SMLR - Earnings call transcript Q2 2020

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Operator

Good day, and welcome to the Semler Scientific Second Quarter 2020 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

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

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

Doug Murphy-Chutorian

Rosenberg, joining Good Semler you financial call. afternoon, I'd the like half Dennis? who presentation Scientific today. second Dennis Chief you and introduce XXXX thank and first will begin results our everybody, to our Marketing Officer, for quarter to

Dennis Rosenberg

Doug. and providers. begin to with the Semler's effectiveness reminder about technology health of is our Semler that improve to We Scientific always a strategy. solutions a clinical calls company Thanks, care efficiency like provides

attacks was like Comparing business preventive strokes and was when events pandemic. the intervene one $X.X our In to three, ago. heart number Our by highlights to assist diseases. evaluating one, quarter million enable innovative number million; and quarter report COVID-XX the and million; $X.X lower identify and second to to XX% income revenues of We results technology four, manufacture and pretax appropriate the care year today's number by $X.X as treating believe products compared mission $X.X customers lower is net million our and second was solutions $XX.X quarter options quarter, market software are XX% chronic impacted of XXXX develop, are occur. before from that customers the in two, income second to of that by net cash at were follows; number our our to XXXX, to was million; end the

our more financial Now Andy? Vice Finance describe in performance Weinstein, Senior and President our detail. will Accounting, Andy of

Andy Weinstein

revert the financial results distributed Please at to conference the close – that Dennis. press Thanks, in refer market described today. was

which XXXX, the revenue, of per million. Operating June or share, from $XXX,XXX a during net million million. income the X%. a per For of same compared share ended to or or diluted was million quarter share was $X.X XXXX, million, million $X.X $X.X the XX% and revenues million, cost was compared includes million, $X.XX basic of last period was diluted basic XX% $X.XX to to Pretax of period a of which increase corresponding $X.X $X.X per million. decrease and were share from Net $X.X income per XX, $X of $X.X income XX% million, year. an Net $X.XX $X.XX per $X.X decrease $X or expense, compares share decrease

basic XX% average of revenue, share revenue, XX% revenue, total was was expense percentage and a expense as Analyzing quarterly expense marketing of XX% sales XX% is development share quarterly was categories XXXX was administrative XX% quarterly of revenue. was in and shares. quarter count general engineering revenue, count revenue quarterly X,XXX,XXX earnings and quarterly product June of expense weighted quarterly quarter expense was second ended and and the of and XXXX, cost of the of X,XXX,XXX revenue For XX, of diluted the operating

million, $X.X an and XXXX. of XX, increase that's compared of As had to Semler of June cash million, of June as XXXX, million $X.X $XX.X XX,

June XX, our result of $XX million items, these as stockholders' is As now of equity a XXXX.

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

Form quarter income, $XXX,XXX income net amounting to cash amounting second payable deferred to provided grew by amounting amounting XX-Q the by accounts provided XXXX, operations, quarter the $XXX,XXX; receivable XXXX, of to prepaid due offset by to to the accrued and cash amounting capital partially compared of of which amounting and shortly. net other was $XXX,XXX, first primarily by inventory provided with be liabilities to purchases for other addition expenses $XXX,XXX, amounting accounts $XXX,XXX, $XX,XXX; will change, cash $XXX,XXX; of used net in expenditures to filed to cash $XX,XXX. SEC revenue and current to $X.X In then with reconciliation to million. This expenses

of Test to affects Our of first customer full future or on results. or to occurring a largely license comprised during orders revenues equipment decrease and $XXX,XXX. any X%. Variable $X,XXX,XXX, experience year based the Because executive sales $XXX,XXX started approximately the approximately license or have This shelter-in-place distancing of were results other the quarter, revenues restrictions. XX% quarter indicative fee other $XXX,XXX fee largest quarterly we not from similar usage fee in were our decreased variable second Fixed are volumes quarter, effects quarter which and the fiscal and continued were second mandating home COVID-XX revenues. into in revenue late due visits. social the of are which arrangements,

that vendor testing indicate To maintained revenues have consultants. May volumes $XXX,XXX. state fee during to July will eased software second and XXXX on compared salaries cost-cutting that have expenses reductions included restrictions governments a variable June $XXX,XXX fee licenses results for variable to decreased. Operating spending as decreased and staffing, grew. Preliminary the increased and $XX,XXX. travel decreased quarter, usual levels, XXXX, XXXX inventory date, expenses from exceed quarter XXXX at the fee measures software In the of our of our As second during license result have

increase We expect third more in will we as to hire the employees. quarter the begin operating expenses

resume. uncertain line customer interest with other changes Although return will times. in services guidance, these Scientific in Semler QuantaFlo costs its we our preserve do are believe and business our plan the not not conservatively nonemergency do business we shelter-in-place more provide lifted manage and medical expenses activity revenues related to on to We such effects to to or are quantifiable, our in similar pandemic formal pre-COVID-XX or undertake exceed services Until cash COVID-XX during plan operations. on at changes any our time product the to restrictions of intends material and as

ask remarks. will and I Now concluding discussion Dennis continue provide to the Dennis?

