SMLR - Earnings call transcript Q3 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Semler Scientific Third Quarter 2018 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

Before we begin, Semler Scientific would like to remind you that this conference call may contain forward-looking statements. risks identified or such and results words involve number be expect, may, such to can could a estimate, that those anticipate, with of differ statements materially by Scientific's discussed as words will, statements cause from Such Semler uncertainties here. actual and similar meaning, revision the to that and any it presentation, these Semler these revise Please results of publicly to statements note the Scientific's opinions in new no obligation statements date reflect forward-looking only or release events. as light of or information forward-looking undertakes of of future Please filings and description may detailed refer forward-looking Semler to factors Semler affect the Scientific's these for a that risk the SEC statements. more results Scientific's of

As a reminder, conference is this call being recorded.

Murphy-Chutorian, may Sir, Semler Doug CEO Now, of begin. I'd you to Scientific. like introduce

Doug Murphy-Chutorian

everybody, Semler solutions providers. Thank call. results that and of the is for thank and quarter efficiency third you. XXXX provides you Good improve company Scientific growth financial joining morning effectiveness technology an emerging Semler clinical to the healthcare

Our believe options mission evaluating intervene diseases. when that customers exceeded has events care from manufacture, chronic report identify products and is innovative XXXX appropriate profit and and of growth. for the treating occur. the and record of like customers XXXX market first revenue months We assist to and already best our Today, attacks revenue strokes continued before XXXX. our heart solutions company, the to-date that enable in technology and preventive nine we revenue software our and annual year is to are that to develop, on

R&D based primarily continued in sequential in of team XXXX such on one that growth, from customers. see revenue was XXXX revenue of occasional outsized expect and we license spurts sales to our our is growth team. achievements the impressively. our largest due growing larger-than-usual with the the product full-year to Management XXXX, the orders by of interest In for remainder believes of ever best customer and quarter third The of

distributed refer which the will in next. described was discuss this morning, financial release that please Now, I to results the press

For revenue basic diluted $X.XX development of of share a share XX% the cost an revenue, was per expense XX% or an Earnings XX% increase compared of quarterly to XX% revenue, the Operating were share was and which $XXX,XXX was increase quarterly expense includes period XX, was revenue quarter $X,XXX,XXX quarterly ended September of XX% $X,XXX,XXX. $X,XXX,XXX, from revenue. net administrative $X,XXX,XXX. of Net count XX, from in per was of $XX,XXX. the cost revenue, as $X,XXX,XXX and of profit growth and revenue, and expense, XXXX, was increase sales XX% engineering satisfying of and was $X,XXX,XXX per quarter of XXXX, diluted $X,XXX,XXX, of quarterly profit of for share revenue, $X,XXX,XXX. product $X,XXX,XXX, a of expense corresponding marketing a of quarterly calculated net from the the ended loss quarterly an basic of of revenue, became quarter a of XX% general count profit. revenue using that third September expense and $X.XX note XXXX, share and was XXXX, net percentage Analyzing earnings XX% in categories of to or It's

income cash XXXX of $XXX,XXX of and partially and XX, $X,XXX,XXX, increase September of in $X,XXX,XXX, which purchases which exercise due net warrants June cash primarily As operations Semler as an provided compared and inventory increased by by expenditures of by by and adjusted provided to offset XX, as of the XXXX, sequentially $XXX,XXX. such had capital and accounts items receivable to $XXX,XXX options proceeds

in combination which lieu XX, notes holders company equity of other of of note repaid notes in $X,XXX,XXX note of resulted stock shares earnings, an September common stockholder's repaid as in cash. XX,XXX of XXXX. the issuance of quarter increase XXXX, and the of to as to interest and totaled June in $XXX,XXX shares stock options $XX,XXX to issuing common the third with $XXX,XXX holder During XX, of exercise XXXX in cash compared The by and

