | $ 6,373 | $ 7,953 | $ 15,803 | $ 14,714 |
Operating expenses: | ||||
Cost of revenue | 700 | 885 | 1,550 | 1,781 |
Engineering and product development | 762 | 591 | 1,605 | 1,160 |
Sales and marketing | 2,473 | 2,212 | 5,168 | 4,281 |
General and administrative | 1,478 | 1,570 | 3,069 | 2,943 |
Total operating expenses | 5,413 | 5,258 | 11,392 | 10,165 |
Income from operations | 960 | 2,695 | 4,411 | 4,549 |
Interest income (expense) | (1) | (1) | (3) | (2) |
Other income (expense) | 29 | 26 | (2) | |
Other expense | 30 | 1 | 29 | |
Pre-tax net income | 990 | 2,696 | 4,440 | 4,549 |
Income tax (benefit) provision | (85) | 77 | 692 | 77 |
Net income | $ 1,075 | $ 2,619 | $ 3,748 | $ 4,472 |
Net income per share, basic | $ 0.16 | $ 0.41 | $ 0.57 | $ 0.70 |
Weighted average number of shares used in computing basic income per share | 6,548,215 | 6,411,606 | 6,540,755 | 6,368,905 |
Net income per share, diluted | $ 0.13 | $ 0.32 | $ 0.47 | $ 0.55 |
Weighted average number of shares used in computing diluted income per share | 8,035,048 | 8,086,140 | 8,050,394 | 8,128,241 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash | $ 13,646 | $ 7,741 |
Trade accounts receivable, net of allowance for doubtful accounts of $56 and $36 respectively | 982 | 3,486 |
Prepaid expenses and other current assets | 639 | 216 |
Total current assets | 15,267 | 11,443 |
Assets for lease, net | 1,928 | 2,079 |
Property and equipment, net | 287 | 249 |
Long-term deposits | 15 | |
Long-term deferred tax assets | 3,905 | 4,501 |
Total assets | 21,387 | 18,287 |
Current liabilities: | ||
Accounts payable | 207 | 338 |
Accrued expenses | 3,343 | 3,914 |
Deferred revenue | 813 | 955 |
Other short-term liabilities | 5 | |
Total current liabilities | 4,368 | 5,207 |
Long-term liabilities: | ||
Deferred Lease | 7 | |
Total long-term liabilities | 7 | |
Stockholders' equity: | ||
Common stock, $0.001 par value; 50,000,000 shares authorized; 6,588,176, and 6,556,221 shares issued, and 6,563,176 and 6,531,221 shares outstanding (treasury shares of 25,000, and 25,000, respectively) | 7 | 7 |
Additional paid-in capital | 19,598 | 19,400 |
Accumulated deficit | (2,586) | (6,334) |
Total stockholders' equity | 17,019 | 13,073 |
Total liabilities and stockholders' equity | $ 21,387 | $ 18,287 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Condensed Balance Sheets | ||
Allowance for doubtful accounts on trade accounts receivable (in dollars) | $ 56 | $ 36 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 6,588,176 | 6,556,221 |
Common stock, shares outstanding | 6,563,176 | 6,531,221 |
Treasury stock, shares | 25,000 | 25,000 |
Statements of Stockholders' Equ
Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2018 | $ 6 | $ 25,608 | $ (21,418) | $ 4,196 | |
Balance (in shares) at Dec. 31, 2018 | 6,349,985 | (25,000) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Warrant Re-purchase | (2,687) | (2,687) | |||
Warrant Exercises (in shares) | 22,527 | ||||
Stock Option Exercises | 44 | 44 | |||
Stock Option Exercises (in shares) | 111,902 | ||||
Stock-based Compensation | 196 | 196 | |||
Net income | 4,472 | 4,472 | |||
Balance at Jun. 30, 2019 | $ 6 | 23,161 | (16,946) | 6,221 | |
Balance (in shares) at Jun. 30, 2019 | 6,484,414 | (25,000) | |||
Balance at Mar. 31, 2019 | $ 6 | 25,719 | (19,565) | 6,160 | |
Balance (in shares) at Mar. 31, 2019 | 6,356,147 | (25,000) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Warrant Re-purchase | (2,687) | (2,687) | |||
Warrant Exercises (in shares) | 22,527 | ||||
Stock Option Exercises | 31 | 31 | |||
Stock Option Exercises (in shares) | 105,740 | ||||
Stock-based Compensation | 98 | 98 | |||
Net income | 2,619 | 2,619 | |||
Balance at Jun. 30, 2019 | $ 6 | 23,161 | (16,946) | 6,221 | |
Balance (in shares) at Jun. 30, 2019 | 6,484,414 | (25,000) | |||
Balance at Dec. 31, 2019 | $ 7 | 19,400 | (6,334) | 13,073 | |
Balance (in shares) at Dec. 31, 2019 | 6,556,221 | (25,000) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock Option Exercises | 70 | $ 70 | |||
Stock Option Exercises (in shares) | 31,955 | 32,567 | |||
Stock-based Compensation | 128 | $ 128 | |||
Net income | 3,748 | 3,748 | |||
Balance at Jun. 30, 2020 | $ 7 | 19,598 | (2,586) | 17,019 | |
Balance (in shares) at Jun. 30, 2020 | 6,588,176 | (25,000) | |||
Balance at Mar. 31, 2020 | $ 7 | 19,470 | (3,661) | 15,816 | |
Balance (in shares) at Mar. 31, 2020 | 6,559,076 | (25,000) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock Option Exercises | 67 | 67 | |||