Dennis Rosenberg

XXXX, was of employees, quarter second headcount the a of decrease In one. XX

in firm for activities no and at in point we company forward. time virtual as using will time. a arises. ourselves. capital the do it. our this additional include to and financing are communicating working been with Also, Investor from training when and investment change to reserve NASDAQ we've out raise right yet homes. We This meetings others attending as have to years, sponsored are comfortable not web-based and or XX we place our that non-deal uplist experienced plan have We We we is do plan market. host virtual virtual now the plans There increasing in our of conferences to Relations a we As plan bankers need on by opportunity

Street Virtual XX, participate Securities Virtual we on We Colliers Lake September Conference. Securities Conference. September in Investor at the the are on And will Investor scheduled XX one-on-ones hold already to

health develop, continue provide time value to customers. and return the acquire plans, chronic we Semler We benefit to facilities, enhanced But identifying products, similar and or a by the because the provide have Our shelter-in-place our who are wellness I in-license our existing and positioned for effect improve in with of new those the the that to in support. the well continuing cost-effective measures. and/or believe and services of care Scientific R&D deliver We related or conclusion, to government outcomes preventive business and and decline which product product your from customer lifted as we may solutions health due to patients the our for upgrade such QuantaFlo services patients. and services that company We of you the want is goals insurance pre-COVID-XX your to in services at reiterate seen interest to we resume. believe medical diseases. activity are data In the for economics COVID-XX. services work for nonemergency Thank patients restrictions interest exceed providers, should

happy please Andy Doug, I lines. Now the questions. and your be address open to will operator,

Operator

comes We will now Brooks O'Neil [Operator Please question Lake Instructions] from of begin go Street Capital Markets. the first The question-and-answer session. ahead.

Brooks O'Neil

Good guys uncertain afternoon, Doug, you are I hope doing Andy Dennis. these and in okay times.

Doug Murphy-Chutorian

you. Thank

Dennis Rosenberg

you. Thank

Brooks O'Neil

know call, I can questions. since there's might only on questions have a guess few. And us this ask three two I asking you one or of a or you So probably I few

And/or if at just had June activity? In expected the greater environment. your we significantly significantly per-use that commentary year I'll before testing you beginning volume compares particular, maybe is if of normal do COVID kind of for of just XX resumption the I'm Or you what with curious June your you you pent-up per-use So the got $XXX,XXX growing think demand there's would over – the May. comment, to over and how start than in think July is this testing? a really do into about

Doug Murphy-Chutorian

bit. question take the first there, part a for the Brooks. Thanks I'll

approximately I we quarter, first revenue. million than think did fee the less per-test in $X that in

it. as not trend. second a will ask it the certainly to it's was, as question, I much it's do So to And answer but well-done Dennis

Dennis Rosenberg

is that was is I yes, kind the Brooks, know, None previously we has regionally, there a up. paper, story. of evaporated. how mean, Sure. of there pent-up we're as question this and, from still how demand. demand clearly, know It's the all as different you of quickly reading a ramping

hard get to still assessment these were, as companies up. where So they in as we're to but home-risk seeing they working it's can back ramp

Brooks O'Neil

Sure.

bit Or that. a – just Or a percentage reflect else bit that Can up? about your why you your sense. them just ramping a little falling all big That this makes a quarter? largest some little of such off? everybody customer combination Can was talk Does you get I lot talk about sorry. why therein? all I'm Okay.

Doug Murphy-Chutorian

probably per of test. by our It and paying third, fee that were big the us represents case second customers,

So are HRAs. these

this only And so the is thing.

by So the percentage explained that. is

Brooks O'Neil

Thank Okay. you. I get that.

who and I begin of services all on as or products new to see activity when see being of we strategic about products, think manifestation Can it comment at Semler? you services just your from commenting new was new the of and an development might part was important Dennis whatnot.

