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Tempus AI Revenue Jumps 85% as Pricing Catalysts Line Up
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Key Takeaways
TEM's Q3 revenue rose 84.7% to $334.2M as genomics testing demand and data services drove growth.
Higher volumes, better pricing, and sales efficiency helped gross profit jump 98% to $209.9M.
Improved reimbursement and FDA pathways support visibility into pricing and long-term leverage.
Tempus AI (TEM - Free Report) posted another breakout quarter as diagnostics volumes and pricing improved while data partnerships extended visibility. Execution on mix, reimbursement and bookings sets a clearer path to operating leverage.
With Selectivity warranted near catalysts, investors weigh growth durability against GAAP losses and conversion timing of multi-year data deals.
Revenue Acceleration With Mix Shift Improving
Third-quarter 2025 revenues rose 84.7% year over year to $334.2 million. Genomics climbed 117% to $252.9 million while Data and services increased 26.1% to $81.3 million. Tempus AI delivered 217,000 clinical tests, up 33% year over year on stronger oncology and hereditary demand. Oncology testing revenue reached $139.5 million and hereditary testing was $102.6 million. Within Data and services, the Insights sub-segment grew 37.6%, reflecting rising data licensing and study activity.
Margins Trend Better While Losses Persist
Gross profit soared 98% to $209.9 million on higher volume and improving average selling prices. Adjusted EBITDA turned positive at $1.5 million, a sharp improvement from a year-ago loss, though GAAP net loss remained substantial at $80.0 million. Management emphasized cost discipline and better sales force efficiency following portfolio integration, supporting incremental margin progress even as non-cash charges and integration costs weigh on GAAP results.
Pricing Progress and Regulatory Milestones to Watch
Average reimbursement improved by the mid-teens percentage per test in the quarter, narrowing the gap with peers. About one-third of xT CDx volume is already on FDA-approved or Advanced Diagnostic Laboratory Test pathways, with plans to migrate the majority through 2026. The company expects to submit xF for FDA approval by the end of 2025, with the xR assay thereafter. Minimal residual disease reimbursement remains on track and should ramp gradually as coverage expands.
Data Monetization Expands Multi-Year Visibility
Data and services momentum is increasingly visible in multi-quarter bookings, which tend to be back-half weighted and convert over time. Compass CRO awards and real-world data collaborations add to backlog, but the elongated conversion cycle can constrain near-term reported revenue growth. As these contracts deliver, they enhance mix and operating leverage given the scalable analytics platform and established life sciences relationships.
Tempus AI ended the third quarter with $764.3 million in cash and marketable securities, providing ample capacity to fund AI compute, regulatory filings and commercial investments. For 2025, management now expects approximately $1.265 billion in revenue and roughly $20 million of adjusted EBITDA. The company continues to target positive annual earnings per share in 2027 as reimbursement, unit economics and operating scale improve.
What the Short-Term Rating Implies
The stock carries a Zacks Rank #3 (Hold) with Style Scores of Value F, Growth C, Momentum B and VGM D. The industry is ranked in the top 38%, which indicates a constructive but selective backdrop. Near term, estimate momentum is mixed and the path to pricing parity depends on regulatory execution and timely payer decisions. That argues for patience around key catalysts while tracking MRD coverage progress and the xF submission.
Peer context also points to a selective approach. Doximity (DOCS - Free Report) and 10x Genomics (TXG - Free Report) both carry a Zacks Rank #3 (Hold) within Tempus AI’s peer set, underscoring balanced estimate trends across adjacent digital health and life-science tools. For investors seeking exposure to the theme while monitoring Tempus AI’s milestones, those peers offer additional ways to track sentiment and revisions within the group. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Tempus AI Revenue Jumps 85% as Pricing Catalysts Line Up
Key Takeaways
Tempus AI (TEM - Free Report) posted another breakout quarter as diagnostics volumes and pricing improved while data partnerships extended visibility. Execution on mix, reimbursement and bookings sets a clearer path to operating leverage.
With Selectivity warranted near catalysts, investors weigh growth durability against GAAP losses and conversion timing of multi-year data deals.
Revenue Acceleration With Mix Shift Improving
Third-quarter 2025 revenues rose 84.7% year over year to $334.2 million. Genomics climbed 117% to $252.9 million while Data and services increased 26.1% to $81.3 million. Tempus AI delivered 217,000 clinical tests, up 33% year over year on stronger oncology and hereditary demand. Oncology testing revenue reached $139.5 million and hereditary testing was $102.6 million. Within Data and services, the Insights sub-segment grew 37.6%, reflecting rising data licensing and study activity.
Margins Trend Better While Losses Persist
Gross profit soared 98% to $209.9 million on higher volume and improving average selling prices. Adjusted EBITDA turned positive at $1.5 million, a sharp improvement from a year-ago loss, though GAAP net loss remained substantial at $80.0 million. Management emphasized cost discipline and better sales force efficiency following portfolio integration, supporting incremental margin progress even as non-cash charges and integration costs weigh on GAAP results.
Pricing Progress and Regulatory Milestones to Watch
Average reimbursement improved by the mid-teens percentage per test in the quarter, narrowing the gap with peers. About one-third of xT CDx volume is already on FDA-approved or Advanced Diagnostic Laboratory Test pathways, with plans to migrate the majority through 2026. The company expects to submit xF for FDA approval by the end of 2025, with the xR assay thereafter. Minimal residual disease reimbursement remains on track and should ramp gradually as coverage expands.
Data Monetization Expands Multi-Year Visibility
Data and services momentum is increasingly visible in multi-quarter bookings, which tend to be back-half weighted and convert over time. Compass CRO awards and real-world data collaborations add to backlog, but the elongated conversion cycle can constrain near-term reported revenue growth. As these contracts deliver, they enhance mix and operating leverage given the scalable analytics platform and established life sciences relationships.
Tempus AI, Inc. Price and Consensus
Tempus AI, Inc. price-consensus-chart | Tempus AI, Inc. Quote
Balance Sheet, Guidance, and the Near-Term Setup
Tempus AI ended the third quarter with $764.3 million in cash and marketable securities, providing ample capacity to fund AI compute, regulatory filings and commercial investments. For 2025, management now expects approximately $1.265 billion in revenue and roughly $20 million of adjusted EBITDA. The company continues to target positive annual earnings per share in 2027 as reimbursement, unit economics and operating scale improve.
What the Short-Term Rating Implies
The stock carries a Zacks Rank #3 (Hold) with Style Scores of Value F, Growth C, Momentum B and VGM D. The industry is ranked in the top 38%, which indicates a constructive but selective backdrop. Near term, estimate momentum is mixed and the path to pricing parity depends on regulatory execution and timely payer decisions. That argues for patience around key catalysts while tracking MRD coverage progress and the xF submission.
Peer context also points to a selective approach. Doximity (DOCS - Free Report) and 10x Genomics (TXG - Free Report) both carry a Zacks Rank #3 (Hold) within Tempus AI’s peer set, underscoring balanced estimate trends across adjacent digital health and life-science tools. For investors seeking exposure to the theme while monitoring Tempus AI’s milestones, those peers offer additional ways to track sentiment and revisions within the group. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.