Stock Option Exercises (in shares) | 29,100 | ||||
Stock-based Compensation | 61 | 61 | |||
Net income | 1,075 | 1,075 | |||
Balance at Jun. 30, 2020 | $ 7 | $ 19,598 | $ (2,586) | $ 17,019 | |
Balance (in shares) at Jun. 30, 2020 | 6,588,176 | (25,000) |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 3,748 | $ 4,472 |
Reconciliation of Net Income to Net Cash Provided by Operating Activities: | ||
Depreciation | 235 | 307 |
Deferred tax expense | 596 | |
Loss on disposal of assets for lease | 125 | 97 |
Allowance for bad debt | 36 | 21 |
Stock-based compensation expense | 128 | 196 |
Changes in Operating Assets and Liabilities: | ||
Trade accounts receivable | 2,468 | (730) |
Prepaid expenses and other assets | (408) | (60) |
Accounts payable | (131) | 125 |
Accrued expenses | (573) | (538) |
Deferred revenue | (142) | 493 |
Net Cash Provided by Operating Activities | 6,082 | 4,383 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Additions to property and equipment | (100) | (63) |
Purchase of assets for lease | (147) | (779) |
Net Cash Used in Investing Activities | (247) | (842) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Re-purchase of warrants | (2,687) | |
Exercise of stock option | 70 | 44 |
Net Cash Provided by (Used in) Financing Activities | 70 | (2,643) |
INCREASE IN CASH | 5,905 | 898 |
CASH, BEGINNING OF PERIOD | 7,741 | 3,284 |
CASH, END OF PERIOD | $ 13,646 | $ 4,182 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2020 | |
Basis of Presentation | |
Basis of Presentation | 1. Basis of Presentation Semler Scientific, Inc., a Delaware corporation (“Semler” or “the Company”), prepared the unaudited interim financial statements included in this report in accordance with United States generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2019 filed with the SEC on March 9, 2020 (the “Annual Report”). In the opinion of management, these financial statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented. The results of operations for the interim periods shown in this report are not necessarily indicative of the results that may be expected for any future period, including the full year. On January 30, 2020, the World Health Organization (“WHO”) declared the recent novel coronavirus (COVID-19) outbreak a global health emergency, which prompted national, state and local governments to begin putting actions in place to slow the spread of COVID-19. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic. The outbreak of COVID-19 has resulted in travel restrictions, quarantines, “stay-at-home” and “shelter-in-place” orders and extended shutdown of certain businesses around the world. For the three and six months ended June 30, 2020 the Company's revenues, primarily from variable-fee licenses were negatively impacted by the COVID-19 pandemic. The extent and duration of the pandemic is unknown, and the future effects on the Company's business are uncertain and difficult to predict. The Company is continuing to monitor the events and circumstances surrounding the COVID-19 pandemic, which may require adjustments to the Company's estimates and assumptions in the future. Recently Issued Accounting Pronouncements Accounting Pronouncements Recently Adopted In November 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-08 – Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customer (Topic 606) In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“Topic 326”) Codification Improvements to Topic 326 Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments Financial Instruments – Credit Losses (Topic 326); Targeted Transition Relief In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes In January 2020, the FASB issued ASU No. 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) In March 2020, FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting |
Variable-fee Revenue
Variable-fee Revenue | 6 Months Ended |
Jun. 30, 2020 | |
Variable-fee Revenue | |
