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TEM Q3 Earnings Call Highlights Growth and 2027 Pricing Upside
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Key Takeaways
Tempus AI raises its 2026 revenue guidance to $1.60-$1.605 billion, targeting 25% year-over-year growth.
TEM expects $80 million in incremental oncology revenues in 2027 from improved reimbursement for its xT assay.
MRD testing volumes surged 300%, while multiyear data contracts and the Personalis deal support TEM's growth.
Tempus AI, Inc. (TEM - Free Report) emphasized accelerating oncology testing volumes, expanding pharmaceutical partnerships and improving profitability during its third-quarter 2026 earnings call. Management also outlined significant reimbursement-driven revenue opportunities beginning in 2027.
The company raised its annual revenue outlook while maintaining its profitability target, with executives highlighting pricing improvements, recurring data contracts and the planned Personalis acquisition as important growth drivers.
TEM Raises Revenue Outlook Amid Strong Demand
Tempus increased its 2026 revenue guidance to $1.60-$1.605 billion, representing approximately 25% year-over-year growth. The company maintained its adjusted EBITDA forecast of approximately $65 million.
Eric Lefkofsky, founder and CEO, reiterated management's preference for sustainable annual growth of approximately 25% rather than temporary periods of faster expansion.
Third-quarter revenues increased 23% to $411.5 million, exceeding the Zacks Consensus Estimate of $411.3 million by 0.05%. The company reported adjusted earnings of 7 cents per share, in contrast to the Zacks Consensus Estimate of a loss of 9 cents.
Tempus Sees Significant Oncology Pricing Tailwinds
During the analyst Q&A, Canaccord Genuity questioned the diagnostics outlook amid potential reimbursement pressures.
Chief financial officer James Rogers explained that expanded FDA approval for the xT assay would enable additional testing volumes to receive updated reimbursement beginning January 2027. Management expects approximately $80 million in incremental oncology revenue from higher average selling prices that year.
Further pricing upside depends on FDA approval of the xF assay. Rogers also indicated that hereditary testing should face limited pressure from proposed reimbursement changes, while its rare-disease testing mix could support higher average prices.
TEM Plans Measured Expansion of MRD Testing
Minimal residual disease (MRD) testing volumes increased 300% to approximately 12,000 tests during the quarter. Management views the pending Personalis acquisition as an important opportunity to expand this business.
Responding to BTIG's questions about commercial expansion, Lefkofsky explained that reimbursement economics, rather than transaction completion alone, would determine the pace of deployment.
Management expects improving reimbursement, particularly in colorectal cancer, to support positive gross profit per test around mid-2027. Broader sales-force deployment could subsequently accelerate adoption during the second half of 2027 and into 2028.
Tempus Expands Long-Term Data Partnerships
Data and Applications revenues increased 33% to $108.1 million, supported by 29% growth in Insights. Data licensing bookings exceeded $550 million year to date.
Lefkofsky highlighted the Bristol Myers Squibb collaboration, comprising up to $137.5 million in oncology agreements and a separate $55 million Alzheimer's-related arrangement involving Pathos.
During Needham's questioning, Rogers emphasized that multiyear contracts provide stronger revenue visibility through 2027-2029. Lefkofsky added that customers increasingly conduct analytics and AI modeling within Tempus' Lens platform, strengthening ongoing commercial relationships.
TEM Balances EBITDA Expansion With Investment
Adjusted EBITDA reached $25.6 million, compared with $1.5 million a year earlier. Gross profit increased 27% to $266.7 million.
Responding to TD Cowen's questions regarding future margins, Rogers explained that Tempus currently reinvests approximately two-thirds of incremental gross profit while allowing one-third to support profitability.
Management expects this allocation to reverse over time as businesses mature. However, the anticipated Personalis acquisition will initially introduce additional losses, requiring Tempus to balance MRD investments with continued EBITDA improvement.
Tempus Maintains Focus on Sustainable Expansion
Management's commentary reflected confidence in oncology demand, pharmaceutical data licensing and reimbursement improvements, alongside caution regarding the timing of MRD profitability.
Lefkofsky and Rogers emphasized continued investment rather than maximizing near-term earnings. Their priorities remain expanding the diagnostics portfolio, strengthening recurring data relationships and generating operating leverage.
TEM's Zacks Rank and Style Scores Signal Caution
TEM currently carries a Zacks Rank #3 (Hold), indicating a neutral near-term earnings-revision outlook. Its Value Score of F, Growth Score of D and Momentum Score of F indicate relatively unfavorable characteristics across these investment styles. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The stock's VGM Score of F reinforces its weak combined positioning. These scores are less favorable than the A or B ratings preferred within the Zacks framework. However, the Zacks Rank can change as analysts revise earnings estimates following the third-quarter results.
