Semler Scientific Stumbles After Market Close Following Convertible Note Offering and Earnings Announcement

Semler Scientific (SMLR), a company focused on medical devices, saw its stock drop by 15% in after-hours trading on Thursday following an announcement about a $75 million convertible senior notes offering. The company revealed that some of the proceeds from the offering would be used to increase its bitcoin (BTC) holdings.

Shares fell to as low as $51, and pre-market trading showed an 8% decline. Semler, based in Santa Clara, California, later expanded the offering to $85 million, with an additional $15 million option. The notes, which have a maturity date in 2030, offer a 4.25% annual interest rate.

The conversion price was set at $76.44, a 2% premium over the stock’s closing price. The notes are redeemable after August 2028, provided the stock price hits 130% of the conversion price.

The funds from the offering will be used in part for capped-call transactions to reduce dilution for existing shareholders, with the remainder allocated to expanding bitcoin holdings and general business expenses.

For the fourth quarter, Semler reported a 3.3% increase in revenue, reaching $12.5 million, and an 8.8% rise in operating income to $3.7 million. The company’s unrealized gain on its bitcoin holdings was about $29 million. As of January 17, Semler Scientific owned 2,321 BTC, with an aggregate purchase price of $191.9 million and an average purchase price of $82,689.