Tempus AI’s Earnings Call Highlights Strong Growth Amid Challenges

Tempus AI, Inc. Class A ((TEM)) has held its Q3 earnings call. Read on for the main highlights of the call.

Tempus AI, Inc. Class A recently held its earnings call, revealing a generally positive sentiment despite some challenges. The company reported strong growth in its Genomics segment and significant achievements, such as positive adjusted EBITDA and successful data licensing deals. However, disruptions caused by changes in the sales force and costs associated with the Paige acquisition were noted as challenges. Overall, the positive achievements and strong growth trajectory indicate a healthy business outlook.

Strong Genomics Volume Growth

The earnings call highlighted a robust 33% growth in the Genomics segment, with Oncology and Hereditary segments growing at 27% and 37%, respectively. The company has revised its expectations for Hereditary growth to the low to mid-20s, reflecting a more conservative outlook.

Data Licensing Business Success

Tempus AI’s Insights business experienced a 38% growth in the quarter, adding $150 million in total contract value. This marks a strong bookings quarter, underscoring the company’s success in data licensing.

Achievement of Positive Adjusted EBITDA

For the first time, Tempus AI reported positive adjusted EBITDA, a significant milestone achieved despite the additional expenses from the Paige acquisition. This achievement highlights the company’s ability to manage costs effectively while pursuing growth.

Sustained Growth in Oncology

Oncology volumes showed strong performance, with expectations to maintain a 25% growth rate over the next three years. This sustained growth is indicative of the company’s strategic focus on expanding its Oncology segment.

Foundation Model Progress

The company reported good progress on its foundation model with AstraZeneca and Pathos, with post-training expected to begin early 2026. This development is part of Tempus AI’s ongoing efforts to enhance its technological capabilities.

Sales Force Havoc

Changes to the sales force caused significant disruption, taking several quarters to resolve. This challenge was acknowledged as a temporary setback in the company’s operational efficiency.

Paige Acquisition Drag

The mid-quarter acquisition of Paige contributed several million dollars in additional expenses, impacting Tempus AI’s financials. Despite this, the company managed to achieve positive adjusted EBITDA, demonstrating resilience.

Forward-Looking Guidance

Tempus AI’s guidance indicates a slightly positive adjusted EBITDA for the year, even with the financial drag from the Paige acquisition. The company plans to maintain a 25% growth rate over the next three years, driven by ongoing advancements and strategic investments, including MRD reimbursement and the regulatory filing of their liquid biopsy xF.

In conclusion, Tempus AI, Inc. Class A’s earnings call reflected a positive sentiment with strong growth in key segments and significant achievements. Despite challenges such as sales force disruptions and acquisition costs, the company remains on a healthy growth trajectory, with optimistic forward-looking guidance.