Cardiac And Digital Health Expansion Will Encounter Bitcoin Risks

Key Takeaways

• Diversification into cardiac disease markets and value-based care tools positions the company for higher recurring revenues and improved long-term margins.
  
• Unique strategy leveraging healthcare cash flow to invest in Bitcoin assets distinguishes its growth model and supports potential value appreciation.
  
• Heavy dependence on volatile Bitcoin and shrinking core healthcare revenues heighten financial risk, while limited diversification and industry disruption threaten future stability and growth.

Catalysts

Provides technology solutions to enhance the clinical effectiveness and efficiency of healthcare providers in the United States.

• Expansion of the health care business into new, high-growth cardiac disease markets via CardioVanta (heart failure, arrhythmia) leverages demographic tailwinds of an aging population and higher chronic disease incidence, which could drive significantly higher revenues and diversify recurring income streams.
  
• Growing adoption of preventative, non-invasive screening tools (including QuantaFlo® and future SaaS-based products) aligns with the healthcare industry's increasing focus on value-based care and early detection, supporting longer-term revenue acceleration and margin improvement.
  
• Strengthened relationships and contracts with Medicare Advantage plans and payors for existing and new devices may improve reimbursement outlook and pricing power, enhancing both gross margins and earnings potential.
  
• Ongoing investment in research, regulatory approvals, and expanded indications for the company's devices positions Semler to capitalize on the expansion of digital health and remote patient monitoring, facilitating entry into telemedicine and at-home care markets, which could broaden the company's addressable market and boost revenues.
  
• The company's unique dual-engine model-generating operational free cash flow from healthcare to acquire appreciating Bitcoin assets with intelligent leverage-creates a differentiated value proposition, supporting potential EPS and net asset value growth as secular adoption of both digital assets and preventative health continue.

Semler Scientific Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Semler Scientific's revenue will decrease by 12.5% annually over the next 3 years.
• Analysts assume that profit margins will shrink from 86.2% today to 16.7% in 3 years time.
• Analysts expect earnings to reach $4.8 million (and earnings per share of $-0.28) by about September 2028, down from $37.0 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 401.0x on those 2028 earnings, up from 11.2x today. This future PE is greater than the current PE for the US Medical Equipment industry at 29.7x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.9%, as per the Simply Wall St company report.

Semler Scientific Future Earnings Per Share Growth

Risks

• Heavy reliance on Bitcoin price appreciation and the success of a highly leveraged Bitcoin treasury strategy exposes Semler to significant volatility and downside risk if Bitcoin underperforms, which could materially impact both reported earnings and long-term shareholder equity.
  
• Core healthcare revenues are declining (Q2 2025 revenues down year-over-year) due to reimbursement headwinds like the 2024 CMS rate changes, and decreased device usage at key customers, indicating risk to recurring revenue and cash flow stability required to fund ongoing operations and Bitcoin purchases.
  
• The business is operating at an operating loss ($1.2M for Q2 2025) and is increasingly dependent on dilution through equity issuances or leverage (convertible debt, ATM stock offerings) to maintain liquidity and support its dual strategy, which could compress net margins and dilute per-share value for existing shareholders over time.
  
• The company faces product concentration risk around QuantaFlo and limited geographic diversification, increasing vulnerability to U.S. healthcare regulatory changes, potential reimbursement cuts, or competitive threats, which could further erode earnings and future revenue growth.
  
• Industry disruption from rapid advancements in AI-driven diagnostics, preference for integrated/bundled care platforms, and intensified competition from larger med-tech firms may threaten the relevance and market share of both existing and new healthcare product lines (including the CardioVanta initiative), impairing long-term earnings and valuation potential.

Valuation

• The analysts have a consensus price target of $85.333 for Semler Scientific based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $101.0, and the most bearish reporting a price target of just $60.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $28.8 million, earnings will come to $4.8 million, and it would be trading on a PE ratio of 401.0x, assuming you use a discount rate of 7.9%.
• Given the current share price of $28.07, the analyst price target of $85.33 is 67.1% higher. Despite analysts expecting the underlying buisness to decline, they seem to believe it's more valuable than what the market thinks.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.