Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Oct. 28, 2022 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-36305 | |
Entity Registrant Name | SEMLER SCIENTIFIC, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 26-1367393 | |
Entity Address, Address Line One | 2340-2348 Walsh Avenue, Suite 2344 | |
Entity Address, City or Town | Santa Clara | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 95051 | |
City Area Code | 877 | |
Local Phone Number | 774-4211 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | SMLR | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 6,839,973 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001554859 | |
Amendment Flag | false |
Condensed Statements of Income
Condensed Statements of Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Condensed Statements of Income | ||||
Revenues | $ 14,047 | $ 13,991 | $ 42,891 | $ 41,485 |
Operating expenses: | ||||
Cost of revenues | 1,138 | 1,382 | 3,070 | 3,957 |
Engineering and product development | 1,244 | 1,036 | 3,444 | 2,676 |
Sales and marketing | 4,153 | 3,968 | 13,031 | 10,407 |
General and administrative | 3,045 | 2,352 | 9,760 | 6,710 |
Total operating expenses | 9,580 | 8,738 | 29,305 | 23,750 |
Income from operations | 4,467 | 5,253 | 13,586 | 17,735 |
Interest income | 137 | 3 | 151 | 8 |
Other (expenses) income | (3) | 1 | (2) | 6 |
Other income | 134 | 4 | 149 | 14 |
Pre-tax net income | 4,601 | 5,257 | 13,735 | 17,749 |
Income tax provision | 926 | 1,107 | 2,626 | 2,034 |
Net income | $ 3,675 | $ 4,150 | $ 11,109 | $ 15,715 |
Net income per share, basic | $ 0.55 | $ 0.61 | $ 1.65 | $ 2.34 |
Weighted average number of shares used in computing basic income per share | 6,678,175 | 6,754,526 | 6,738,717 | 6,722,858 |
Net income per share, diluted | $ 0.46 | $ 0.51 | $ 1.38 | $ 1.93 |
Weighted average number of shares used in computing diluted income per share | 7,939,926 | 8,143,377 | 8,027,271 | 8,135,337 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current Assets: | ||
Cash and cash equivalents | $ 45,536 | $ 37,323 |
Trade accounts receivable, net of allowance for doubtful accounts of $71 and $61, respectively | 3,673 | 3,619 |
Inventory, net | 511 | 550 |
Prepaid expenses and other current assets | 1,960 | 4,044 |
Total current assets | 51,680 | 45,536 |
Assets for lease, net | 1,986 | 1,643 |
Property and equipment, net | 635 | 394 |
Long-term investments | 821 | 821 |
Long-term notes receivable | 1,179 | |
Other non-current assets | 2,267 | 332 |
Long-term deferred tax assets | 2,351 | 1,946 |
Total assets | 60,919 | 50,672 |
Current liabilities: | ||
Accounts payable | 483 | 443 |
Accrued expenses | 6,653 | 3,436 |
Deferred revenue | 1,158 | 921 |
Other short-term liabilities | 91 | 80 |
Total current liabilities | 8,385 | 4,880 |
Long-term liabilities: | ||
Other long-term liabilities | 182 | 245 |
Total long-term liabilities | 182 | 245 |
Commitments and contingencies (Note 12) | ||
Stockholders' equity: | ||
Common stock, $0.001 par value; 50,000,000 shares authorized; 6,879,497, and 6,824,380 shares issued, and 6,665,075, and 6,758,458 shares outstanding (treasury shares of 214,422 and 65,922), respectively | 7 | 7 |
Additional paid-in capital | 16,341 | 20,645 |
Retained earnings | 36,004 | 24,895 |
Total stockholders' equity | 52,352 | 45,547 |
Total liabilities and stockholders' equity | $ 60,919 | $ 50,672 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Condensed Balance Sheets | ||
Allowance for doubtful accounts on trade accounts receivable (in dollars) | $ 71 | $ 61 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 6,879,497 | 6,824,380 |
Common stock, shares outstanding | 6,665,075 | 6,758,458 |
Treasury stock, shares | 214,422 | 65,922 |
Condensed Statements of Stockho
Condensed Statements of Stockholders Equity - USD ($) $ in Thousands | Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings | Total |
Balance at Dec. 31, 2020 | $ 7 | $ 22,113 | $ 7,673 | $ 29,793 | |
Balance (in shares) at Dec. 31, 2020 | 6,725,422 | ||||
Balance (in shares) at Dec. 31, 2020 | (25,000) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Exercise of put option in Synaps Dx | (2,230) | $ (2,230) | |||
Exercise of put option in Synaps Dx (in Shares) | (40,922) | 40,922 | |||
Employee stock grants | 537 | $ 537 | |||
Employee stock grants (in shares) | 5,516 | ||||
Stock option exercises | 54 | 54 | |||
Stock option exercises (in shares) | 92,192 | ||||
Stock-based compensation | 145 | 145 | |||
Net income | 15,715 | 15,715 | |||
Balance at Sep. 30, 2021 | $ 7 | 20,619 | 23,388 | 44,014 | |
Balance (in shares) at Sep. 30, 2021 | 6,823,130 | ||||
Balance (in shares) at Sep. 30, 2021 | (65,922) | ||||
Balance at Jun. 30, 2021 | $ 7 | 20,563 | 19,238 | 39,808 | |
Balance (in shares) at Jun. 30, 2021 | 6,819,304 | ||||
Balance (in shares) at Jun. 30, 2021 | (65,922) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Employee stock grants (in shares) | 116 | ||||
Stock option exercises | 9 | 9 | |||
Stock option exercises (in shares) | 3,710 | ||||
Stock-based compensation | 47 | 47 | |||
Net income | 4,150 | 4,150 | |||
Balance at Sep. 30, 2021 | $ 7 | 20,619 | 23,388 | 44,014 | |
Balance (in shares) at Sep. 30, 2021 | 6,823,130 | ||||
Balance (in shares) at Sep. 30, 2021 | (65,922) | ||||
Balance at Dec. 31, 2021 | $ 7 | 20,645 | 24,895 | $ 45,547 | |
Balance (in shares) at Dec. 31, 2021 | 6,824,380 | ||||
Balance (in shares) at Dec. 31, 2021 | (65,922) | 65,922 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Treasury stock acquired | (4,991) | $ (4,991) | |||
Treasury stock acquired (in shares) | (148,500) | 148,500 | |||
Employee stock grants | 698 | $ 698 | |||
Employee stock grants (in shares) | 10,482 | ||||
Taxes paid related to net share settlement of equity awards | (114) | (114) | |||
Taxes paid related to net share settlement of equity awards (in shares) | (1,710) | ||||
Stock option exercises | 93 | $ 93 | |||
Stock option exercises (in shares) | 46,345 | 47,000 | |||
Stock-based compensation | 10 | $ 10 | |||
Net income | 11,109 | 11,109 | |||
Balance at Sep. 30, 2022 | $ 7 | 16,341 | 36,004 | $ 52,352 | |
Balance (in shares) at Sep. 30, 2022 | 6,879,497 | ||||
Balance (in shares) at Sep. 30, 2022 | (214,422) | 214,422 | |||
Balance at Jun. 30, 2022 | $ 7 | 18,334 | 32,329 | $ 50,670 | |
Balance (in shares) at Jun. 30, 2022 | 6,864,625 | ||||
Balance (in shares) at Jun. 30, 2022 | (166,964) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Treasury stock acquired | (2,045) | $ (2,045) | |||
Treasury stock acquired (in shares) | (47,458) | 47,458 | |||
Employee stock grants | 25 | $ 25 | |||
Employee stock grants (in shares) | 872 | ||||
Stock option exercises | 20 | 20 | |||
Stock option exercises (in shares) | 14,000 | ||||
Stock-based compensation | 7 | 7 | |||
Net income | 3,675 | 3,675 | |||
Balance at Sep. 30, 2022 | $ 7 | $ 16,341 | $ 36,004 | $ 52,352 | |
Balance (in shares) at Sep. 30, 2022 | 6,879,497 | ||||
Balance (in shares) at Sep. 30, 2022 | (214,422) | 214,422 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 11,109 | $ 15,715 |
Reconciliation of Net Income to Net Cash Provided by Operating Activities: | ||
Depreciation | 462 | 470 |
Deferred tax expense | (405) | 774 |
Loss on disposal of assets for lease | 303 | 221 |
Allowance for doubtful accounts | 53 | 13 |
Stock-based compensation | 708 | 682 |
Changes in Operating Assets and Liabilities: | ||
Trade accounts receivable | (107) | (1,177) |
Inventory | 39 | (1,448) |
Prepaid expenses and other current assets | 2,083 | (3,029) |
Other non-current assets | (1,934) | 65 |
Accounts payable | 40 | (276) |
Accrued expenses | 3,217 | 2,506 |
Other current and non-current liabilities | (52) | (63) |
Deferred revenue | 237 | (54) |
Net Cash Provided by Operating Activities | 15,753 | 14,399 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Additions to property and equipment | (388) | (261) |
Notes receivable | (1,179) | |
Purchase of assets for lease | (961) | (341) |
Net Cash Used in Investing Activities | (2,528) | (602) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Taxes paid related to net settlement of equity awards | (114) | |
