Is Semler Scientific Flashing a Warning Sign for Bitcoin Treasury Firms?

Nasdaq-listed healthcare technology firm Semler Scientific was valued at a razor-thin premium compared to its Bitcoin holdings on Tuesday, according to the company’s website.

The firm’s mNAV, or multiple-to-net asset value, was recently 1.07. That means the company’s $498.5 million enterprise value—accounting for Semler’s market cap, debt, and cash balance—was slightly above that of its 4,449 Bitcoin worth $466 million.

Matthew Sigel, head of digital assets research at VanEck, told Decrypt that “Semler is now in a position where many Bitcoin treasury companies may find themselves in the coming quarters: trading close to NAV and facing pressure to demonstrate capital discipline.”

Decrypt reached out to Semler for additional comment.

Bitcoin treasury companies like Semler seek to maximize shareholder value by growing the amount of Bitcoin they own per share. When a company’s mNAV falls below one, it can no longer grow its Bitcoin per share by selling stock and using the proceeds to buy more Bitcoin. 

When Semler unveiled its latest Bitcoin purchase this month, the company said in a regulatory filing that it had recently acquired 185 Bitcoin for $20 million. Semler also signaled that it could sell $364 million worth of common stock through an at-the-market, or ATM, offering program.

In a recent interview with Decrypt, Ben Werkman, chief investment officer at financial services firm Swan Bitcoin, explained that a discount can spook investors in a Bitcoin treasury firm if they start to suspect that the firm can no longer raise funds in a way that benefits shareholders.

“The company has several strategic levers it can pull to stabilize value,” Sigel said. “If management prioritizes shareholders, I believe the risk/reward at current levels is favorable.”

On X, formerly, Twitter, Sigel said Bitcoin treasury firms can adopt safeguards, including pausing “ATM issuance if the stock trades below 0.95 times [net asset value] for 10 or more trading days” and prioritizing share “buybacks when BTC appreciates,” among other options.

In recent months, mNAV has become a popular metric for comparing Bitcoin treasury firms, as everyone from cannabis cultivators to asset managers have seized on the trend. But Semler is not a relatively new face, purchasing its first Bitcoin last May.

In April, Semler said that it had reached a tentative $30 million settlement with the U.S. Department of Justice to resolve allegations of federal anti-fraud law violations pertaining to its QuantaFlo product marketing. On Tuesday, Rosen Law Firm, a global investor rights law firm, said it would begin investigating potential securities claims on behalf of shareholders.

Semler’s stock price closed down 6.5% on Tuesday, dropping to $28.30, according to Yahoo Finance. The company has the 10th largest Bitcoin treasury by dollar value, just behind video game retailer GameStop, according to Bitcoin Treasuries.

Sigel noted that “legacy business issues which have worsened” may be weighing on Semler’s mNAV, along with a small market cap, low liquidity, and limited convertible bond issuances.

Some analysts have warned that if Bitcoin’s price falls below a certain level, it could force companies to sell their Bitcoin, reversing buying pressure this year.

Edited by James Rubin