On November 4, 2024 Tempus AI, Inc. (NASDAQ: TEM), a technology company leading the adoption of AI to advance precision medicine and patient care, reported financial results for the quarter that ended September 30, 2024 (Press release, Tempus, NOV 4, 2024, View Source [SID1234647681]). The company also announced that it has entered into an agreement to acquire Ambry Genetics, a leader in genetic testing that aims to improve health by understanding the relationship between genetics and disease.
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Revenue increased 33.0% year-over-year to $180.9 million in the third quarter of 2024
Data and services revenue growth accelerated to 64.4% year-over-year
Genomics unit growth accelerated to 23.9% annually with rising average revenue per clinical test
Net Loss of $(75.8 million), which included $22.2 million of stock compensation expense and related employer payroll taxes
Adjusted EBITDA improved $14.4 million year over year to $(21.8 million)
Expect full year 2024 revenue of ~$700 million, which represents ~32% annual growth
For additional information on the quarter, including a letter from our CEO and CFO, please visit our investors relations site at investors.tempus.com.
"The overall business performed well in the quarter, as demonstrated by accelerating volume growth in our genomics business and accelerating revenue growth in our data and services business, specifically within Insights," said Eric Lefkofsky, Founder and CEO of Tempus. "We’re also excited to announce the pending acquisition of Ambry Genetics, which broadens our testing portfolio, expands our disease coverage, and enhances the types of products we can offer to our biotech and pharmaceutical partners. In addition, Ambry is uniquely positioned given that its revenues are currently growing at north of 25% a year and it generates meaningful EBITDA and cash flow."Genomics revenue of $116.4 million in the third quarter of 2024, an increase of $19.6 million or 20.3% over the third quarter of 2023, with 23.9% unit growth.
Data and services revenue of $64.5 million in the third quarter of 2024, an increase of $25.3 million or 64.4% over the third quarter of 2023.
Non-GAAP Genomics gross margin was 49.3% in the third quarter of 2024, compared to 51.9% in the third quarter of 2023, largely related to one-time cash payments in 2023.
Non-GAAP Data and services gross margin was 78.3% in the third quarter of 2024, compared to 60.5% in the third quarter of 2023, led by Insights, or data licensing revenue, which grew 86.6% year over year.
Net Loss of $(75.8 million), which included $22.2 million of stock compensation and related employer payroll taxes compared to net loss of $(552.2 million) in the second quarter of 2024, including $493.1 million of stock compensation and related employer taxes and net loss of $(53.4 million) in the third quarter of 2023.
Adjusted EBITDA $(21.8 million) in the third quarter of 2024, compared to $(31.2 million) in the second quarter of 2024, and $(36.2 million) in the third quarter of 2023.
Ending cash and marketable securities were $466.3 million.
Additional Operating Highlights
Announced a multi-year first of its kind collaboration with BioNTech to leverage Tempus’ TCR dataset in support of BioNTech’s next-generation oncology pipeline.
Announced a 3 year extension with Merck EMD at the culmination of our last 3 year strategic agreement.
Initiated a collaboration with OneOncology to bring more biomarker-driven trials to patients in the community setting at scale.
Initiated the beta launch of our patient-facing app, Olivia, an AI-enabled personal health locker that empowers individuals to holistically organize, store, and manage their own health data through our generative AI healthcare concierge.
Ambry Genetics Acquisition
Tempus reported that it has entered into an agreement to acquire Ambry Genetics, a leader in genetic testing. Under the terms of the agreement, Tempus will pay $375 million in cash and $225 million in shares at closing, of which $100 million will be subject to a lock-up agreement until one year post-transaction close. The deal is expected to be financed in part through a $300 million increase in short and long term debt provided by Ares, Tempus’ current lender. Ambry expects to generate >$300 million in revenue in calendar year 2024 and EBITDA of >$40 million. For more information on Ambry and its impact, see Tempus’ latest investor deck.
Ambry is a leader in hereditary cancer screening and currently serves as Tempus’ main reference lab in this category. The acquisition will provide Tempus with expanded testing capabilities for inherited cancer risk. These services are becoming more and more important for healthcare professionals navigating critical medical decisions with cancer patients and their relatives.
In addition to expanding and enhancing the company’s hereditary screening portfolio, the acquisition of Ambry will complement Tempus’ strategy of using data to advance clinical and scientific innovation. Ambry’s extensive product offerings will also allow Tempus to expand into new disease categories, including pediatrics, rare disease, immunology, women’s reproductive health, and cardiology.
Financial Outlook and Guidance
Tempus continues to expect full year 2024 revenue of approximately $700 million, which represents approximately 32% year-over-year growth and approximately $(105 million) in adjusted EBITDA, an improvement of approximately $50 million over 2023.
Webcast and Conference Call Information
A conference call and webcast will begin today, November 4, 2024 after market close at 4:30 p.m. Eastern Time. Interested parties may access details at:
Conference ID: 7177136
Domestic Dial-in Number: (800) 715-9871
International Dial-in Number: (646) 307-1963
Live Webcast: View Source
The webcast may be accessed on the company’s investor relations website at investors.tempus.com. For those unable to listen to the live webcast, a recording will be made available on the company’s website after the event and will be accessible for one year. Visit the investor relations website to find the company’s latest deck, and commentary on the quarter by Eric Lefkofsky, Founder and CEO and Jim Rogers, CFO, which will be discussed on the conference call and webcast.