Variable-fee Revenue | 2. Variable-fee Revenue Topic 606 affects revenue recognition for the Company’s variable-fee licenses (i.e., fee per test) and sales of hardware equipment and accessories. Total fees from variable-fee licenses represent approximately $290 and $2,250 of revenues for the three months ended June 30, 2020 and 2019, respectively. Total fees from variable-fee licenses represent approximately $2,992 and $3,506 for the six months ended June 30, 2020 and 2019, respectively. Total sales of hardware and equipment accessories represent approximately $129 and $307 of revenues for the three months ended June 30, 2020 and 2019, respectively. Total sales of hardware and equipment accessories represent approximately $400 and $552 of revenues for the six months ended June 30, 2020 and 2019, respectively. Essentially all of the variable-fee licenses are with large healthcare organizations. The remainder of the revenue is earned from leasing the Company's testing product for a fixed fee, which is not subject to Topic 606. |
Assets for Lease, net
Assets for Lease, net | 6 Months Ended |
Jun. 30, 2020 | |
Assets for Lease, net | |
Assets for Lease, net | 3. Assets for Lease, net The Company enters into contracts with customers for the Company’s QuantaFlo ® Assets for lease consist of the following: June 30, December 31, 2020 2019 Assets for lease $ 3,308 $ 3,374 Less: accumulated depreciation (1,380) (1,295) Assets for lease, net $ 1,928 $ 2,079 Depreciation expense amounted to $44 and $126 for the three months ended June 30, 2020 and 2019, respectively. Depreciation expense amounted to $172 and $236 for the six months ended June 30, 2020 and 2019, respectively. Reduction to accumulated depreciation for returned items was $22 and $42 for the three months ended June 30, 2020 and 2019, respectively. Reduction to accumulated depreciation for returned items was $87 and $77 for the six months ended June 30, 2020 and 2019, respectively. The Company recognized a loss on disposal of assets for lease in the amount of $59 and $63 for the three months ended June 30, 2020 and 2019, respectively. The Company recognized a loss on disposal of assets for lease in the amount of $125 and $97 for the six months ended June 30, 2020 and 2019, respectively. |
Property and Equipment, net
Property and Equipment, net | 6 Months Ended |
Jun. 30, 2020 | |
Property and Equipment, net | |
Property and Equipment, net | 4. Property and Equipment, net Capital assets consist of the following: June 30, December 31, 2020 2019 Capital assets $ 737 $ 636 Less: accumulated depreciation (450) (387) Capital assets, net $ 287 $ 249 Depreciation expense amounted to $32 and $37 for the three months ended June 30, 2020 and 2019, respectively. Depreciation expense amounted to $63 and $71 for the six months ended June 30, 2020 and 2019, respectively. |
Accrued Expenses
Accrued Expenses | 6 Months Ended |
Jun. 30, 2020 | |
Accrued Expenses | |
Accrued Expenses | 5. Accrued Expenses Accrued expenses consist of the following: June 30, December 31, 2020 2019 Compensation $ 2,365 $ 2,803 Accrued taxes 615 378 Miscellaneous accruals 363 733 Total accrued expenses $ 3,343 $ 3,914 |
Concentration of Credit Risk
Concentration of Credit Risk | 6 Months Ended |
Jun. 30, 2020 | |
Concentration of Credit Risk | |
Concentration of Credit Risk | 6. Concentration of Credit Risk Credit risk is the risk of loss from amounts owed by the financial counterparties. Credit risk can occur at multiple levels; as a result of broad economic conditions, challenges within specific sectors of the economy, or from issues affecting individual companies. Financial instruments that potentially subject the Company to credit risk consist of cash and accounts receivable. The Company maintains cash with major financial institutions. The Company’s cash consists of bank deposits held with banks that, at times, exceed federally insured limits. The Company limits its credit risk by dealing with counterparties that are considered to be of high credit quality and by performing periodic evaluations of the relative credit standing of these financial institutions. Management periodically monitors the creditworthiness of its customers and believes that it has adequately provided for any exposure to potential credit loss. For the three months ended June 30, 2019, three customers accounted for 50.8%, 14.8% and 13.8% of the Company’s revenues, respectively. For the six months ended June 30, 2019, three customers accounted for 53.0%, 13.2%, and 11.1% of the Company’s revenues, respectively. For the three months ended June 30, 2020, one customer accounted for 62.1% of the Company’s revenues. For the six months ended June 30, 2020, two customers accounted for 52.5% and 14.0% of the Company’s revenues, respectively. As of December 31, 2019, three customers accounted for 55.9%, 17.6% and 12.0% of