Tempus Ai,Inc.(US:TEM)2025-11-04 21:06Financial 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]