As And a The $XXX,XXX balance of to holder X,XXX,XXX of on accrued that requirements with XX, day, remaining equity for company anticipate reminder, the $X,XXX,XXX. XXXX, sheet we $X the are at note note million. stock. is NASDAQ exercised share additional equity. of and increase an satisfied warrants stockholder's the to latter Subsequent listing interest same cash or the action September on stockholder's common repaid the

on discussions include report our and quarterly statement flow cash cash and will liquidity. Form Our more XX-Q our of

numbers supply from We license September sales. For or XX, established new of do numbers of vascular licensing XX, of from equipment total growth don't leasing Revenue other new the usage by the of fee XX% lower the licensing report third remainder revenue XXXX comparison, the grow sales both and came the seen the usage period QuantaFlo, increased the to during and usage the XXXX, to fees of and of in quarterly accounted accounted for accounted from to XXXX, of of customers report from from revenues increase months In for revenue revenue. and installations during and of of accounted revenue. from $XXX,XXX supply new usage each. fees quarter fees compared revenue third sales We partially of of the we The corresponding the due of of that while lowest recurring XXXX, of business. to XX% in mostly XX% which numbers revenue to in and full-year XXXX In XX% licensing customers expansions of of fees In customers pattern from supply XXXX. came established for XXXX three was quarter XX hardware usual installations revenue revenue while sales months of expect three expect the performing our from September license ended continue license $X,XXX,XXX XXXX. to previous and we each. due license ended recurrent product same XXXX, spurts as months, offset testing The the outsized usage fees over the quarter license for To orders in give the the to revenue for is with or guidance due model XXXX believes the growth in sequential in next customer's wherein $X,XXX,XXX has in the the the products as to quarter year. can same orders This were of revenue occasional formal more together don't continued of quarters compared and interest fees growing. customers. first expectations pattern the growth revenue from three quarter specific in $X,XXX,XXX of for we revenue In period routinely An of specific $X,XXX,XXX reiterate, that been orders. remainder in We all latter larger vascular compared third was than [ph]. products. Management in to revenue XXXX well. our quantifier recognized testing increased XXXX,

XXXX. relatively the XXXX, We expenses flat expect operating business quarter to will quarter operating from expected expenses grows. are as in And the fourth to increase be quarter

intent and remain our As to we expenses it to is profitable. faster rate stated before, than at grow have a revenue

additional company's on We right in plan our arises. to is full to opportunity history. are the raise this as We financing track to reserve no capital XXXX for be first There the plans or year currently time. the need change of profitability

large testing QuantaFlo Our market is is as care for goal of further disease the establish believe that the vascular current standard penetration. our in relative to a market industry. We to

patient. diseases. who Scientific months the well-positioned provide deliver may by We health there Through economics is patients So chronic in those solutions cost-effective health is care work benefit because room for patients Semler insurance that improve care of preventive continued the for market for and with health We the this providers, the think growth. the identifying wellness We first nine government plans, the from of outcomes for earnings facilities, measures. the share. of a for revenue already terms XXXX tested of patients diluted. for financial exceed To was of $XX.X loss remarks, year with $X.XX $X.XX per prepared These products, was being the which conclude entire in and company. as was million is per basic our million and both revenue $X.XX the XXXX a XXXX of number year numbers performance established record share and my performance the with $XX.X we

we Operator, to new expect quarter these currently thank highs you attain the the for support, the During I of and lines interest your company, your XXXX, in questions. please open categories. in fourth for continuing now

Operator

the our And Instructions] comes O'Neil with [Operator you. question line Street Capital. of from Lake first Thank Brooks

open. Your line is now

Brooks O'Neil

outsized occasional suggestion like regarding be I'm comments little solid guess, congratulations Doug, and some a sequential that continued there seeing probing can potential start I morning, questions. Good for a you the the confidence prospects on to such may to you quarter. your few made statement? I there guessing you I'd growth basis some with is any sequential from in Could just with continue a have on gives or may the us make additional outsized the just growth color future. for orders that and give what on you some the be customers orders. indications bold