the Company’s accounts receivable, respectively. As of June 30, 2020, three customers accounted for 33.0%, 12.1% and 10.6% of the Company’s accounts receivable, respectively. The Company’s largest customer in terms of both revenues and accounts receivable in the three months ended June 30, 2020 is a U.S. diversified healthcare company and its affiliated plans. As of December 31, 2019, three vendors accounted for 23.3%, 20.3% and 11.1% of the Company’s accounts payable, respectively. As of June 30, 2020, two vendors accounted for 11.4%, and 10.3% of the Company’s accounts payable, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 7. Commitments and Contingencies Facilities Leases The Company recognized facilities lease expenses of $18 and $17 for the three months ended June 30, 2020 and 2019, respectively. The Company recognized facilities lease expenses of $35 and $34 for the six months ended June 30, 2020 and 2019, respectively. Indemnification Obligations The Company enters into agreements with customers, partners, lenders, consultants, lessors, contractors, sales representatives and parties to certain transactions in the ordinary course of the Company’s business. These agreements may require the Company to indemnify the other party against third party claims alleging that its product infringes a patent or copyright. Certain of these agreements require the Company to indemnify the other party against losses arising from: a breach of representations or covenants, claims relating to property damage, personal injury or acts or omissions of the Company, its employees, agents or representatives. The Company has also agreed to indemnify the directors and certain of the officers and employees in accordance with the by-laws of the Company. These indemnification provisions will vary based upon the nature and terms of the agreements. In many cases, these indemnification provisions do not contain limits on the Company’s liability, and the occurrence of contingent events that will trigger payment under these indemnities is difficult to predict. As a result, the Company cannot estimate its potential liability under these indemnities. The Company believes that the likelihood of conditions arising that would trigger these indemnities is remote and, historically, the Company has not made any significant payment under such indemnification provisions. Accordingly, the Company has not recorded any liabilities relating to these agreements. In certain cases, the Company has recourse against third parties with respect to the aforesaid indemnities, and the Company believes it maintains adequate levels of insurance coverage to protect the Company with respect to potential claims arising from such agreements. |
Stock Option Plan
Stock Option Plan | 6 Months Ended |
Jun. 30, 2020 | |
Stock Option Plan | |
Stock Option Plan | 8. Stock Option Plan The Company’s stock-based compensation program is designed to attract and retain employees while also aligning employees’ interests with the interests of its stockholders. Stock options have been granted to employees under the stockholder-approved 2007 Key Person Stock Option Plan (“2007 Plan”) or the stockholder-approved 2014 Stock Incentive Plan (“2014 Plan”). Stockholder approval of the 2014 Plan became effective in September 2014. The 2014 Plan originally provided that the aggregate number of shares of common stock that may be issued pursuant to awards granted under the 2014 Plan may not exceed 450,000 shares (the “Share Reserve”), however in October 2015, the stockholders approved a 1,500,000 increase to the Share Reserve. In addition, the Share Reserve automatically increases on January 1st of each year, for a period of not more than 10 years, beginning on January 1st of the year following the year in which the 2014 Plan became effective and ending on (and including) January 1, 2024, in an amount equal to 4% of the total number of shares of common stock outstanding on December 31st of the preceding calendar year. The Company’s Board of Directors may act prior to January 1st of a given year to provide that there will be no January 1st increase in the Share Reserve for such year or that the increase in the Share Reserve for such year will be a lesser number of shares of common stock than would otherwise occur. On January 1, 2020, the Share Reserve increased by 261,249 shares due to the automatic 4% increase. The Share Reserve is currently 2,783,616 