Summary Semler Scientific has pivoted to a Bitcoin treasury strategy, amassing 3,192 BTC in the process, inspired by Strategy's approach. Semler Scientific’s $270M in Bitcoin plus $15M in cash nearly covers its $372M market cap, pricing the core med-tech firm at only $87M. Its QuantaFlo business generated $24.4M in free cash flow last year, suggesting a rare 3.6× FCF multiple. At 3.6× FCF, the market is valuing a steadily profitable healthcare business at a deep discount, making Semler an intriguing "arbitrage" crypto opportunity. I haven't posted an article for a while, but the time seems to have arrived, as I think I might have uncovered a unique value play in today’s market. Today, we are looking at Semler Scientific ( SMLR ), for which you can effectively pay $270 million ($27.7 per share for the company’s Bitcoin ( BTC-USD ) holdings and its $14.85 million net cash and effectively get its entire medical tech business for around $87 million. Some Useful Background I know most of you are unfamiliar with Semler. Unless you follow companies building Bitcoin Treasuries (and if you have not even noticed this is a theme, it is a major one), you have probably never heard of it. So basically, Semler has been around since 2007 and is based in Santa Clara, California. Its bread-and-butter is QuantaFlo, a device that measures blood flow in just a few minutes, helping healthcare providers detect peripheral arterial disease early. For context, for 2024, Semler reported $56.3 million in revenue, $51.5 million in gross profit, and $24.4 million in free cash flow, which reveals a high-margin specialized med-tech player. These aren't one-off numbers. The company has grown consistently for years, and while revenues did dip last year, the company still reported excellent gross profits and record free cash flow. Semler's Revenues, Gross Profits, Free Cash Flow (Koyfin) The moment that changed everything was around mid-2024 when Semler decided to follow a strategy birthed by MicroStrategy ( MSTR ) (now Strategy), the Michael Saylor-led company famous for accumulating the largest Bitcoin treasury in the world. MSTR, which I have explored in recent articles, now holds 499,096 Bitcoins (or about 2.38% of all the Bitcoins to ever exist), worth about $41.7 billion. But back to Semler. In May 2024, the company acquired $40 million worth of BTC, about 581 coins, and saw its stock jump 25% in a day. But that was only the beginning. By February 2025, when the company reported its Q4 earnings through a mix of operating cash flow, share offerings, and $100 million in convertible notes, Semler had amassed 3,192 BTC , which continues to stand true today. What was a diagnostics business now carries a substantial crypto position and is the 10th largest non-government Bitcoin Treasury in the world. The Logic Behind the Bitcoin Pivot By listening to earnings calls and management interviews, you can quickly see that shifting to a Bitcoin treasury strategy wasn’t a publicity move. Semler’s management does actually believe that Bitcoin’s scarcity, inflation resistance, and long-term growth potential could outpace what the company would earn from idle cash in bank accounts. With $24.4 million in free cash flow in 2024 and a CAPEX-light business model, Semler had and will have more than enough cash to make a large, meaningful investment. And if you are orange-pilled into believing that Bitcoin is the best asset in the world (let's not open this discussion today), of course, you will take all your existing cash and upcoming cash flows and throw them into BTC. You will even borrow to buy BTC, and that's exactly what Semler has done. The Saylor Connection At this point, I should mention that leading the charge in Semler is CEO Doug Murphy-Chutorian, who has openly admired Michael Saylor’s approach. His social media activity features retweets of Saylor’s Bitcoin commentary and photos of each other in Bitcoin-related events. No wonder Semler’s Bitcoin strategy closely mirrors MicroStrategy’s. Beyond the initial $40 million buy, Semler tapped several funding avenues (including an ATM share offering that raised $119.6 million) to keep adding BTC. By early 2025, the company had spent $280.4 million on Bitcoin, replicating Saylor's moves (apart from the preferred stock offering ( STRK ), for which Semler is likely yet too small to pursue). Semler even adopted the controversial-for-Wall-Street “BTC Yield” metric, celebrating a 152.2% return on its BTC investment since July 2024 and totally embracing Saylor’s gold standard for quantifying performance in crypto-centric terms. Tallying the Numbers: $258 Million in BTC, $60 Million for Everything Else Today, Bitcoin hovers around $84,500 per coin. With 3,192 BTC, Semler’s holdings stand at roughly $270 million. Add $15 million in net cash, and the total liquid assets come to around $285 million. Meanwhile, SMLR is trading at $38.84, giving the company a market capitalization of about $372 million. Subtract the $285 million in BTC and net cash, and you’re left with $87 million for the entire medical tech business. That’s the part raising my eyebrows. This same division produced $24.4 million in free cash flow last year, implying a price-to-free-cash-flow ratio of around 3.6. For a company with a proven product and consistent customer demand, 3.6 times FCF is a ridiculously cheap multiple by almost any industry standard. One could argue that the healthcare arm's revenue declined 17% last year to $56.3 million. Nevertheless, Semler still managed $20.9 million in operating income. Even factoring out crypto gains, the diagnostics side remains highly profitable. A typical firm with stable free cash flow might trade at 10 to 15 times FCF, especially in med-tech, where specialized solutions tend to carve out loyal client bases. Yet we see here Mr. Market slapping a steep discount on a company that might otherwise attract a higher multiple because "Bitcoin?". Key Risks Now, I do believe Semler offers a strong "arbitrage" opportunity. But also, I have to mention a couple of noteworthy risks attached to Semler's investment case, which is none other than the underlying volatility. Bitcoin maxis embrace it, but traditional investors hate it. Even with Semler’s dependable cash flow from diagnostics, sudden drops in BTC’s price will overshadow the med-tech success and shake investor confidence. This is especially the case if ATM share issuance finances BTC purchases, meaning that they hurt shareholders if the price of BTC falls below the purchasing price. We have seen this play out, and it has certainly played a role in the company's discounted valuation. Then, as I mentioned, Semler financed part of its Bitcoin purchases with $100 million in convertible notes. If these convert to equity, current shareholders could face dilution. Still, note that it should still be accretive to BTC/share deep in the money. Furthermore, this factor complicates the free cash flow multiple calculations since future share count changes could influence how investors perceive the company’s valuation. But once again, this point is countered by the fact that the company has a net cash position even after the convertible. But other than that, most risks have already been stripped away. Given the current administration's stance on BTC, including the fact that they essentially recognize it as the only truly decentralized crypto and that the President himself has urged to "never sell" it, confidence in its regulatory status has solidified. On top of that, with the U.S. government confirming i t will not sell Bitcoin held in its Strategic Bitcoin Reserve, treating it as a permanent store of value, the legal and regulatory outlook for Bitcoin is becoming more favorable than many BTC bulls might have anticipated. And don't forget that BTC is classified as a commodity, not a security. This means there are no restrictions on how much can be held, even by publicly traded companies. Final Thoughts Sometimes, investment ideas don't have to be complex. I think this one is pretty straightforward. At a market cap of around $372 million, against $270 million in BTC and $15 million in cash, the market is attributing a mere $87 million to a healthcare business that produced $24.4 million in free cash flow last year. Semler could donate all of its Bitcoin away I bet you the market would still value the core business at around $200 million just to assign it a fair FCF multiple. The current valuation, therefore, likely presents a unique opportunity, in my view.
