Financial Data and Key Metrics Changes - In Q3 2025, the company reported a strong overall growth of 33% in genomics volume, with oncology growing at 27% and hereditary testing at 37% [5][6] - The company achieved positive Adjusted EBITDA for the first time, a key milestone after 10 years of efforts, despite incurring additional expenses from the Paige acquisition [7][8] - The company expects to be slightly positive in Adjusted EBITDA for the year, even with the additional expenses from Paige [8] Business Line Data and Key Metrics Changes - The data licensing or insights business grew by 38% in the quarter, contributing an additional $150 million in total contract value [6][7] - The genomic growth was broad-based, with all assays performing exceptionally well [5][6] Market Data and Key Metrics Changes - The company noted that the overall market for testing volumes has been healthy, driven by the identification of more biomarkers [14] - The company is positioned to benefit from a broader market shift towards more NGS testing, although it does not see any one-time benefits artificially propping up its growth [16] Company Strategy and Development Direction - The company aims for sustained long-term unit growth and revenue growth, targeting about 25% growth for the next three years [20][22] - The integration of digital pathology with genomic diagnostics is expected to enhance sequencing capabilities and improve patient outcomes [75][77] - The company is investing heavily in AI and technology to differentiate itself in the market, aiming to operate like a tech company [59][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of the hereditary business, expecting it to grow in the low to mid-20s, significantly above the industry average [44][46] - The company believes that the healthcare reimbursement system will eventually adapt to cover data interpretation and analysis, which could lead to rapid scaling of its algorithms [66][70] Other Important Information - The foundation model is progressing well, with expectations to enter the post-training phase by early 2026 [58][60] - The company is focused on maintaining a strong portfolio of both naive and informed products in the MRD space, leveraging its trained salesforce [22][21] Q&A Session Summary Question: What is driving the strong growth in the oncology portfolio? - The CEO attributed the growth to a more efficient salesforce and the integration of technology that provides comprehensive results to physicians [11][13] Question: How is the company planning to market MRD testing? - The CEO indicated that the company will gradually increase its market presence as reimbursement becomes available, aiming for sustainable growth rather than a sudden spike [20][22] Question: Can you provide details on the $150 million in new contracts? - The CEO explained that the company highlights significant deals when they bundle together, and these contracts are typically multi-year, not immediately translating to revenue [29][30] Question: How does the company view the competitive landscape in hereditary testing? - Management noted that Ambry's growth is driven by both share gains and organic expansion, expecting to outperform the broader market [44][46] Question: What updates can you provide on the foundation model with AstraZeneca? - The CEO reported that the foundation model is in the pretraining phase and is expected to enter post-training by early 2026, with promising progress [58][60] Question: How does the company plan to address reimbursement for data interpretation? - The CEO emphasized the need for the healthcare system to adapt to reimburse for data analysis, which could lead to significant revenue growth for the company [66][70]

Financial Data and Key Metrics Changes - Tempus reported a strong Q3 2025 with overall genomics volume growth of 33%, oncology growing at 27%, and hereditary testing growing at 37% [4] - The company achieved positive adjusted EBITDA for the first time, a key milestone after 10 years, with expectations for slightly positive adjusted EBITDA for the year despite additional expenses from the Paige acquisition [5] Business Line Data and Key Metrics Changes - The data licensing or insights business grew by 38% in the quarter, contributing an additional $150 million in total contract value, indicating strong bookings across multiple contracts [4][5] - The hereditary growth is expected to moderate to the low- to mid-20s percentage range, an increase from previous guidance of mid- to high teens [4] Market Data and Key Metrics Changes - The company noted that testing volumes have been healthy, with a general market tailwind as more biomarkers are identified, leading to increased patient testing [10] - Tempus is positioned well across the entire continuum of genomic testing, with strong offerings in hereditary profiling, therapy selection, and MRD monitoring [27] Company Strategy and Development Direction - Tempus aims for sustained long-term unit growth and revenue growth, targeting about 25% growth for the next three years [14][17] - The company is investing heavily in its foundation model and AI capabilities, integrating efforts from the Paige acquisition to enhance its genomic diagnostics business [42][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of the genomic business, emphasizing the importance of long-term growth over short-term fluctuations [40] - The company anticipates that reimbursement for data interpretation and analysis will eventually improve, positioning Tempus favorably for future growth [48] Other Important Information - The company highlighted the differentiation of its data products, which are increasingly sought after by clients, contributing to the growth of its data licensing business [23][24] - Tempus is actively working on regulatory filings for its liquid biopsy tests, which are expected to enhance reimbursement opportunities [29] Q&A Session Summary Question: What is driving the strong growth in the oncology portfolio? - Management attributed the growth to a more efficient sales force and the integration of technology that provides comprehensive results to physicians, alongside general market trends in testing volumes [9][10] Question: How is Tempus planning to market MRD testing? - The company plans to gradually increase MRD testing as reimbursement becomes available, leveraging its trained sales force and a strong portfolio of assays [16][17] Question: Can you provide details on the $150 million in new contracts? - Management explained that the disclosure of significant contracts is made when they rise to a level worth highlighting, emphasizing that these are multi-year deals and do not directly translate to immediate revenue [20][21] Question: What is the outlook for the hereditary cancer testing market? - Management indicated that Ambry's growth is expected to moderate but remains strong, with the hereditary business anticipated to grow in the low to mid-20s percentage range [32][33] Question: How does the Paige acquisition enhance Tempus's capabilities? - The integration of Paige.AI is expected to improve sequencing outcomes and speed up result delivery through digital pathology algorithms, enhancing the overall diagnostic capabilities [52][54]