shares as of June 30, 2020. In light of stockholder approval of the 2014 Plan, the Company no longer grants equity awards under the 2007 Plan. As of June 30, 2020, 0 shares of an aggregate total of 407,500 shares were available for future stock-based compensation grants under the 2007 Plan and 1,258,557 shares of an aggregate total of 2,783,616 shares were available for future stock-based compensation grants under the 2014 Plan. Aggregate intrinsic value represents the difference between the closing market value as of June 30, 2020 of the underlying common stock and the exercise price of outstanding, in-the-money options. A summary of the Company’s stock option activity and related information for the six months ended June 30, 2020 is as follows: Options Outstanding Weighted Number of Weighted Average Stock Average Remaining Aggregate Options Exercise Contractual Intrinsic Value Outstanding Price Term (In Years) (in thousands) Balance, January 1, 2020 1,581,582 $ 3.23 5.86 $ 70,827 Options exercised (32,567) 3.01 — — Balance, June 30, 2020 1,549,015 $ 3.23 5.37 $ 66,248 Exercisable as of June 30, 2020 1,482,272 $ 3.10 5.28 $ 63,588 The total compensation cost related to unvested stock option awards not yet recognized was $307 as of June 30, 2020. The weighted average period over which the total unrecognized compensation cost related to these unvested stock awards will be recognized is 0.66 years. There were no options granted during the three or six months ended June 30, 2020 or 2019. The Company has recorded an expense of $61 and $98 $128 and $196 Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Cost of Revenue $ — $ 1 $ — $ 1 Engineering and Product Development — 5 — 12 Sales and Marketing — 15 — 31 General and Administrative 61 77 128 152 Total $ 61 $ 98 $ 128 $ 196 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Taxes | |
Income Taxes | 9. Income Taxes The Company’s income tax provision for the three and six months ended June 30, 2020 and June 30, 2019, respectively, reflects its estimate of the effective tax rates expected to be applicable for the full year, adjusted for any discrete events that are recorded in the period in which they occur. The estimates are re-evaluated each quarter based on the estimated tax expense for the full year. The effective tax rate for the three and six months ended June 30, 2020 was (8.59%) and 15.59%, respectively, compared to 2.86% and 1.69%, respectively, in the same periods of the prior year. The increase in the effective tax rate for the six months ended June 30, 2020 is primarily related to the release of the entire valuation allowance against the deferred tax assets for federal and state net operating loss (“NOL”) carryforwards and other related deferred tax assets in quarter ended September 30, 2019. The decrease in the effective tax rate for the three months ended June 30, 2020 is primarily related to tax benefit from discrete events that occurred during the quarter. The effective tax rate for the three and six months ended June 30, 2020, respectively, differed from the U.S. federal statutory rate of 21% primarily due to state income taxes (net of federal benefit) partially offset by tax benefits associated with employee equity plans, federal and state research and development (“R&D”) credit benefit and the effect of changes in enacted tax laws. The difference between the U.S. federal statutory rate of 21% and the Company’s effective tax rate for the three and six months ended June 30, 2019, respectively, was primarily due to NOL carryforwards that offset potential current taxes for which a full valuation allowance had been previously provided. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act was signed into law. The Company has evaluated the impact of the new regulations and determined that there is no material impact to its financial statements. |
Net Income Per Share, Basic and
Net Income Per Share, Basic and Diluted | 6 Months Ended |
Jun. 30, 2020 | |
Net Income Per Share, Basic and Diluted | |
