How Tempus AI Is Advancing Toward Regulatory Pricing Catch-Up

Core Insights - Tempus AI's reimbursement showed modest sequential improvement in Q3 2025, but average blended reimbursement per test continues to lag behind peers significantly [2][11] - The company has structural catalysts that could help narrow the pricing gap over time [2] - Tempus exited Q3 with approximately one-third of xT CDx volume on FDA-approved or Advanced Diagnostic Laboratory Test (ADLT) pathways, with plans to submit the xF assay for FDA approval by the end of 2025 [3][11] - MRD reimbursement is progressing as planned and is expected to scale gradually, outlining a clear path to improving pricing and unit economics [4] Execution and Risks - While the strategic roadmap is clear, execution risk remains elevated due to dependence on regulatory review timelines, with near-term per-test economics below peer levels [5] - The magnitude and timing of ADLT-related pricing uplift will not be known until approvals are secured, which could defer expected pricing convergence and slow margin expansion [5] Peer Update - Doximity commands over 80% of U.S. physicians and 60% of NPs and PAs as members, creating a powerful network effect that enhances platform stickiness and advertising effectiveness [6] - Doximity has scaled into hiring solutions, workflow tools, and telehealth, addressing an $18.55 billion U.S. total addressable market (TAM) [7] - Illumina unveiled a strategic roadmap aimed at returning to growth, expecting high-single-digit revenue growth by 2027 and double-digit annual EPS growth over the next three years [8] Financial Performance - Tempus shares have rallied 84.8% over the past year, significantly outperforming the industry, which saw a 1.5% decline [10] - Tempus currently trades at a forward 12-month Price-to-Sales (P/S) ratio of 7.35X, compared to the industry average of 5.77X, indicating an expensive valuation [12] - The loss per share estimate for Tempus AI for 2025 has narrowed by 1 cent to 64 cents in the past 30 days [13]