Doug Murphy-Chutorian

sequential you've growth. as last growth have seen, quarters, the continued over Historically we Brooks,

ones predominantly interact the lead that - coming seen did upon field, with Some will, required that IT the where quarters a them quarter, who were of historically, the are then late comment their in later to once not in quarters installations wanted a to quarter we past about put and devices, get staggered us on to the when won't comment increases we customers said have up. our if and/or but of outsize billing again, in our departments orders we but you shipment, a put intra in we large basis,

have, of we a get because tests that when you the the results is systems As operational, daily of each we all basis. going we on it know, know

the the So best that and to made very good the saying more that my in also had just year statement far. in and the so see of we we I opinion a quarter expect third the obviously quarter of certainly I think we're same

for there's to a optimistic of a lot think reason growth. we we be have So that framework future

Brooks O'Neil

your I you as That's your be you in that on helpful. seasonality Semler or that. any patterns in might fluctuations? if seen described appreciate at seasonal say the Could have ever time very commenting business

Doug Murphy-Chutorian

has The Not at its of different revenue done spurts the year. times license clearly.

to seasonality So say no that can we we real that. have

seen kind of with we it's year history revenue, a what lowest usage fee is we've that let to fourth year, fees, here. - second, the the and are in the in example, $XXX,XXX $XXX,XXX get first the third you first our fees - saw usage higher. second, $XXX,XXX me in see have approximately usage I XXXX, essence the and I in the numbers This seen early of for on believe, and are This $XXX,XXX $XX,XXX but for quarter fourth the quarter. substantially we the quarter. the in of if year and in first that On can was quarters third

The seems absolute numbers it. and second therefore not was quarter this $X,XXX,XXX on that what giving be about continue. anticipate to we We so that could quarter guidance would pattern have $X,XXX,XXX pattern seen. We're that of was

So although, we last there'll be in like was has activity I clients sales brought there don't as burst know us. new another important said, year, if to

wait see just year. to happens have and we'll next what So

Brooks O'Neil

activity to That's are quarter new in that very as at reasonable in reasonably seeing look about customers are - anticipate you say the future? don't or evaluate want anything you helpful looking a Sure. in what but or customer seeing near this you out know I could from clients, overall you more how individual too. your acquisition you you perhaps say specifically would business to you pickup existing might

Doug Murphy-Chutorian

not numbers. important clients. or you new this as quantifying giving more we're quarter actually more in The sales think brought brought from established I in and team they clients orders also said,

So regards. we're happy in both

Brooks O'Neil

Yes, yes. that's great,

note? more that one, Okay. the seeing questions, on you front of anything competitive Two new quick are is

Doug Murphy-Chutorian

No [ph].

Brooks O'Neil

simply the you there some And then secondly, listings. to equity and milestones for $X you relatively in requirement $X be to mentioned for there getting to or then or million To in NASDAQ to future listing of steps equity address it the need your get is million listed? the your criteria knowledge NASDAQ or eligible are Okay. experiences perfunctory meaningful other

Doug Murphy-Chutorian

relatively latter, steps; are some perfunctory there other The criteria.

exactly there. a because We we how get example, will have that, requirement do shareholders to and try better on see a run, a many there's number to for

in is indeed up I making if should to is but requirement. the all that We're be statement else equity was the certainly keeping paperwork, think everything reports, that I there, is we the shape. that requirements that on able calls, was cetera the the good NASDAQ the address necessary, was et the i.e. hopeful

there company, We NASDAQ when two a independent become we have addition, In members. additional is board requirement a to independent. have currently

increase each - some are each consider the but perfunctory, independent, to but box would be just five them the of has those I checked. we examples. So point

Brooks O'Neil

just be this Sure. on congratulate to I I upon would I continue and enthusiastic say, appreciate that prospects and year. I fairly your your you wildly accomplishments

Doug Murphy-Chutorian

Operator, are other questions? New there questions?

