Business Context and Reporting Period
Company: Tempus AI, Inc.
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Quarter and six months ended June 30, 2026
Business Overview: Tempus AI is a healthcare technology company combining laboratory testing with artificial intelligence to improve patient care. The company operates two primary segments: Diagnostics (genetic testing) and Data and Applications (data licensing and clinical trial support). The company is a large accelerated filer incorporated in Nevada.
Key Financial Metrics
| Metric (in thousands) | Q2 2026 | Q2 2025 | 6M 2026 | 6M 2025 |
|---|---|---|---|---|
| Total Net Revenue | $382,486 | $314,635 | $730,602 | $570,372 |
| Net Income (Loss) | $5,642 | $(42,843) | $(120,277) | $(110,880) |
| Loss from Operations | $(75,913) | $(61,774) | $(160,624) | $(130,463) |
| Adjusted EBITDA | $8,044 | $(5,580) | $5,211 | $(21,754) |
| Cash and Cash Equivalents | $599,614 | N/A | N/A | N/A |
| Total Debt (Principal) | $1,210,000 | N/A | N/A | N/A |
| Stockholders' Equity | $444,934 | N/A | N/A | N/A |
Note: Debt principal includes $460M in 2032 Notes and $750M in 2030 Notes. Credit facilities were fully repaid in May 2026.
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 22% year-over-year (Q2) and 28% (6M). Diagnostics revenue grew 20% (Q2) driven by increased oncology and hereditary test volumes. Data and Applications revenue grew 28% (Q2) due to increased demand for Insights products and the Pathos Foundation Model agreement.
- Profitability: The company reported a net income of $5.6M for Q2 2026, a significant improvement from a net loss of $42.8M in Q2 2025. This was primarily driven by a $102.8M gain in "Other income, net" (largely unrealized gains on marketable equity securities) and reduced interest expense.
- Operating Expenses: Selling, General, and Administrative (SG&A) expenses increased 25% (Q2) and 31% (6M), driven by higher stock-based compensation ($20.9M increase in Q2) and personnel costs. Cost of revenues increased 14% (Q2) due to higher cloud costs and material expenses.
- Debt Restructuring: The company repaid all outstanding balances on its Term Loan Facility and Revolving Credit Facility in May 2026, resulting in an $11.6M loss on debt extinguishment. Concurrently, the company issued $460M in 0.00% Convertible Senior Notes due 2032.
- Acquisitions: The company completed the acquisition of Paige.AI, Inc. in August 2025 (post-period start) and previously acquired Ambry Genetics and Deep 6 AI in early 2025, contributing to revenue and goodwill.
Guidance, Outlook, and Risks
- Strategic Acquisitions: On July 20, 2026, Tempus announced an agreement to acquire Personalis, Inc. for a total enterprise value of $1.5 billion. The deal is expected to close in late 2026 or early 2027, subject to regulatory and shareholder approval.
- Liquidity: As of June 30, 2026, the company held $604.3M in cash, cash equivalents, and restricted cash. Management believes this, combined with marketable equity securities and operating cash flows, is sufficient to fund operations for more than 12 months.
- Key Risks:
- Acquisition Risks: The Personalis merger faces regulatory hurdles and termination risks, including a termination fee of approximately $76.8M if the deal fails under specific circumstances.
- Convertible Notes: The issuance of $1.21B in convertible notes creates potential dilution and liquidity risks if conversion is triggered or if the company must settle in cash.
- Legal Proceedings: Ongoing patent litigation with Guardant Health regarding liquid biopsy technology and class action lawsuits regarding genetic privacy laws in Illinois.
- Reimbursement: Financial performance relies heavily on reimbursement rates from commercial payers and government programs (Medicare/Medicaid), which remain uncertain.
Investor Verification Checklist
- Personalis Merger Status: Verify the progress of regulatory approvals and shareholder votes for the $1.5B Personalis acquisition.
- Debt Conversion Triggers: Monitor stock price performance relative to the conversion prices of the 2030 Notes ($84.19) and 2032 Notes ($69.26) to assess dilution risk.
- Reimbursement Rates: Review updates on payer coverage for oncology and hereditary tests, as this is a primary driver of Diagnostics revenue.
- Equity Security Valuation: Assess the volatility of "Other income, net" driven by the fair value of Recursion Pharmaceuticals and Personalis stock holdings, which significantly impacted Q2 net income.
- Legal Exposure: Track developments in the Guardant Health patent infringement case and the Illinois genetic privacy class actions.