Semler Scientific: The Hidden Gem for Bitcoin Bulls Seeking Leveraged Exposure

Semler Scientific: A High-Leverage Bitcoin Proxy

Semler Scientific (NASDAQ:SMLR) has emerged as a high-leverage Bitcoin proxy, trading near its Bitcoin Net Asset Value (NAV). This makes it an appealing option for BTC bulls looking for leveraged exposure to Bitcoin's price movements without directly holding the cryptocurrency.

Semler's Bitcoin Holdings and Strategy

As of now, Semler holds 4,636 BTC, valued at approximately $550 million with Bitcoin priced at $118,600 per coin. This marks a 45% increase from the 3,192 BTC held in March. The company has financed these acquisitions through:

• $24.4 million in free cash flow from its QuantaFlo device.
• Proceeds from ATM share offerings.
• $100 million in 4.25% convertible senior notes issued in Q1.

Semler aims to hold 105,000 BTC by the end of 2027, positioning itself as a significant player among Bitcoin Treasury Companies.

Convertible Debt: A Smart Move for Shareholders

The company's $100 million convertible notes are a strategic tool to increase Bitcoin per share. These notes, with an initial conversion price of $76.44/share, allow noteholders to convert debt into equity if SMLR's stock rises above this level. This strategy effectively reduces dilution and increases Bitcoin exposure per share.

Why Semler Remains a Bargain

Despite its potential, Semler trades just above its BTC NAV of $550 million, with a market cap of $623 million. This means investors are paying $173 million for the rest of the company and its debt, valuing the core business at 7x FCF based on last year's $24.4 million in free cash flow.

Risks to Consider

• Bitcoin price volatility: A drop in BTC prices could strain Semler's leveraged balance sheet.
• Core business pressures: Revenue dropped 27% YoY in Q1 due to reduced purchases from a major customer.

Final Thoughts

For Bitcoin believers, Semler offers a leveraged play on BTC's upside with the added benefit of a discounted core business. The company's disciplined accumulation and creative financing make it a compelling investment for those bullish on Bitcoin's future.