Brooks O'Neil

We few shall a I more questions? maybe Doug, ask lost the operator,

Doug Murphy-Chutorian

And at would on if Yes, you some back the operator point can be come that terrific. may…

Brooks O'Neil

Could you quarter, spending to and you what positive about R&D talk be? think but in little R&D those right. alluded bit the I'm sure might All some elaborate not I you heard on just a developments I

Doug Murphy-Chutorian

and we R&D Made what capability; number those for obviously $XXX,XXX, features, you'll we security attempt quarter in handling, I of some future growth. all me, multi-platform get I don't an framework the front are And dramatic the see have mean spent those the in done analytics ready. again a once our part products improvements in data by of to on in think that and few

Brooks O'Neil

no just to as you capital, you specifically a continue as grows your way is R&D, to to summarize? in mentioned And Sure. perfectly to like invest and you cash meet from feel reasonable needs as plans operations that is it business the the flow had adequate raise you growing

Doug Murphy-Chutorian

the than what in growth. with of the path in and and it's stock is given No, the we company happening reference on earlier undervalued see planned, minimal think still we're we of terms price share our dilution

plan cash be So operations. this there's point, to, assuming now from the no going to that is accumulating at

that to have the right a change want to giving based We happy but very management we plan on but to cash those the necessity, I swelling, recession very plans increases, to or fact opportunity our balance cash clean we are accelerate the reserve very, see have expenditures, sheet. now no and

Brooks O'Neil

Absolutely, that's great.

Doug. very Okay, I much. that's' Thanks questions all the have

Doug Murphy-Chutorian

other Operator, questions? any

Operator

Thank you.

of & Kyle Our line with Dougherty Company. from the next question comes Bauser

line now is Your open.

Kyle Bauser

hear okay. you Hi, good Can morning me Doug.

Doug Murphy-Chutorian

you? Kyle can, hi I how are

Kyle Bauser

annual connection doing actually Great, eligible insurers opportunity home like companies at the some in opportunity patients what current your there to you getting they sign so assessment don't is an is on Medicare are risk non-current well third with checkups to for of about partnering their whole the that leverage based for with receive insurers license administrators in nice of leveraging clients, go talked there health thanks, roughly so a a exam current wellness health they clients, other blues. the that are Semler aren't of Advantage I'm an if of also the big is partner non-anthem that to clients remaining at

Doug Murphy-Chutorian

it to decision right their assessment exactly case patients of the in their help clients the their In plan people may risk third terms some data taken of in a clinic setting would let the the not do. for or care you're that think their that and it's clients of home conclusion the client logical program successful a would I party rest vendor hope what the not client is we the economically. marketing setting them decision that of the would by home usage. in and means Their be that be plan would make own therefore of to of clinically essence next make, current particular should them clients gets terms their so does they insurance how of also show wonderful make be a of many to this which that both in ours patients for and feeling and

Kyle Bauser

any QX quarters. for non-licensed slightly sequentially and line so function Okay, license If maybe about that the and about XXX% past and sales on in assessment a of one sales look we at update great. from in would licensed client up of home health was of on thanks from have your which remarks grown here base were this is came sales and in three in look QX users QX signing prepared quarter great XX% year-over-year flat results this sequentially and one with stay within of in risk not these QX companies QX sort developments be QX

Doug Murphy-Chutorian

I'm the and impacted is fourth the first is more clients who XXXX predominantly increased really a and up the testing third the that look of divide with we and running end were do the fourth they're get It to a doesn't have insurance at year both facts clients whether the unclear had It look on to apply really us quarter and which fourth to going a it's to we not pattern which to insurance from in just think this going the bit I and that the were or the new existing mean to names is and first coming little because questions and so have It's third the plans in me for that and And and are yet. doing or anything bigger, we're exactly saw do quarter seeing hard usage second from and for fees, and in are waiting there really then be some say that better do we to get third of doing of whether a the see contracts then of tested. has of second, just you does third from I up I be This to we at so of he are give that of question to little who we a of their have the third of impact years, HRA that. pattern the have they a and them sorry homes, that our assume bit that the all to made, holidays considerations history be sum that give year that ourselves. know so in your don't plans customers future would beginning in to who because would bit quarter it a if quarter while just do the in can't that. the have names the the raise those increased what cases additional sort lot I people's members would to wanted so who lot where quarter tell in year by second fourth. little second answer the little third is cases a you equally we facts to we to a if in feel I will is bit vendor and