Net Income Per Share, Basic and Diluted | 10. Net Income Per Share, Basic and Diluted Basic earnings per share (“EPS”) represent net income attributable to common stockholders divided by the weighted average number of common shares outstanding during the measurement period. Diluted EPS represents net income attributable to common stockholders divided by the weighted average number of common shares outstanding during the measurement period while also giving effect to all potentially dilutive common shares that were outstanding during the period using the treasury stock method. Basic and diluted EPS is calculated as follows: Three months ended June 30, 2020 2019 Shares Net Income EPS Shares Net Income EPS Basic 6,548,215 $ 1,075 $ 0.16 6,411,606 $ 2,619 $ 0.41 Common stock warrants 69,039 — 168,099 — Common stock options 1,417,794 — 1,506,435 — Diluted 8,035,048 $ 1,075 $ 0.13 8,086,140 $ 2,619 $ 0.32 Six months ended June 30, 2020 2019 Shares Net Income EPS Shares Net Income EPS Basic 6,540,755 $ 3,748 $ 0.57 6,368,905 $ 4,472 $ 0.70 Common stock warrants 69,377 — 207,471 — Common stock options 1,440,262 — 1,551,865 — Diluted 8,050,394 $ 3,748 $ 0.47 8,128,241 $ 4,472 $ 0.55 The were no weighted average shares outstanding of common stock equivalents excluded from the computation of diluted net loss per share for the three or six months ended June 30, 2020 and 2019. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events | |
Subsequent Events | 11. Subsequent Events None |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Basis of Presentation | |
Basis of Presentation | Semler Scientific, Inc., a Delaware corporation (“Semler” or “the Company”), prepared the unaudited interim financial statements included in this report in accordance with United States generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2019 filed with the SEC on March 9, 2020 (the “Annual Report”). In the opinion of management, these financial statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented. The results of operations for the interim periods shown in this report are not necessarily indicative of the results that may be expected for any future period, including the full year. On January 30, 2020, the World Health Organization (“WHO”) declared the recent novel coronavirus (COVID-19) outbreak a global health emergency, which prompted national, state and local governments to begin putting actions in place to slow the spread of COVID-19. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic. The outbreak of COVID-19 has resulted in travel restrictions, quarantines, “stay-at-home” and “shelter-in-place” orders and extended shutdown of certain businesses around the world. For the three and six months ended June 30, 2020 the Company's revenues, primarily from variable-fee licenses were negatively impacted by the COVID-19 pandemic. The extent and duration of the pandemic is unknown, and the future effects on the Company's business are uncertain and difficult to predict. The Company is continuing to monitor the events and circumstances surrounding the COVID-19 pandemic, which may require adjustments to the Company's estimates and assumptions in the future. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Accounting Pronouncements Recently Adopted In November 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-08 – Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customer (Topic 606) In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“Topic 326”) Codification Improvements to Topic 326 Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments Financial Instruments – Credit Losses (Topic 326); Targeted Transition Relief In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes In January 2020, the FASB issued ASU No. 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) In March 2020, FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting |
Assets for Lease, net (Tables)
Assets for Lease, net (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Assets for Lease, net | |
Schedule of assets for lease | June 30, December 31, 2020 2019 Assets for lease $ 3,308 $ 3,374 Less: accumulated depreciation (1,380) (1,295) Assets for lease, net $ 1,928 $ 2,079 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Property and Equipment, net | |
Schedule of capital assets | June 30, December 31, 2020 2019 Capital assets $ 737 $ 636 Less: accumulated depreciation (450) (387) Capital assets, net $ 287 $ 249 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Accrued Expenses | |
Schedule of accrued expenses | June 30, December 31, 2020 2019 Compensation $ 2,365 $ 2,803 Accrued taxes 615 378 Miscellaneous accruals 363 733 Total accrued expenses $ 3,343 $ 3,914 |
Stock Option Plan (Tables)
Stock Option Plan (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Stock Option Plan | |
