Breaking the "zombie company" dilemma, the US-listed medical company Semler Scientific launches Bitcoin strategic reserves

Author: Weilin, PANews

Currently, the publicly listed company MicroStrategy, which holds the most Bitcoin globally, has not only inspired the Japanese listed company Metaplanet to follow its Bitcoin reserve strategy but has also become a case study for the American listed medical technology company Semler Scientific.

On May 28 of this year, this medical company, then valued at $200 million, announced its Bitcoin reserve strategy, having purchased 581 Bitcoins for $40 million. The following week, on June 6, Semler Scientific announced it had purchased an additional 247 Bitcoins for $17 million, with CEO Doug Murphy-Chutorian emphasizing that this was just the beginning.

On August 6, Semler Scientific announced it had purchased an additional 101 Bitcoins for $6 million. Since announcing its Bitcoin asset reserve strategy on May 28, 2024, the company has accumulated a total of 929 Bitcoins, amounting to $63 million. Recently, Semler Scientific's chairman Eric Semler revealed the story behind the company's strategic shift to increase its Bitcoin reserves.

Significant Boost in Stock Price, Founder Excited About Investing in "New Gold"

Semler Scientific is a publicly listed company in the United States that develops and manufactures innovative products and services to support the early detection and treatment of chronic diseases. The company's founder, Dr. Herbert Semler, served as an aviation surgeon during the Korean War and later specialized in cardiology at a hospital in Portland. He co-founded Semler Scientific (SMLR) in 2007. The stock price of Semler Scientific peaked at $153.21 on October 1, 2021, but subsequently remained relatively stagnant compared to some larger companies in terms of competitiveness and recognition.

However, since announcing its Bitcoin asset reserve strategy on May 28, 2024, Semler Scientific's stock price has seen a significant boost. On May 24, Semler Scientific's stock price on Nasdaq was $23.32, rising to $40.57 by June 12, an increase of 74%. As of August 7, amidst a declining trend in the U.S. stock market, SMLR's stock price had retreated to $27.52.

"He is very excited," said Eric Semler, the son of founder Herbert Semler, when discussing his father's reaction to this new investment strategy. Eric Semler noted that his grandfather, Harry Semler, viewed gold as a great investment in his time, so his father Herbert is pleased to see the company investing in "new gold."

Eric Semler has been a professional investor since 1998 and met Bitcoin entrepreneurs early in the cryptocurrency space, starting to make personal purchases in 2016. Eric stated that his investment focus has always been on future trends, and he enjoys looking for stocks and companies that can achieve this goal, ranging from small-cap to large-cap companies. However, Eric had not been very active in investing in Semler Scientific until April 2023, when he began to take a more active role due to corporate governance issues.

Breaking the "Zombie Company" Dilemma, Imitating and Becoming MicroStrategy

When the American software company MicroStrategy began investing in Bitcoin in August 2020, some believed that then-CEO Michael Saylor had gone mad. Despite Bitcoin's crash in 2022, MicroStrategy still maintained a stock price higher than before its Bitcoin purchases, despite significant paper losses. Now, in the current bull market, the company's market capitalization is approaching $30 billion—nearly 30 times what it was in August 2020. On August 7, Tree News reported that Michael Saylor claimed to personally hold over $1 billion worth of Bitcoin.

The success story of MicroStrategy has caught the attention of other companies, and it now has an increasing number of imitators.

PANews previously reported on the Bitcoin investment strategy of the Japanese listed company Metaplanet, which once had an economy hotel business line and has announced several large Bitcoin purchases since April of this year. As of July 22, Metaplanet held a total of 245.992 Bitcoins. After transitioning to Bitcoin investment, it quickly boosted market sentiment, with the company's stock price experiencing a strong growth of up to 360% over the two months from April to June after a long period of stagnation.

On August 8, Metaplanet announced it had successfully secured a loan of 1 billion yen (annual interest rate of 0.1%), which will be used for further Bitcoin purchases. MicroStrategy Chairman Michael Saylor

In early May of this year, MicroStrategy Chairman Michael Saylor reiterated his views on Bitcoin during the On The Tape podcast, discussing why Bitcoin can help escape the plight of dead money and zombie companies: "We were too ambitious to call on a nation to do this. A more pragmatic and practical next step is to have a thousand companies in the Russell 2000 do this, all of which are dead money and zombie companies, to get them to start doing this. There are many such zombie companies in Japan as well. So the problem is that thousands of companies have lifeless coffers because their capital assets have a negative real yield in those coffers."

"I believe that the obvious beneficiaries among those listening to this podcast should be the shareholders, managers, and directors of small and medium-sized companies, especially publicly listed companies that essentially cannot surpass the 'Seven Giants.' If you think you cannot surpass companies like Google, Meta, Microsoft, and Nvidia, and you have some cash on hand, then you should either take that cash to buy Bitcoin or issue stock to buy Bitcoin, or issue bonds, preferably convertible bonds to buy Bitcoin, because this allows you to recapitalize through appreciating assets rather than losing capital or holding depreciating assets that have negative real yields and are eroding shareholder value."

This time, Eric was clearly inspired by Michael Saylor's ideas. Eric stated, "Michael Saylor's warning about having large amounts of cash and small, unnoticed zombie companies resonated with all members of our board." Therefore, they decided to study MicroStrategy's success and see the value in adopting its strategy.

On Monday (August 5), as the cryptocurrency market experienced significant fluctuations, Eric Semler also noted that the price of Bitcoin had dropped to about $57,000, reducing the value of the company's Bitcoin assets by about $10 million, but this did not change the board's conviction. "When you have such a strong belief in something, you must be willing to step up and buy when things are not going well," he said. "I believe the ultimate test of faith is whether you will buy those things that have fallen, which you once bought at a price 20% higher."

Drawing on Michael Saylor's strategy, Semler Scientific has begun to raise funds in the capital markets to purchase more Bitcoin. The company submitted a mixed shelf offering application for a $150 million stock issuance in early June and is currently awaiting approval from the U.S. Securities and Exchange Commission to proceed.