Financial Data and Key Metrics Changes - Quarterly revenue increased by 75.4% year over year to $255.7 million [4] - Genomics revenue reached $193.8 million, reflecting approximately 89% year over year growth [4] - Gross profit for the quarter was $155.2 million, representing a 99.8% growth year over year [5] - Adjusted EBITDA improved to negative $16.2 million from negative $43.9 million year over year, an improvement of $27.8 million [5] - Full year 2025 revenue guidance increased to $1.25 billion, indicating about 80% year over year growth [5] Business Line Data and Key Metrics Changes - Oncology testing revenue grew by 31% year over year, with approximately 20% volume growth [4] - Hereditary testing contributed $63.5 million in revenue, with unit growth of 23% [5] - Revenue from data and services totaled $61.9 million, marking a 43% year over year growth, led by insights or data licensing business which grew by 58% [5] Market Data and Key Metrics Changes - The company reported delivering approximately 158,000 tests in the quarter, with unit growth in the 20% range [45] - The insights business and data services business grew more than 40%, with the insights business specifically growing by 58% [46] Company Strategy and Development Direction - The company announced a three-year $200 million data and modeling license agreement with AstraZeneca and Pathos to build a foundation model in oncology [6] - This agreement is expected to enhance the company's capabilities in precision medicine and data-driven diagnostics [9] - The company aims to leverage AI technology to differentiate its diagnostics offerings and improve patient outcomes [50] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong demand for hereditary testing and the potential for significant growth in the future [24] - The company is focused on long-term sustained growth rather than short-term fluctuations, emphasizing the importance of maintaining a steady growth trajectory [45] - Management acknowledged the challenges in the biotech funding environment but noted that relationships with large pharmaceutical companies remain strong and committed [70] Other Important Information - The company has over 4,000 connections to high-quality institutions, enhancing its data capabilities [30] - The company is actively investing in AI applications and data infrastructure to support future growth [38] Q&A Session Summary Question: Follow-up on the Pathos deal and its implications for other pharma collaborations - Management noted significant interest from other pharmaceutical companies following the Pathos deal, with ongoing discussions about potential collaborations [14][15] Question: Insights on the Hereditary business performance - Management highlighted that the hereditary business is performing better than expected, with a potential for continued high growth rates [22][25] Question: Details on the Deep Six acquisition and its capabilities - The acquisition of Deep Six is expected to enhance the company's data connectivity and analytics capabilities, allowing for richer data sets [28][30] Question: Clarification on gross margin and ASP improvements related to reimbursement - Management indicated that ASP improvements are expected as the company migrates more volume to FDA-approved versions of assays, but no reimbursement has been baked into current projections [34][35] Question: Assessment of risks in the current macro environment - Management acknowledged some impact on biotech funding but emphasized that relationships with large pharma companies remain stable and committed [68][70] Question: Update on MRD assay performance and expectations - Management reported strong demand for both tumor naive and tumor informed assays, with expectations for strong volumes once reimbursement is secured [72][74]

Financial Performance - Revenue increased by 754% year-over-year to $2557 million in Q1 2025[56] - Genomics revenue reached $1938 million, an 889% increase compared to Q1 2024[56] - Data and services revenue totaled $619 million, growing 432% year-over-year, with Insights (data licensing) growing 580%[56] - Gross profit improved by 998% year-over-year to $1552 million in Q1 2025[56] - Adjusted EBITDA improved from $(439) million in Q1 2024 to $(162) million in Q1 2025[56] - The company anticipates approximately $300 million, or ~24%, of its annual revenue guidance in the second quarter[66] Genomics - Oncology testing (legacy Tempus clinical) revenue increased by 310% year-over-year to $1190 million, driven by ~20% volume growth[56] - Hereditary (legacy Ambry Genetics) revenue was $635 million, representing ~23% unit growth year-over year[56] - Oncology NGS tests delivered increased from 62700 in Q1 2024 to 75000 in Q1 2025[21] - Hereditary tests delivered were approximately 63500 in Q1 2024 and increased to approximately 78000 in Q1 2025[23] Data and AI - Total Remaining Contract Value (TCV) for Data and Services exceeded $940 million at the end of 2024[39] - Data Licensing Retention was approximately 140% at the end of 2024[39] - The company has >300 petabytes of rich multimodal healthcare data[12]

[Part I – Condensed Consolidated Financial Statements (Unaudited)](index=2&type=section&id=Part%20I%20%E2%80%93%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements for the period, including balance sheets, operations, cash flows, and equity [Item 1. Condensed Consolidated Quarterly Financial Statements (Unaudited)](index=2&type=section&id=Item%201.