Treasury stock acquired | (4,991) | |
Proceeds from exercise of stock options | 93 | 54 |
Net Cash (Used in) Provided by Financing Activities | (5,012) | 54 |
INCREASE IN CASH | 8,213 | 13,851 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 37,323 | 22,079 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 45,536 | 35,930 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for taxes | $ 1,617 | 2,647 |
Exercised put option of 211,928 common stock in Synaps Dx for 40,922 common stock of the company | $ 2,230 |
Condensed Statements of Cash _2
Condensed Statements of Cash Flows (Parenthetical) | 9 Months Ended |
Sep. 30, 2021 shares | |
Condensed Statements of Cash Flows | |
Exercised put option of common stock in Synaps Dx (in shares) | 211,928 |
Exercised put option for number of common stock of the company (in shares) | 40,922 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2022 | |
Basis of Presentation | |
Basis of Presentation | 1. Basis of Presentation Semler Scientific, Inc., a Delaware corporation (“Semler” or “the Company”), prepared the unaudited interim financial statements included in this report in accordance with United States generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 4, 2022 (the “Annual Report”). In the opinion of management, these financial statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented. The results of operations for the interim periods shown in this report are not necessarily indicative of the results that may be expected for any future period, including the full year. COVID-19 In 2021, variable fee license revenues (fee-per-test), which grew strongly in the first half of 2021, decreased subsequently in the second half of 2021. The Company believes this new pattern in the home-testing market is due to a change in the behavior of insurance plans when ordering QuantaFlo testing from its health risk assessment customers. The extent and duration of the pandemic is still unknown due to new variants spreading, and the future effects of the new variants on the Company’s business are uncertain and difficult to predict. The Company is continuing to monitor the events and circumstances surrounding the COVID-19 pandemic, which may require adjustments to the Company’s estimates and assumptions in the future. As the Company looks forward into the remaining three months of 2022 and first half of 2023, there is continued uncertainty as recent outbreaks of new variants have occurred and vaccination rates lag in certain jurisdictions. New, additional or different restrictions could be imposed, which could impact the usage of its product by its customers, or further impact the timing of demand for its products. Other customers who have fixed-fee licenses could decide to cancel their licenses if they are not able to use the Company’s device as frequently as they had anticipated in light of such restrictions. Recently Issued Accounting Pronouncements Accounting Pronouncements Recently Adopted In May 2021, the financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2021-04, Earnings Per Share (Topic 260), Debt Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options In July 2021, the FASB issued ASU No. 2021-05, Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments . This update addresses stakeholders’ concerns by amending the lease classification requirements for lessors to align them with practice under Topic 840. Lessors should classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if both of the following criteria are met: i) fiscal years beginning after December 15, 2021. In November 2021, the FASB issued ASU No. 2021-10 , Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance . This ASU increases the transparency of government assistance to include the disclosure of (1) the types of assistance, (2) an entity's accounting for the assistance, and (3) the effect of the assistance on an entity's financial statements. The guidance in ASU 2021-10 is effective for financial statements of all entities, including private companies, for annual periods beginning after December 15, 2021, with early application permitted. Entities are required to provide the new disclosures prospectively for all transactions with a government entity that are accounted for under either a grant or a contribution accounting model and are reflected in the financial statements at the date of initially applying the new amendments, and to new transactions entered into after that date. Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . Codification Improvements to Topic 326 Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments Financial Instruments – Credit Losses (Topic 326); effect will largely depend on the composition and credit quality of the Company's portfolio of financial assets and the economic conditions at the time of adoption. In March 2020, FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments Financial instruments – credit losses (Topic 326): measurement of credit losses on financial statements In October 2021, the FASB issued ASU No.2021-08, Business Combinations (Topic 805): ccounting for Contract Assets and Contract Liabilities from Contracts with Customers This ASU improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer In March 2022, the FASB issued ASU No.2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, |
Variably-Priced Revenue
Variably-Priced Revenue | 9 Months Ended |
Sep. 30, 2022 | |
Variably-Priced Revenue | |
Variably-Priced Revenue | 2. Variably-Priced Revenue The Company recognizes variable-fee licenses (i.e., fee per test) and sales of hardware equipment and accessories in accordance with ASC 606. Total fees from variable-fee licenses represent approximately $4,887 and $5,847 for the three months ended September 30, 2022 and 2021, respectively. Total fees from variable-fee licenses represent approximately $16,742 and $18,009 for the nine months ended September 30, 2022 and 2021, respectively. Total sales of hardware and equipment accessories represent approximately $539 and $300 of revenues for the three months ended September 30, 2022 and 2021, respectively. Total sales of hardware and equipment accessories represent approximately $1,091 and $820 of revenues for the nine months ended September 30, 2022 and 2021, respectively. |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2022 | |
Inventory | |
Inventory | 3. Inventory, which is made up of finished goods, is recorded at the lower of cost or net realizable value. Cost is determined on the first-in, first-out method. The Company periodically analyzes its inventory levels to identify inventory that has a cost basis in excess of its estimated realizable value, and writes down such inventory as appropriate. Inventory balance was $511 and $550 as of September 30, 2022 and December 31, 2021, respectively. |
Assets for Lease, net
Assets for Lease, net | 9 Months Ended |
Sep. 30, 2022 | |
Assets for Lease, net | |
