Tempus AI: A good bet for the future of healthcare
AI is moving from hype to clinical utility, and Tempus AI (NASDAQ: TEM) is one of the few companies showing real traction across data, diagnostics, and dollars. The company's dataset is scaling, test volumes are climbing, and the financial picture is trending in the right direction. After a pullback in valuation, the long-term case looks compelling.
The dataset is compounding
Tempus continues to build one of the deeper multi-modal clinical datasets in oncology and genetics. DNA + RNA profiles stand at ~340,000 (up ~40,000 since mid-year). Samples sequenced have crossed 4 million. Imaging records exceed 8 million, up from ~2 million in Q1. Total patient records now top 45 million.
For care teams, this scale matters. Bigger, cleaner datasets sharpen model performance, improve clinical decision support, and enable better trial matching and real-world evidence generation.
Genomics is the growth engine
Oncology testing volumes reached 87,500 in the latest quarter, up from ~69,000 a year ago. Average revenue per test is about $1,600, a healthy level that supports reinvestment.
Hereditary testing is also gaining steam, supported by guideline-based screening for breast, ovarian, pancreatic, prostate, and colorectal cancers. If you're updating genetics pathways, align with current recommendations from the NCCN and your institutional policies.
Financial momentum is building
Revenue came in at $334.21 million, up 84.7% year over year, modestly ahead of expectations by $5.54 million. Genomics segment revenue grew 117.2% year over year. Management raised full-year 2025 guidance to $1.265 billion, implying ~80% growth, with Q4 guided to ~79% growth.
Profitability metrics are improving. Adjusted gross margin expanded 400 basis points to 63.9%. Operating expense growth (SG&A up 67%; adjusted tech R&D up 22%; adjusted R&D up 68%) is being outpaced by revenue, suggesting better operating leverage. Adjusted net loss per share narrowed to $0.11 from $0.24, a $0.07 beat.
Cash position is solid
Tempus ended the quarter with $764.3 million in cash and marketable securities. Operating cash burn was $119.8 million, with $6.7 million in capex. The company has posted positive operating cash flow in some prior quarters, and with losses narrowing, the runway looks sufficient for ongoing product development and commercialization.
Valuation: still a premium, now more reasonable
The forward price-to-sales multiple has compressed, creating a better entry point. Shares still trade at a premium to typical healthcare peers, but the company's unique position at the intersection of AI, multi-modal data, and clinical testing helps justify it. With stronger growth, expanding margins, and a sizable cash balance, the long-term thesis remains intact.
Practical takeaways for healthcare leaders
- Oncology programs: integrate comprehensive genomic profiling where appropriate and streamline reflex testing to reduce time-to-therapy.
- Genetics services: expand hereditary testing workflows, preauthorization, and counseling to meet guideline-directed demand.
- Data/IT: evaluate EHR integration, imaging pipelines, and governance models that support multi-modal data use while protecting privacy.
- Research: leverage matched molecular, clinical, and imaging datasets for trial design, eligibility screening, and real-world evidence.
- Finance: monitor reimbursement trends, margins, and vendor terms to avoid lock-in and preserve unit economics.
Risks and watch items
- Reimbursement and pricing pressure across oncology and hereditary testing.
- Regulatory changes around LDTs and diagnostics oversight.
- Data privacy/security and evolving consent requirements.
- Competition from established genomics labs and tech entrants.
- Sustaining test volume growth and average revenue per test as the market matures.
Bottom line
Tempus AI is executing: bigger datasets, higher testing volumes, better margins, and a healthier balance sheet. With valuation lower than earlier this year, the risk/reward looks favorable. For hospitals and clinics, expect more precise diagnostics and increasingly usable AI at the point of care. For investors, the setup supports a continued buy stance.
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