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Tempus Ai,Inc.(TEM) - 2024 Q3 - Quarterly Report
TEMTempus Ai,Inc.(TEM)2024-11-04 21:05
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Financial Performance - Total revenue for the three months ended September 30, 2024 was 180.9million,comparedto180.9 million, compared to 136.1 million in the same period in 2023, representing a 32.9% increase[165] - Net losses for the three months ended September 30, 2024 were 75.8million,comparedto75.8 million, compared to 53.4 million in the same period in 2023[165] - Adjusted EBITDA for the three months ended September 30, 2024 was (21.8)million,comparedto(21.8) million, compared to (36.2) million in the same period in 2023[165] - Total net revenue increased from 136.1millionto136.1 million to 180.9 million for the three months ended September 30, 2024 compared to the same period in 2023, a 33% increase[202] - Adjusted EBITDA improved to (96.9)millionfortheninemonthsendedSeptember30,2024,comparedto(96.9) million for the nine months ended September 30, 2024, compared to (119.1) million in the same period in 2023[234] - The company had an accumulated deficit of 2.1billionasofSeptember30,2024,withcash,cashequivalents,andrestrictedcashtotaling2.1 billion as of September 30, 2024, with cash, cash equivalents, and restricted cash totaling 388.9 million[235][237] - Net cash used in operating activities for the nine months ended September 30, 2024 was 149.8million,drivenbyanetlossof149.8 million, driven by a net loss of 692.8 million[247][248] - Cash used in investing activities for the nine months ended September 30, 2024 was 122.4million,includinga122.4 million, including a 95.2 million investment in a joint venture[250] - Cash provided by financing activities for the nine months ended September 30, 2024 was 494.5million,primarilyfromIPOproceedsandSeriesG−5PreferredStockissuance[252]RevenueGrowthandBreakdown−Genomicsrevenueincreasedfrom494.5 million, primarily from IPO proceeds and Series G-5 Preferred Stock issuance[252] Revenue Growth and Breakdown - Genomics revenue increased from 96.8 million to 116.4millionforthethreemonthsendedSeptember30,2024comparedtothesameperiodin2023,a20116.4 million for the three months ended September 30, 2024 compared to the same period in 2023, a 20% increase[202] - Data and services revenue increased from 39.2 million to 64.5millionforthethreemonthsendedSeptember30,2024comparedtothesameperiodin2023,a6464.5 million for the three months ended September 30, 2024 compared to the same period in 2023, a 64% increase[202] - Genomics revenue increased by 60.5 million (22%) for the nine months ended September 30, 2024, primarily due to a rise in oncology NGS tests from 159,400 to 198,200[217] - Data and services revenue increased by 48.1million(4248.1 million (42%) for the nine months ended September 30, 2024, driven by 43.4 million from Insights products and new customer adoption[218] - Total net revenue increased by 108.6million(28108.6 million (28%) for the nine months ended September 30, 2024, with Genomics contributing 60.5 million and Data and services contributing 48.1million[216]ExpensesandCosts−Costofrevenuesincreasedby48.1 million[216] Expenses and Costs - Cost of revenues increased by 54.2 million (30%) for the nine months ended September 30, 2024, primarily due to 20.5millioninstock−basedcompensationand20.5 million in stock-based compensation and 16.4 million in material and service costs[220] - Technology research and development expenses increased by 65.2million(9265.2 million (92%) for the nine months ended September 30, 2024, driven by 54.4 million in stock-based compensation and 9.4millioninpersonnel−relatedcosts[222]−Selling,generalandadministrativeexpensesincreasedby9.4 million in personnel-related costs[222] - Selling, general and administrative expenses increased by 30.0 million (42%) in Q3 2024, primarily due to 12.6millioninstock−basedcompensationand12.6 million in stock-based compensation and 7.9 million in personnel-related costs[210] - Research and development expenses increased by 53.4million(8153.4 million (81%) to 119.7 million for the nine months ended September 30, 2024, driven by 44.8millioninstock−basedcompensation,44.8 million in stock-based compensation, 2.2 million in validation fees, and 5.3millioninpersonnelcosts[223]−Selling,general,andadministrativeexpensesroseby5.3 million in personnel costs[223] - Selling, general, and administrative expenses rose by 432.4 million (204%) to 644.1million,primarilydueto644.1 million, primarily due to 389.6 million in stock-based compensation and increases in personnel, software, and cloud storage costs[224] - Stock-based compensation expense recognized during the nine months ended September 30, 2024 was 509.4million[258]InvestmentsandFinancing−ThecompanycompleteditsIPOonJune17,2024,issuing11,100,000sharesofClassAcommonstockat509.4 million[258] Investments and Financing - The company completed its IPO on June 17, 2024, issuing 11,100,000 shares of Class A common stock at 37.00 per share, with net proceeds of 382.0million[168]−ThecompanyenteredintoaSecuritiesPurchaseAgreementtoacquireAmbryGeneticsCorporationfor382.0 million[168] - The company entered into a Securities Purchase Agreement to acquire Ambry Genetics Corporation for 375.0 million in cash and 4,843,136 shares of Class A common stock[166] - The company secured a 100millionseniorsecuredrevolvingcreditfacilityand100 million senior secured revolving credit facility and 200.0 million in additional term loans to fund the Ambry Genetics acquisition[167] - Net proceeds from the IPO in June 2024 were 382.0million,andthecompanyraised382.0 million, and the company raised 200.0 million in a private placement in April 2024[237] - Term