Assets for Lease, net | 4. Assets for Lease, net The Company enters into contracts with customers for the Company’s QuantaFlo product. The Company has determined these contracts meet the definition of a lease under Topic 842. Operating leases are short-term in nature (monthly, quarterly or one year), and all of which have renewal options. The assets that may be associated with these leasing arrangements are identified below as assets for lease. Upon shipment under operating leases, assets for lease are depreciated. During the three months ended September 30, 2022 and 2021, the Company recognized approximately $8,621 and $7,844 , respectively, in lease revenues related to these arrangements. During the nine months ended September 30, 2022 and 2021, the Company recognized approximately $25,058 and $22,656 , respectively, in lease revenues related to these arrangements, which is included in Revenues on the Condensed Statements of Income. Upon shipment under variable-fee license contracts, these assets for lease are sold to the customers, and the asset is recognized as cost of revenue under ASC 606, Revenue from Contracts with Customers. Assets for lease consist of the following: September 30, December 31, 2022 2021 Assets for lease $ 3,305 $ 3,241 Less: accumulated depreciation (1,319) (1,598) Assets for lease, net $ 1,986 $ 1,643 Depreciation expense amounted to $103 and $111 for the three months ended September 30, 2022 and 2021, respectively. Depreciation expense amounted to $315 and $334 for the nine months ended September 30, 2022 and 2021, respectively. Reduction to accumulated depreciation for returned and retired items was $448 and $48 for the three months ended September 30, 2022 and 2021, respectively. Reduction to accumulated depreciation for returned and retired items was $594 and $239 for the nine months ended September 30, 2022 and 2021, respectively. The Company recognized a loss on disposal of assets for lease in the amount of $82 and $97 for the three months ended September 30, 2022 and 2021, respectively. The Company recognized a loss on disposal of assets for lease in the amount of $303 and $221 for the nine months ended September 30, 2022 and 2021, respectively. |
Property and Equipment, net
Property and Equipment, net | 9 Months Ended |
Sep. 30, 2022 | |
Property and Equipment, net | |
Property and Equipment, net | 5. Property and Equipment, net Capital assets consist of the following: September 30, December 31, 2022 2021 Capital assets $ 1,271 $ 882 Less: accumulated depreciation (636) (488) Capital assets, net $ 635 $ 394 Depreciation expense amounted to $49 for the three months ended September 30, 2022 and 2021, respectively. Depreciation expense amounted to $147 and $136 for the nine months ended September 30, 2022 and 2021, respectively. |
Long-Term Investments
Long-Term Investments | 9 Months Ended |
Sep. 30, 2022 | |
Long-Term Investments. | |
Long-Term Investments | 6. Long-Term Investments Long term investments consist of the following for the periods presented: September 30, December 31, 2022 2021 Investments in Synaps Dx $ 512 $ 512 Investments in Mellitus Health Inc. 309 309 Total $ 821 $ 821 In September 2020, the Company acquired a promissory note from NeuroDiagnostics Inc., which is doing business as Synaps Dx (“Synaps”), in the principal amount of $500. Subsequently, in December 2020, the Company agreed to convert the promissory note, together with all accrued interest thereon, into shares of preferred stock of Synaps as repayment in full of the promissory note. The value of the note exchanged for the shares of preferred stock of Synaps held by the Company as of September 30, 2022 and December 31, 2021 was approximately $512. In October 2020, the Company acquired from a seller a convertible promissory note previously issued by Mellitus Health Inc., (“Mellitus”) to such seller for a purchase price of $59, which represented the $50 principal amount of the note and all accrued and unpaid interest thereon. Subsequently, in October 2020, the Company purchased $250 of shares of preferred stock of Mellitus, and in connection with such transaction, the convertible promissory note, together with all accrued interest thereon, also converted pursuant to its terms into shares of preferred stock of Mellitus as repayment in full of such convertible promissory note. The value of consideration exchanged for the shares of preferred stock of Mellitus held by the Company as of September 30, 2022 and December 31, 2021 was approximately $309. The investments in Synaps and Mellitus securities that were retained by the Company as of September 30, 2022 were recorded in accordance with ASC 321, Investments – equity securities, |
Notes Receivable
Notes Receivable | 9 Months Ended |
Sep. 30, 2022 | |
Notes Receivable | |
Notes Receivable | 7. Notes Receivable Notes receivable consist of the following for the periods presented: September 30, December 31, 2022 2021 Senior secured promissory notes $ 1,000 $ — Secured convertible promissory note 179 — Total notes receivable $ 1,179 $ — In June 2022, the Company loaned Mellitus an aggregate of $1,000 through the purchase of two senior secured promissory notes that bear interest at a rate of 5% per annum, and mature in three years unless accelerated due to an event of default as provided in the notes. Repayment of notes is secured by a first priority interest in all of Mellitus’ assets. In May 2022, to facilitate the subordination of such notes in connection with the purchase of the senior secured notes, the Company acquired $179 aggregate principal amount of outstanding convertible notes of Mellitus, which, as amended, mature July 5, 2025, if not automatically converted into preferred stock prior thereto. This note bears an interest rate of 10% per annum. The Company accrued interest income of $17 and $20 for the three and nine months ended September 30, 2022. This interest is included in prepaid and other current assets. |
Other Non-current assets
Other Non-current assets | 9 Months Ended |
Sep. 30, 2022 | |
Other Non-current assets | |
Other Non-current assets | 8. Other Non-current assets Other non-current assets consist of the following for the periods presented: September 30, December 31, 2022 2021 Prepaid licenses $ 1,995 $ — Other 272 332 Total other non-current assets $ 2,267 $ 332 In April 2021, the Company entered into an agreement with Mellitus to exclusively market and distribute its product line in the United States, including Puerto Rico, except for selected accounts. The Company is currently developing a marketing plan. Under this distribution agreement, the Company agreed to purchase $2,000 of product licenses and prepaid $2,000 for the license purchases. Unless terminated early in accordance with its terms, the exclusive distribution agreement will remain in full force and effect until April 1, 2026, and thereafter there is an option for this agreement to be automatically renewed for additional one-year terms. Revenue from these product licenses will be recognized in accordance with ASC 606, Revenue from Contracts with Customers . This prepayment was reclassed to a long-term asset in the second quarter as the recoverability of the prepayment is now expected to be more than twelve months. Other includes right-of-use asset (“ROU”) of $253 and miscellaneous deposits balance of $19 as of September 30, 2022. As of December 31, 2021, ROU asset and miscellaneous deposits balances were $314 and $18 respectively. |
Accrued Expenses
Accrued Expenses | 9 Months Ended |
Sep. 30, 2022 | |
Accrued Expenses | |
Accrued Expenses | 9. Accrued Expenses Accrued expenses consist of the following: September 30, December 31, 2022 2021 Compensation $ 4,386 $ 1,754 Accrued Taxes 1,955 1,159 Miscellaneous Accruals 312 523 Total Accrued Expenses $ 6,653 $ 3,436 |
Concentration of Credit Risk
Concentration of Credit Risk | 9 Months Ended |
Sep. 30, 2022 | |
Concentration of Credit Risk | |
Concentration of Credit Risk | 10. Concentration of Credit Risk Credit risk is the risk of loss from amounts owed by the financial counterparties. Credit risk can occur at multiple levels; as a result of broad economic conditions, challenges within specific sectors of the economy, or from issues affecting individual companies. Financial instruments that potentially subject the Company to credit risk consist of cash and accounts receivable. The Company maintains cash with major financial institutions. The Company’s cash and cash equivalents consist of bank deposits and money market funds held with banks that, at times, exceed federally insured limits. The cash and cash equivalents also include short term treasury bills with original maturities of three months or less. The Company invested in treasury bills in the amount of $19.9 million and money market funds of $7.5 million which are measured at fair value on a recurring basis based on quoted market prices in active markets and are classified as level 1 within the fair value hierarchy. The Company limits its credit risk by dealing with counterparties that are considered to be of high credit quality and by performing periodic evaluations of the relative credit standing of these financial institutions. Management periodically monitors the creditworthiness of its customers and believes that it has adequately provided for any exposure to potential credit loss. F or the three months ended September 30, 2022, two customers accounted for 41.2% and 26.2% of the Company’s revenues, respectively. For the three months ended September 30, 2021, two customers accounted for 39.7% and 27.9% of the Company’s revenues. or the nine months ended September 30, 2022, two customers accounted for 39.9% and 30.1% , of the Company’s revenues, respectively. For the nine months ended September 30, 2021, two customers accounted for 38.6% and 30.5% of the Company’s revenues, respectively. As of September 30, 2022, two vendors accounted for 11.9% and 11.4% of the Company’s accounts payable, respectively. As of December 31, 2021, one vendor accounted for 14.0% of the Company’s accounts payable, respectively. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2022 | |
