Semler Scientific, Inc.

Good afternoon and welcome to the Semler Scientific 2024 First Quarter Financial Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then 2. Please note this event is being recorded. Before we begin, Semler Scientific needs to remind you that certain comments made during this call may constitute forward-looking statements and are made pursuant to and within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 as amended. These include statements regarding the expectations for expansion of the business and the development and marketing of additional products, including receipt and time of an additional 501K clearance for quanta flow and investment in emerging growth opportunities. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in the press release and our SEC filings. The forward-looking statements made today are as of the date of this call, and the company does not undertake any obligation to update the forward-looking statements. If you do not have a copy of today's release, you may obtain one by visiting the investor relations page of the website, SemlarScientific.com. Now I would like to introduce Doug Murphy, Tutorium, CEO of Semlar Scientific. Please go ahead.

Good afternoon, everybody. Thank you for joining us on our first quarter 2024 results call. We achieved year-over-year earnings growth and ended the quarter with our highest cash protrusion in the history of our company. Now, I'm pleased to introduce our CFO, Renee Cormier, to provide further details. Renee?

Thank you, Doug. Good afternoon, everyone, and thank you for being part of today's conference call. Today, I'll be presenting an overview of our first quarter 2024 financial results and discussing recent corporate development. Jennifer Oliva Harrington, our COO, will be providing information about our market developments and opportunities. Following our remarks, Doug, Jennifer, and I will be available to address any questions you may have. As mentioned in today's earnings release, we had a very strong quarter of cash generation despite the regulatory-driven year-over-year revenue decline from our PAD product. Even with the decline in year-over-year quarterly revenues, we achieved year-over-year earnings growth in the first quarter 2024 compared to the first quarter of 2023. This achievement is a testament to the hard work of our team. who adjusted spending accordingly to changes in market conditions. We expect that our revenues will reaccelerate if we are successful in our efforts to obtain a new 510K clearance from the FDA that would allow us to market our heart dysfunction product. Now for the details of our first quarter results. Total revenues in Q1 2024 were $15.9 million. a decrease of 13% compared to the first quarter of 2023. Our revenues are driven by continued sales of Quantiflow to existing and new customers to test for peripheral arterial disease, or PAD. Fixed fee revenues were $7.1 million, a decrease of 24% year over year. Variable fee revenues were $8 million, a decrease of 6% year over year. Equipment and other revenues were $0.8 million, an increase of 140% year-over-year. Equipment revenues are primarily sales to variable fee customers, and they remain strong versus historical levels. In March 2023, the Centers for Medicare and Medicaid Services, or CMS, announced the three-year phase-in of the removal of the HPC code relating to PAD without complications from the Medicare Advantage risk adjustment model. 2024 marks the first year of the three-year phase-in of the decreased economics to our managed care customers. For the remainder of 2024, we anticipate our revenues could follow a similar cadence that we saw in 2023, with H1 more heavily weighted versus H2. We are encouraged by the continued testing for PAD given the importance of early diagnosis and treatment that can lead to improved long-term clinical outcomes for patients. In the first quarter of 2024, our three largest customers, including their related affiliates, comprised 45%, 25%, and 11% of quarterly revenue. Operating expenses in Q1 2024, which includes cost of revenue, were $8.9 million. a decrease of 25% year over year. As a percentage of revenues, operating expenses decreased to 56% compared to 66% in 2023 due to continued expense control after our strategic corporate streamlining announced in July last year. We have an outstanding group of leaders and employees here at Simler that remain diligent in ensuring we're focused on cost disciplines without sacrificing the high service our customers have come to expect. We anticipate we could experience a slight uptick in expenses throughout the year as we prepare for the next phase of launching QuantaFlow with expanded use as an aid in the diagnosis of other cardiovascular diseases that is subject to FDA clearance, which we hope to achieve in the second half of 2024. Pre-tax net income was $7.8 million compared to $6.6 million in the prior year. Net income was $6.1 million or 88 cents per basic share and 78 cents per fully diluted share compared to $5 million or 74 cents per basic share and 63 cents per fully diluted share in Q1 2023. We had a record high cash balance at March 31st, 2024 of $62.9 million. Now I'd like to turn the call over to Jennifer to provide a more in-depth discussion of our market developments and opportunities.