Schedule of stock option activity | Options Outstanding Weighted Number of Weighted Average Stock Average Remaining Aggregate Options Exercise Contractual Intrinsic Value Outstanding Price Term (In Years) (in thousands) Balance, January 1, 2020 1,581,582 $ 3.23 5.86 $ 70,827 Options exercised (32,567) 3.01 — — Balance, June 30, 2020 1,549,015 $ 3.23 5.37 $ 66,248 Exercisable as of June 30, 2020 1,482,272 $ 3.10 5.28 $ 63,588 |
Schedule of stock-based compensation | Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Cost of Revenue $ — $ 1 $ — $ 1 Engineering and Product Development — 5 — 12 Sales and Marketing — 15 — 31 General and Administrative 61 77 128 152 Total $ 61 $ 98 $ 128 $ 196 |
Net Income Per Share, Basic a_2
Net Income Per Share, Basic and Diluted (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Net Income Per Share, Basic and Diluted | |
Schedule of basic and diluted net EPS | Three months ended June 30, 2020 2019 Shares Net Income EPS Shares Net Income EPS Basic 6,548,215 $ 1,075 $ 0.16 6,411,606 $ 2,619 $ 0.41 Common stock warrants 69,039 — 168,099 — Common stock options 1,417,794 — 1,506,435 — Diluted 8,035,048 $ 1,075 $ 0.13 8,086,140 $ 2,619 $ 0.32 Six months ended June 30, 2020 2019 Shares Net Income EPS Shares Net Income EPS Basic 6,540,755 $ 3,748 $ 0.57 6,368,905 $ 4,472 $ 0.70 Common stock warrants 69,377 — 207,471 — Common stock options 1,440,262 — 1,551,865 — Diluted 8,050,394 $ 3,748 $ 0.47 8,128,241 $ 4,472 $ 0.55 |
Variable-fee Revenue (Details)
Variable-fee Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Variable-fee Revenue | ||||
Revenue from variable-fee licenses | $ 290 | $ 2,250 | $ 2,992 | $ 3,506 |
Revenue from sales of hardware and equipment accessories | $ 129 | $ 307 | $ 400 | $ 552 |
Assets for Lease, net (Details)
Assets for Lease, net (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Assets for Lease, net | ||
Assets for lease | $ 3,308 | $ 3,374 |
Less: accumulated depreciation | (1,380) | (1,295) |
Assets for lease, net | $ 1,928 | $ 2,079 |
Assets for Lease, net - Additio
Assets for Lease, net - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Assets for Lease, net | ||||
Lease revenue | $ 5,954 | $ 5,396 | $ 12,411 | $ 10,656 |
Depreciation expense | 44 | 126 | 172 | 236 |
Reduction to accumulated depreciation for returned items | 22 | 42 | 87 | 77 |
Loss on disposal of assets for lease | $ (59) | $ (63) | $ (125) | $ (97) |
Property and Equipment, net (De
Property and Equipment, net (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Property and Equipment, net | ||
Capital assets | $ 737 | $ 636 |
Less: accumulated depreciation | (450) | (387) |
Capital assets, net | $ 287 | $ 249 |
Property and Equipment, net - A
Property and Equipment, net - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Property and Equipment, net | ||||
Depreciation expense | $ 32 | $ 37 | $ 63 | $ 71 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Accrued Expenses | ||
Compensation | $ 2,365 | $ 2,803 |
Accrued taxes | 615 | 378 |
Miscellaneous accruals | 363 | 733 |
Total accrued expenses | $ 3,343 | $ 3,914 |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Customer concentration risk | Revenue | |||||
Concentration of Credit Risk | |||||
Number of customers | 1 | 3 | 2 | 3 | |
Customer concentration risk | Revenue | Customer one | |||||
Concentration of Credit Risk | |||||
Concentration risk percentage | 62.10% | 50.80% | 52.50% | 53.00% | |
Customer concentration risk | Revenue | Customer two | |||||
Concentration of Credit Risk | |||||
Concentration risk percentage | 14.80% | 14.00% | 13.20% | ||
Customer concentration risk | Revenue | Customer three | |||||
Concentration of Credit Risk | |||||
Concentration risk percentage | 13.80% | 11.10% | |||
Customer concentration risk | Accounts receivable | |||||
Concentration of Credit Risk | |||||
Number of customers | 3 | 3 | |||
Customer concentration risk | Accounts receivable | Customer one | |||||
Concentration of Credit Risk | |||||
Concentration risk percentage | 33.00% | 55.90% | |||
Customer concentration risk | Accounts receivable | Customer two | |||||
Concentration of Credit Risk | |||||
Concentration risk percentage | 12.10% | 17.60% | |||
Customer concentration risk | Accounts receivable | Customer three | |||||
Concentration of Credit Risk | |||||
Concentration risk percentage | 10.60% | 12.00% | |||
Vendor concentration risk | Accounts payable | |||||
Concentration of Credit Risk | |||||