Leases | |
Leases | 11. Leases On July 31, 2020, the Company entered into a 61-month lease agreement for office space to use, as necessary, for office administration, lab space and assembly and storage purposes, located in Santa Clara, California. The Company took possession of the leased office space in September 2020, and the lease is effective through September 30, 2025. As of September 30, 2022, the remaining lease term is three years and three months with no options to renew. The Company recognized facilities lease expenses of $22 and $22 for the three months ended September 30, 2022 and 2021, respectively. The Company recognized facilities lease expenses of $66 and $90 for the nine months ended September 30, 2022 and 2021, respectively. The following table summarizes the future minimum rental payments required under operating leases that had initial or remaining non-cancelable lease terms greater than one year as of September 30, 2022: Total 2022 Remaining period $ 22 2023 90 2024 93 2025 71 Total undiscounted future minimum lease payments 276 Less: present value discount (10) Total lease liabilities 266 Lease expense in excess cash payment (13) Total ROU asset $ 253 As of September 30, 2022, the Company’s right-of-use (“ROU”) asset was $253 , which was recorded on the Company’s balance sheet as other noncurrent assets, and the Company’s current and noncurrent lease liabilities were $84 and $182 , respectively, which were recorded on the Company’s balance sheet as other short-term liabilities and other long-term liabilities, respectively. As of December 31, 2021, the Company’s ROU asset was $314 , which was recorded on the Company’s balance sheet as other noncurrent assets, and the Company’s current and noncurrent lease liabilities were $80 and $245 , respectively, which were recorded on the Company’s balance sheet as other short-term liabilities and other long-term liabilities, respectively. Lease Arrangements The Company enters into contracts with customers for the Company’s QuantaFlo product. The Company has determined these contracts meet the definition of a lease under Topic 842. The lease portfolio primarily consists of operating leases that are short-term in nature (monthly, quarterly or one year, all of which have renewal options). The Company allocates the consideration in a bundled contract with its customers based on relative standalone selling prices of the lease and non-lease components. The Company made an accounting policy election to apply the practical expedient to not separate lease and eligible non-lease components. The lease component is the predominant component and consists of fees charged for use of the equipment over the period of the arrangement. The nature of the eligible non-lease component is primarily software support. The assets associated with these leasing arrangements are separately identified in the Balance Sheet as Assets for Lease and separately disclosed in Note 4 to the Unaudited Condensed Financial Statements. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 12. Commitments and Contingencies Facilities Leases On July 31, 2020, the Company entered into a 61-month Indemnification Obligations The Company enters into agreements with customers, partners, lenders, consultants, lessors, contractors, sales representatives and parties to certain transactions in the ordinary course of the Company’s business. These agreements may require the Company to indemnify the other party against third party claims alleging that its product infringes a patent or copyright. Certain of these agreements require the Company to indemnify the other party against losses arising from: a breach of representations or covenants, claims relating to property damage, personal injury or acts or omissions of the Company, its employees, agents or representatives. The Company has also agreed to indemnify the directors and certain of the officers and employees in accordance with the by-laws of the Company. These indemnification provisions will vary based upon the nature and terms of the agreements. In many cases, these indemnification provisions do not contain limits on the Company’s liability, and the occurrence of contingent events that will trigger payment under these indemnities is difficult to predict. As a result, the Company cannot estimate its potential liability under these indemnities. The Company believes that the likelihood of conditions arising that would trigger these indemnities is remote and, historically, the Company has not made any significant payment under such indemnification provisions. Accordingly, the Company has not recorded any liabilities relating to these agreements. In certain cases, the Company has recourse against third parties with respect to the aforesaid indemnities, and the Company believes it maintains adequate levels of insurance coverage to protect the Company with respect to potential claims arising from such agreements. 401(K) Plan Effective January 1, 2022, the Company started to match 50% of employee’s 401(k) deferral up to a maximum of 6% of the employee’s eligible earnings. Other The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) provides for an employee retention payroll tax credit for certain employers, which is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees after March 12, 2020 and before December 31, 2021. For each employee, wages (including health plan costs) up to $10,000 can be counted to determine the amount of the 50% credit. The Company started claiming this credit on its July 2020 payroll until mid-April 2021 when it determined that it no longer qualified given the change in government restrictions on travel that had impacted its sales activities. The Company’s determination that it qualified to claim the employee retention payroll tax credit is subjective and subject to audit by the Internal Revenue Service (“IRS”). If the IRS were to disagree with the Company’s tax position, it could be required to pay the retention credit claimed, along with penalties. As of December 31, 2021, the Company has claimed $1.24 million in this retention credit. Litigation |
Stock Incentive Plan
Stock Incentive Plan | 9 Months Ended |
Sep. 30, 2022 | |
Stock Incentive Plan | |
