Nasdaq:TEM
Tempus AI, Inc.
Tempus AI combines genomics and real-time patient data to power precision medicine solutions for hospitals and pharma companies.
Key Metrics
Investment Thesis
Bull Case
Investors may view Tempus as a high-potential growth play in the expanding precision medicine market, backed by a robust $604.8M cash reserve and a clear path to profitability as their AI models mature. The company's ability to monetize its proprietary data ecosystem through software subscriptions and partnerships offers a scalable revenue model that could eventually generate substantial free cash flow. Strategic acquisitions totaling $376.7M demonstrate management's confidence in expanding market share and technological capabilities.
Bear Case
The stock carries significant risk due to a prolonged history of losses, with net income remaining negative for two consecutive years and a retained earnings deficit exceeding $2.4B. Heavy reliance on external financing to fund operations and acquisitions creates vulnerability if capital markets tighten or if the company fails to achieve consistent revenue growth. High levels of long-term debt and liabilities relative to equity suggest financial leverage that could be dangerous in a downturn.
About Tempus AI, Inc.
Tempus AI Inc. leverages artificial intelligence and advanced data analytics to accelerate precision medicine by combining real-time patient data with genomic insights. Operating primarily in the United States, the company serves oncologists, healthcare providers, and pharmaceutical partners through its proprietary Tempus One platform. Key revenue streams include diagnostic testing services, clinical workflow software solutions, and strategic partnerships for drug discovery.
Analysis
Management Discussion
Despite reporting a net loss of $245M in 2025, the company narrowed its losses compared to the previous year and generated positive net cash from financing activities of $884.1M. However, operating cash flow remains negative at -$218.1M, driven by high general and administrative expenses totaling $731.7M and significant capital expenditures. The substantial increase in accounts receivable suggests strong demand but also exposes the balance sheet to potential collection risks.
Industry Overview
The precision medicine industry is experiencing rapid growth driven by advancements in genomics and AI, yet it remains fragmented with high barriers to entry regarding data acquisition. Regulatory scrutiny on data privacy and reimbursement models for diagnostic tests continues to evolve, impacting revenue predictability across the sector. Success in this space depends heavily on building large, diverse datasets while maintaining competitive pricing against established healthcare providers.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2024 | 2025 |
|---|---|---|
| Revenue | $693.4M | $1.27B |
| Cost of Revenue | $0 | $0 |
| Gross Profit | $693.4M | $1.27B |
| Operating Expenses | $1.38B | $1.52B |
| Operating Income | $-691.1M | $-252.9M |
| R&D | $149.3M | $172.9M |
| G&A | $755.4M | $731.7M |
| Stock-Based Comp | $534.1M | $124.7M |
| Depreciation | $26.4M | $32.1M |
| Other OpEx | $479.8M | $620.0M |
| Non-Operating Income | $-10.2M | $-38.2M |
| Interest Income | $11.1M | $12.6M |
| Pre-Tax Income | $-701.3M | $-291.1M |
| Income Tax | $266.0K | $-51.7M |
| Continuing Ops | $-701.6M | $-239.4M |
| Discontinued Ops | $-4.2M | $-5.6M |
| Net Income | $-705.8M | $-245.0M |
| Minority Interest | $0 | $0 |
| Net to Common | $-705.8M | $-245.0M |
| Metric | 2024 | 2025 |
|---|---|---|
| Current Assets | $667.6M | $1.17B |
| Cash & Equivalents | $341.0M | $604.8M |
| Accounts Receivable | $154.8M | $311.2M |
| Inventory | $38.4M | $51.7M |
| Prepaid Expenses | $26.1M | $40.5M |
| Other Current Assets | $107.3M | $159.0M |
| Long-Term Assets | $258.5M | $1.11B |
| PP&E (Net) | $58.1M | $89.2M |
| Intangibles | $11.7M | $355.3M |
| Goodwill | $73.3M | $470.2M |
| Operating Leases | $14.8M | $64.5M |
| Other LT Assets | $100.6M | $128.5M |
| Total Assets | $926.1M | $2.27B |
| Current Liabilities | $291.1M | $372.4M |
| Accounts Payable | $53.8M | $82.0M |
| Current Leases | $6.5M | $13.4M |
| Deferred Revenue | $76.0M | $92.7M |
| Other Current Liab | $24.4M | $29.0M |
| Long-Term Liabilities | $578.7M | $1.41B |
| LT Operating Leases | $26.2M | $74.3M |
| Other LT Liab | $545.8M | $1.32B |
| Total Liabilities | $869.8M | $1.78B |
| Shareholders' Equity | $56.3M | $491.3M |
| Retained Earnings | $-2.15B | $-2.40B |
| AOCI | $94.0K | $902.0K |
| Total L&E | $926.1M | $2.27B |
| Metric | 2024 | 2025 |
|---|---|---|
| Net Income (CFO) | $-705.8M | $-245.0M |
| Non-Cash Adjustments | $420.2M | $-72.1M |
| Working Capital Changes | $96.6M | $99.1M |
| Cash from Operations | $-189.0M | $-218.1M |
| Capital Expenditures | $22.1M | $21.0M |
| Cash from Investing | $-130.4M | $-398.4M |
| Debt Repayments | — | $276.9M |
| Dividends Paid | $5.6M | $0 |
| Cash from Financing | $494.3M | $884.1M |
| FX Effect | $336.0K | $-62.0K |
| Net Change in Cash | $175.2M | $267.6M |
| Beginning Cash | $166.6M | $341.8M |
| Ending Cash | $341.8M | $609.5M |
Frequently Asked Questions
How does Tempus AI, Inc. make money?
The company's financials reflect a core business model driven by high-margin diagnostic testing services and low-margin clinical workflow software subscriptions. Significant investments in research and development alongside substantial acquisitions indicate a strategy focused on expanding its proprietary database of genomic and electronic health record data. Revenue growth from 2024 to 2025 suggests successful market penetration, while heavy operating expenses highlight the capital-intensive nature of building AI-driven healthcare infrastructure.
What are the main risks for TEM?
The company faces intense competition from established healthcare IT giants and emerging biotech firms seeking to enter the precision medicine space. Persistent negative operating cash flow and a widening retained earnings deficit raise concerns about long-term sustainability without consistent profitability. Regulatory changes in healthcare data privacy or reimbursement rates could significantly impact their high-volume diagnostic testing revenue model.
What is TEM's competitive advantage?
Tempus possesses a massive, proprietary multi-modal dataset that improves the accuracy of its machine learning models over time, creating a significant data network effect. The integration of genomic testing with real-time clinical data provides a unique value proposition that competitors struggle to replicate without similar historical depth. Strong cash position relative to liabilities allows for strategic acquisitions and R&D investment even while reporting net losses.
Related Companies
Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.