Performance was driven by a 29% unit growth in Oncology diagnostics, which management noted has been accelerating throughout the fiscal year. The Data business outperformed expectations with 69% growth in the quarter, fueled by a proprietary data set of over 450 petabytes of connected multimodal data. Management attributes their competitive moat to the 'flywheel' of using diagnostic data to train AI models, then delivering those insights back to physicians through 5,500 hospital connections. The Ins ...

Core Thesis - Centene Corporation (CNC) is viewed as a deep value opportunity with a current share price of $39.34 and a cost basis for investors at $28.15 per share, indicating a discounted valuation relative to its fundamental strength [1][2]. Company Overview - Centene Corporation operates as a healthcare enterprise providing services to under-insured and uninsured families, as well as commercial organizations in the United States [2]. - As the largest Medicaid provider in the U.S., CNC is positioned as a dominant low-cost player in a specialized segment of the healthcare industry, benefiting from scale advantages [3]. Financial Metrics - The estimated maximum liquidation value of Centene exceeds its current market capitalization by over 50%, suggesting substantial potential gains through asset sales [4]. - CNC's seven-year average owner earnings are approximately $2.37 billion, indicating that investors could recoup their investment in about eight years at the current valuation, or in closer to four years if recent earnings levels are maintained [4]. Investment Strategy - The investment strategy involves holding CNC shares unless a superior opportunity arises or there is a significant change in the company's or industry's fundamentals [5]. - A key aspect of the investment thesis is the ability of healthcare insurers to raise prices over time, which supports earnings durability and incremental value creation [5]. Market Context - The broader profitability upswing expected across health insurers is driven by the short-tail nature of healthcare risk, allowing for pricing resets and margin recovery [3].

Core Insights - The company achieved its first positive adjusted EBITDA in Q3, marking a significant milestone in its financial performance [2] - The company aims to maintain profitability while continuing to grow, with a projected top-line growth of approximately 25% annually over the next three years [3] Financial Performance - Achieving positive adjusted EBITDA was a long-term goal for the company, which was reached in Q3 [2] - The company plans to reinvest about two-thirds of incremental gross profit back into the business, allowing one-third to contribute to adjusted EBITDA [3] Future Strategy - After the initial three-year period of growth, the reinvestment strategy is expected to shift to one-third reinvestment and two-thirds contributing to adjusted EBITDA [3] - The company is committed to not reverting to negative adjusted EBITDA in the future [2]

Core Insights - Tempus AI, Inc. reported a narrower adjusted loss of 11 cents per share for Q3 2025, outperforming the Zacks Consensus Estimate by 31.3% [1] - The company experienced a significant revenue increase of 84.7% year-over-year, totaling $334.2 million, which also exceeded the Zacks Consensus Estimate by 2.4% [2] Revenue Breakdown - Genomics revenues reached $252.9 million, marking a 117.2% increase year-over-year, with oncology testing contributing $139.5 million (up 31.7%) and hereditary testing contributing $102.6 million (up 32.8%) [3] - The Data and Services product line generated $81.3 million in sales, reflecting a 26.1% year-over-year growth, driven by a 37.6% increase in data licensing [4] Margin Performance - Gross profit for Q3 was $209.9 million, up 98.4% from the previous year, with an adjusted gross margin of 62.8%, an increase of 432 basis points [5] - Total adjusted operating expenses rose to $232.8 million, an 80.8% increase year-over-year, resulting in an operating loss of $22.9 million, unchanged from the previous year [5] Liquidity Position - As of the end of Q3 2025, the company had cash and cash equivalents of $655.9 million, a significant increase from $186.3 million at the end of Q2 [6] - Cumulative net cash used in investing activities was $387.6 million, compared to $122.4 million a year ago [6] Full-Year Outlook - Tempus raised its 2025 revenue guidance to approximately $1.265 billion, indicating nearly 80% annual growth, slightly below the Zacks Consensus Estimate of $1.26 billion [7] - Adjusted EBITDA for the year is now expected to be $20 million, up from the previous estimate of $5 million [9] Strategic Developments - The company achieved several milestones in Q3, including the acquisition of Paige, an AI company in digital pathology, and obtaining FDA clearance for multiple diagnostic devices [10] - Despite the operating loss, the raised revenue guidance is seen as a positive indicator for the stock [10]