Number of vendors | 2 | 3 | |||
Vendor concentration risk | Accounts payable | Vendor one | |||||
Concentration of Credit Risk | |||||
Concentration risk percentage | 11.40% | 23.30% | |||
Vendor concentration risk | Accounts payable | Vendor two | |||||
Concentration of Credit Risk | |||||
Concentration risk percentage | 10.30% | 20.30% | |||
Vendor concentration risk | Accounts payable | Vendor three | |||||
Concentration of Credit Risk | |||||
Concentration risk percentage | 11.10% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Commitments and Contingencies. | ||||
Facilities lease expense | $ 18 | $ 17 | $ 35 | $ 34 |
Stock Option Plan (Details)
Stock Option Plan (Details) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020USD ($)$ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares | |
Number of Stock Options Outstanding | ||
Balance, Beginning | shares | 1,581,582 | |
Options exercised | shares | (32,567) | |
Balance, Ending | shares | 1,549,015 | 1,581,582 |
Exercisable, Ending | shares | 1,482,272 | |
Weighted Average Exercise Price | ||
Balance, Beginning | $ / shares | $ 3.23 | |
Options exercised | $ / shares | 3.01 | |
Balance, Ending | $ / shares | 3.23 | $ 3.23 |
Exercisable, Ending | $ / shares | $ 3.10 | |
Weighted Average Remaining Contractual Term, Options Outstanding (in years) | 5 years 4 months 13 days | 5 years 10 months 9 days |
Weighted Average Remaining Contractual Term, Options Exercisable (in years) | 5 years 3 months 10 days | |
Aggregate Intrinsic Value, Options Outstanding | $ | $ 66,248 | $ 70,827 |
Aggregate Intrinsic Value, Options Exercisable | $ | $ 63,588 |
Stock Option Plan - Stock-based
Stock Option Plan - Stock-based compensation - Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 61 | $ 98 | $ 128 | $ 196 |
Cost of Revenue | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | 1 | 1 | ||
Engineering and Product Development | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | 5 | 12 | ||
Sales and Marketing | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | 15 | 31 | ||
General and Administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 61 | $ 77 | $ 128 | $ 152 |
Stock Option Plan - Additional
Stock Option Plan - Additional information (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
Jan. 31, 2019 | Oct. 31, 2015 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Sep. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total unrecognized compensation cost related to non-vested stock options | $ 307 | $ 307 | |||||
Weighted average period of unvested stock awards | 7 months 28 days | ||||||
Stock-based compensation expense | $ 61 | $ 98 | $ 128 | $ 196 | |||
Number of stock option granted | 0 | 0 | 0 | 0 | |||
2007 Key Person Stock Option Plan | Options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares available for future stock-based compensation grants | 0 | 0 | |||||
Maximum number of shares issued pursuant to awards granted under plan | 407,500 | 407,500 | |||||
2014 Stock Incentive Plan | Options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares available for future stock-based compensation grants | 1,258,557 | 1,258,557 | |||||
Maximum number of shares issued pursuant to awards granted under plan | 2,783,616 | 2,783,616 | 450,000 | ||||
Maximum term of stock option grants | 10 years | ||||||
Number of share reserve increased | 261,249 | 1,500,000 | |||||
Percentage of shares reserve increased | 4.00% | 4.00% |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Taxes | ||||
Effective income tax rate | (8.59%) | 2.86% | 15.59% | 1.69% |
Federal statutory rate | 21.00% | 21.00% |
Net Income Per Share, Basic a_3
Net Income Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Net Income Per Share, Basic and Diluted | ||||
Basic EPS (in shares) | 6,548,215 | 6,411,606 | 6,540,755 | 6,368,905 |
Common stock warrants (in shares) | 69,039 | 168,099 | 69,377 | 207,471 |
Common stock options (in shares) | 1,417,794 | 1,506,435 | 1,440,262 | 1,551,865 |
Diluted EPS (in shares) | 8,035,048 | 8,086,140 | 8,050,394 | 8,128,241 |
Net Income - Basic EPS | $ 1,075 | $ 2,619 | $ 3,748 | $ 4,472 |
Net Income - Common stock warrants | 0 | 0 | 0 | 0 |
Net Income - Common stock options | 0 | 0 | 0 | 0 |
Net Income - Diluted EPS | $ 1,075 | $ 2,619 | $ 3,748 | $ 4,472 |
Basic EPS (in dollars per share) | $ 0.16 | $ 0.41 | $ 0.57 | $ 0.70 |
Diluted EPS (in dollars per share) | $ 0.13 | $ 0.32 | $ 0.47 | $ 0.55 |