Financial Performance - Q3 2025 revenue increased by 84.7% year-over-year to $334.2 million, compared to $180.9 million in Q3 2024[47] - Genomics revenue totaled $252.9 million in Q3 2025, a 117.2% increase compared to Q3 2024[51] - Data and Services revenue reached $81.3 million in Q3 2025, a 26.1% increase compared to Q3 2024[51] - Gross profit improved by 98.4% year-over-year, reaching $209.9 million in Q3 2025, compared to $105.8 million in Q3 2024[47] - Adjusted EBITDA was $1.5 million in Q3 2025, a $23.3 million improvement from $(21.8) million in Q3 2024[47] Genomics Business - Oncology testing (Tempus Genomics) revenue was $139.5 million in Q3 2025, a 31.7% year-over-year increase[51] - Hereditary testing (Ambry Genetics) revenue was $102.6 million in Q3 2025, a 32.8% increase on a pro forma basis[51] - Hereditary tests delivered in Q3 2025 were approximately 129,500, with an average reimbursement per test of $790[24] Data and Services - Total Remaining Contract Value (TCV) for Data and Services was over $940 million at the end of 2024[34] - Data Licensing Retention was approximately 140% at the end of 2024[34] Guidance - Full year 2025 revenue guidance increased to approximately $1.265 billion, representing approximately 80% annual growth[60]

