UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


	☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021



	☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission File Number 001-36305

SEMLER SCIENTIFIC, INC.

(Exact name of registrant as specified in its charter)

Delaware	26-1367393
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

2340-2348 Walsh Avenue, Suite 2344

Santa Clara, CA 95051

(Address of principal executive offices) (Zip Code)

(877) 774-4211

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None.

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001 per share		SMLR		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer	☐	Accelerated Filer	☐

Non-Accelerated Filer	☒	Smaller Reporting Company	☒

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 1, 2021, there were 6,757,708 shares of the issuer’s common stock, $0.001 par value per share, outstanding.

Table of Contents

TABLE OF CONTENTS

		Page
Part I.	Financial Information	1

Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	20
Item 4.	Controls and Procedures	21

Part II.	Other Information	21

Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3.	Defaults upon Senior Securities	21
Item 4.	Mine Safety Disclosures	21
Item 5.	Other Information	21
Item 6.	Exhibits	22

Signatures		23

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains forward-looking statements. Such forward-looking statements include those that express plans, anticipation, intent, contingency, goals, targets or future development and/or otherwise are not statements of historical fact. In some cases, you can identify forward-looking statements by terminology, such as “expects,” “anticipates,” “intends,” “estimates,” “plans,” “believes,” “seeks,” “may,” “should,” “continue,” “could” or the negative of such terms or other similar expressions. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this report. These forward-looking statements are based on our current expectations and projections about future events and they are subject to risks and uncertainties known and unknown that could cause actual results and developments to differ materially from those expressed or implied in such statements, including risks associated with:

●

implementation of our business strategy and the fact that we actively market only two FDA-cleared products and may not benefit from our recent investments in other companies developing complementary products;

●

the failure of physicians and other customers to widely adopt our products, or to determine that our product provides a safe and effective alternative to existing ankle brachial index, or ABI, devices;

●

the fact that our testing product is generally but not specifically approved for reimbursement under any third-party payor codes;

●

our reliance on the talents of a small number of key personnel, and a small direct sales force;

●

not requiring customers to enter into long-term licenses;

●

concentration of our revenues and accounts receivable with a limited number of customers;

●

our reliance on a small number of independent suppliers and facilities for the manufacturing of our product;

●

our business being subject to many laws and government regulations, including governing the manufacture and sale of medical devices, patient data, and others;

●

our ability to protect our intellectual property;

●

impacts of the ongoing Covid-19 pandemic; and

●

the other factors set forth under the caption “Risk Factors” in our annual report on Form 10-K filed with the Securities and Exchange Commission, or SEC, on March 9, 2021.

Because the risks and uncertainties referred to above and in our SEC reports could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking statements.

You should read this quarterly report and the documents that we reference herein and therein and have filed as exhibits to this report and our other filings with the SEC. You should assume that the information appearing in this quarterly report is accurate as of the date of this quarterly report only. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of the information presented in this quarterly report, and particularly our forward-looking statements, by these cautionary statements.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Semler Scientific, Inc.

Condensed Statements of Income

Unaudited

(In thousands of U.S. Dollars, except share and per share data)


	For the three months ended September 30,				For the nine months ended September 30,
	2021		2020		2021		2020
Revenues	$	13,991	$	10,727	$	41,485	$	26,530
Operating expenses:
Cost of revenues		1,382		820		3,957		2,370
Engineering and product development		1,036		672		2,676		2,277
Sales and marketing		3,968		2,116		10,407		7,283
General and administrative		2,352		1,564		6,710		4,634
Total operating expenses		8,738		5,172		23,750		16,564
Income from operations		5,253		5,555		17,735		9,966
Interest income		3		2		8		5
Other income		1		38		6		64
Other income		4		40		14		69
Pre-tax net income		5,257		5,595		17,749		10,035
Income tax provision		1,107		729		2,034		1,421
Net income	$	4,150	$	4,866	$	15,715	$	8,614
Net income per share, basic	$	0.61	$	0.74	$	2.34	$	1.31
Weighted average number of shares used in computing basic income per share		6,754,526		6,578,808		6,722,858		6,553,522
Net income per share, diluted	$	0.51	$	0.61	$	1.93	$	1.07
Weighted average number of shares used in computing diluted income per share		8,143,377		8,038,513		8,135,337		8,046,759

See accompanying notes to unaudited condensed financial statements.

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Semler Scientific, Inc.

Condensed Balance Sheets

(In thousands of U.S. Dollars, except share and per share data)


	September 30,		December 31,
	2021		2020
		Unaudited
Assets
Current Assets:
Cash and cash equivalents	$	35,930	$	22,079
Trade accounts receivable, net of allowance for doubtful accounts of $61 and $61, respectively		3,972		2,808
Inventory		1,788		340
Prepaid expenses and other current assets		4,405		1,376
Total current assets		46,095		26,603
Assets for lease, net		1,727		1,941
Property and equipment, net		386		261
Other non-current assets		353		418
Long-term investments		821		3,051
Long-term deferred tax assets		1,591		2,365
Total assets	$	50,973	$	34,639

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	401	$	677
Accrued expenses		5,304		2,798
Deferred revenue		909		963
Other short-term liabilities		79		76
Total current liabilities		6,693		4,514

Long-term liabilities:
Other long-term liabilities		266		332
Total long-term liabilities		266		332
Commitments and contingencies (Note 10)
Stockholders’ equity:
Common stock, $0.001 par value; 50,000,000 shares authorized; 6,823,130, and 6,725,422 shares issued, and 6,757,208 and 6,700,422 shares outstanding (treasury shares of 65,922 and 25,000, respectively)		7		7
Additional paid-in capital		20,619		22,113
Retained earnings		23,388		7,673

Total stockholders’ equity		44,014		29,793

Total liabilities and stockholders’ equity	$	50,973	$	34,639

See accompanying notes to unaudited condensed financial statements.

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Semler Scientific, Inc.

Statements of Stockholders’ Equity

Unaudited

(In thousands of U.S. Dollars, except share and per share data)


	For the Three Months Ended September 30, 2020
	Common Stock			Treasury Stock			Additional
		Common Stock					Paid-In		(Accumulated Deficit)		Total Stockholders'
	Shares Issued	Amount		Shares	Amount		Capital				Equity
Balance at June 30, 2020	6,588,176	$	7	(25,000)	$	—	$	19,598	$	(2,586)	$	17,019
Employee stock grants	641		—	—		—		—		—		—
Stock option exercises	52,016		—	—		—		104

SEC Form 10-Q filed by Semler Scientific Inc.