Kyle Bauser

that helpful, Medicare just kind that's No, so early here. to of you're saying these HRAs of said administrators the a Advantage gave on list

Here're you some whenever go exam, so patients what year and that annual haven't come can for next ahead saying? in their over the them test wellness and you're

Doug Murphy-Chutorian

more really do it come target discussing into but, it's sure not of I than of the people more than know basis think I'm clinics so describing. years, they not for kind that it's may they but the is business like I who sophisticated to have sophisticated because their I'm

I on only make and we your and then to that. look suppositions present that data think what based the we to have have do can at that you you is

Kyle Bauser

and detect in anecdotal PAD feedback used to can lot Okay. And the practice then lastly standard this a can't for early is received you of from flow this care any and or reason PD patients. even early instances how quantum on there's for has where given their been become of the clinicians, share of detection no simplicity flow accuracy quant you changing of really physicians

Doug Murphy-Chutorian

and a well years data literature story good I testing lot found news we time to medical There and patients think and though had documented that it first medicines younger we good a to we're good their and in supporting growing and come had in cases in now patients and we into can their more now intervention. then getting so right that I preventive lives getting there's what out is or to think an that heart had hope to anecdotes disease you do that We the that, over a right some are which feeling assume doing, costs, were accuracy, they stories medicine. fit the use a them There's this have inside XXs I general reduce is discover of intervening cases think is and I analysis, lifestyle hopefully don't save this. of many the had right very it in for we so or in continue in that literature so way say, other behavioral medicine a PAD prevention, need for preclude or healthy preventive interventions about the

hallmarks efficient the and medical effective is care. also medical good think and I of care cost

Kyle Bauser

great. Thanks taking for the lot a That's questions.

Doug Murphy-Chutorian

Kyle. you, Thank

Operator

next Marckx and Brian from you line Zacks question our comes with Thank Investment of Research. the

is line Your now open.

Brian Marckx

been incremental commented some maybe quarter. QX Hi, interpret Most sounds expenditures of have come that though R&D you've could the terms in there Doug, on asked relative of that, QX R&D congrats to that, were that down should expense. mine I like on it

Doug Murphy-Chutorian

that done energy revenue sooner at them get we've of because product seen Yes, think along. benefit in there was settle cost it's all and we to R&D now. have to and a we so major range, don't want it percentages go think quarterly be into think XX%, think a the where but but of X%, down that that paying don't a so of us I it's then expense, changes they're a I to might, earnings and it's that running dollars we think our in and revenues put cetera to company, that or look ballpark. that $XXX,XXX can in planned to us spend a there on where the which Engineering would want been XX% it right to to any up expecting now anticipate those a quarter we'll I same little we if et running and you interest see project burst they've we I future we've us something corner, that been historically actually happens getting development of into we right big benefit I worth projects down going not we take where you did completed

Brian Marckx

to Okay, the one you had that do is today outstanding last it with what then great and tell just share count? me count, on can the diluted

Doug Murphy-Chutorian

here. Yes, one I it and have second

September XX, option stock that some outstanding warrants common the XXX,XXX that just options stock also I invested in and call were of to common and XXXX X,XXX,XXX that did said early you of on mentioned there were XXX,XXX and there unvested did October. As I hear shares, stock X,XXX,XXX convert the

Brian Marckx

and Okay you file queue? when the to expect

Doug Murphy-Chutorian

to Generally speaking say week, we by the sometime file certainly next queue week Friday. the let's next so

Brian Marckx

all you, Okay, Doug. Thank right.

