Semler Scientific's Q3 Net Income Soars on Bitcoin Gains, Revenue Plummets

TL;DR

**Semler's Q3 looks good on paper thanks to Bitcoin, but their core business is bleeding cash and the Strive merger is a huge gamble.**

AI Summary

Semler Scientific, Inc. reported a significant increase in net income to $16.9 million for the three months ended September 30, 2025, up from $5.6 million in the prior year, primarily driven by a substantial $28.49 million change in fair value of intangible digital assets (Bitcoin holdings). Despite this, revenues decreased sharply to $7.49 million from $13.51 million in the same period, reflecting challenges in its core medical device business. Operating expenses surged to $12.88 million from $8.45 million, largely due to an increase in general and administrative expenses to $8.01 million from $3.13 million. For the nine months ended September 30, 2025, net income was $19.13 million, compared to $11.69 million in 2024, bolstered by a $70.42 million change in fair value of intangible digital assets. However, a $29.75 million DOJ settlement expense and a decline in nine-month revenues to $24.54 million from $43.88 million highlight ongoing operational pressures. The company's strategic outlook includes a proposed merger with Strive, Inc. and continued implementation of its Bitcoin treasury strategy, alongside efforts to obtain new FDA 510(k) clearance for QuantaFlo.

Why It Matters

This filing reveals Semler Scientific's pivot towards a Bitcoin treasury strategy, which is significantly impacting its financial performance, overshadowing its declining core medical device revenues. For investors, the company's profitability is now heavily tied to Bitcoin's volatile price, introducing a new layer of risk and opportunity. Employees and customers of its medical device business, particularly those relying on QuantaFlo, face uncertainty given the revenue decline and the $29.75 million DOJ settlement. The proposed merger with Strive, Inc. could reshape the company's competitive landscape and strategic direction, potentially offering diversification away from its struggling core product line and intense competition in the medical device sector.

Risk Assessment

Risk Level: high — The company faces high risk due to its significant reliance on the volatile price of Bitcoin, which accounted for a $28.49 million gain in Q3 2025, masking a substantial decline in core revenues from $13.51 million to $7.49 million. Additionally, a $29.75 million DOJ settlement expense for the nine months ended September 30, 2025, and notices from large customers intending to discontinue testing, indicate severe operational and regulatory challenges in its primary healthcare business.

Analyst Insight

Investors should exercise extreme caution and thoroughly evaluate Semler Scientific's exposure to Bitcoin volatility and the declining performance of its core medical device business. Consider if the proposed merger with Strive, Inc. offers sufficient diversification or if the company's future is too heavily dependent on speculative digital asset gains rather than sustainable operational growth.

Financial Highlights

debt To Equity

N/A

revenue

$7.49M

operating Margin

-71.9%

total Assets

$596.68M

total Debt

$120.0M

net Income

$16.9M

eps

$1.14

gross Margin

N/A

cash Position

$10.18M

revenue Growth

-44.5%

Revenue Breakdown

Key Numbers

• $16.9M — Net income for Q3 2025 (Increased from $5.6M in Q3 2024, primarily due to Bitcoin gains.)
• $7.49M — Revenues for Q3 2025 (Decreased significantly from $13.51M in Q3 2024, indicating core business decline.)
• $28.49M — Change in fair value of intangible digital assets (Bitcoin) for Q3 2025 (Major contributor to net income, up from $1.14M in Q3 2024.)
• $29.75M — DOJ settlement expense for YTD Q3 2025 (Significant one-time expense impacting nine-month operating results.)
• $539.84M — Intangible digital assets (Bitcoin) as of Sep 30, 2025 (Substantial increase from $214.63M at Dec 31, 2024, reflecting Bitcoin treasury strategy.)
• $100.0M — Senior convertible notes due 2030 (New indebtedness exposing the company to associated risks.)
• $20.0M — Loan from Coinbase (Collateralized by Bitcoin, adding to financial risk.)
• 15,159,895 — Shares of common stock outstanding as of Nov 7, 2025 (Increased from prior periods, impacting per-share metrics.)

