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How Tempus AI Is Advancing Toward Regulatory Pricing Catch-Up
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Key Takeaways
TEM reported modest sequential reimbursement improvement in Q3 2025, but per-test pricing still trails peers.
TEM ended Q3 with about one-third of xT CDx volume on FDA-approved or ADLT pathways to support pricing.
TEM plans FDA submissions for xF by 2025-end and xR later, while MRD reimbursement scales gradually.
Tempus AI’s (TEM - Free Report) reimbursement showed modest sequential improvement in the third quarter of 2025, though average blended reimbursement per test continues to lag peers by a meaningful margin. The company has several structural catalysts that could help narrow this pricing gap over time.
Tempus exited the quarter with approximately one-third of xT CDx volume already on the FDA-approved or Advanced Diagnostic Laboratory Test (ADLT) pathway. Management also expects to submit the xF assay for FDA approval by the end of 2025, which would make it eligible for ADLT status, with the xR assay expected to follow.
MRD reimbursement is progressing as planned and is expected to scale gradually, while regulatory submissions and ADLT migrations through 2025–2026 outline a clear path to improving pricing and unit economics.
While the strategic roadmap is clear, execution risk remains elevated, given the dependence on regulatory review timelines. The magnitude and cadence of ADLT-related pricing uplift will not be known until approvals are secured, leaving near-term per-test economics below peer levels. Prolonged reviews, reimbursement delays, or adverse payer policy changes could defer the expected pricing convergence and slow margin expansion.
Peer Update
Doximity (DOCS - Free Report) commands an unmatched footprint across the U.S. medical community, with over 80% of physicians and 60% of NPs and PAs as members. This scale creates a powerful network effect that enhances the platform’s stickiness and advertising effectiveness.
As healthcare becomes more digitized and mobile, Doximity's first-mover advantage and deep relationships with its user base position it as the go-to B2B healthcare engagement platform. Beyond its original media model, DOCS has scaled into hiring solutions, workflow tools, and telehealth — now addressing an $18.55B U.S. TAM. With a largely fixed cost structure and high incremental margins, Doximity is capital-efficient and highly cash-generative.
Illumina (ILMN - Free Report) unveiled a strategic roadmap aimed at returning to growth and boosting profitability. ILMN expects high-single-digit revenue growth by 2027 and double-digits to teens annual EPS growth over the next three years. Underpinning these targets are three pillars - growing the core sequencing business, scaling into multiomics and expanding services, data and software capabilities.
In the third quarter, Illumina achieved its year-end targets for NovaSeq X transition, with more than 75% of high-throughput gigabases shipped and more than 50% of high-throughput revenues on the platform. Based on its agreement to acquire SomaLogic, the company launched Illumina Protein Prep. It had also announced its capabilities in single-cell, CRISPR-based Perturb-Seq and spatial analysis.
TEM’s Stock Price Performance
Over the past year, Tempus’ shares have rallied 84.8% against the industry’s 1.5% decline. The S&P 500 composite has improved 16.8% in the same time frame.
Image Source: Zacks Investment Research
Expensive Valuation
TEM currently trades at a forward 12-month Price-to-Sales (P/S) of 7.35X compared with the industry average of 5.77X.
Image Source: Zacks Investment Research
TEM Stock Estimate Trend
In the past 30 days, Tempus AI's loss per share estimate for 2025 has narrowed 1 cent to 64 cents.
Image: Bigstock
How Tempus AI Is Advancing Toward Regulatory Pricing Catch-Up
Key Takeaways
Tempus AI’s (TEM - Free Report) reimbursement showed modest sequential improvement in the third quarter of 2025, though average blended reimbursement per test continues to lag peers by a meaningful margin. The company has several structural catalysts that could help narrow this pricing gap over time.
Tempus exited the quarter with approximately one-third of xT CDx volume already on the FDA-approved or Advanced Diagnostic Laboratory Test (ADLT) pathway. Management also expects to submit the xF assay for FDA approval by the end of 2025, which would make it eligible for ADLT status, with the xR assay expected to follow.
MRD reimbursement is progressing as planned and is expected to scale gradually, while regulatory submissions and ADLT migrations through 2025–2026 outline a clear path to improving pricing and unit economics.
While the strategic roadmap is clear, execution risk remains elevated, given the dependence on regulatory review timelines. The magnitude and cadence of ADLT-related pricing uplift will not be known until approvals are secured, leaving near-term per-test economics below peer levels. Prolonged reviews, reimbursement delays, or adverse payer policy changes could defer the expected pricing convergence and slow margin expansion.
Peer Update
Doximity (DOCS - Free Report) commands an unmatched footprint across the U.S. medical community, with over 80% of physicians and 60% of NPs and PAs as members. This scale creates a powerful network effect that enhances the platform’s stickiness and advertising effectiveness.
As healthcare becomes more digitized and mobile, Doximity's first-mover advantage and deep relationships with its user base position it as the go-to B2B healthcare engagement platform. Beyond its original media model, DOCS has scaled into hiring solutions, workflow tools, and telehealth — now addressing an $18.55B U.S. TAM. With a largely fixed cost structure and high incremental margins, Doximity is capital-efficient and highly cash-generative.
Illumina (ILMN - Free Report) unveiled a strategic roadmap aimed at returning to growth and boosting profitability. ILMN expects high-single-digit revenue growth by 2027 and double-digits to teens annual EPS growth over the next three years. Underpinning these targets are three pillars - growing the core sequencing business, scaling into multiomics and expanding services, data and software capabilities.
In the third quarter, Illumina achieved its year-end targets for NovaSeq X transition, with more than 75% of high-throughput gigabases shipped and more than 50% of high-throughput revenues on the platform. Based on its agreement to acquire SomaLogic, the company launched Illumina Protein Prep. It had also announced its capabilities in single-cell, CRISPR-based Perturb-Seq and spatial analysis.
TEM’s Stock Price Performance
Over the past year, Tempus’ shares have rallied 84.8% against the industry’s 1.5% decline. The S&P 500 composite has improved 16.8% in the same time frame.
Image Source: Zacks Investment Research
Expensive Valuation
TEM currently trades at a forward 12-month Price-to-Sales (P/S) of 7.35X compared with the industry average of 5.77X.
Image Source: Zacks Investment Research
TEM Stock Estimate Trend
In the past 30 days, Tempus AI's loss per share estimate for 2025 has narrowed 1 cent to 64 cents.
Image Source: Zacks Investment Research
TEM currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.