Stock Incentive Plan | 13. Stock Incentive Plan The Company’s stock-based compensation program is designed to attract and retain employees while also aligning employees’ interests with the interests of its stockholders. Stock options have been granted to employees under the stockholder-approved 2007 Key Person Stock Option Plan (“2007 Plan”) and stock options and restricted stock have been granted to employees under the stockholder-approved 2014 Stock Incentive Plan (“2014 Plan”). Stockholder approval of the 2014 Plan became effective in September 2014. The 2014 Plan originally provided that the aggregate number of shares of common stock that may be issued pursuant to awards granted under the 2014 Plan may not exceed 450,000 shares (the “Share Reserve”), however in October 2015, the stockholders approved a 1,500,000 increase to the Share Reserve. In addition, the Share Reserve automatically increases on January 1st of each year, for a period of not more than 10 years, beginning on January 1st of the year following the year in which the 2014 Plan became effective and ending on (and including) January 1, 2024, in an amount equal to 4% of the total number of shares of common stock outstanding on December 31st of the preceding calendar year. The Company’s Board of Directors may act prior to January 1st of a given year to provide that there will be no January 1st increase in the Share Reserve for such year or that the increase in the Share Reserve for such year will be a lesser number of shares of common stock than would otherwise occur. In the fourth quarter of 2020, the Board of Directors agreed not to increase the Share Reserve, and accordingly, the Share Reserve did not increase on January 1, 2021. On January 1, 2022, the Share Reserve increased by 270,338. The Share Reserve is currently 3,315,203 shares as of September 30, 2022. In light of stockholder approval of the 2014 Plan, the Company no longer grants equity awards under the 2007 Plan. As of September 30, 2022, there were no shares available for future stock-based compensation grants under the 2007 Plan and 1,472,319 shares of an aggregate total of 3,315,203 shares were available for future stock-based compensation grants under the 2014 Plan. Treasury Stock Acquired On March 14, 2022, the Company’s Board of Directors authorized a share repurchase program under which it may repurchase up to $20.0 million of its outstanding common stock. Under this program the Company Stock Awards The Company granted fully vested stock awards of 10,482 shares of common stock to the non-employee members of the board of directors, employees and one non-employee as compensation during the nine months ended September 30, 2022. Net shares issued after deducting taxes paid on these grants were 8,772. Fair value of these stock awards on grant date was $698. The Company granted fully vested stock awards of 5,516 shares of common stock to the non-employee members of the board of directors, employees and one non-employee as compensation during the nine months ended September 30, 2021. Fair value of these stock awards on grant date was $537. Stock Options Aggregate intrinsic value represents the difference between the closing market value as of September 30, 2022 of the underlying common stock and the exercise price of outstanding, in-the-money options. A summary of the Company’s stock option activity and related information for the nine months ended September 30, 2022 is as follows: Options Outstanding Weighted Average Number of Weighted Remaining Aggregate Stock Options Average Contractual Intrinsic Value Outstanding Exercise Price Term (In Years) (In Thousands) Balance, December 31, 2021 1,356,245 $ 3.30 3.97 $ 119,830 Options exercised (47,000) 2.41 — — Options granted 5,000 30.48 4.00 — Balance, September 30, 2022 1,314,245 $ 3.43 3.28 $ 44,806 Exercisable as of September 30, 2022 1,309,245 $ 3.33 3.25 $ 44,806 On May 17, 2022 the Company awarded 5,000 options to an employee as compensation pursuant to the 2014 Plan with an exercise price of $30.48 and Black-Scholes options pricing model value of $22.27 . In applying the Black-Scholes options pricing model, following assumptions were used: 1) expected price volatility of 78.6% ; risk-free interest rate of 2.884% ; weighted average expected life of 7 years; zero forefeiture rate and no dividend yield. 1/4th of these options are vested one year after the grant date and 1/48th for each month thereafter contingent upon the participant’s continued service beginning on the initial vesting date and ending when the Vested Ratio equals 1/1. As of September 30, 2022, No options were granted during the nine months ended September 30, 2021. The Company has recorded an expense of $32 and $47 The Company has recorded an expense of $708 and $682 as it relates to stock-based compensation for the nine months ended September 30, 2022 and 2021, respectively Three months ended September 30 Nine months ended September 30, 2022 2021 2022 2021 Engineering and Product Development $ — — 45 $ 32 Sales and Marketing — — 172 105 General and Administrative 32 47 491 545 Total $ 32 $ 47 $ 708 $ 682 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Taxes | |
Income Taxes | 14. Income Taxes The Company’s income tax provision for the three months ended September 30, 2022 was $926 and for the three months ended September 30, 2021 was $1,107. The Company’s income tax provision for the nine months ended September 30, 2022 and 2021 was $2,626 and $2,034, respectively. The income tax provision reflects its estimate of the effective tax rates expected to be applicable for the full year, adjusted for any discrete events that are recorded in the period in which they occurred. The estimates are re-evaluated each quarter based on the estimated tax expense for the full year. For uncertain tax positions that meet a “more likely than not” threshold, the Company recognizes the benefit of uncertain tax positions in the financial statements. The Company’s practice is to recognize interest and penalties, if any, related to uncertain tax positions in income tax expense in the statements of operations. The effective tax rate for the three and nine months ended September 30, 2022 was 20.13% and 19.12% , respectively compared to 21.06% and 11.46% , respectively, in the same periods of the prior year. The decrease in effective tax rate for the three months ended September 30, 2022 is primarily related to an increase of tax benefits associated with share-based compensations. The increase in the effective tax rate for the nine months ended September 30, 2022 is primarily due to lower tax benefits associated with employee stock-based compensation plans. The effective tax rate for the three and nine months ended September 30, 2022 differed from the U.S. federal statutory rate of 21% primarily due to tax benefits associated with stock-based compensation plans, state income taxes (net of federal benefit), and federal and state research and development credit benefit. As of September 30, 2022, and December 31, 2021, the Company had $419 and $476, respectively of unrecognized tax benefits, excluding interest and penalties. The Company’s practice is to recognize interest and penalty expenses related to uncertain tax positions in income tax expense, which was zero for the year ended December 31, 2021 and $8 for the nine months ended September 30, 2022. On August 16, 2022, the "Inflation Reduction Act" (H.R. 5376) was signed into law in the United States. Among other things, the IRA imposes a 15% corporate alternative minimum tax for tax years beginning after December 31, 2022, levies a 1% excise tax on net stock repurchases after December 31, 2022, and provides tax incentives to promote clean energy. The Company is still in the process of analyzing the provisions of the IRA. The Company does not currently expect the Inflation Reduction Act to have a material impact on the Company's Financial Statements. |
Net Income Per Share, Basic and
Net Income Per Share, Basic and Diluted | 9 Months Ended |
Sep. 30, 2022 | |
Net Income Per Share, Basic and Diluted | |
