Physician’s are increasingly encouraged to use blood flow as an indicator of vascular health. An objective examination is made possible by a blood flow monitor branded as QuantaFlo by Semler Scientific, Inc. QuantaFlo can be used for outpatient exams in clinic and doctor office situations. In the last twelve months the Company reported $66.9 million in total revenue, driven largely by adoption of the blood flow device. Additionally, Semler offers a software application, Insulin Insights, for optimizing outpatient insulin dosing. Semler has been successful in expanding its operating margin to 30.4% by creating efficiencies in customer capture and conversion.
In the twelve months ending September 2022, the Company converted 30.8% of each sales dollar to operating cash flow. Strong cash flows has made it possible for Semler to keep a low-leverage balance sheet and to invest in growth projects using low-cost internal capital. Consequently, return on invested capital of 27.4% well exceeds weighted average cost of capital of 9.8%, implying an excess return of 17.6%.
Fundamentally, Semler is a high quality operation and well qualified as a long-term hold. This low-volatility stock with a beta measure of 0.90, may offer a smooth ride for traders. However, a low flotation of 4.8 million shares presents some challenges for entering and exiting positions. Trading volume is less than 100,000 share per trading session. On the flip-side, insiders one 21% of the company, placing them well aligned with shareholders
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