%20Condensed%20Consolidated%20Quarterly%20Financial%20Statements%20(Unaudited)) This section presents Tempus AI's unaudited Q1 2025 financial statements, including balance sheets, operations, cash flows, equity, and detailed notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, highlighting significant increases in total assets and stockholders' equity | Metric | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total Assets | $1,543.1 | $926.1 | | Total Liabilities | $1,216.9 | $869.8 | | Total Stockholders' Equity | $326.2 | $56.3 | - Total assets increased significantly from **$926.1 million** at December 31, 2024, to **$1,543.1 million** at March 31, 2025, primarily driven by increases in goodwill and intangible assets due to business combinations[9](index=9&type=chunk) - Total stockholders' equity saw a substantial increase from **$56.3 million** at December 31, 2024, to **$326.2 million** at March 31, 2025[11](index=11&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section details the company's financial performance, including revenue growth and net loss per share improvement | Metric | Three Months Ended March 31, 2025 (in millions) | Three Months Ended March 31, 2024 (in millions) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Total net revenue | $255.7 | $145.8 | | Loss from operations | $(68.7) | $(53.3) | | Net Loss | $(68.0) | $(64.7) | | Net loss per share, basic and diluted | $(0.40) | $(1.47) | - Total net revenue increased by **75%** year-over-year, from **$145.8 million** in Q1 2024 to **$255.7 million** in Q1 2025[13](index=13&type=chunk) - Net loss per share significantly improved from **$(1.47)** in Q1 2024 to **$(0.40)** in Q1 2025, despite a slight increase in total net loss[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the company's cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity | Three Months Ended March 31, 2025 (in millions) | Three Months Ended March 31, 2024 (in millions) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net cash used in operating activities | $(105.6) | $(101.4) | | Net cash (used in) provided by investing activities | $(375.8) | $17.0 | | Net cash provided by (used in) financing activities | $293.0 | $(1.4) | | Net decrease in Cash, Cash Equivalents and Restricted Cash | $(188.5) | $(85.8) | | Cash, cash equivalents and restricted cash, end of period | $153.3 | $80.8 | - Investing activities shifted from providing **$17.0 million** in Q1 2024 to using **$375.8 million** in Q1 2025, primarily due to business combinations[16](index=16&type=chunk) - Financing activities provided **$293.0 million** in Q1 2025, a significant increase from using **$1.4 million** in Q1 2024, mainly from new credit facilities[18](index=18&type=chunk) [Condensed Consolidated Statements of Redeemable Convertible Preferred Stock, Common Stock and Stockholders' Equity (Deficit)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Redeemable%20Convertible%20Preferred%20Stock,%20Common%20Stock%20and%20Stockholders'%20Equity%20(Deficit)) This section details changes in the company's equity structure, including common stock issuances and accumulated deficit | Metric | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Class A Voting Common Stock (shares) | 167,989,074 | 157,076,972 | | Additional Paid-In Capital | $2,544.0 | $2,210.7 | | Accumulated deficit | $(2,218.9) | $(2,150.8) | | Total Stockholders' equity | $326.2 | $56.3 | - Total stockholders' equity increased substantially from **$56.3 million** at December 31, 2024, to **$326.2 million** at March 31, 2025, driven by increased additional paid-in capital and common stock issuances[21](index=21&type=chunk) - The accumulated deficit increased to **$(2,218.9) million** as of March 31, 2025, from **$(2,150.8) million** at December 31, 2024, reflecting ongoing net losses[21](index=21&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's accounting policies, business operations, and financial statement components [1. Description of Business](index=10&type=section&id=1.%20DESCRIPTION%20OF%20BUSINESS) Tempus AI, Inc. is a healthcare technology company leveraging AI and machine learning to improve patient care across multiple diseases - Tempus AI, Inc. is a healthcare technology company focused on applying AI and machine learning to improve patient care, combining lab test results with multimodal datasets[24](index=24&type=chunk) - The company primarily derives revenue from selling comprehensive genetic testing, licensing data to third parties, matching patients to clinical trials, and related services[24](index=24&type=chunk) - Tempus operates as one operating and reportable segment, with its CEO reviewing financial information on a consolidated basis for decision-making[26](index=26&type=chunk) [2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines the company's accounting policies, including consolidation, presentation, estimates, and emerging growth status - The condensed consolidated financial statements are prepared in accordance with GAAP and include all wholly-owned subsidiaries, with intercompany transactions eliminated[31](index=31&type=chunk) - The company is an 'emerging growth company' and has elected to use the extended transition period for complying with new or revised financial accounting standards[36](index=36&type=chunk)[37](index=37&type=chunk) - Significant estimates are made for revenue, accounts receivable, stock-based compensation, operating lease liabilities, useful lives of assets, and fair value of acquired intangible assets[38](index=38&type=chunk) - New accounting pronouncements ASU 2023-09 (Income Taxes) and ASU 2024-03 (Income Statement Expenses) are effective for fiscal years beginning after December 15, 2024, and 2026, respectively, with the company evaluating their impact[39](index=39&type=chunk)[40](index=40&type=chunk) [3. Revenue Recognition](index=13&type=section&id=3.%20REVENUE%20RECOGNITION) Tempus AI recognizes revenue from Genomics (lab services) and Data and services (data licensing, clinical trial support) - Revenue is primarily derived from Genomics (lab services) and Data and services (commercialization of lab-generated data, clinical trial support)[44](index=44&type=chunk) | Revenue Stream | Three Months Ended March 31, 2025 (in millions) | Three Months Ended March 31, 2024 (in millions) | | :--------------- | :-------------------------------------------- | :-------------------------------------------- | | Genomics | $193.8 | $102.6 | | Data and services| $61.9 | $43.3 | - Genomics revenue for clinical orders is determined by reducing standard charges by estimated variable consideration based on historical collections and reimbursement trends[48](index=48&type=chunk) - Data and services contracts often span multiple years but generally include customer opt-in or early termination clauses, making the contract period typically less than one year for revenue recognition purposes[50](index=50&type=chunk) - Remaining performance obligations related to multi-year contracts totaled **$194.3 million** as of March 31, 2025, with **59%** expected to be recognized in the next year[60](index=60&type=chunk) [4. Business Combinations](index=19&type=section&id=4.