Net Income Per Share, Basic and Diluted | 15. Net Income Per Share, Basic and Diluted Basic earnings per share (“EPS”) represent net income attributable to common stockholders divided by the weighted average number of common shares outstanding during the measurement period. Diluted EPS represents net income attributable to common stockholders divided by the weighted average number of common shares outstanding during the measurement period while also giving effect to all potentially dilutive common shares that were outstanding during the period using the treasury stock method. Basic and diluted EPS is calculated as follows: Three months ended September 30, 2022 2021 Shares Net Income EPS Shares Net Income EPS Basic 6,678,175 $ 3,675 $ 0.55 6,754,526 $ 4,150 $ 0.61 Common stock warrants 67,932 — 73,922 — Common stock options 1,193,819 — 1,314,929 — Diluted 7,939,926 $ 3,675 $ 0.46 8,143,377 $ 4,150 $ 0.51 Nine months ended September 30, 2022 2021 Shares Net Income EPS Shares Net Income EPS Basic 6,738,717 $ 11,109 $ 1.65 6,722,858 $ 15,715 $ 2.34 Common stock warrants 69,068 — 73,736 — Common stock options 1,219,486 — 1,338,743 — Diluted 8,027,271 $ 11,109 $ 1.38 8,135,337 $ 15,715 $ 1.93 As of September 30, 2022, 5,000 options related to stock awards were granted and unvested. These options were considered anti-dilutive for the computation of diluted net income per share. Hence, these options were excluded from the computation of diluted net income per share. As of September 30, 2021, there were no weighted average shares outstanding of common stock equivalents excluded from the computation of diluted net income per share. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Basis of Presentation | |
Basis of Presentation | Semler Scientific, Inc., a Delaware corporation (“Semler” or “the Company”), prepared the unaudited interim financial statements included in this report in accordance with United States generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 4, 2022 (the “Annual Report”). In the opinion of management, these financial statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented. The results of operations for the interim periods shown in this report are not necessarily indicative of the results that may be expected for any future period, including the full year. |
COVID-19 | COVID-19 In 2021, variable fee license revenues (fee-per-test), which grew strongly in the first half of 2021, decreased subsequently in the second half of 2021. The Company believes this new pattern in the home-testing market is due to a change in the behavior of insurance plans when ordering QuantaFlo testing from its health risk assessment customers. The extent and duration of the pandemic is still unknown due to new variants spreading, and the future effects of the new variants on the Company’s business are uncertain and difficult to predict. The Company is continuing to monitor the events and circumstances surrounding the COVID-19 pandemic, which may require adjustments to the Company’s estimates and assumptions in the future. As the Company looks forward into the remaining three months of 2022 and first half of 2023, there is continued uncertainty as recent outbreaks of new variants have occurred and vaccination rates lag in certain jurisdictions. New, additional or different restrictions could be imposed, which could impact the usage of its product by its customers, or further impact the timing of demand for its products. Other customers who have fixed-fee licenses could decide to cancel their licenses if they are not able to use the Company’s device as frequently as they had anticipated in light of such restrictions. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Accounting Pronouncements Recently Adopted In May 2021, the financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2021-04, Earnings Per Share (Topic 260), Debt Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options In July 2021, the FASB issued ASU No. 2021-05, Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments . This update addresses stakeholders’ concerns by amending the lease classification requirements for lessors to align them with practice under Topic 840. Lessors should classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if both of the following criteria are met: i) fiscal years beginning after December 15, 2021. In November 2021, the FASB issued ASU No. 2021-10 , Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance . This ASU increases the transparency of government assistance to include the disclosure of (1) the types of assistance, (2) an entity's accounting for the assistance, and (3) the effect of the assistance on an entity's financial statements. The guidance in ASU 2021-10 is effective for financial statements of all entities, including private companies, for annual periods beginning after December 15, 2021, with early application permitted. Entities are required to provide the new disclosures prospectively for all transactions with a government entity that are accounted for under either a grant or a contribution accounting model and are reflected in the financial statements at the date of initially applying the new amendments, and to new transactions entered into after that date. Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . Codification Improvements to Topic 326 Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments Financial Instruments – Credit Losses (Topic 326); effect will largely depend on the composition and credit quality of the Company's portfolio of financial assets and the economic conditions at the time of adoption. In March 2020, FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments Financial instruments – credit losses (Topic 326): measurement of credit losses on financial statements In October 2021, the FASB issued ASU No.2021-08, Business Combinations (Topic 805): ccounting for Contract Assets and Contract Liabilities from Contracts with Customers This ASU improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer In March 2022, the FASB issued ASU No.2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, |
Assets for Lease, net (Tables)
Assets for Lease, net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Assets for Lease, net | |
Summary of assets for lease, net | September 30, December 31, 2022 2021 Assets for lease $ 3,305 $ 3,241 Less: accumulated depreciation (1,319) (1,598) Assets for lease, net $ 1,986 $ 1,643 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Property and Equipment, net | |
Schedule of capital assets | September 30, December 31, 2022 2021 Capital assets $ 1,271 $ 882 Less: accumulated depreciation (636) (488) Capital assets, net $ 635 $ 394 |
Long-Term Investments (Tables)
Long-Term Investments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Long-Term Investments. | |
Schedule of long term investments | September 30, December 31, 2022 2021 Investments in Synaps Dx $ 512 $ 512 Investments in Mellitus Health Inc. 309 309 Total $ 821 $ 821 |
Notes Receivable (Tables)
Notes Receivable (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Notes Receivable | |
Schedule of notes receivable | September 30, December 31, 2022 2021 Senior secured promissory notes $ 1,000 $ — Secured convertible promissory note 179 — Total notes receivable $ 1,179 $ — |
Other Non-current assets (Table
Other Non-current assets (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Other Non-current assets | |
Schedule of other non-current assets | September 30, December 31, 2022 2021 Prepaid licenses $ 1,995 $ — Other 272 332 Total other non-current assets $ 2,267 $ 332 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accrued Expenses | |
Schedule of accrued expenses | September 30, December 31, 2022 2021 Compensation $ 4,386 $ 1,754 Accrued Taxes 1,955 1,159 Miscellaneous Accruals 312 523 Total Accrued Expenses $ 6,653 $ 3,436 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases | |
Schedule of future minimum rental payments required under operating leases | Total 2022 Remaining period $ 22 2023 90 2024 93 2025 71 Total undiscounted future minimum lease payments 276 Less: present value discount (10) Total lease liabilities 266 Lease expense in excess cash payment (13) Total ROU asset $ 253 |
Stock Incentive Plan (Tables)
Stock Incentive Plan (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Stock Incentive Plan | |
Schedule of stock option activity | Options Outstanding Weighted Average Number of Weighted Remaining Aggregate Stock Options Average Contractual Intrinsic Value Outstanding Exercise Price Term (In Years) (In Thousands) Balance, December 31, 2021 1,356,245 $ 3.30 3.97 $ 119,830 Options exercised (47,000) 2.41 — — Options granted 5,000 30.48 4.00 — Balance, September 30, 2022 1,314,245 $ 3.43 3.28 $ 44,806 Exercisable as of September 30, 2022 1,309,245 $ 3.33 3.25 $ 44,806 |