Operator

Thank you. And our next question of comes [indiscernible] from line Partners. the

line open. Your now is

Unidentified Analyst

Hi or your been Doug, annual, lives, suggest those have view I - had what a a don't question annual overall covered it's know and do percentage I an lives just test? one-time of of regarding test what's are is you if it tested, in

Doug Murphy-Chutorian

to Generally risk The programs once risk and a years who like American for everyone we the where about or country comes but so… procedure have believe Peripheral are, that have there a penetrated in number minus administered cetera. we've are College would either year. we or screening Artery and XX uses past no at as we of given the a XXX,XXX not tested XX the were of cardiovascular to Cardiology the Association programs criteria in some we are million physicians group there. group speaking, And for be market patients smoking we care physicians are numbers cigarette and and XX testing older, terms X% said been plus Heart about updating primary or age to had in that course and that factors that factors American That be monitoring would about look Disease people older et of

Unidentified Analyst

how I'm base your your covered to customers nationwide. discovered? install about currently about talking talking lives You're many

Doug Murphy-Chutorian

our insurance in you've they're the so these united believe customers that you therefore obviously this customer are lives with easily that of plans figures say their just ones We for we than our can are it not up customer number are who not the and that more and also did my country, approximately disclosed share, the top head, the the patient but I and market that, they off population in you associated look so with XX% the have only of who got. have biggest are optimal

Unidentified Analyst

to I'm the view that, are your Semler's just understand been have trying of covered to many lives I your that view tested? how in in out appropriate be figure tested are what

Doug Murphy-Chutorian

think We digit. single low

Unidentified Analyst

the a And is there there can of early show are refer material payback that you studies intervention? that are to

Doug Murphy-Chutorian

We intervention particular you Peripheral patient I and PAD you other the one can population can the where just looking we referred a look that we out if benefit there Disease. period mortality to, of in substantial is identify you question There up paper that with a over have XX% there, job one can that patient that that intervention I that patient done articles there just at Artery want offline decrease from that you is is asked there the was in multi-year paper. was decrease, are did many we references paper. good what believe is what centric and a potential in get clinical

Unidentified Analyst

you. thank Okay,

Doug Murphy-Chutorian

Thanks so much.

Operator

Hillary comes your from and question next Christopher you Thank with of the Roubaix Capital. line

is open. now line Your

Christopher Hillary

Hi morning. good

Doug Murphy-Chutorian

Good morning.

Christopher Hillary

given size, how your run? have expect you about ask wanted evolve profitability or of remarkable to just that to you comments certainly in a I medium level have long you the

Doug Murphy-Chutorian

not really to income guidance had We net reporting given we tax as that, because are loss of carry-forwards.

continue We anticipate forward. I that substantially were income carry in this there drop of as would amounts. change but goal million we're that will will relatively at any XXXX line expenses our to of I to our $XX number updated revenue that tax in not $XX given and keeping gotten a point million exact a growing loss the believe haven't not of having bit time. reported terms or approximately of then the to in of We less guidance's growth bottom line as obviously quite would mean said taxes, some situation have so I

Christopher Hillary

results. Okay, on thanks very the much. great Congratulations

Doug Murphy-Chutorian

again. Thank you

Operator

And closing time. not you. for questions further I to Doug back Scientific of call remarks. any this Thank like showing Semler CEO at I'm now any Murphy-Chutorian, would turn over the to

Doug Murphy-Chutorian

to updating forward joining continued you Operator. progress. Thank us today look Thank you soon I you, on our for everyone.

out we continue. like to please progress any are this me other may today. day. the We the reach Especially kind had the on if ask call we of Good questioners have should free not are on happy with at you to feel and questions would very if thanks the have chance call, you phone to to to on a can moment, where any update information and

Operator

and participating thank conference. Ladies in This you does all wonderful program have Everyone and you day. gentlemen, conclude a may disconnect. for today's today's

Semler Scientific (SMLR) 26 Oct 182018 Q3 Earnings call transcript