Doug Murphy-Chutorian

please? Dennis

Dennis Rosenberg

a talking have to before, in on solid said fronts. we'll conservatively actively be that talk when number kind Well, are working But the Sure. when about, we this sense it. we that's as of about of take something we we

and know, you things current of be things variable. these As particularly on line COVID, can climate the time the in

this more So we at don't detailed point. have in anything about to that talk particularly regard

Brooks O'Neil

sense all freeze the to that perhaps you talking end recall talk I I Okay. at hiring hiring first recent Cool. people some Can of I about quarter. actually about And additional or think the and/or beginning now. activity? about you're you get think hiring at

Doug Murphy-Chutorian

Yes. people the this We a confident give indicated on adding future. call don't we're we that on board said, that But in likely often we're hiring. about being exactly who commentary we're today because

know to account, you people we've R&D that people and manage such, things. or a and people As bunch technical sales other hired also of do

you likely considering. don't people. to for about this one. future. more So can that I if say revenue as people as develop XX of very to this reduced and expenses or it we're choice that we're as trying we career gains. a add have our that. to we is but people much this growth, XX also doing or in at add I'm services, hire our talking XX But it's be choice, and we're not But that. I the as – we'll be hiring will new career But on some said And doesn't is mean going we in

Brooks O'Neil

that. all get I

Okay. to And one I That's the more, maybe the ask questions, very great. appreciate helpful. just answers and guys, then I'll really

the would there As as to health now? more now, to seeing right you the say likely more your you you plan services? in be consider What you're you out there's think seeing are likely for Or adoption? about be HRA landscape product additional or right marketplace demand

Doug Murphy-Chutorian

can you comment? Dennis,

Dennis Rosenberg

starting is to HRA on seeing, their point, strength on as third we're up we to were licenses. growth also the execute seeing interest new Well, – existing on And our on existing the programs new in back we’re continued are to from seeing continuing we to get where wanting and speed contracts. and We're that at front back up. this mentioned,

goes cetera. looking are et pretty positive. regards just pretty, areas this three going to all point we'll to how So that And have in at forward see COVID,

Brooks O'Neil

Great.

look guys. for talking you And and you Okay, so Thank the much questions answers. in forward I to September. to

Doug Murphy-Chutorian

Thank you.

Dennis Rosenberg

Thank you, Brooks.

Operator

Please go of question comes Securities. Colliers Kyle ahead. The next from Bauser

Kyle Bauser

here. update Hi, and for all Doug, the thanks Andy, Dennis

So And and had the while out is or similar for like some Signify. of Advantage QuantaFlo are United the financial compelling. the as primarily phenomenal, nice ROI speaking the you've payers HRAs I'm obviously to very terms And some big clients channel. success rolling just Medicare your about like

mean talk indication? of In potential or integration your that for triple and would you little plans them your two exists bolt other indications? bit interest build rather other another able example, PAD to around more can to given other your UNH, how a I have profitable a So to straightforward is to example, QuantaFlo about application for for any be clients, about essentially portfolio TAM. your double within for seem expressed on diagnostics words, or in

to support focused on new products? are just out Or platform the building perhaps adding I cloud QuantaFlo? So more guess you

Doug Murphy-Chutorian

both. to trying We're do

And a or because either COVID also of need we and the distribution, that need opportunities We R&D. have in lot we've amount a seen on have have both. cash spent environment healthy people

are Our a – – lot with of diseases. clients deal well, they They diseases. different

don't asking think any are many go name. – deal you anything also, to from I other said, That off course. ourselves likely progressive, the So some they We – only areas don't we we're the them being a that identify have targets. going targets protecting by from us not protecting get – with clients go what to we to pursue. COVID after, us And that we're indicate get to or to that that

Kyle Bauser

the like list the get the of on patients the like it. been up, linger year? sales is a and for per-use of right It year, typically regarding kind names as they But of place. at making now. back for calendar had through year And the Brooks' Got they've they HRA the year before HRA and even their looks up scramble to kind up out of Got get when of end It flare months it. you to channel. I know beginning continues seems the seeing reach lost the do a COVID And to following list bolus now question of are to of a wellness end it. take to the exam

Doug Murphy-Chutorian

this? you Yes. Dennis, answer can

Dennis Rosenberg

Yes. Sure.

catch things the of We under different And up, definitely back those are eagerness on in seeing on essentially they the where can to the get their constraints contracts. everything to execute were, they're part of happening they to regions doing country.

or see that, on on So whether there's we the we course, But whether or expect shutdowns step COVID backwards to contingent more not. of front they're eager.

that way. Let's put it

Kyle Bauser

anything any Right. the But the then just if front? have seen you I'm Thank out competitive surfaced to the kind you. I the that And a Makes out seen just Semler entering clearly, there. partnered for curious largest is anyone on market there you've sense. mean, is with entry barrier other of lastly companies enter here, still massive payer market.