%20BUSINESS%20COMBINATIONS) Tempus AI completed two significant acquisitions in Q1 2025: Ambry Genetics and Deep 6 AI, expanding capabilities - On February 3, 2025, Tempus acquired Ambry Genetics Corporation for **$375.0 million** in cash and **4,843,136** shares of Class A common stock (valued at **$298.0 million**), totaling **$695.3 million**[66](index=66&type=chunk)[67](index=67&type=chunk)[70](index=70&type=chunk) - The Ambry acquisition expands testing capabilities into inherited cancer risk, pediatrics, rare disease, immunology, women's reproductive health, and cardiology[68](index=68&type=chunk) - Ambry contributed **$63.5 million** in net revenue (Genomics) and **$5.5 million** in net income to Tempus's consolidated results for the three months ended March 31, 2025[75](index=75&type=chunk) - On March 11, 2025, Tempus acquired Deep 6 AI, Inc. for **$4.3 million** in cash and **$13.1 million** in Class A common stock, resulting in **$21.1 million** in goodwill[77](index=77&type=chunk)[78](index=78&type=chunk) [5. Balance Sheet Components](index=24&type=section&id=5.%20BALANCE%20SHEET%20COMPONENTS) This section details the composition of property and equipment, net, and accrued expenses on the balance sheet | Property and Equipment (in millions) | March 31, 2025 | December 31, 2024 | | :------------------------------------ | :------------- | :---------------- | | Total property and equipment, gross | $206.8 | $163.5 | | Property and equipment, net | $93.5 | $58.1 | - Depreciation expense for property and equipment increased to **$7.9 million** in Q1 2025 from **$6.3 million** in Q1 2024[83](index=83&type=chunk) | Accrued Expenses (in millions) | March 31, 2025 | December 31, 2024 | | :------------------------------ | :------------- | :---------------- | | Accrued compensation and employee benefits | $35.0 | $24.8 | | Accrued employer payroll tax related to stock-based compensation | $7.4 | $24.4 | | Total accrued expenses | $129.2 | $130.4 | [6. Goodwill and Intangibles](index=25&type=section&id=6.%20GOODWILL%20AND%20INTANGIBLES) Goodwill and intangible assets significantly increased in Q1 2025 due to the Ambry and Deep 6 acquisitions - Goodwill increased by **$252.3 million** during Q1 2025, primarily from the Ambry and Deep 6 acquisitions[85](index=85&type=chunk) - The company recorded significant additions to intangible assets in Q1 2025, including **$234.0 million** in customer relationships, **$114.0 million** in developed technology - biotech, **$33.0 million** in trade names, and **$18.0 million** in developed technology - software[87](index=87&type=chunk) | Intangible Assets (in millions) | March 31, 2025 (Net) | December 31, 2024 (Net) | | :------------------------------- | :------------------- | :---------------------- | | Customer relationships | $232.8 | $4.9 | | Developed technology - biotech | $110.2 | $0.0 | | Trade names | $36.5 | $4.6 | | Total Intangible Assets, Net | $399.5 | $11.7 | - Amortization expense for intangible assets was **$12.5 million** in Q1 2025, up from **$2.9 million** in Q1 2024, with a weighted average life of approximately six years[89](index=89&type=chunk) [7. Joint Venture](index=27&type=section&id=7.%20JOINT%20VENTURE) Tempus AI formed SB Tempus Corp., a 50/50 joint venture with SoftBank Group Corporation in Japan, in July 2024 - Tempus AI formed SB Tempus Corp., a **50/50** joint venture with SoftBank Group Corporation, in Japan on July 18, 2024, with each party contributing **¥15 billion** (**$95.2 million**)[91](index=91&type=chunk) - The joint venture is accounted for under the equity method, and Tempus's maximum exposure to loss is its **$94.2 million** investment carrying value as of March 31, 2025[92](index=92&type=chunk)[93](index=93&type=chunk) - Tempus recognized **$6.2 million** in Data and services revenue from a Data License Agreement and **$4.0 million** in other (expense) income, net from an IP License Agreement with SB Tempus for the three months ended March 31, 2025[94](index=94&type=chunk)[95](index=95&type=chunk) [8. Commitments and Contingencies](index=27&type=section&id=8.%20COMMITMENTS%20AND%20CONTINGENCIES) Tempus AI has non-cancelable purchase obligations and is involved in various legal matters, including government inquiries - Future payments under non-cancelable purchase obligations, primarily for data licenses and cloud computing services, totaled **$220.8 million** as of March 31, 2025[96](index=96&type=chunk)[97](index=97&type=chunk) | Year | Purchase Obligations (in millions) | | :--- | :-------------------------------- | | 2025 | $57.7 | | 2026 | $51.6 | | 2027 | $43.9 | | 2028 | $43.5 | | 2029 and thereafter | $24.1 | | Total | $220.8 | - The company is subject to various legal matters, including a Civil Investigative Demand from the U.S. Attorney's Office regarding False Claims Act and Anti-Kickback statute compliance, and patent infringement lawsuits with Guardant Health Inc[278](index=278&type=chunk)[280](index=280&type=chunk) [9. Leases](index=28&type=section&id=9.%20LEASES) Tempus AI has non-cancelable operating lease agreements for office and lab space, with total lease costs of $4.1 million for Q1 2025 | Lease Cost Component (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Operating lease cost | $2.1 | $1.7 | | Variable lease cost | $1.6 | $1.4 | | Total lease costs | $4.1 | $3.2 | - The weighted-average remaining lease term for operating leases is **5.8 years**, with a weighted-average discount rate of **6.0%** as of March 31, 2025[100](index=100&type=chunk) - Total minimum lease payments for operating leases are **$67.6 million**, with a present value of **$57.0 million** as of March 31, 2025[100](index=100&type=chunk) [10. Stockholders' Equity](index=28&type=section&id=10.%20STOCKHOLDERS'%20EQUITY) Tempus AI's stockholders' equity structure includes Class A and Class B common stock with differing voting rights - The company has Class A common stock (one vote per share) and Class B common stock (thirty votes per share), with Class B convertible to Class A under specific circumstances[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk) - A warrant granted to AstraZeneca to purchase **$100 million** in Class A common stock was automatically cancelled and terminated for no consideration as AstraZeneca declined to extend its financial commitment[109](index=109&type=chunk)[110](index=110&type=chunk) - In January 2023, the company repurchased **145,466** shares of non-voting common stock, accounted for as treasury stock[112](index=112&type=chunk) [11. Redeemable Convertible Preferred Stock](index=32&type=section&id=11.