Business Context and Reporting Period
Company: Tempus AI, Inc.
Filing Type: Form 10-K (Annual Report)
Period Ended: December 31, 2025
Business Overview: Tempus is a healthcare technology company focused on precision medicine, utilizing artificial intelligence (AI) to create "Intelligent Diagnostics." The company operates two primary product lines: Diagnostics (oncology and hereditary testing) and Data and Applications (licensing de-identified data, clinical trial matching, and algorithmic diagnostics). The company operates as a single reporting segment.
Key Financial Metrics
| Metric (in millions) | 2025 | 2024 | Change |
|---|---|---|---|
| Total Net Revenue | $1,271.8 | $693.4 | +83% |
| Net Loss | $(245.0) | $(705.8) | Improved |
| Adjusted EBITDA | $(7.4) | $(104.7) | Improved |
| Cash and Cash Equivalents | $609.5 | $341.8 | +78% |
| Total Debt Outstanding | $1.3 billion | $1.0 billion (approx.) | Increased |
Revenue Breakdown (2025):
- Diagnostics: $955.4 million (75% of total revenue), driven by a 111% increase due to the acquisition of Ambry Genetics and growth in oncology testing volume.
- Data and Applications: $316.4 million (25% of total revenue), driven by a 31% increase primarily from the Insights product line.
Material Changes vs. Prior Period
- Acquisitions: The company significantly expanded its footprint through three major acquisitions in 2025:
- Ambry Genetics Corporation (Feb 2025): Added hereditary testing capabilities, contributing $362.7 million to Diagnostics revenue.
- Paige.AI, Inc. (Aug 2025): Acquired for $101.5 million to strengthen digital pathology capabilities.
- Deep 6 AI, Inc. (Mar 2025): Acquired to enhance clinical trial matching and real-world evidence generation.
- Capital Structure:
- Issued $750.0 million in 0.75% Convertible Senior Notes due 2030 in July 2025.
- Amended credit facilities to include an additional $200.0 million term loan and $100.0 million revolving credit facility to fund the Ambry acquisition.
- Repaid $276.9 million of prior term loans, resulting in a $12.0 million loss on debt extinguishment.
- Profitability Trend: While the company remains unprofitable, the net loss narrowed significantly from $705.8 million in 2024 to $245.0 million in 2025. Adjusted EBITDA improved from a loss of $104.7 million to a loss of $7.4 million.
Guidance, Outlook, and Risks
Management Commentary & Outlook:
Management emphasizes a long-term focus on platform development and commercial growth. The company expects to continue investing heavily in research and development (R&D) and technology to expand into new disease areas (cardiology, neuropsychiatry) and develop algorithmic diagnostics ("Algos"). The company anticipates that revenue growth will continue to outpace expense growth over time, though operating expenses are expected to increase in absolute dollars due to headcount and public company costs.
Key Risks and Contingencies:
- Reimbursement Uncertainty: A significant portion of revenue relies on third-party payer reimbursement (Medicare, Medicaid, commercial). The company faces risks regarding coverage policies, reimbursement rates, and the potential for retroactive adjustments or denials. As of Dec 31, 2025, payment had been received on approximately 55% of clinical oncology NGS tests performed in the prior 24 months.
- Regulatory Environment: The company is subject to evolving regulations regarding Laboratory Developed Tests (LDTs), FDA oversight of AI/Software as a Medical Device (SaMD), and data privacy laws (HIPAA, GDPR). Recent court rulings have invalidated certain FDA LDT regulations, creating uncertainty.
- Intellectual Property Litigation: Guardant Health has filed patent infringement lawsuits against Tempus regarding liquid biopsy technology. Tempus has filed counterclaims and separate infringement suits against Guardant.
- Debt Obligations: The company carries significant debt ($1.3 billion total), including a convertible note with Google and senior secured term loans. Covenants require maintaining minimum liquidity and revenue thresholds.
Investor Verification Checklist
- Reimbursement Rates: Verify the stability of average reimbursement per test ($1,600 for oncology, $770 for hereditary) and monitor payer coverage policies, particularly for Medicare Administrative Contractors (MACs).
- Acquisition Integration: Assess the successful integration of Ambry Genetics, Paige.AI, and Deep 6 AI, specifically regarding revenue synergies and retention of key personnel.
- Debt Covenants: Confirm compliance with financial covenants in the Credit Agreement, specifically the minimum consolidated revenue requirements ($1.0 billion for 2025, $1.1 billion for 2026).
- Legal Proceedings: Monitor the status of the patent infringement litigation with Guardant Health and any government investigations (e.g., Civil Investigative Demand from the U.S. Attorney's Office regarding the False Claims Act).
- Stock-Based Compensation: Note the significant reduction in stock-based compensation expense in 2025 ($124.7 million) compared to 2024 ($534.1 million) due to the satisfaction of IPO performance conditions; evaluate future expense levels as new grants vest.