Doug Murphy-Chutorian

please. Dennis,

Dennis Rosenberg

Sure.

arrive so impact in far, we same the will anything course, things on not the is any still levels, that situation not ABI, of most competitor. while, market. from that beyond, a direct is the had new in which, conventional are have in been We which for expectation a we've But

Kyle Bauser

Sure.

taking so much Okay. Great. questions. of Thanks the

Dennis Rosenberg

you. Thank

Operator

next Please question comes Nichols ahead. Riley. B. The go Josh of from

Josh Nichols

that? the detail a churn more that fee a you Hey, little thanks the business Great was couple see from you bit on to color? basis. additional billing X% was like Is Can largely question. on higher in a looks provide, for headwind my that like negotiations, of I saw? July, it that taking know almost fixed where relatively to though, is pre-COVID on like back there manageable Any it HRA a like side.

Doug Murphy-Chutorian

this, speak please? can Andy, you to

Andy Weinstein

The of all other thing, different not things. one a Sure. it's it's it's across I said, mix doesn't – just of and a like actually you additional board, customers items. bunch the X% think churn

the I it's mix. that's point the one and think a So say, can't X%. I for the thing reason really

Josh Nichols

revenue bounce July? from progressed there June to provide that maybe And versus could how back roll between able and is so you're to been out? in And what as anything a far like as of beginning you COVID the seeing new you've that's licenses us

Doug Murphy-Chutorian

be you – I'll know, Well, back getting Andy to it's But and again as comment if – it's let please. normal. to easier that's

Andy Weinstein

things mean existing with are customers. I Yes. just not coming back,

some new seeing customers in. are We coming

So in. as or customers on units again, existing or customers a older reactivating bringing it is coming well new of more mix as

Josh Nichols

for the expectation great What's been hear. on over building second for publish this Well, that's of see? also, you And you couple quarters. to to into increased deploying I is that's the half? And don't those in last Are the based of sheet be then interest you release. balance know today? Where a more assets market full the up the that lease going the

Doug Murphy-Chutorian

doesn't increase cost But now maintained request we going many of – we six But prevent the into And continue and it inventory way unit anything And to interruption that how our expectations, want don't little it have. We – do do to that a on that but months forward. we to on, you much say COVID, we to a that maybe a to We've is of have safety want for for because depends need – speaking. we as we'll net least. about of much. at bit us? this any sales Andy, it it's service.

Andy Weinstein

March customers, and mean again, back cases, landscape ramping and be is to seemed more on ordering Yes. now the and in customers bringing I and up better we are some existing right units. it than in April, was new

your yes. to is question the So answer

be seems the better out compared in we point pandemic. COVID at getting more demand units there to this earlier So are as getting the to

Josh Nichols

that your have under you optimistic Or customer materially to pretty COVID? to do the year? not advent of anything product, are be may Are changed pushouts? get much your new there with about belt then, any ask first this think you'll too you but And the able

Doug Murphy-Chutorian

Dennis, go? can you

Dennis Rosenberg

Yes. on point. far don't that concrete, pushing fronts. timing No, as anything can we this we'll talking we goes some as about And talk got on at have it. soon as that, something we've really We're certainly about be as

Josh Nichols

states kind plan of to Any And every in a some from kind you're I that strength now last seeing you're has drive reopening. own of know the provide pockets of the me. second like in now COVID or of could what weakness that commentary you executing the that question its how specifically half? that performance to then air expected for and handle state they're on for

Doug Murphy-Chutorian

well? think that nothing see we're it's can don't that think, you as news. comment the I I anyway, special in Andy, seeing you Andy? But

Andy Weinstein

I don't see and the I Yes. I I say California see isn't believe Northeast I mean, Like can't you, actually don't quick." or it's growing pockets. well, "Oh, area don't as that I to Florida see here. patterns.

of think the our I'm business. back random pockets in normal noticing it's the or definitely don't regionally. it struggling throughout. see same are it's to I I terms But country of get not that to

Josh Nichols

Thank guys. Great. you

Operator

like our session. to turn Dennis remarks. concludes conference would I question-and-answer This the Rosenberg closing over for to any back

Dennis Rosenberg

you our us forward and look updating progress. today, continued soon we joining to you for Thank on

the You close call. can

Operator

today's now attending has you Thank concluded. conference presentation. The for

may disconnect. now You

Semler Scientific (SMLR) 3 Aug 202020 Q2 Earnings call transcript