Key Players & Entities

• Semler Scientific, Inc. (company) — registrant
• CardioVanta, Inc. (company) — wholly-owned subsidiary
• Strive, Inc. (company) — proposed merger partner
• U.S. Food and Drug Administration (regulator) — medical device clearance
• Centers for Medicare and Medicaid Services (regulator) — reimbursement policies
• U.S. Department of Justice (regulator) — settlement allegations
• Bitcoin (dollar_amount) — intangible digital asset
• Nasdaq Stock Market LLC (regulator) — exchange for common stock
• Coinbase (company) — lender collateralized by Bitcoin

FAQ

Risk Factors

• Volatility of Digital Assets [high — financial]: The company holds substantial intangible digital assets (Bitcoin), valued at $539.84M as of September 30, 2025. Fluctuations in Bitcoin's market price, as evidenced by the $28.49M change in fair value in Q3 2025, can significantly impact net income and overall financial condition.
• DOJ Settlement [high — legal]: A significant $29.75M DOJ settlement expense was incurred for the nine months ended September 30, 2025. This one-time charge heavily impacted operating results, contributing to a substantial loss from operations for the period.
• New Indebtedness [medium — financial]: The company has issued $100.0M in senior convertible notes due 2030 and a $20.0M loan from Coinbase collateralized by Bitcoin. This new debt increases financial leverage and associated risks, including interest payments and potential collateral liquidation.
• Core Business Decline [high — operational]: Revenues from the core medical device business have sharply declined, falling to $7.49M in Q3 2025 from $13.51M in Q3 2024. This trend, coupled with increased operating expenses, signals significant pressure on the company's primary revenue-generating activities.
• Increased Operating Expenses [medium — operational]: Total operating expenses surged to $12.88M in Q3 2025 from $8.45M in Q3 2024, driven by a substantial increase in general and administrative expenses to $8.01M from $3.13M. This rise in costs, without a corresponding revenue increase, erodes profitability.
• FDA 510(k) Clearance [medium — regulatory]: The company is seeking new FDA 510(k) clearance for QuantaFlo. Delays or failure to obtain this clearance could hinder product commercialization and future revenue growth in the medical device segment.

Industry Context

Semler Scientific operates in the medical device sector, facing competition and regulatory hurdles like FDA clearance. Simultaneously, its significant Bitcoin holdings place it within the volatile cryptocurrency market, influencing its financial performance through asset appreciation or depreciation.

Regulatory Implications

The company is subject to FDA regulations for its medical devices, requiring ongoing compliance and clearance processes. The DOJ settlement indicates past or ongoing legal scrutiny, which could lead to further compliance requirements or financial penalties.

What Investors Should Do

1. Monitor Bitcoin price volatility
2. Assess core business performance
3. Evaluate impact of DOJ settlement and new debt
4. Track progress on QuantaFlo FDA clearance

Key Dates

• 2025-09-30: End of Third Quarter 2025 — Reported significant net income driven by Bitcoin gains, but also a sharp revenue decline and increased operating expenses.
• 2025-11-07: Shares of common stock outstanding — 15,159,895 shares outstanding, an increase impacting per-share metrics.

Glossary

Intangible digital assets

Assets that are not physical but have value, such as cryptocurrencies like Bitcoin. Their value is subject to market fluctuations. (Represents a significant portion of the company's assets ($539.84M) and a major driver of net income through fair value changes.)

DOJ settlement

An agreement reached with the Department of Justice to resolve legal claims or investigations, often involving a financial penalty. (A $29.75M expense for the nine months ended September 30, 2025, significantly impacting the company's profitability.)

Senior convertible notes

Debt instruments that can be converted into a predetermined amount of the issuer's equity under certain conditions. (The company issued $100.0M of these notes due 2030, adding to its debt obligations and potential equity dilution.)

FDA 510(k) clearance

A premarket notification process required by the U.S. Food and Drug Administration (FDA) for medical devices to demonstrate that the device is at least as safe and effective, that is, substantially equivalent, to a legally marketed device. (The company is seeking this clearance for QuantaFlo, crucial for its medical device business.)

Year-Over-Year Comparison

For the three months ended September 30, 2025, revenue decreased by 44.5% to $7.49M compared to $13.51M in the prior year, while net income surged by 201.3% to $16.9M from $5.6M, primarily due to a substantial $28.49M gain from intangible digital assets. Operating expenses increased by 52.5% to $12.88M from $8.45M, largely driven by a 156% rise in general and administrative expenses. For the nine months, revenue fell 44.1% to $24.54M from $43.88M, but net income grew 63.6% to $19.13M from $11.69M, again boosted by digital asset gains, though offset by a $29.75M DOJ settlement expense.