%20REDEEMABLE%20CONVERTIBLE%20PREFERRED%20STOCK) Tempus AI issued Series G-4 and G-5 convertible preferred stock, which converted to common stock upon IPO - In October 2023, Tempus issued **785,245** shares of Series G-4 convertible preferred stock for **$45.0 million**[113](index=113&type=chunk) - In April 2024, the company issued **3,489,981** shares of Series G-5 convertible preferred stock for **$200.0 million**[114](index=114&type=chunk) - Upon the IPO in June 2024, all outstanding redeemable convertible preferred stock and accrued dividends automatically converted into **71,976,178** shares of Class A voting common stock and **5,043,789** shares of Class B voting common stock[115](index=115&type=chunk) [12. Stock-Based Compensation](index=32&type=section&id=12.%20STOCK-BASED%20COMPENSATION) Tempus AI recognized $23.0 million in stock-based compensation expense in Q1 2025, primarily due to IPO-related vesting - Stock-based compensation expense totaled **$22.974 million** for the three months ended March 31, 2025, compared to zero in the same period of 2024[122](index=122&type=chunk) - The increase in stock-based compensation is primarily due to the full impact of RSU expiration extensions and the satisfaction of performance-based vesting conditions upon the IPO[117](index=117&type=chunk)[122](index=122&type=chunk) - The 2024 Equity Incentive Plan, effective post-IPO, authorizes **7,430,000** shares of Class A common stock and includes an annual evergreen increase provision[119](index=119&type=chunk) [13. Debt](index=34&type=section&id=13.%20DEBT) Tempus AI amended its Credit Agreement in February 2025, securing new credit facilities and amending its Google convertible note - On February 3, 2025, Tempus entered into an Amendment Agreement for its Credit Agreement, providing an additional **$200.0 million** Term Loan Facility and a **$100.0 million** Revolving Credit Facility[123](index=123&type=chunk) - Proceeds from the new credit facilities were used to fund the cash consideration for the Ambry Acquisition and related fees[123](index=123&type=chunk) - Interest expense related to Term Loans was **$12.5 million** (effective rate **3.1%**) and Revolving Credit Facility was **$1.3 million** (effective rate **1.3%**) for Q1 2025[132](index=132&type=chunk) - The convertible promissory note with Google was amended on February 22, 2025, extending its maturity to December 31, 2030, and resetting the principal balance to **$238.8 million**[133](index=133&type=chunk)[134](index=134&type=chunk) [14. Net Loss Per Share Attributable to Common Stockholders](index=38&type=section&id=14.%20NET%20LOSS%20PER%20SHARE%20ATTRIBUTABLE%20TO%20COMMON%20STOCKHOLDERS) Tempus AI reported a basic and diluted net loss per share of $(0.40) for Q1 2025, an improvement from Q1 2024 | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss attributable to common stockholders | $(68.0) million | $(93.1) million | | Weighted-average common shares outstanding | 170,506 | 63,430 | | Net loss per share, basic and diluted | $(0.40) | $(1.47) | - Potentially dilutive shares, including unvested RSUs and RSAs, totaled **5,805,292** as of March 31, 2025, but were excluded from diluted EPS due to the net loss[138](index=138&type=chunk) [15. Income Taxes](index=40&type=section&id=15.%20INCOME%20TAXES) Tempus AI recorded an income tax benefit of $46.2 million for Q1 2025, primarily from a valuation allowance release due to the Ambry Acquisition - For Q1 2025, Tempus recorded an income tax benefit of **$46.2 million**, resulting from the release of a valuation allowance due to deferred tax liabilities from the Ambry Acquisition[142](index=142&type=chunk)[143](index=143&type=chunk) - The company maintains a full valuation allowance on its U.S. federal and state deferred tax assets due to a history of losses[143](index=143&type=chunk) [16. Fair Value Measurements and Marketable Equity Securities](index=40&type=section&id=16.%20FAIR%20VALUE%20MEASUREMENTS%20AND%20MARKETABLE%20EQUITY%20SECURITIES) Tempus AI measures marketable equity securities and holdback liabilities at fair value, recognizing a net loss in Q1 2025 - Marketable equity securities and holdback liabilities are classified as Level 1 fair value measurements, while contingent consideration is Level 1 post-IPO[146](index=146&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk) | Fair Value Measurement (in millions) | March 31, 2025 | | :------------------------------------ | :------------- | | Marketable equity securities | $67.2 | | Holdback liability | $0.8 | - The company recognized a net loss of **$31.8 million** on marketable equity securities in Q1 2025, compared to a gain of **$6.2 million** in Q1 2024[159](index=159&type=chunk) - Unrealized losses on marketable equity securities still held at March 31, 2025, amounted to **$35.1 million**[159](index=159&type=chunk) [17. Related Parties](index=44&type=section&id=17.%20RELATED%20PARTIES) Tempus AI has ongoing related party arrangements, including a strategic investment in Pathos AI, Inc. and various service agreements - Tempus has a strategic investment in Pathos AI, Inc., holding a warrant to purchase approximately **15%** of Pathos's outstanding equity[161](index=161&type=chunk) - Revenue recognized from Pathos for Q1 2025 was **$0.6 million**, an increase from **$0.1 million** in Q1 2024[162](index=162&type=chunk) - As of March 31, 2025, **$0.7 million** was due from related parties, a decrease from **$4.3 million** at December 31, 2024[163](index=163&type=chunk) [18. Subsequent Events](index=44&type=section&id=18.