Schedule of stock-based compensation expense | Three months ended September 30 Nine months ended September 30, 2022 2021 2022 2021 Engineering and Product Development $ — — 45 $ 32 Sales and Marketing — — 172 105 General and Administrative 32 47 491 545 Total $ 32 $ 47 $ 708 $ 682 |
Net Income Per Share, Basic a_2
Net Income Per Share, Basic and Diluted (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Net Income Per Share, Basic and Diluted | |
Schedule of basic and diluted EPS | Three months ended September 30, 2022 2021 Shares Net Income EPS Shares Net Income EPS Basic 6,678,175 $ 3,675 $ 0.55 6,754,526 $ 4,150 $ 0.61 Common stock warrants 67,932 — 73,922 — Common stock options 1,193,819 — 1,314,929 — Diluted 7,939,926 $ 3,675 $ 0.46 8,143,377 $ 4,150 $ 0.51 Nine months ended September 30, 2022 2021 Shares Net Income EPS Shares Net Income EPS Basic 6,738,717 $ 11,109 $ 1.65 6,722,858 $ 15,715 $ 2.34 Common stock warrants 69,068 — 73,736 — Common stock options 1,219,486 — 1,338,743 — Diluted 8,027,271 $ 11,109 $ 1.38 8,135,337 $ 15,715 $ 1.93 |
Variably-Priced Revenue (Detail
Variably-Priced Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Variably-Priced Revenue | ||||
Revenue from variable-fee licenses | $ 4,887 | $ 5,847 | $ 16,742 | $ 18,009 |
Revenue from sales of hardware and equipment accessories | $ 539 | $ 300 | $ 1,091 | $ 820 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Inventory | ||
Inventory balance | $ 511 | $ 550 |
Assets for Lease, net (Details)
Assets for Lease, net (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Assets for Lease, net | ||
Assets for lease | $ 3,305 | $ 3,241 |
Less: accumulated depreciation | (1,319) | (1,598) |
Assets for lease, net | $ 1,986 | $ 1,643 |
Assets for Lease, net - Additio
Assets for Lease, net - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Assets for Lease, net | ||||
Lease revenue | $ 8,621 | $ 7,844 | $ 25,058 | $ 22,656 |
Operating Lease, Lease Income, Statement of Income or Comprehensive Income [Extensible Enumeration] | Revenue from Contract with Customer, Excluding Assessed Tax | Revenue from Contract with Customer, Excluding Assessed Tax | Revenue from Contract with Customer, Excluding Assessed Tax | Revenue from Contract with Customer, Excluding Assessed Tax |
Depreciation expense | $ 103 | $ 111 | $ 315 | $ 334 |
Reduction to accumulated depreciation for returned and retired items | 448 | 48 | 594 | 239 |
Loss on disposal of assets for lease | $ (82) | $ (97) | $ (303) | $ (221) |
Property and Equipment, net (De
Property and Equipment, net (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Property and Equipment, net | ||
Capital assets | $ 1,271 | $ 882 |
Less: accumulated depreciation | (636) | (488) |
Capital assets, net | $ 635 | $ 394 |
Property and Equipment, net - A
Property and Equipment, net - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Property and Equipment, net | ||||
Depreciation expense | $ 50 | $ 49 | $ 147 | $ 136 |
Long-Term Investments (Details)
Long-Term Investments (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Equity Securities without Readily Determinable Fair Value [Line Items] | ||
Long-term investments | $ 821 | $ 821 |
Investments in Synaps Dx | ||
Equity Securities without Readily Determinable Fair Value [Line Items] | ||
Long-term investments | 512 | 512 |
Investments in Mellitus Health Inc. | ||
Equity Securities without Readily Determinable Fair Value [Line Items] | ||
Long-term investments | $ 309 | $ 309 |
Long-Term Investments - Additio
Long-Term Investments - Additional Information (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | 12 Months Ended | |
Oct. 31, 2020 | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2020 | |
Equity Securities without Readily Determinable Fair Value [Line Items] | ||||
Impairment | $ 0 | $ 0 | ||
Investments in Mellitus Health Inc. | ||||
Equity Securities without Readily Determinable Fair Value [Line Items] | ||||
Amount of shares purchased | $ 250 | |||
Promissory note from Synaps Dx | ||||
Equity Securities without Readily Determinable Fair Value [Line Items] | ||||
Principal amount | $ 500 | |||
Conversion value | 512 | 512 | ||
Convertible promissory note previously issued by Mellitus | ||||
Equity Securities without Readily Determinable Fair Value [Line Items] | ||||
Purchase price | 59 | |||
Principal amount | $ 50 | |||
Conversion value | $ 309 | $ 309 |
Notes Receivable (Details)
Notes Receivable (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |
Jun. 30, 2022 USD ($) item | May 31, 2022 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Total notes receivable | $ 1,179 | $ 1,179 | ||
Aggregate principal amount | 1,179 | |||
Interest income | 17 | 20 | ||
Senior secured promissory notes | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Total notes receivable | 1,000 | 1,000 | ||
Aggregate principal amount | $ 1,000 | $ 179 | ||
Number of notes receivable | item | 2 | |||
Interest rate (as a percent) | 5% | 10% | ||
Term (in years) | 3 years | |||
Secured convertible promissory note | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Total notes receivable | $ 179 | $ 179 |
Other Non-current assets - Sche
Other Non-current assets - Schedule of other non-current assets (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Other Non-current assets | ||
Prepaid licenses | $ 1,995 | |
Other | 272 | $ 332 |
Total other non-current assets | $ 2,267 | $ 332 |
Other Non-current assets - Addi
Other Non-current assets - Additional Information Details (Details) - USD ($) $ in Thousands | 1 Months Ended | ||
Apr. 30, 2021 | Sep. 30, 2022 | Dec. 31, 2021 | |
Equity Securities without Readily Determinable Fair Value [Line Items] | |||
ROU asset | $ 253 | $ 314 | |
Miscellaneous deposits | $ 19 | $ 18 | |
Mellitus | |||
Equity Securities without Readily Determinable Fair Value [Line Items] | |||
Purchase of product licenses | $ 2,000 | ||
Prepaid license purchases | $ 2,000 | ||
Renewal term of purchase agreement (in years) | 1 year |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Accrued Expenses | ||
Compensation | $ 4,386 | $ 1,754 |
Accrued Taxes | 1,955 | 1,159 |
Miscellaneous Accruals | 312 | 523 |
Total Accrued Expenses | $ 6,653 | $ 3,436 |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 USD ($) customer | Sep. 30, 2021 customer | Sep. 30, 2022 USD ($) customer item | Sep. 30, 2021 customer | Dec. 31, 2021 item customer | |
Customer concentration risk | Revenue | |||||
Concentration of Credit Risk | |||||
Number of customers | customer | 2 | 2 | 2 | 2 | |
Customer concentration risk | Revenue | Customer one | |||||
Concentration of Credit Risk | |||||
Concentration risk percentage | 41.20% | 39.70% | 39.90% | 38.60% | |
Customer concentration risk | Revenue | Customer two | |||||
Concentration of Credit Risk | |||||
Concentration risk percentage | 26.20% | 27.90% | 30.10% | 30.50% | |
Customer concentration risk | Accounts receivable | |||||
Concentration of Credit Risk | |||||
Number of customers | customer | 3 | 3 | |||
Customer concentration risk | Accounts receivable | Customer one | |||||
Concentration of Credit Risk | |||||
Concentration risk percentage | 30.30% | 21.90% | |||
Customer concentration risk | Accounts receivable | Customer two | |||||
Concentration of Credit Risk | |||||
Concentration risk percentage | 26.30% | 20.10% | |||
Customer concentration risk | Accounts receivable | Customer three | |||||
Concentration of Credit Risk | |||||
Concentration risk percentage | 13% | 16.60% | |||
Vendor concentration risk | Accounts payable | |||||
Concentration of Credit Risk | |||||
Number of vendors | item | 2 | 1 | |||
Vendor concentration risk | Accounts payable | Vendor one | |||||
Concentration of Credit Risk | |||||
Concentration risk percentage | 11.90% | 14% | |||
Vendor concentration risk | Accounts payable | Vendor two | |||||
Concentration of Credit Risk | |||||
Concentration risk percentage | 11.40% | ||||
Recurring | Level 1 | Treasury bills | |||||
Concentration of Credit Risk | |||||
Treasury bills invested amount | $ | $ 19.9 | $ 19.9 | |||
Recurring | Level 1 | Money Market Funds | |||||
Concentration of Credit Risk | |||||
