More than two years before the birth of Bitcoin, Dr. Herbert Semler served as a flight surgeon during the Korean War and later led cardiology at a hospital in Portland; he co-founded Semler Scientific (SMLR) in 2007.
Seventeen years later, the medical device manufacturer has converted most of its cash reserves into Bitcoin and plans to purchase more.
"He was very excited at the time," said company chairman Eric Semler, reflecting on his father's reaction to this new investment strategy. Eric Semler told CoinDesk that Herbert's father and Eric's grandfather, Harry Semler, believed that gold was a good investment in his day, so he would be happy to see the company invest in the 'new gold.'
Now nearly 96 years old, Herbert is retired and no longer involved in the business of Semler Scientific; even Eric was just a passive investor in SMLR until April 2023, when he began to engage more actively after governance issues arose at the company.
Since the young Semler joined, the company has undergone many changes, the most notable of which is the company's announcement in May of this year to adopt Bitcoin as a financial strategy. In this regard, Semler has sought to emulate MicroStrategy (MSTR), which famously converted its cash reserves into Bitcoin under the leadership of Michael Saylor and now holds tokens worth nearly $14 billion.
"Michael Saylor's appeal to 'zombie companies' that have a lot of cash, are smaller in scale, and are overlooked in the stock market resonated with all members of the board," Semler said. Therefore, they decided to study MicroStrategy's success and see the value of adopting its strategy.
According to the company's second-quarter earnings report, Semler Scientific has purchased a total of 929 Bitcoins so far, worth $63 million, at an average price slightly below $68,000 each. The recent price drop to about $57,000 has reduced the value of these holdings by approximately $10 million, but this does not change the board's belief, Semler stated.
"When you are so convinced about something and have faith, you must be willing to take action and buy when prices go down," he said. "I think the ultimate test of faith is whether you are willing to buy something that is down 20% in price."
Influenced by Saylor, Semler has also taken initiatives to raise funds to purchase larger amounts of Bitcoin in the capital markets. The company submitted a mixed listing application for $150 million in early June and is currently awaiting SEC approval to proceed.
Experienced issuers (like MicroStrategy) are often able to quickly obtain regulatory approval, but since Semler Scientific is a smaller company and this is the first time the company is attempting such capital raising, approval takes more time.
Having been a professional investor since 1998, Semler met with Bitcoin entrepreneurs early in Bitcoin's inception and began personally purchasing Bitcoin in 2016. Semler stated that his investment focus has always been on future trends, and he enjoys looking for stocks and companies that can grow from small market caps to large ones.
"Bitcoin fits this space," he said, and in recent years, he has realized that cryptocurrencies have shown resilience, particularly during the collapse of Silicon Valley Bank, one of three banks, in 2023. These three banks provided banking services for cryptocurrency companies, further increasing uncertainty in the industry.
"The resilience of Bitcoin during that crisis impressed me and influenced my thinking," Semler recalled.
The final decision to use Bitcoin as a financial reserve is a simple business move, Semler explained. The company has a significant amount of idle cash on its balance sheet and generates additional positive cash flow each year — Semler believes these fundamentals are not recognized by Wall Street.
"This is a thoughtful result, a reflection on how to provide shareholder value," he said.
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