Shares in health technology group Tempus AI (TEM) raced 7% higher today after its Q2 revenues surged on cancer testing demand.
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Forecast Busting
The company reported an 89.6% year-over-year hike in revenues to $314.6 million beating estimates of around $297 million. Its earnings per share loss also narrowed to $0.22, again surpassing forecasts.
Genomics, which covers specialized diagnostic tests for cancer and inherited conditions, reached $241.8 million in revenue, a jump of 115.3% compared to the second quarter of 2024.
Oncology testing, a product line that analyzes patient tumor genetics for therapy selection, delivered $133.2 million in sales, up 26%. Hereditary testing, following the company’s Ambry Genetics acquisition last year contributed $97.3 million.
The company also cited continued multi-year contract wins as a boon to the business including a $200 million, three-year agreement with AstraZeneca (AZN) and Pathos to build a large AI model for oncology.
Outlook Raised
Management raised its full-year 2025 outlook, increasing revenue guidance to $1.26 billion and adjusted EBITDA guidance to $5 million. It now expects revenue of $1.26 billion for full year 2025, up from $1.25 billion previously, and adjusted EBITDA profitability of $5 million, an improvement of $110 million over fiscal 2024.
This marks a milestone for the business, as achieving profitability on an adjusted EBITDA basis in full year 2025 was a big goal for the company’s first decade.
“The business is performing well with revenues and margins growing faster than expected,” said Eric Lefkofsky, Founder and CEO of Tempus. “Combined with our continued leadership in AI and progress toward building the largest foundation model in oncology, ‘we’re hitting our stride’ as we approach our 10th anniversary.”
Is TEM a Good Stock to Buy Now?
On TipRanks, TEM has a Moderate Buy consensus based on 3 Buy and 2 Hold ratings. Its highest price target is $75. TEM stock’s consensus price target is $70.40, implying an 11.71% upside.