Loan Facility increased to 260millionaftertwoamendments,withinterestratesadjustedby25basispointsand7.25260 million after two amendments, with interest rates adjusted by 25 basis points and 7.25% for Term SOFR borrowings[241] - Convertible Promissory Note with Google reduced to 250 million, with principal reductions based on Google Cloud Platform usage[243][244] Partnerships and Commitments - AstraZeneca committed to spend a minimum of 220milliononthecompany′sproductsandservicesthroughDecember31,2028,withpotentialtoincreaseto220 million on the company's products and services through December 31, 2028, with potential to increase to 320 million[174] - GlaxoSmithKline committed to spend a minimum of 180milliononthecompany′sproductsandservicesthroughDecember31,2027,withpotentialforanadditional180 million on the company's products and services through December 31, 2027, with potential for an additional 120 million[176] - Recursion Pharmaceuticals agreed to pay up to 160millioninlicensefeesoverfiveyearsforaccesstothecompany′sproprietarydatabaseandservices[177]ProductandServiceOfferings−Thecompany′sGenomicsproductlineleveragesnext−generationsequencingandothermolecularpathologytestingtogeneratestructured,de−identifieddataforcommercialization[164]−Thecompany′sofferingshavebeenusedbymorethan7,000physiciansandover200biotechcompanies,including19ofthe20largestpublicpharmaceuticalcompaniesbasedon2023revenue[182]−ThenumberofoncologyNGStestsincreasedfromapproximately55,700testsforthethreemonthsendedSeptember30,2023toapproximately69,000testsforthethreemonthsendedSeptember30,2024[203]−Dataandservicesrevenueincreasedby160 million in license fees over five years for access to the company's proprietary database and services[177] Product and Service Offerings - The company's Genomics product line leverages next-generation sequencing and other molecular pathology testing to generate structured, de-identified data for commercialization[164] - The company's offerings have been used by more than 7,000 physicians and over 200 biotech companies, including 19 of the 20 largest public pharmaceutical companies based on 2023 revenue[182] - The number of oncology NGS tests increased from approximately 55,700 tests for the three months ended September 30, 2023 to approximately 69,000 tests for the three months ended September 30, 2024[203] - Data and services revenue increased by 23.3 million in Q3 2024, driven by higher demand for Insights products and growth from existing and new customers[204] Interest and Other Financial Metrics - Interest income increased by 3.3million(2233.3 million (223%) in Q3 2024, driven by higher cash on hand[211] - Interest expense increased by 1.4 million (11%) in Q3 2024, primarily due to compounding interest on the Amended Note[212] - Other (expense) income, net decreased by 13.8million(−60413.8 million (-604%) in Q3 2024, driven by a 45.6 million increase in expense related to the change in fair value of warrant liability[213] - Interest income increased by 1.7million(291.7 million (29%) to 7.5 million, driven by higher cash on hand as of September 30, 2024[225] - Interest expense rose by 7.0million(217.0 million (21%) to 40.3 million, primarily due to compounding interest on debt and additional borrowings[225] - Other (expense) income, net, decreased by 25.7million(−32525.7 million (-325%) to (17.8) million, driven by a 50.4millionincreaseinwarrantliabilityfairvalueexpense[226]−Lossesfromequitymethodinvestmentsincreasedby50.4 million increase in warrant liability fair value expense[226] - Losses from equity method investments increased by 1.4 million (462%) to 1.7million,duetolossesfromajointventureenteredintoinJuly2024[228]ReimbursementandTestingMetrics−AsofDecember31,2023,thecompanyhadreceivedpaymentonapproximately501.7 million, due to losses from a joint venture entered into in July 2024[228] Reimbursement and Testing Metrics - As of December 31, 2023, the company had received payment on approximately 50% of its clinical oncology NGS tests across all payers performed from January 1, 2021 through December 31, 2022[184] - The company's average reimbursement for NGS tests in oncology was approximately 916 and 1,452fortheyearsendedDecember31,2022and2023,respectively[184]RiskFactors−Companyisexposedtointerestrateriskandforeigncurrencyrisk,withnomaterialimpactfromahypothetical101,452 for the years ended December 31, 2022 and 2023, respectively[184] Risk Factors - Company is exposed to interest rate risk and foreign currency risk, with no material impact from a hypothetical 10% change in foreign currency exchange rates[262][264] - Inflation risk could impact future operating results, though no material impact has been observed to date[265] - Majority of revenue generated in the United States, with insignificant foreign currency-denominated revenue as of September 30, 2024[264] - Hypothetical 10% change in foreign currency exchange rates would not materially impact financial condition or results of operations as of September 30, 2024[264] - No hedging arrangements in place for foreign currency risk as of September 30, 2024[264] - Company exposed to inflation risk, including increases in raw material and overhead costs[265] - Inflation has not materially impacted financial position or results of operations to date[265] - High future inflation rates may adversely affect gross margin and operating expenses as a percentage of revenue[265] Future Outlook and Requirements - The company anticipates increased capital expenditure requirements due to higher demand for its tests and potential expansion of laboratory capacity[236] - Company required to generate consolidated revenues of 459.1 million and $594.1 million for the years ending December 31, 2024 and 2025, respectively[242]