Financial Performance - Total revenue for the three months ended September 30, 2025, was $334.2 million, a 84.5% increase from $180.9 million in the same period of 2024[218] - Net losses for the three months ended September 30, 2025, were $80.0 million, compared to $75.8 million in the same period of 2024[218] - Adjusted EBITDA for the three months ended September 30, 2025, was $1.5 million, a significant improvement from $(21.8) million in the same period of 2024[218] - The company generated total revenue of $904.6 million for the nine months ended September 30, 2025, compared to $492.7 million in the same period of 2024, representing an increase of 83.6%[218] - The company incurred net losses of $190.9 million for the nine months ended September 30, 2025, compared to $692.8 million in the same period of 2024, indicating a significant reduction in losses[218] - Total net revenue for the three months ended September 30, 2025, was $334,206,000, an increase of 85% compared to $180,929,000 in the same period of 2024[260] - Genomics revenue increased by 117% to $252,878,000 for the three months ended September 30, 2025, up from $116,422,000 in 2024, driven by a higher volume of tests performed[260][261] - Genomics revenue increased by 108% to $688.5 million for the nine months ended September 30, 2025, compared to $331.3 million in 2024[278] - Total net revenue for the nine months ended September 30, 2025, was $904.6 million, up 84% from $492.7 million in 2024[278] Acquisitions and Investments - The acquisition of Ambry Genetics Corporation was completed for $375.0 million in cash and 4,843,136 shares of Class A common stock, valued at $61.54 per share[221] - The acquisition of Paige.AI, Inc. was completed for a total consideration of $102.7 million, including $3.0 million in cash and 1,272,151 shares of Class A common stock, valued at $80.52 per share[227] - The company invested $45.0 million and $27.3 million in research and development during the three months ended September 30, 2025 and 2024, respectively, and $122.5 million and $119.7 million during the nine months ended September 30, 2025 and 2024, respectively[236] - The company plans to continue investing in new assay development and expansion into new disease areas, leading to an expected increase in research and development expenses[247] - The company anticipates that technology research and development expenses will increase in absolute dollars as it continues to invest in its technology platform and new product development[248] Expenses and Costs - Cost of revenues for the Genomics product line is expected to increase in absolute dollars as revenue continues to grow[245] - Selling, general and administrative expenses rose by 85% to $187,891,000 for the three months ended September 30, 2025, compared to $101,427,000 in 2024, largely due to personnel-related costs from the Ambry acquisition[270] - Research and development expenses increased by 64% to $44,960,000 for the three months ended September 30, 2025, compared to $27,348,000 in 2024, driven by higher personnel-related costs[269] - Cost of revenues increased by 65% to $124,264,000 for the three months ended September 30, 2025, compared to $75,090,000 in 2024, primarily due to increased material and service costs[265] - Cost of revenues increased by 47% to $344.4 million for the nine months ended September 30, 2025, compared to $233.7 million in 2024[283] - Selling, general and administrative expenses decreased by 19% to $523.2 million for the nine months ended September 30, 2025, compared to $644.1 million in 2024[288] Financing Activities - The company completed a private offering of $750.0 million in Convertible Senior Notes due 2030, with net proceeds of $725.7 million after expenses[219][220] - On July 3, 2025, the company completed the offering of $750 million aggregate principal amount of 0.75% Convertible Senior Notes due 2030, with net proceeds of $725.7 million[307] - The company entered into a Credit Agreement for a senior secured loan with an original principal amount of $175 million, which has been increased to $260 million through amendments[315] - Cash provided by financing activities for the nine months ended September 30, 2025 was $887.7 million, driven by net proceeds from the Notes of $726.5 million and net proceeds from the ATM of $195.5 million[335] - The company sold 2,381,895 shares under the ATM at a weighted average price of $83.97 per share, generating total proceeds of $195.5 million, net of commissions[328] Legal and Compliance - The company has received requests for documents related to compliance with the False Claims Act and has provided responsive documents[359] - The company is involved in various legal proceedings, including a federal securities class-action lawsuit, which it intends to defend vigorously[362] Market Presence and Future Outlook - The company has worked with over 200 biotech companies and 19 of the 20 largest public pharmaceutical companies based on 2024 revenue, indicating strong market presence[237] - The company anticipates continued growth in Genomics and Data and Services segments, supported by the integration of Ambry and increased demand for Insights products[264] - The company expects to incur additional operating losses in the near future as it invests in new offerings and expands its sales organization[302] Cash and Liquidity - As of September 30, 2025, the company had cash, cash equivalents, and restricted cash totaling $660.5 million[303] - The company has an accumulated deficit of $2.3 billion as of September 30, 2025[301] - The company anticipates that its current cash and cash equivalents will be sufficient to meet its cash requirements for more than twelve months from the date of the report[304] - The company may seek to raise additional capital for business expansion and strategic investments[304] - The company has a minimum liquidity requirement of at least $25 million and must maintain specified amounts of consolidated revenues, with a minimum of $1.0 billion for the trailing twelve months ending December 31, 2025[323] Interest and Debt - Interest expense increased by 12% to $(15,399,000) for the three months ended September 30, 2025, compared to $(13,761,000) in 2024, primarily due to compounding interest on loans[272] - Interest expense increased by 36% to $(54.98) million for the nine months ended September 30, 2025, from $(40.29) million in 2024[291] - The principal balance of the Second Amended Note was reset to $238.8 million, with an interest rate of 6.0% per annum, compounded annually[326] - The company incurred $0.8 million in deferred offering costs related to the Sales Agreement, which were reclassified as a reduction of paid-in-capital upon completion of the sale[328] Risk Factors - The conditional conversion feature of the Notes may adversely affect the company's financial condition and operating results if triggered[368] - The company may experience a material reduction in net working capital if a portion of the outstanding principal of the Notes is reclassified as a current liability[370] - The company is subject to counterparty risk with respect to the Capped Call, as option counterparties are financial institutions[373] - Global economic conditions could adversely affect the performance of option counterparties under the Capped Call, potentially increasing dilution[374]

