Business Context and Reporting Period
Company: Tempus AI, Inc.
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: March 31, 2026
Business Overview: Tempus AI is a healthcare technology company combining laboratory testing with artificial intelligence and machine learning to improve patient care. The company operates as a single segment, deriving revenue primarily from Diagnostics (genetic testing) and Data and applications (licensing de-identified data and clinical trial services). The company reincorporated from Delaware to Nevada effective August 7, 2025.
Key Financial Metrics
| Metric (in thousands, except per share) | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Net Revenue | $348,116 | $255,737 |
| Net Loss | $(125,919) | $(68,037) |
| Loss Per Share (Diluted) | $(0.71) | $(0.40) |
| Adjusted EBITDA | $(2,833) | $(16,174) |
| Cash and Cash Equivalents | $521,170 | $151,603 |
| Total Debt (Long-term + Current) | $1,133,953 | N/A |
| Stockholders' Equity | $416,405 | $326,194 |
Note: Total Debt includes Convertible Senior Notes ($729M), Long-term debt ($205M), Revolving Credit Facility ($100M), and Convertible Promissory Note ($199M).
Material Changes vs. Prior Period
- Revenue Growth: Total net revenue increased 36% to $348.1 million, driven by a 35% increase in Diagnostics revenue (to $261.1M) and a 41% increase in Data and applications revenue (to $87.0M). The Diagnostics increase was largely due to the full-quarter inclusion of the Ambry Genetics acquisition and higher test volumes.
- Expense Expansion: Total operating expenses rose 33% to $432.8 million. Selling, general, and administrative (SG&A) expenses increased 37% to $212.6 million, primarily due to higher stock-based compensation ($18.9M increase), personnel costs, and amortization of intangibles from the Ambry acquisition.
- Net Loss Widening: Net loss increased to $125.9 million from $68.0 million. This was influenced by a $46.2 million discrete tax benefit recorded in Q1 2025 related to the Ambry acquisition, which did not recur in Q1 2026.
- Cash Flow: Net cash used in operating activities improved to $73.3 million from $105.6 million, despite the higher net loss, due to significant non-cash charges including $52.7 million in stock-based compensation and $32.3 million in unrealized losses on marketable equity securities.
Guidance, Outlook, and Risks
- Liquidity: Management believes current cash, cash equivalents, and marketable securities ($525.9 million total) are sufficient to fund operations for more than 12 months. The company maintains a $100 million revolving credit facility and a $750 million convertible senior note offering completed in July 2025.
- Strategic Collaborations: Significant revenue drivers include a $200 million data license agreement with Pathos AI (over three years) and minimum spend commitments with AstraZeneca ($220M) and GlaxoSmithKline ($180M).
- Acquisitions: The company completed the acquisition of Paige.AI in August 2025 and Ambry Genetics in February 2025. These acquisitions are expected to expand testing capabilities and data assets.
- Risks and Contingencies:
- Legal Proceedings: Ongoing patent infringement litigation with Guardant Health regarding liquid biopsy technology. Additionally, class action lawsuits were filed in February 2026 alleging violations of the Illinois Genetic Information Privacy Act.
- Reimbursement: Financial performance relies heavily on payer reimbursement rates. The company noted average reimbursement for oncology NGS tests was approximately $1,600 in 2025.
- Debt Covenants: The company must maintain minimum consolidated revenues of $1.1 billion for trailing twelve-month periods ending through December 31, 2026, to remain in compliance with its Credit Agreement.
Investor Verification Checklist
- Reimbursement Rates: Verify trends in payer adjudication and average reimbursement per test, as this directly impacts Diagnostics margins.
- Debt Compliance: Monitor quarterly revenue against the $1.1 billion trailing twelve-month covenant requirement in the Credit Agreement.
- Legal Exposure: Track the status of the Guardant Health patent litigation and the Illinois privacy class action lawsuits for potential financial impact.
- Acquisition Integration: Assess the realization of synergies and revenue growth from the Ambry Genetics and Paige.AI acquisitions.
- Stock-Based Compensation: Review the trajectory of stock-based compensation expenses, which increased significantly ($52.7M in Q1 2026) and impacts net loss.