View the Zacks #1 Rank List
Image: Bigstock
TEM Q3 Earnings Call Highlights Growth and 2027 Pricing Upside
Key Takeaways
Tempus AI, Inc. (TEM - Free Report) emphasized accelerating oncology testing volumes, expanding pharmaceutical partnerships and improving profitability during its third-quarter 2026 earnings call. Management also outlined significant reimbursement-driven revenue opportunities beginning in 2027.
The company raised its annual revenue outlook while maintaining its profitability target, with executives highlighting pricing improvements, recurring data contracts and the planned Personalis acquisition as important growth drivers.
TEM Raises Revenue Outlook Amid Strong Demand
Tempus increased its 2026 revenue guidance to $1.60-$1.605 billion, representing approximately 25% year-over-year growth. The company maintained its adjusted EBITDA forecast of approximately $65 million.
Eric Lefkofsky, founder and CEO, reiterated management's preference for sustainable annual growth of approximately 25% rather than temporary periods of faster expansion.
Third-quarter revenues increased 23% to $411.5 million, exceeding the Zacks Consensus Estimate of $411.3 million by 0.05%. The company reported adjusted earnings of 7 cents per share, in contrast to the Zacks Consensus Estimate of a loss of 9 cents.
Tempus AI, Inc. Price, Consensus and EPS Surprise
Tempus AI, Inc. price-consensus-eps-surprise-chart | Tempus AI, Inc. Quote
Tempus Sees Significant Oncology Pricing Tailwinds
During the analyst Q&A, Canaccord Genuity questioned the diagnostics outlook amid potential reimbursement pressures.
Chief financial officer James Rogers explained that expanded FDA approval for the xT assay would enable additional testing volumes to receive updated reimbursement beginning January 2027. Management expects approximately $80 million in incremental oncology revenue from higher average selling prices that year.
Further pricing upside depends on FDA approval of the xF assay. Rogers also indicated that hereditary testing should face limited pressure from proposed reimbursement changes, while its rare-disease testing mix could support higher average prices.
TEM Plans Measured Expansion of MRD Testing
Minimal residual disease (MRD) testing volumes increased 300% to approximately 12,000 tests during the quarter. Management views the pending Personalis acquisition as an important opportunity to expand this business.
Responding to BTIG's questions about commercial expansion, Lefkofsky explained that reimbursement economics, rather than transaction completion alone, would determine the pace of deployment.
Management expects improving reimbursement, particularly in colorectal cancer, to support positive gross profit per test around mid-2027. Broader sales-force deployment could subsequently accelerate adoption during the second half of 2027 and into 2028.
Tempus Expands Long-Term Data Partnerships
Data and Applications revenues increased 33% to $108.1 million, supported by 29% growth in Insights. Data licensing bookings exceeded $550 million year to date.
Lefkofsky highlighted the Bristol Myers Squibb collaboration, comprising up to $137.5 million in oncology agreements and a separate $55 million Alzheimer's-related arrangement involving Pathos.
During Needham's questioning, Rogers emphasized that multiyear contracts provide stronger revenue visibility through 2027-2029. Lefkofsky added that customers increasingly conduct analytics and AI modeling within Tempus' Lens platform, strengthening ongoing commercial relationships.
TEM Balances EBITDA Expansion With Investment
Adjusted EBITDA reached $25.6 million, compared with $1.5 million a year earlier. Gross profit increased 27% to $266.7 million.
Responding to TD Cowen's questions regarding future margins, Rogers explained that Tempus currently reinvests approximately two-thirds of incremental gross profit while allowing one-third to support profitability.
Management expects this allocation to reverse over time as businesses mature. However, the anticipated Personalis acquisition will initially introduce additional losses, requiring Tempus to balance MRD investments with continued EBITDA improvement.
Tempus Maintains Focus on Sustainable Expansion
Management's commentary reflected confidence in oncology demand, pharmaceutical data licensing and reimbursement improvements, alongside caution regarding the timing of MRD profitability.
Lefkofsky and Rogers emphasized continued investment rather than maximizing near-term earnings. Their priorities remain expanding the diagnostics portfolio, strengthening recurring data relationships and generating operating leverage.
TEM's Zacks Rank and Style Scores Signal Caution
TEM currently carries a Zacks Rank #3 (Hold), indicating a neutral near-term earnings-revision outlook. Its Value Score of F, Growth Score of D and Momentum Score of F indicate relatively unfavorable characteristics across these investment styles. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The stock's VGM Score of F reinforces its weak combined positioning. These scores are less favorable than the A or B ratings preferred within the Zacks framework. However, the Zacks Rank can change as analysts revise earnings estimates following the third-quarter results.