Financial Performance - Revenue grew 84.7% year-over-year to $334.2 million in Q3 2025[5] - Gross profit reached $209.9 million in Q3 2025, an improvement of 98.4% year-over-year[5] - Adjusted EBITDA of $1.5 million in Q3 2025 compared to a loss of $21.8 million in Q3 2024, an improvement of $23.3 million year-over-year[5] - Total net revenue for Q3 2025 reached $334.2 million, a 84.5% increase from $180.9 million in Q3 2024[23] - Genomics revenue was $252.9 million for Q3 2025, compared to $116.4 million in Q3 2024, representing a 116.7% year-over-year growth[23] - The company reported a net loss of $80.0 million for Q3 2025, slightly higher than the net loss of $75.8 million in Q3 2024[23] - The company reported a comprehensive loss of $82.9 million for Q3 2025, compared to a comprehensive loss of $65.5 million in Q3 2024[23] - Non-GAAP net loss per share for Q3 2025 was $0.11, an improvement from $0.24 in Q3 2024[39] - Total net loss for the nine months ended September 30, 2025, was $190,862, a decrease from $692,795 in the same period of 2024[39] Revenue Segmentation - Oncology testing contributed $139.5 million, up 31.7% year-over-year, with approximately 27% volume growth[5] - Hereditary testing contributed $102.6 million, an increase of 32.8% year-over-year, with approximately 37% volume growth[5] - Genomics revenue for the nine months ended September 30, 2025, reached $688.5 million, a 107.5% increase from $331.3 million in 2024[35] - Data and services revenue for the nine months ended September 30, 2025, was $216.1 million, up 33.9% from $161.4 million in 2024[36] - Total net revenue for the nine months ended September 30, 2025, was $904.6 million, compared to $492.7 million in 2024, reflecting an increase of 83.6%[37] Expenses and Liabilities - Total operating expenses for Q3 2025 were $395.2 million, up from $234.5 million in Q3 2024, marking a 68.4% increase[23] - Operating expenses for the nine months ended September 30, 2025, totaled $751.6 million, down from $899.4 million in 2024, indicating a reduction of 16.4%[38] - Total liabilities increased to $1.77 billion as of September 30, 2025, compared to $869.8 million at December 31, 2024[25] - The company incurred $12.0 million in loss on debt extinguishment during the nine months ended September 30, 2025[23] Cash and Assets - The company ended the quarter with $764.3 million of cash and marketable securities[5] - Cash and cash equivalents increased to $655.9 million as of September 30, 2025, compared to $341.0 million at December 31, 2024[25] - Total assets grew to $2.28 billion as of September 30, 2025, up from $926.1 million at December 31, 2024[25] - Cash, cash equivalents, and restricted cash at the end of the period were $660.5 million, up from $388.9 million at the beginning of the period, marking an increase of 70%[32] - Net cash provided by financing activities for the nine months ended September 30, 2025, was $887.7 million, compared to $494.5 million in 2024, an increase of 79.6%[32] Investments and Acquisitions - Acquired Paige, an AI company specializing in digital pathology, to expand dataset and technical team[5] - The company invested $375.0 million in business combinations during the nine months ended September 30, 2025[32] Regulatory and Program Participation - Selected by ARPA-H to provide testing and CRO services for the ADAPT program[5] - Obtained 510(k) clearance from the U.S. FDA for xR IVD, supporting life sciences' drug development programs[5] Stock and Shareholder Information - Stock-based compensation expenses for the nine months ended September 30, 2025, were $79.4 million, down from $509.4 million in the same period of 2024[29] - Stock-based compensation expense increased to $33,979 in Q3 2025 from $21,038 in Q3 2024, reflecting a rise of 61.5%[41] - Weighted average common shares outstanding increased to 174,945 in Q3 2025 from 165,612 in Q3 2024[39] Other Financial Metrics - Non-GAAP gross margin for the nine months ended September 30, 2025, improved to 62.7%, compared to 56.8% in 2024[37] - The company incurred $37.3 million in cash paid for interest during the nine months ended September 30, 2025, compared to $20.9 million in 2024[32] - Fair value changes resulted in a gain of $1,255 in Q3 2025, compared to a gain of $15,605 in Q3 2024[41] - Loss from operations for Q3 2025 was $60,996, compared to $53,616 in Q3 2024, indicating a decline of 13.5% year-over-year[43] - Acquisition-related expenses for Q3 2025 amounted to $552, while there were no such expenses in Q3 2024[40] - Amortization of intangibles due to acquisition was $16,764 in Q3 2025, with no corresponding expense in Q3 2024[43]

Andriy Onufriyenko / Moment via Getty Images Tempus AI (NASDAQ:TEM) isn't an AI stock that immediately comes to mind when one thinks of machine-learning-driven technological innovators with disruptive potential. Undoubtedly, the AI revolution has made a lot of investors a lot of money, but beyond generative AI are some even more profound technologies that could take investor euphoria to the next level. Of course, it's always smart to gauge for bubbliness whenever there's a new technological theme that's po ...

