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Core Insights - Tempus AI reported Q3 2025 revenue of $334.2 million, a significant increase of 84.7% year-over-year, surpassing market expectations of $328.73 million [1] - The company experienced a net loss of $80 million in Q3, which is wider than the $75.8 million loss in the same period last year, influenced by one-time expenses [1] - The adjusted EBITDA for Q3 was $1.5 million, a recovery from a loss of $21.8 million in the previous year [2] Revenue Breakdown - Genomics revenue reached $252.9 million, up 117.2% year-over-year, with tumor testing contributing $139.5 million, a 31.7% increase [2] - Genetic testing revenue from Ambry Genetics was $102.6 million, reflecting a 32.8% increase, while data and services revenue grew by 26.1% to $81.3 million [2] - The gross profit for Q3 was $209.9 million, marking a 98.4% increase compared to the previous year [2] Operational Highlights - The company acquired digital pathology AI firm Paige to enhance its data set and technical team [3] - Tempus AI was selected by ARPA-H for the ADAPT program to provide testing and CRO services [3] - The company received FDA 510(k) clearance for several products, including xR IVD and Tempus Pixel cardiac imaging platform [3] Future Outlook - Tempus AI raised its full-year 2025 revenue guidance to approximately $1.265 billion, representing an expected growth of about 80% [3] - The company anticipates an adjusted EBITDA of approximately $20 million for Q4, with a slight positive adjusted EBITDA for the full year [3] Financial Position - As of the end of the quarter, Tempus AI held $764.3 million in cash and securities [4]

Market Overview - US stock markets experienced a significant decline, with the Nasdaq falling over 2.5% and the semiconductor index dropping 4% [1] - The Dow Jones Industrial Average closed down 251.44 points (0.53%) at 47085.24, the Nasdaq down 486.09 points (2.04%) at 23348.64, and the S&P 500 down 80.34 points (1.17%) at 6771.63 [1] - Major tech companies saw declines, with Microsoft down 0.52%, Meta down 1.63%, Amazon down 1.84%, Google down 2.18%, Nvidia down 3.96%, and Tesla down 5.15% [1] Oil and Currency Markets - Oil prices fell due to a strong dollar and oversupply expectations, with WTI crude oil down 0.8% to $60.56 per barrel and Brent crude down 0.7% to $64.44 per barrel [2] - The ICE dollar index rose 0.38%, reaching a high of 100.255 points, while the Bloomberg dollar index also increased by 0.38% to 1226.13 points [2] Cryptocurrency Market - Bitcoin fell below the $100,000 mark for the first time since June, dropping over 6.5% to $100,870, with a low of $99,966 during the day [5] - Ethereum also saw a significant decline, dropping nearly 10% to $3,296 [5] Macro Economic News - The US government shutdown has reached its sixth week, tying the record for the longest shutdown in history, with uncertainty surrounding the potential for political compromise following recent elections [4] - The Senate has repeatedly rejected temporary funding proposals from the House, with no change in stance from either party [4] Company Earnings and Forecasts - AMD reported a significant year-over-year revenue increase of 36% to $9.25 billion, exceeding Wall Street's expectations, but its fourth-quarter guidance did not impress investors [7] - Arista Networks reported strong Q3 results with revenue of $2.31 billion, up 27% year-over-year, and adjusted EPS of $0.75, surpassing market expectations [8] - Tempus AI reported Q3 revenue of $334.2 million, a year-over-year increase of 84.7%, but net losses widened due to various one-time expenses [9] Investment Sentiment - CEOs from Goldman Sachs and Morgan Stanley warned of potential market corrections, suggesting a 10% to 20% pullback in the next 12 to 24 months due to current valuation concerns [6] - Michael Burry's fund disclosed short positions in Nvidia and Palantir, indicating a bearish outlook on AI stocks amid concerns of an AI bubble [10]

Core Insights - Tempus AI reported a quarterly loss of $0.11 per share, better than the Zacks Consensus Estimate of a loss of $0.16, and improved from a loss of $0.25 per share a year ago, resulting in an earnings surprise of +31.25% [1] - The company achieved revenues of $334.21 million for the quarter ended September 2025, exceeding the Zacks Consensus Estimate by 2.38% and significantly up from $180.93 million in the same quarter last year [2] - Tempus shares have increased approximately 162.8% year-to-date, outperforming the S&P 500's gain of 16.5% [3] Earnings Outlook - The future performance of Tempus stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4] - The current consensus EPS estimate for the upcoming quarter is -$0.08 on revenues of $361.46 million, and for the current fiscal year, it is -$0.69 on revenues of $1.26 billion [7] Industry Context - The Medical Info Systems industry, to which Tempus belongs, is currently ranked in the top 24% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - The correlation between near-term stock movements and earnings estimate revisions suggests that tracking these revisions can provide insights into stock performance [5]

Financial Data and Key Metrics Changes - The company reported a strong overall growth of 33% in genomics volume, with oncology growing at 27% and hereditary testing at 37% [4] - Positive adjusted EBITDA was achieved for the first time, marking a significant milestone after 10 years of efforts [5] - The company expects to be slightly positive in 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 [4] - The genomic growth was broad-based, with all assays performing exceptionally well [4] Market Data and Key Metrics Changes - The company noted that testing volumes have been healthy as more biomarkers are identified, contributing to the overall growth in the genomics market [10] - The average reimbursement for the third quarter was $1,600, which is still below parity with peers [30] 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 [15] - The integration of digital pathology with genomic diagnostics is expected to enhance sequencing capabilities and improve patient outcomes [61] 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 range [35] - The company is well-positioned to benefit from future reimbursement changes in the healthcare system, particularly for data interpretation and analysis [52] Other Important Information - The foundation model is progressing well, with expectations to enter the post-training phase later this year and have the first versions ready by Q1 2026 [46] - The company is actively investing in AI and cloud computing to enhance its technological capabilities [47] Q&A Session Summary Question: What is driving the strong growth in the oncology portfolio? - The growth is attributed to a more efficient sales force and the integration of technology that provides comprehensive results to physicians [9][10] Question: How is the company planning to market MRD testing? - The company plans to gradually increase market presence as reimbursement becomes available, leveraging a well-trained sales force [17] Question: Can you provide details on the $150 million in new contracts? - The company highlighted that these contracts are multi-year deals and do not directly translate to immediate revenue increases [21][22] Question: How does Ambry's growth compare to the broader market? - Ambry's growth is primarily driven by share gains, and the company expects its growth to moderate in Q4 [34] Question: What updates can you provide on the foundation model with AstraZeneca and Pathos? - The foundation model is in the pretraining phase, with positive progress and expectations for the first versions to be ready in early 2026 [46] Question: How does the company view the potential for reimbursement of data interpretation? - Management believes that reimbursement for data interpretation will eventually be necessary for scaling, positioning the company well for future growth [52]

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]