Insights

Why Semler Scientific Stock Is Sinking Today

What happened
Shares of Semler Scientific (NASDAQ: SMLR) were sinking 23.1% as of 10:33 a.m. ET on Tuesday. The steep decline came after the medical technology company reported its first-quarter results following the market close on Monday.
Semler announced Q1 revenue of $14 million, up 6% year over year. However, this result was below the consensus revenue estimate of $15.8 million.
The company posted earnings of $3.4 million, or $0.41 per diluted share. In the prior-year period, Semler generated earnings of $4.9 million, or $0.60 per diluted share. The average analysts’ earnings estimate was $0.56 per share.
So what
It’s not surprising that the healthcare stock fell today. That’s to be expected any time a company misses both top- and bottom-line estimates. However, investors shouldn’t focus too much on one quarterly snapshot.
Semler’s Q1 growth was likely constrained somewhat by the increase in COVID-19 cases caused by the coronavirus omicron variant. But this headwind won’t last forever.
The biggest factor behind Semler’s lower earnings compared to the prior-year period was its increased spending on sales and marketing. However, that’s an investment that could pay off over the long run.
Image source: Getty Images.

Now what
Probably the most important thing to watch with Semler going forward is the impact of an independent peer-reviewed study of QuantaFlo, the company’s test for helping diagnose cardiovascular diseases, including peripheral arterial disease (PAD). This study makes a strong case for the use of QuantaFlo in screening asymptomatic Medicare Advantage patients. Semler thinks that new customers could be attracted to QuantaFlo as the results of the study become more well known among healthcare professionals.
Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Semler Scientific. The Motley Fool has a disclosure policy. –

What happened

Shares of Semler Scientific (NASDAQ: SMLR) were sinking 23.1% as of 10:33 a.m. ET on Tuesday. The steep decline came after the medical technology company reported its first-quarter results following the market close on Monday.

Semler announced Q1 revenue of $14 million, up 6% year over year. However, this result was below the consensus revenue estimate of $15.8 million.

The company posted earnings of $3.4 million, or $0.41 per diluted share. In the prior-year period, Semler generated earnings of $4.9 million, or $0.60 per diluted share. The average analysts’ earnings estimate was $0.56 per share.

So what

It’s not surprising that the healthcare stock fell today. That’s to be expected any time a company misses both top- and bottom-line estimates. However, investors shouldn’t focus too much on one quarterly snapshot.

Semler’s Q1 growth was likely constrained somewhat by the increase in COVID-19 cases caused by the coronavirus omicron variant. But this headwind won’t last forever.

The biggest factor behind Semler’s lower earnings compared to the prior-year period was its increased spending on sales and marketing. However, that’s an investment that could pay off over the long run.

Image source: Getty Images.

Now what

Probably the most important thing to watch with Semler going forward is the impact of an independent peer-reviewed study of QuantaFlo, the company’s test for helping diagnose cardiovascular diseases, including peripheral arterial disease (PAD). This study makes a strong case for the use of QuantaFlo in screening asymptomatic Medicare Advantage patients. Semler thinks that new customers could be attracted to QuantaFlo as the results of the study become more well known among healthcare professionals.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Semler Scientific. The Motley Fool has a disclosure policy.

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