Tempus AI (NASDAQ:TEM) isn't an AI stock that immediately comes to mind when one thinks of machine-learning-driven technological innovators with disruptive potential. ...

Industry Overview - The integration of genomics into cancer care has shifted treatment from uniform therapies to precision medicine, tailoring clinical decisions to individual tumor genetics and molecular profiles [1] - The genomics in cancer care market was valued at $21.07 billion in 2024, with an expected CAGR of 16.2% from 2025 to 2030, driven by technology innovation and clinical validation [1] Company Profiles Tempus AI - Tempus AI reported $241.8 million in Genomics revenues for the quarter ended June 2025, marking a nearly 115% year-over-year increase, supported by a 26% volume growth in oncology tests [5] - The company launched a new liquid biopsy assay, xM for Treatment Response Monitoring, designed to track tumor fraction changes in patients undergoing immune-checkpoint inhibitor therapies [6] - Tempus plans to introduce its first whole-genome sequencing test, Xh, next year, and is developing a companion diagnostic with Verastem Oncology [7] - Tempus AI's Genomics revenues surged 115% year over year, with significant contributions from testing growth and acquisitions [9] - The Data and Services segment saw a 35.7% year-over-year increase in sales, driven by a 40.7% rise in Insights, the data licensing business [10] - A notable development includes a $200 million data and modeling license agreement with AstraZeneca and Pathos, enhancing Tempus' contract value to over $1 billion [11] Exact Sciences - Exact Sciences is strengthening its position in cancer diagnostics, with international adoption of its Oncotype DX and validation of its Oncodetect test for predicting recurrence in colorectal cancer [12] - The company launched Cologuard Plus, an enhanced colorectal cancer screening test expected to reduce false-positive results by over 40% compared to the original [13] - Exact Sciences introduced Cancerguard, a multi-cancer early detection blood test, which is the first commercially available test analyzing multiple biomarker classes [14] - Cologuard remains a cornerstone of Exact Sciences' portfolio, with the company delivering its 20 millionth result, doubling its total from three years ago [15] Valuation and Performance - Tempus AI is trading at a forward 12-month price-to-sales ratio of 10.52, while Exact Sciences has a forward sales multiple of 3.46, indicating that Tempus is trading at a premium [16] - The Zacks Consensus Estimate for Tempus' 2025 sales implies an 81.21% year-over-year growth, while Exact Sciences' sales are expected to rise by 14.4% [17][20] - Tempus AI has seen a year-to-date share price increase of 158.8%, while Exact Sciences has gained 12.6% [4] Investment Considerations - Tempus AI's strong momentum in genomic testing and data partnerships, alongside Exact Sciences' advancements in molecular diagnostics, positions both companies as key players in the genomics landscape [20] - Exact Sciences, currently rated as a Strong Buy, is viewed as more attractively valued compared to Tempus AI, which holds a Hold rating [21][22]

Core Insights - Tempus AI, Inc. will participate in the Stifel 2025 Healthcare Conference on November 13, 2025, with CFO Jim Rogers speaking in a fireside chat [1] - The company will report its third quarter 2025 financial results on November 4, 2025, with a conference call featuring CEO Eric Lefkofsky and CFO Jim Rogers [4] - Tempus has announced a multi-year collaboration with Whitehawk Therapeutics to enhance biomarker-driven oncology research [5] - Six abstracts from Tempus have been accepted for presentation at the European Society for Medical Oncology Congress 2025, highlighting the role of real-world data and AI in personalized medicine [6] Company Overview - Tempus is a technology company focused on advancing precision medicine through artificial intelligence, utilizing one of the largest libraries of multimodal data to provide AI-enabled solutions for personalized patient care [2]

Core Insights - Tempus AI, Inc. is recognized as a significant player in the AI sector on Wall Street, with a Buy rating and a price target of $110.00 set by Canaccord Genuity analyst Kyle Mikson, driven by the potential for AI deployment in clinical practice to enhance long-term revenue growth [1][3]. Group 1: Company Overview - Tempus AI, Inc. operates in the healthcare technology sector, providing AI-enabled precision medicine solutions, including oncology testing for genomic profiling and data services [3]. - The company has a strong acquisition strategy, exemplified by the Ambry deal, which is expected to enhance testing capabilities and AI functionalities, thereby accelerating growth [2][3]. Group 2: Financial Projections - The firm's DCF model for Tempus AI includes key assumptions such as a 10-year revenue compound annual growth rate (CAGR) of 22.8% and a peak operating margin of 45.6%, with a discount rate of 15.0% [3].