NEW YORK – Semler Scientific’s mNAV raises concerns for Bitcoin treasury firms amid financial pressures.
Breaking: Semler’s mNAV Nears Critical Threshold
Nasdaq-listed healthcare technology firm Semler Scientific was valued at a razor-thin premium compared to its Bitcoin holdings on Tuesday. The firm’s mNAV, or multiple-to-net asset value, hovered around 1.07, indicating that its enterprise value of $498.5 million slightly exceeded the value of its 4,449 Bitcoin, worth $466 million.
Matthew Sigel, head of digital assets research at VanEck, highlighted the precarious position Semler finds itself in, stating, “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.”
Immediate Impact on Bitcoin Treasury Firms
Bitcoin treasury companies like Semler aim to maximize shareholder value by increasing the amount of Bitcoin they own per share. However, if a company’s mNAV falls below one, it becomes challenging to grow Bitcoin per share by selling stock and using the proceeds for additional Bitcoin purchases.
In a recent regulatory filing, Semler disclosed the acquisition of 185 Bitcoin for $20 million. The company also indicated potential plans to sell $364 million worth of common stock through an at-the-market offering program.
Key Details Emerge
Ben Werkman, chief investment officer at Swan Bitcoin, warned that investor confidence could wane if a discount suggests the firm can no longer raise funds beneficially for shareholders. “The company has several strategic levers it can pull to stabilize value,” Sigel noted, emphasizing the importance of prioritizing shareholders.
“If management prioritizes shareholders, I believe the risk/reward at current levels is favorable.” – Matthew Sigel
Industry Response and Strategic Options
On social media platform X, formerly Twitter, Sigel suggested that Bitcoin treasury firms could adopt safeguards. These include pausing ATM issuance if the stock trades below 0.95 times net asset value for ten or more trading days and prioritizing share buybacks when Bitcoin appreciates.
mNAV has become a popular metric for comparing Bitcoin treasury firms, with companies across various sectors adopting the trend. However, Semler is not new to this strategy, having made its first Bitcoin purchase last May.
By the Numbers
- 4,449 Bitcoin owned by Semler
- $498.5 million enterprise value
- $466 million Bitcoin value
- 10th largest Bitcoin treasury by dollar value
Background Context
In April, Semler announced a tentative $30 million settlement with the U.S. Department of Justice to resolve allegations of federal anti-fraud law violations related to its QuantaFlo product marketing. This backdrop of regulatory scrutiny adds another layer of complexity to Semler’s financial maneuvers.
On Tuesday, Rosen Law Firm, a global investor rights law firm, announced an investigation into potential securities claims on behalf of Semler’s shareholders.
What Comes Next for Semler
Semler’s stock price closed down 6.5% on Tuesday, dropping to $28.30. The company ranks as the 10th largest Bitcoin treasury by dollar value, just behind GameStop, according to Bitcoin Treasuries.
Sigel pointed out that “legacy business issues which have worsened” might be affecting Semler’s mNAV, along with a small market cap, low liquidity, and limited convertible bond issuances. Analysts caution that a significant drop in Bitcoin’s price could compel companies to sell, reversing the buying trend seen this year.
The ongoing developments at Semler Scientific highlight the delicate balance Bitcoin treasury firms must maintain amid fluctuating market conditions and regulatory challenges. As the situation evolves, industry watchers will be keenly observing how Semler navigates these financial headwinds.