%20SUBSEQUENT%20EVENTS) Subsequent to Q1 2025, Tempus AI entered new agreements with AstraZeneca and Pathos for oncology model development and data licensing - On April 17, 2025, Tempus entered into agreements with AstraZeneca and Pathos for the development of a foundational large multimodal model in oncology[164](index=164&type=chunk)[165](index=165&type=chunk) - AstraZeneca will pay Tempus a fee of **$35 million** for the Foundational Model[165](index=165&type=chunk) - Pathos will pay Tempus data license fees of **$200 million** over a three-year period, including an upfront payment of **$50 million**, for a comprehensive de-identified multi-modal dataset[166](index=166&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=50&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Tempus AI's Q1 2025 financial condition and operational results [Overview](index=50&type=section&id=Overview) Tempus is a healthcare technology company focused on Intelligent Diagnostics, combining deep healthcare expertise with AI and data analytics - Tempus is a healthcare technology company focused on Intelligent Diagnostics, combining deep healthcare expertise with AI and data analytics to personalize medicine[176](index=176&type=chunk) - The company offers three product lines: Genomics (NGS diagnostics), Data (licensing de-identified data, clinical trial matching), and AI Applications (algorithmic diagnostics, clinical decision support tools)[178](index=178&type=chunk) | Metric | Three Months Ended March 31, 2025 (in millions) | Three Months Ended March 31, 2024 (in millions) | | :---------------- | :-------------------------------------------- | :-------------------------------------------- | | Total revenue | $255.7 | $145.8 | | Net loss | $(68.0) | $(64.7) | | Adjusted EBITDA | $(16.2) | $(43.9) | [Acquisition of Ambry Genetics Corporation](index=52&type=section&id=Acquisition%20of%20Ambry%20Genetics%20Corporation) Tempus completed the acquisition of Ambry Genetics Corporation on February 3, 2025, funded by new credit facilities - Tempus completed the acquisition of Ambry Genetics Corporation on February 3, 2025, for **$375.0 million** in cash and **4,843,136** shares of Class A common stock[180](index=180&type=chunk) - The acquisition was funded by borrowings under an additional **$200.0 million** Term Loan Facility and a **$100.0 million** Revolving Credit Facility[181](index=181&type=chunk) [Strategic Collaborations](index=52&type=section&id=Strategic%20Collaborations) Tempus entered agreements with AstraZeneca and Pathos for an oncology model and data licensing, and has ongoing GSK and Recursion agreements - In April 2025, Tempus entered agreements with AstraZeneca and Pathos to develop a foundational large multimodal oncology model, with AstraZeneca paying Tempus **$35 million** and Pathos licensing data for **$200 million** over three years[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk) - The warrant issued to AstraZeneca in November 2021, allowing purchase of up to **$100 million** in Class A common stock, was automatically cancelled and terminated for no consideration as AstraZeneca declined to extend its financial commitment[185](index=185&type=chunk)[186](index=186&type=chunk) - Tempus has a Strategic Collaboration Agreement with GlaxoSmithKline (GSK) for a minimum commitment of **$180 million** for products and services through December 31, 2027[187](index=187&type=chunk) - Under the Recursion Agreement, Recursion Pharmaceuticals, Inc. will pay an initial license fee of **$22 million** and annual fees totaling up to **$160 million** for data and services, payable in cash, Class A common stock, or a combination[188](index=188&type=chunk)[189](index=189&type=chunk) [Factors Affecting Our Performance](index=54&type=section&id=Factors%20Affecting%20Our%20Performance) Key factors affecting performance include R&D investments, customer acquisition, technology investments, and payer coverage - Tempus expects to maintain high investments in R&D for new assays, algorithms, and expansion into new disease areas, with R&D expenses increasing by **47%** YoY to **$35.9 million** in Q1 2025[191](index=191&type=chunk) - Customer acquisition and expansion are key, with offerings used by over **7,500** physicians and partnerships with **19** of the **20** largest public pharmaceutical companies[192](index=192&type=chunk)[193](index=193&type=chunk) - Significant investments in technology are ongoing to improve user experience and data processing, with technology R&D expenses increasing by **23%** YoY to **$33.4 million** in Q1 2025[194](index=194&type=chunk) - Payer coverage and reimbursement are critical, with an average reimbursement of approximately **$1,590** per Oncology test in Q1 2025, up from **$1,450** in Q1 2024, driven by increased Medicare rates[195](index=195&type=chunk)[216](index=216&type=chunk) [Components of Results of Operations](index=56&type=section&id=Components%20of%20Results%20of%20Operations) Revenue is primarily from Genomics and Data and Services, with operating expenses including R&D and SG&A - Revenue is primarily derived from Genomics (Oncology and Hereditary testing) and Data and Services (data licensing, clinical trial matching, analytical services)[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk) - Cost of revenues for Genomics is a higher percentage of revenue than for Data and Services[200](index=200&type=chunk) - Operating expenses include Cost of Revenues (Genomics, Data and Services), Technology Research and Development, Research and Development, and Selling, General and Administrative[201](index=201&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk) - Interest income is from cash and cash equivalents, while interest expense is from the Second Amended Note and Credit Facilities[207](index=207&type=chunk)[208](index=208&type=chunk) - Other (expense) income, net includes foreign currency gains/losses, marketable equity securities gains/losses, income from IP License Agreement, and changes in fair value of warrant assets/liabilities[209](index=209&type=chunk) [Results of Operations](index=60&type=section&id=Results%20of%20Operations) This section details the company's Q1 2025 financial performance, including revenue, expenses, and net loss, with year-over-year comparisons | Metric | Three Months Ended March 31, 2025 (in millions) | Three Months Ended March 31, 2024 (in millions) | Change ($ in millions) | Change (%) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------- | :--------- | | Total net revenue | $255.7 | $145.8 | $109.9 | 75% | | Genomics revenue | $193.8 | $102.6 | $91.2 | 89% | | Data and services revenue | $61.9 | $43.3 | $18.7 | 43% | | Total cost and operating expenses | $324.4 | $199.1 | $125.3 | 63% | | Loss from operations | $(68.7) | $(53.3) | $(15.4) | 29% | | Net Loss | $(68.0) | $(64.7) | $(3.3) | 5% | - Genomics revenue increased by **89%** YoY, driven by a rise in Oncology tests (from **62,700** to **75,000**) and the addition of **78,000** Hereditary tests from the Ambry acquisition, contributing **$63.5 million**[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk) - Data