Treasury bills invested amount | $ | $ 7.5 | $ 7.5 |
Leases - Future minimum rental
Leases - Future minimum rental payments (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Leases | ||
2022 Remaining period | $ 22 | |
2023 | 90 | |
2024 | 93 | |
2025 | 71 | |
Total undiscounted future minimum lease payments | 276 | |
Less: present value discount | (10) | |
Total lease liabilities | 266 | |
Lease expense in excess cash payment | (13) | |
Total ROU asset | $ 253 | $ 314 |
Leases - Lessee Arrangements (D
Leases - Lessee Arrangements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Jul. 31, 2020 | |
Leases | ||||||
Lease agreement term | 61 months | |||||
Remaining lease term | 3 years 3 months | 3 years 3 months | ||||
Options to renew | false | |||||
Lease expenses | $ 22 | $ 22 | $ 66 | $ 90 | ||
ROU asset | $ 253 | $ 253 | $ 314 | |||
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other Assets, Noncurrent | Other Assets, Noncurrent | Other Assets, Noncurrent | |||
Current lease liabilities | $ 84 | $ 84 | $ 80 | |||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other Liabilities, Current | Other Liabilities, Current | Other Liabilities, Current | |||
Noncurrent lease liabilities | $ 182 | $ 182 | $ 245 | |||
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other Liabilities, Noncurrent | Other Liabilities, Noncurrent | Other Liabilities, Noncurrent |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | Jan. 01, 2022 | Dec. 31, 2021 | Jul. 31, 2020 |
Defined Contribution Plan Disclosure [Line Items] | |||
Lease agreement term | 61 months | ||
Retention credit | $ 1,240 | ||
Employer matching contribution | 50% | ||
Maximum | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Maximum contribution of percentage of employee's eligible earnings | 6% |
Stock Incentive Plan - Addition
Stock Incentive Plan - Additional information (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
May 17, 2022 shares | Oct. 31, 2015 shares | Sep. 30, 2022 USD ($) shares | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) employee shares | Sep. 30, 2021 USD ($) employee shares | Jan. 01, 2022 shares | Sep. 30, 2014 shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Stock-based compensation expense | $ | $ 32 | $ 47 | $ 708 | $ 682 | ||||
Number of stock option granted | 5,000 | 0 | ||||||
Aggregate of shares granted fully vested stock awards | 10,482 | 5,516 | ||||||
Number of non-employees | employee | 1 | 1 | ||||||
Fair value of stock awards on grant date | $ | $ 698 | $ 537 | ||||||
Net shares issued after deducting taxes paid on granted shares | 8,772 | |||||||
2014 Stock Incentive Plan | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of stock option granted | 5,000 | |||||||
2014 Stock Incentive Plan | Stock options | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of shares available for future stock-based compensation grants | 1,472,319 | 1,472,319 | ||||||
Maximum number of shares issued pursuant to awards granted under plan | 3,315,203 | 3,315,203 | 450,000 | |||||
Maximum term of stock option grants | 10 years | |||||||
Number of share reserve approved | 1,500,000 | |||||||
Number of shares increase in share reserve | 270,338 | |||||||
Percentage of shares reserve increased | 4% | |||||||
Weighted average period of unvested stock awards | 3 years 4 months 24 days | |||||||
Total number of unvested shares | 3,315,203 | 3,315,203 | ||||||
2007 Key Person Stock Option Plan | Stock options | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of shares available for future stock-based compensation grants | 0 | 0 |
Stock Incentive Plan - Common S
Stock Incentive Plan - Common Stock Repurchase (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2022 | Mar. 14, 2022 | |
Stock Incentive Plan | |||
Shares authorized under Share Repurchase Program | $ 20,000 | ||
Treasury stock acquired (in shares) | 47,458 | 148,500 | |
Cost of treasury stock acquired | $ 2,045 | $ 4,991 |
Stock Incentive Plan - Stock Op
Stock Incentive Plan - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Number of Stock Options Outstanding | |||
Balance, Beginning | 1,356,245 | ||
Options exercised | (47,000) | ||
Options granted | 5,000 | 0 | |
Balance, Ending | 1,314,245 | 1,356,245 | |
Exercisable, Ending | 1,309,245 | ||
Weighted Average Exercise Price | |||
Balance, Beginning | $ 3.30 | ||
Options exercised | 2.41 | ||
Options granted | 30.48 | ||
Balance, Ending | 3.43 | $ 3.30 | |
Exercisable, Ending | $ 3.33 | ||
Weighted Average Remaining Contractual Term, Options Outstanding (in years) | 3 years 3 months 10 days | 3 years 11 months 19 days | |
Weighted Average Remaining Contractual Term, Options granted (in years) | 4 years | ||
Weighted Average Remaining Contractual Term, Options Exercisable (in years) | 3 years 3 months | ||
Aggregate Intrinsic Value, Options Outstanding | $ 44,806 | $ 119,830 | |
Aggregate Intrinsic Value, Options Exercisable | $ 44,806 |
Stock Incentive plan -Stock opt
Stock Incentive plan -Stock option Assumptions (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | ||
May 17, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted | 5,000 | 0 | |
Exercise price | $ 30.48 | ||
2014 Stock Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted | 5,000 | ||
Share-Based Payment Arrangement, Grantee Status [Extensible Enumeration] | us-gaap:ShareBasedPaymentArrangementEmployeeMember | ||
Exercise price | $ 30.48 | ||
Share based compensation, options pricing model value | $ 22.27 | ||
Share based compensation, expected price volatility | 78.60% | ||
Share based compensation, risk-free interest rate | 2.884% | ||
Share based compensation, weighted average expected life (in years) | 7 years | ||
Forfeiture rate | 0% | ||
Share based compensation, expected dividend yield | 0% | ||
2014 Stock Incentive Plan | Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Fair value of unvested stock options | $ 101 | ||
Weighted average period of unvested stock awards | 3 years 4 months 24 days |
Stock Incentive Plan - Stock-ba
Stock Incentive Plan - Stock-based compensation - Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 32 | $ 47 | $ 708 | $ 682 |
Engineering and Product Development | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | 45 | 32 | ||
Sales and Marketing | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | 172 | 105 | ||
General and Administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 32 | $ 47 | $ 491 | $ 545 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Income Taxes | |||||
Income tax provision | $ 926 | $ 1,107 | $ 2,626 | $ 2,034 | |
Effective income tax rate | 20.13% | 21.06% | 19.12% | 11.46% | |
Federal statutory rate | 21% | 21% | |||
Unrecognized tax benefits | $ 419 | $ 419 | $ 476 | ||
Interest and penalty expenses related to uncertain tax positions | $ 8 | $ 0 |
Net Income Per Share, Basic a_3
Net Income Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Net Income Per Share, Basic and Diluted | ||||
Basic shares (in shares) | 6,678,175 | 6,754,526 | 6,738,717 | 6,722,858 |
Common stock warrants (in shares) | 67,932 | 73,922 | 69,068 | 73,736 |
Common stock options (in shares) | 1,193,819 | 1,314,929 | 1,219,486 | 1,338,743 |
Diluted shares (in shares) | 7,939,926 | 8,143,377 | 8,027,271 | 8,135,337 |
Net Income - Basic EPS | $ 3,675 | $ 4,150 | $ 11,109 | $ 15,715 |
Net Income - Common stock warrants | 0 | 0 | 0 | 0 |
Net Income - Common stock options | 0 | 0 | 0 | 0 |
Net Income - Diluted EPS | $ 3,675 | $ 4,150 | $ 11,109 | $ 15,715 |
Basic EPS (in dollars per share) | $ 0.55 | $ 0.61 | $ 1.65 | $ 2.34 |
Diluted EPS (in dollars per share) | $ 0.46 | $ 0.51 | $ 1.38 | $ 1.93 |
Net Income Per Share, Basic a_4
Net Income Per Share, Basic and Diluted - Additional Information (Details) - shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Common Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities excluded from the computation of diluted net income per share | 0 | |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities excluded from the computation of diluted net income per share | 5,000 |