Key Financial Figures

• $0.001 — ch registered Common Stock, par value $0.001 per share SMLR The Nasdaq Stock Mar
• $100.0 million — ce of our common stock. We have issued $100.0 million of senior convertible notes due 2030 an
• $20.0 million — convertible notes due 2030 and borrowed $20.0 million from Coinbase (which loan is collateral

Filing Documents

• smlr-20250930x10q.htm (10-Q) — 1906KB
• smlr-20250930xex31d1.htm (EX-31.1) — 11KB
• smlr-20250930xex32d1.htm (EX-32.1) — 9KB
• 0001554859-25-000061.txt ( ) — 8383KB
• smlr-20250930.xsd (EX-101.SCH) — 70KB
• smlr-20250930_cal.xml (EX-101.CAL) — 67KB
• smlr-20250930_def.xml (EX-101.DEF) — 212KB
• smlr-20250930_lab.xml (EX-101.LAB) — 485KB
• smlr-20250930_pre.xml (EX-101.PRE) — 396KB
• smlr-20250930x10q_htm.xml (XML) — 1351KB

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 28 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 36 Item 4.

Controls and Procedures

Controls and Procedures 37 Part II. Other Information 37 Item 1.

Legal Proceedings

Legal Proceedings 37 Item 1A.

Risk Factors

Risk Factors 38 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 69 Item 3. Defaults upon Senior Securities 70 Item 4. Mine Safety Disclosures 70 Item 5. Other Information 70 Item 6. Exhibits 70

Signatures

Signatures 71 In this report, unless otherwise stated or as the context otherwise requires, references to "Semler Scientific," "the Company," "we," "us," "our" and similar references refer to Semler Scientific, Inc. and its wholly-owned subsidiary, CardioVanta, Inc., or CardioVanta. The Semler Scientific logo, CardioVanta logo, QuantaFlo and other trademarks or service marks of Semler Scientific, Inc. appearing in this report are the property of Semler Scientific, Inc. This report also contains registered marks, trademarks and trade names of other companies. All other trademarks, registered marks and trade names appearing in this report are the property of their respective holders. i Table of Contents 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," "potential," "believes," "seeks," "may," "should," "continue," "could," or the negative of such terms or other similar expressions. The forward-looking statements in this report include, but are not limited to, statements regarding: implementation of our Bitcoin treasury strategy and its effects on our business, including recent volatility in the price of Bitcoin; our seeking to obtain a new U.S. Food and Drug Administration, or FDA, 510(k) clearance for expanded use of QuantaFlo and marketing of additional products and services to our customers; our wholly-owned subsidiary, CardioVanta, and plans for its business and future capitalization; the effects of the 2024 Medicare Advantage and Part D Final Rate Announcement issued by the Centers for Medicare and Medicaid Services, or CMS, on our revenues, in

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. Semler Scientific, Inc. Condensed Consolidated Statements of Operations 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, 2025 2024 2025 2024 Revenues $ 7,491 $ 13,512 $ 24,543 $ 43,881 Operating expenses: Cost of revenues 636 1,156 2,312 3,657 Engineering and product development 1,111 1,186 3,663 3,764 Sales and marketing 3,121 2,976 9,316 10,107 General and administrative 8,013 3,129 18,048 8,962 DOJ settlement — — 29,750 — Total operating expenses 12,881 8,447 63,089 26,490 (Loss) income from operations ( 5,390 ) 5,065 ( 38,546 ) 17,391 Interest (expense) income, net ( 1,575 ) 168 ( 3,526 ) 1,699 Impairment of investments — — ( 1,135 ) 128 Change in fair value of intangible digital assets 28,490 1,137 70,422 ( 3,918 ) Change in fair value of Bitcoin collateral 1,471 — 1,471 — Gain on redemption of notes receivable 803 — 803 — Other income 4 5 7 8 Other income (expense), net 29,193 1,310 68,042 ( 2,083 ) Pre-tax income 23,803 6,375 29,496 15,308 Income tax provision 6,901 766 10,364 3,615 Net income $ 16,902 $ 5,609 $ 19,132 $ 11,693 Net income per share, basic $ 1.14 $ 0.80 $ 1.58 $ 1.68 Weighted average number of shares used in computing basic net income per share 14,848,408 7,045,108 12,073,628 6,961,095 Net income per share, diluted $ 1.07 $ 0.72 $ 1.55 $ 1.50 Weighted average number of shares used in computing diluted net income per share 16,545,198 7,771,088 13,706,067 7,783,350 See accompanying notes to unaudited condensed consolidated financial statements. 1 Table of Contents Semler Scientific, Inc. Condensed Consolidated Balance Sheets (In thousands of U.S. Dollars, except share and per share data)

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