and services revenue increased by **43%** YoY, primarily due to increased demand for Insights products (**$18.2 million**) and growth from existing and new customers[218](index=218&type=chunk) - Selling, general and administrative expenses increased by **94%** YoY to **$154.6 million**, mainly due to personnel costs (**$23.7 million**, including **$14.8 million** from Ambry), stock-based compensation (**$16.0 million**), and amortization of intangibles (**$11.2 million** from Ambry)[225](index=225&type=chunk) - Other (expense) income, net changed from a **$0.7 million** income in Q1 2024 to a **$(27.5) million** expense in Q1 2025, primarily due to a **$38.1 million** increase in unrealized losses on marketable equity securities[229](index=229&type=chunk) - A **$46.2 million** income tax benefit was recorded in Q1 2025, resulting from the release of a valuation allowance due to deferred tax liabilities from the Ambry Acquisition[230](index=230&type=chunk) [Non-GAAP Financial Measure](index=66&type=section&id=Non-GAAP%20Financial%20Measure) Adjusted EBITDA is used as a non-GAAP measure to assess operating performance, showing significant improvement in Q1 2025 - Adjusted EBITDA is used as a non-GAAP financial measure to assess operating performance, excluding interest, taxes, depreciation, amortization, equity method losses, fair value changes, stock-based compensation, acquisition-related expenses, and amortization of deferred other income[233](index=233&type=chunk) | Metric | Three Months Ended March 31, 2025 (in millions) | Three Months Ended March 31, 2024 (in millions) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net loss | $(68.0) | $(64.7) | | EBITDA | $(77.7) | $(43.3) | | Adjusted EBITDA | $(16.2) | $(43.9) | - Adjusted EBITDA improved significantly from **$(43.9) million** in Q1 2024 to **$(16.2) million** in Q1 2025, indicating improved operating leverage[236](index=236&type=chunk) [Liquidity and Capital Resources](index=67&type=section&id=Liquidity%20and%20Capital%20Resources) Tempus has incurred significant losses but believes current cash and anticipated cash flows will be sufficient for over twelve months - Tempus has incurred significant losses and negative cash flows, with an accumulated deficit of **$2.2 billion** as of March 31, 2025[237](index=237&type=chunk) - As of March 31, 2025, cash, cash equivalents, and restricted cash totaled **$153.3 million**[239](index=239&type=chunk) - The company believes its current cash, equivalents, marketable equity securities, and anticipated cash flows will be sufficient for over twelve months[240](index=240&type=chunk) - Net cash used in operating activities was **$(105.6) million** in Q1 2025, primarily due to net loss and increases in accounts receivable[253](index=253&type=chunk) - Net cash used in investing activities was **$(375.8) million** in Q1 2025, mainly due to **$380.8 million** cash paid for the Ambry and Deep 6 acquisitions[255](index=255&type=chunk) - Net cash provided by financing activities was **$293.0 million** in Q1 2025, from **$196.0 million** in Additional Term Loan Facility proceeds and **$98.0 million** from the Revolving Credit Facility[257](index=257&type=chunk) [Off-Balance Sheet Arrangements](index=73&type=section&id=Off-Balance%20Sheet%20Arrangements) Tempus AI did not have any off-balance sheet financing arrangements or relationships during the period presented - Tempus AI did not have any off-balance sheet financing arrangements or relationships with unconsolidated entities or financial partnerships during the period presented[259](index=259&type=chunk) [Critical Accounting Policies and Estimates](index=73&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) No material changes to critical accounting policies and estimates occurred during Q1 2025 - There have been no material changes to critical accounting policies and estimates during Q1 2025, as described in the Form 10-K for the year ended December 31, 2024[261](index=261&type=chunk) - Business combinations are accounted for using the acquisition method, allocating purchase price to acquired assets and liabilities based on estimated fair values, with any excess recorded as goodwill[262](index=262&type=chunk) [Recent Accounting Pronouncements](index=73&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to the relevant note for information on recently issued accounting standards - Refer to Note 2 for information on recently issued accounting pronouncements[263](index=263&type=chunk) [Emerging Growth Company Status](index=73&type=section&id=Emerging%20Growth%20Company%20Status) Tempus AI is an 'emerging growth company' under the JOBS Act, allowing certain exemptions from reporting requirements - Tempus AI is an 'emerging growth company' under the JOBS Act, allowing it to take advantage of certain exemptions from reporting requirements, such as auditor attestation and executive compensation disclosures[264](index=264&type=chunk)[265](index=265&type=chunk) - The company has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards, which may affect comparability with non-emerging growth companies[266](index=266&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=75&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Tempus AI is exposed to market risks primarily from fluctuations in interest rates and foreign currency exchange rates - Market risk exposure is primarily due to fluctuations in interest rates and foreign currency exchange rates[267](index=267&type=chunk) - As of March 31, 2025, **$575.7 million** was outstanding under Term Loan Facilities and Revolving Credit Facility, subject to variable interest rates; a hypothetical **100 basis point** change would not be material[268](index=268&type=chunk) - Foreign currency risk is currently insignificant, but is expected to increase with international market expansion, though a hypothetical **10%** change would not be material as of March 31, 2025[269](index=269&type=chunk) - The company is also exposed to inflation risk, which could impact gross margin and operating expenses[270](index=270&type=chunk) [Item 4. Controls and Procedures](index=75&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated the effectiveness of disclosure controls and procedures as of March 31, 2025, concluding they were effective - Disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level as of March 31, 2025[271](index=271&type=chunk) - No material changes in internal control over financial reporting occurred during the period covered by the report[272](index=272&type=chunk) - Management acknowledges that internal controls have inherent limitations and cannot provide absolute assurance against misstatements or fraud[273](index=273&type=chunk) [Part II – Other Information](index=78&type=section&id=Part%20II%20%E2%80%93%20Other%20Information) This section covers additional disclosures, including legal proceedings, risk factors, equity sales, and other corporate information [Item 1. Legal Proceedings](index=78&type=section&id=Item%201.