Semler Scientific Studied MicroStrategy’s Success Before Adopting Bitcoin Strategy

It
was
more
than
two
years
before
Bitcoin’s
birth
when
Dr.
Herbert
Semler,
who
served
as
a
flight
surgeon
in
the
Korean
War
before
leading
cardiology
at
a
Portland
hospital,
co-founded
Semler
Scientific
(SMLR)
in
2007.

Seventeen
years
later,
the
medical
device
manufacturer
has
converted
much
of
its
cash
holdings
to
bitcoin
and
aims
to
buy
a
lot
more.

“He
was
so
excited,”
Eric
Semler,
the
company’s
chairman
and
son
to
Herbert
Semler,
said
about
his
father’s
reaction
to
this
new
investment
strategy.
Herbert’s
father
and
Eric’s
grandfather,
Harry
Semler,
had
seen
gold
as
a
great
investment
during
his
time,
so
he
would’ve
loved
seeing
the
company
invest
in
the
“new
gold,”
Eric
Semler
told
CoinDesk
in
an
interview
on
Tuesday.

Herbert
–
at
almost
96
years
old
–
is
now
retired
and
not
involved
in
Semler
Scientific
anymore,
and
even
Eric
had
only
been
a
passive
investor
in
SMLR
until
he
took
a
more
active
role
in
April
2023,
spurred
by
governance
issues
at
the
company.

A
lot
has
changed
since
the
younger
Semler’s
arrival,
most
notably
the
company’s
decision
to
adopt
bitcoin
as
a
treasury
strategy
which
was
announced
in
May
of
this
year.
In
this,
Semler
is
attempting
to
follow
the
path
of
MicroStrategy
(MSTR),
which
under
the
leadership
of
Michael
Saylor
famously
began
converting
its
cash
holdings
to
bitcoin
and
today
holds
nearly
$14
billion
worth
of
the
token.

“Michael
Saylor’s
drumbeat
about
zombie
companies
with
a
lot
of
cash
that
were
small
and
weren’t
getting
attention
in
the
stock
market
kind
of
resonated
with
all
of
us
on
the
board,”
Semler
said.
So
they
decided
to
study
MicroStrategy’s
success
and
saw
the
value
in
adopting
its
strategy.

Semler
Scientific
has
so
far
purchased
929
bitcoins
for
a
total
of
$63
million,
or
an
average
price
of
a
bit
less
than
$68,000
each,
according
to
the
firm’s

second-quarter
earnings
report.
The
recent
decline
in
price
to
about
$57,000
has
trimmed
the
value
of
those
holdings
by
about
$10
million,
but
that
doesn’t
change
the
board’s
conviction,
Semler
said.

“When
you
believe
in
something
so
strongly
and
when
you
have
conviction
you
have
to
be
willing
to
step
up
and
buy
things
when
they
go
against
you,”
he
said.
“I
think
that
the
ultimate
test
of
conviction
is
whether
you
will
buy
something
that’s
down
and
that
you
bought
20%
higher.“

Taking
another
page
from
the
Saylor
playbook,
Semler
has
moved
to
raise
money
in
the
capital
markets
to
purchase
far
larger
amounts
of
bitcoin.

The
company
filed
a
$150
million
mixed
shelf
offering
in
early
June
and
is
currently
awaiting
SEC
approval
to
move
forward.

Seasoned
issuers
like
MicroStrategy
typically
receive
the
green
light
from
the
regulator
in
quick
fashion,
but
because
Semler
Scientific
is
a
smaller
company
and
this
is
the
first
time
it
has
attempted
this
sort
of
capital
raise,
the
approval
is
taking
more
time.

Having
been
a
professional
investor
since
1998,
Semler
met
with
bitcoin
entrepreneurs
early
on
in
the
crypto’s
life
and
began
personally
buying
in
2016.
His
investment
focus
had
always
been
on
future
trends,
Semler
said,
and
he
liked
to
look
for
stocks
and
companies
that
could
go
from
small
cap
to
large
cap.

“Bitcoin
fits
into
that
realm,”
he
said
and
in
recent
years,
he
realized
that
the
cryptocurrency
had
shown
staying
power,
specifically
during
the
collapse
of
Silicon
Valley
Bank,
one
of
three
lenders
that
succumbed
to
bank
runs
in
2023.
All
three
banks
had
provided
banking
services
to
cryptocurrency
firms,
which
in
turn
increased
uncertainty
about
the
industry.

“Bitcoin’s
durability
through
that
crisis
impressed
me
and
had
an
impact
on
my
thinking
about
it,”
Semler
recalled.

The
ultimate
decision
to
use
bitcoin
as
a
treasury
reserve
was
a
simple
business
move,
Semler
explained.
The
company
had
plenty
of
free
cash
on
its
balance
sheet
and
was
generating
additional
positive
cash
flow
each
year
–
fundamentals
that
Semler
believed
his
firm
wasn’t
getting
credit
for
from
Wall
Street.

“It
was
the
result
of
a
lot
of
soul
searching
about
how
to
provide
shareholder
value,”
he
said.