Core Thesis - Tempus AI, Inc. is positioned as a significant player in the healthcare sector, leveraging multimodal data and AI to create a comprehensive healthcare operating system [2][6] Company Overview - As of September 25th, Tempus AI's share price was $77.33, with a trailing P/E ratio of 36.85 [1] - The company has made strategic acquisitions, including Ambry Genetics, Deep 6, and Paige, enhancing its capabilities in genomics and pathology [2] - A joint venture with SoftBank in Japan has expanded Tempus' international reach, focusing on aggregating and labeling complex healthcare data [2] Technological Advancements - Tempus is involved in the development of "virtual cell" models that simulate cellular responses, which could revolutionize drug discovery and trial design [3] - The company has established partnerships, such as providing data to Recursion, which indicates the practical utility of its datasets in oncology [3] Leadership and Management - The leadership of Tempus, particularly CEO Eric Lefkofsky, is seen as both an asset and a potential risk due to his previous experience with Groupon and tight control over the company [4] - The management team includes a mix of startup builders and seasoned professionals from scientific and regulatory backgrounds, supported by a board with notable figures like Nobel laureate Jennifer Doudna [4] Financial Insights - Tempus AI has a market valuation of approximately $14 billion, with its trading more reflective of option value rather than cash flow [5] - The company is viewed as having significant upside potential if its data-driven model gains traction and adoption increases [5][6] Market Position and Trends - The stock price of Tempus has appreciated by approximately 79% since previous bullish coverage, indicating strong revenue and EBITDA growth [7] - Despite its potential, Tempus is not among the top 30 most popular stocks among hedge funds, with 27 hedge fund portfolios holding TEM at the end of Q2, up from 21 in the previous quarter [8]

Core Insights - Tempus AI, Inc. reported a narrower adjusted loss of 22 cents per share for Q2 2025, beating the Zacks Consensus Estimate by 4.35% [1][8] - Revenues reached $314.6 million, exceeding expectations by 5.12% and showing an 89.6% year-over-year increase [2][8] Revenue Breakdown - Genomics segment generated $193.8 million in revenues, a 115.3% increase year-over-year, with oncology testing contributing $133.2 million (up 32.9%) and hereditary testing $97.3 million (up 33.6%) [3][8] - Data and Services product line reported $72.8 million in sales, reflecting a 35.7% year-over-year growth, driven by a 40.7% increase in data licensing [4] Margin Performance - Gross profit for the quarter was $195 million, up 158.3% from the previous year, with an adjusted gross margin of 62%, expanding by 1649 basis points despite a 32.2% rise in costs [5] Liquidity Position - At the end of Q2 2025, the company had cash and cash equivalents of $186.3 million, an increase from $151.6 million at the end of Q1 [6] - Cumulative net cash used in operating activities was $61.46 million, significantly reduced from an outflow of $198.5 million in the prior year [6] Full-Year Outlook - Updated guidance for 2025 projects revenues of approximately $1.26 billion, indicating nearly 82% annual growth, with adjusted EBITDA expected to improve by approximately $110 million over 2024 [7] Stock Performance - Following the earnings announcement, shares of Tempus AI rose by 2.2% in pre-market trading, reflecting positive market sentiment [2][9]

Core Viewpoint - Tempus AI, Inc. has acquired Deep 6 AI to enhance its precision medicine capabilities through AI-driven insights, aiming to improve patient recruitment and trial efficiency [1][4]. Company Developments - The acquisition of Deep 6 AI will streamline the process of connecting patients with relevant clinical trials, expediting the development of new treatments [2][6]. - Tempus integrates Deep 6 AI's advanced machine learning algorithms into its existing platform, allowing for real-time analysis of patient data to optimize trial outcomes [9]. - Tempus has a market capitalization of $7.85 billion and expects 42% earnings growth over the next five years, compared to the industry's 20.8% growth [5]. Industry Context - The acquisition strengthens Tempus' position in the rapidly growing AI-driven healthcare market, potentially boosting its stock price in the long run [4]. - Deep 6 AI's technology mitigates risks in clinical trials and enhances patient recruitment by analyzing both structured and unstructured electronic medical record data [8].