%20Legal%20Proceedings) Tempus AI is involved in various legal proceedings, including a Civil Investigative Demand and patent infringement lawsuits - Tempus received a Civil Investigative Demand (CID) from the U.S. Attorney's Office regarding compliance with the False Claims Act and Anti-Kickback statute, specifically the Medicare 14-Day Rule[278](index=278&type=chunk) - Guardant Health Inc. filed a complaint alleging Tempus's liquid biopsy products infringe five U.S. patents, seeking injunctive relief and monetary damages[280](index=280&type=chunk) - Tempus filed counterclaims against Guardant under the Lanham Act for false and misleading advertisements and a separate patent infringement complaint against Guardant[280](index=280&type=chunk) [Item 1A. Risk Factors](index=78&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors were identified during the first quarter of fiscal 2025 - No material changes to the previously disclosed risk factors were identified during the first quarter of fiscal 2025[283](index=283&type=chunk) - Investors should consider the risk factors discussed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as they could materially adversely affect the business[282](index=282&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=79&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Tempus AI issued Class A common stock for an acquisition and used IPO proceeds for tax withholding and working capital - Tempus issued **269,280** shares of Class A common stock to former stockholders of Deep 6 AI, Inc. on March 11, 2025, under Section 4(a)(2) and/or Rule 506 of Regulation D[285](index=285&type=chunk) - The company received net proceeds of **$382.0 million** from its IPO on June 17, 2024[286](index=286&type=chunk) - A portion of IPO proceeds was used for tax withholding and remittance obligations related to RSU Net Settlement and for working capital in Q1 2025, with no material change in expected use[287](index=287&type=chunk) [Item 3. Defaults Upon Senior Securities](index=79&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[288](index=288&type=chunk) [Item 4. Mine Safety Disclosures](index=79&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable[289](index=289&type=chunk) [Item 5. Other Information](index=80&type=section&id=Item%205.%20Other%20Information) This section discloses Rule 10b5-1 trading arrangements adopted or modified by directors and officers during Q1 2025 | Name and Position | Action | Date | Rule 10b5-1* | Total Shares of Class A common stock to be Sold | | :------------------------------------------ | :------- | :----------- | :----------- | :---------------------------------------------- | | Nadja West, Director | Adoption | Dec 3, 2024 | X | 8,443 | | Eric Lefkofsky, CEO, Founder and Director | Adoption | Feb 27, 2025 | X | 1,995,000 | | Eric Lefkofsky, CEO, Founder and Director | Modification | Mar 4, 2025 | X | 3,990,000 | | Ryan Bartolucci, Chief Accounting Officer | Adoption | Mar 14, 2025 | X | To Be Determined | - Eric Lefkofsky, CEO, adopted a Rule 10b5-1 trading plan on February 27, 2025, for **1,995,000** shares, which was modified on March 4, 2025, to **3,990,000** shares[292](index=292&type=chunk)[295](index=295&type=chunk) - Ryan Bartolucci, Chief Accounting Officer, adopted a Rule 10b5-1 trading plan on March 14, 2025, for up to **100%** of net shares received upon RSU vesting, with the exact number indeterminable[292](index=292&type=chunk)[295](index=295&type=chunk) [Item 6. Exhibits](index=81&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate documents, debt agreements, and officer certifications - Key exhibits include the Amended and Restated Certificate of Incorporation and Bylaws, filed on June 17, 2024[296](index=296&type=chunk) - The Third Amendment to Credit Agreement and First Amendment to Guarantee and Collateral Agreement, dated February 3, 2025, is also listed[296](index=296&type=chunk) - Certifications by the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are included[296](index=296&type=chunk) [Signatures](index=82&type=section&id=Signatures) The report is signed by Eric Lefkofsky, CEO, Founder and Chairman, and James Rogers, CFO, on May 6, 2025, certifying its submission - The report is signed by Eric Lefkofsky, CEO, Founder and Chairman, and James Rogers, CFO, on May 6, 2025[301](index=301&type=chunk)

Exhibit 99.1 Tempus Reports First Quarter 2025 Results CHICAGO, May 6, 2025 — Tempus AI, Inc. (NASDAQ: TEM), a technology company leading the adoption of AI to advance precision medicine and patient care, today reported financial results for the quarter ended March 31, 2025. "The business is performing well with revenues growing, margins improving, and our costs remaining in check, allowing us to demonstrate significant year-over-year operating leverage," said Eric Lefkofsky, Founder and CEO of Tempus. "Our ...

Core Viewpoint - Tempus AI has experienced significant stock growth of over 54% year-to-date, contrasting with a decline of over 5% in the S&P 500, indicating strong market performance and potential for future growth [1][2]. Company Overview - Founded in 2015, Tempus AI specializes in AI solutions for cancer treatment and claims to have one of the largest libraries of clinical and molecular oncology data globally, enhancing its diagnostic capabilities for physicians [3]. Innovation and Development - Tempus has introduced a new tool called Tempus Loop, which utilizes patient data and CRISPR screening to identify new drug targets, potentially reducing the high research and development costs faced by pharmaceutical companies [4]. - The company has garnered attention from major pharmaceutical firms, exemplified by an expanded partnership with AstraZeneca to discover new drug targets [5].

Core Viewpoint - Tempus AI, Inc. is set to report its first-quarter fiscal 2025 results, with expectations of a revenue of $248.08 million and a loss of 27 cents per share, reflecting a steady consensus estimate over the past 90 days [2][3]. Financial Performance - In the last reported quarter, Tempus AI had an adjusted loss of 18 cents, which was wider than the Zacks Consensus Estimate of a loss of 15 cents per share, with an average negative earnings surprise of 6.46% over the trailing three quarters [1]. - The company experienced a 43% gain in stock price during the first quarter of 2025, outperforming the broader industry gain of 2.1% and the S&P 500 decline of 4.9% [4][5]. Growth Drivers - The Genomics unit is expected to report strong growth, building on over 30% growth in the previous quarter, while Data and Services revenues are anticipated to have accelerated by 44.6% year over year [10]. - Strategic acquisitions, including Ambry Genetics for $600 million and Deep 6 AI, are expected to enhance Tempus's capabilities in diagnostics and data analytics, contributing positively to financial performance [11][18]. EBITDA and Cash Flow - Tempus AI reported an adjusted EBITDA of -$7.8 million in the fourth quarter of 2025, marking a $27.3 million year-over-year improvement, with expectations of positive adjusted EBITDA of $5 million for the full year 2025 [12]. - The cumulative operating cash outflow improved to $189 million at the end of the fourth quarter of 2024, down from $214.3 million a year ago, indicating a trend towards positive cash flow [13]. Long-term Prospects - The company is advancing precision medicine through AI applications, with a focus on creating Intelligent Diagnostics to enhance personalized care and accelerate therapeutic development [14]. - The launch of the AI-enabled personal health concierge app, olivia, positions Tempus to benefit from the shift towards patient-centric healthcare [15]. - The FDA approval of the xT CDx test strengthens Tempus's oncology portfolio, likely increasing demand for its diagnostic services [16]. Market Position and Valuation - Tempus AI's stock is currently trading at a forward price-to-sales ratio of 6.81, which is higher than the industry average of 5.15, indicating an expensive valuation compared to peers [20]. - Despite the high valuation, the AI market's projected exponential growth positions Tempus AI to capitalize on expanding opportunities in the healthcare sector [21].

Amid a bullish backdrop for the broader market, Tempus AI (TEM 17.72%) stock is posting big gains Wednesday. The company's share price was up 15.8% as of 1:45 p.m. ET. At the same point in time, the S&P 500 was up 2.1%, and the Nasdaq Composite had risen 2.8%.Investors are having a strong positive reaction to news that the Trump administration is apparently interested in getting a trade deal done with China and lowering tariffs in the not-too-distant future. In addition to buying momentum that's lifting val ...

Shares of Tempus AI (TEM 17.46%) were skyrocketing 16.5% higher as of 10:39 a.m. ET on Wednesday. The big gain came after the healthcare artificial intelligence (AI) company announced a multiyear partnership with AstraZeneca and Pathos AI to build a multimodal foundation model for cancer drug discovery and development.Tempus AI has invested heavily over the last decade to create one of the world's largest libraries of multimodal data that can be used in developing precision medicines. The company's de-ident ...

Analyst's Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in TEM over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking ...

Core Insights - The integration of artificial intelligence (AI) in healthcare is creating new tech-driven innovators, with Tempus AI and Doximity emerging as key players in the AI health tech space [1][2] Tempus AI - Tempus AI focuses on AI-driven precision medicine, particularly in oncology and chronic disease management [2] - The company reported a 35.8% year-over-year revenue growth in Q4 2024, with gross profit rising by 49.7%, indicating improved operational leverage [3] - Tempus AI's Data and Services business achieved a 140% net revenue retention rate and has $940 million in remaining contract value, which management plans to reinvest in technology and talent [3] - Recent acquisitions of Deep 6 AI and Ambry Genetics expanded Tempus AI's clinical footprint to over 750 sites and 30 million patients, enhancing its precision medicine platform [4] - Although Q4 adjusted EBITDA was negative $7.8 million, it showed a $27.3 million year-over-year improvement, with expectations of reaching $5 million in positive adjusted EBITDA [5] - The Zacks Consensus Estimate suggests a 63% improvement in Tempus AI's loss per share for 2025 compared to 2024 [11] Doximity - Doximity reported a 25% year-over-year revenue increase in Q3 fiscal 2025, exceeding guidance by 10%, and raised full-year revenue expectations by $28 million [6] - Adjusted EBITDA reached a record $102 million with a 61% margin, up from 54% the previous year, indicating a scalable business model [6] - User engagement metrics are strong, with over 1 million prescribers on the news feed and a 60% quarter-over-quarter increase in AI usage [7] - Doximity is positioned to outpace the market with expected revenue growth of 13% in Q4 and 19% for the full year [8] - The Zacks Consensus Estimate implies a 37.9% improvement in Doximity's EPS for fiscal 2025 compared to the previous fiscal [12] Stock Performance & Valuation - Over the past three months, Tempus AI's stock has increased by 24.6%, while Doximity's stock has risen by 3.7%. However, Doximity has seen a 99.3% increase over the past year compared to Tempus AI's 0.1% rise [9] - Tempus AI trades at a forward price-to-sales (P/S) ratio of 5.24, below its one-year median of 8.49, while Doximity's forward sales multiple is 15.29, above its median of 14.39 [13] - Doximity has an average brokerage recommendation of 2.20, indicating a "Buy," while Tempus AI has a recommendation of 2.24, indicating a "Hold" [14][17] Investment Outlook - Doximity is considered a more stable and financially sound investment opportunity, with strong profitability, margins, and user engagement [20] - Tempus AI, while rapidly growing, is still in the investment phase and has yet to report positive earnings, making it less attractive for risk-averse investors [21]