Tempus AI Q4 2024 Earnings Report

Tempus AI EPS Results

• Actual EPS: N/A
• Consensus EPS: -$0.15
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Tempus AI Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $250.17 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Tempus AI Announcement Details

• Quarter: Q4 2024
• Date: 2/24/2025
• Time: After Market Closes
• Conference Call Date: Monday, February 24, 2025
• Conference Call Time: 4:30PM ET

Tempus AI (NASDAQ:TEM) Inc. is a technology company advancing precision medicine through the practical application of artificial intelligence principally in healthcare. The company provides AI-enabled precision medicine solutions to physicians to deliver personalized patient care and in parallel facilitates discovery, development and delivery of optimal therapeutics. Tempus AI Inc. is based in CHICAGO.

Tempus AI Q4 2024 Earnings Call Transcript

Presentation

[Operator]

you for standing by. My name is Jason, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Fourth Quarter twenty twenty four Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After today's presentation, there will be an opportunity to ask questions.

[Operator]

I will now turn the call over to Lizzie Cottolo. Please go ahead.

[Elizabeth Krutoholow, VP - IR and Competitive Intelligence at Tempus AI]

Thank you, Jason. Good afternoon, and welcome to Tempus' fourth quarter twenty twenty four conference call. This afternoon, Tempus released results for the quarter and year ended 12/31/2024. Joining me today from Tempest are Eric Lipkovsky, Founder and CEO of Tempest and Jim Rogers, CFO. Before we begin, I would like to remind you that during this call, management may make forward looking statements that are subject to risks and uncertainties that could cause actual results to differ materially.

[Elizabeth Krutoholow, VP - IR and Competitive Intelligence at Tempus AI]

For a discussion of these risks, please visit our 10 K filed today, 02/24/2025, as well as any future reports that we file with the SEC. During the call, we will discuss non GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. Definitions of these non GAAP financial measures, along with reconciliations to the most directly comparable GAAP financial measures are included in our fourth quarter earnings release, which has been furnished to the SEC and is available on our website at investors.tempus.com. I would now like to turn the call over to Eric.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

Thank you. And thanks everyone for joining the call. I'm just going to highlight a few quick bullets and then we'll be happy to take questions. Q4 was a fantastic quarter for Tempest across the board. Our revenue growth accelerated to 35.8% year over year in the fourth quarter.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

Gross profit growth accelerated to 49.7. So even though our revenues were growing rapidly, our gross profit was actually growing even more rapidly. We ended the year with $940,000,000 in total remaining contract value and 140% net revenue retention. These were both up pretty materially. And one of the reasons that our gross profit growth was growing so quickly is our data and services business just had a really strong Q4 finishing a really strong year.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

And so that propelled some of that growth and also is the reason we ended the year with an uptick in total remaining contract value and really record net revenue retention. We also closed the acquisition of Ambry Genetics on February 3, which is exciting as we've talked about that historically, but that's now behind us. So we'll have two months this quarter of Ambry's results in our numbers. And we also increased our revenue guidance. We had historically given $1,230,000,000 but we've upped that to $1,240,000,000 for 2025 and expect to be adjusted EBITDA positive and generate about $5,000,000 of adjusted EBITDA.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

Obviously, we're not providing a range. We give fairly specific numbers, but there's always an implied range, but we feel confident enough that we're increasing our guidance for 2025. Finally, I want to just note, if you read the letter Jim and I put out, you'll catch this in a section, but we did extend our Google agreement for another five years. It's kind of an awesome win for us in that. It allows us to avail ourselves of really best in class rates and it pushes out the note we have with Google another five years.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

And that note, as you'll recall, comes down as we spend on their platform. So it gives us more chance to work that down. So all in great quarter, it's where we want to be. You want revenues accelerating in terms of growth. Our gross profits are growing quicker.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

Our costs are in line. So we're generating the kind of leverage we want to see and it's really just nice to be in a position where our certainly our two main businesses, genomics and data are really firing on all cylinders and in a period of strength. On that note, I'm happy to take questions.

[Operator]

We will now open the line for questions. The first question comes from the line of Tidjane Sivan with Morgan Stanley. Please go ahead.

[Tejas Savant, Executive Director / Senior Healthcare Equity Analyst at Morgan Stanley]

Hey guys, good evening and congrats on closing the Amory transaction. Eric, just one question there for me. One of the benefits you'd highlighted in terms of bringing AMRE in house is that it gives you a West Coast lab. So what timeframe could we see you bring some of your somatic workflows to that location? And then Jim, on the seasonality in the AMRE business, how should we think about what's contemplated in the guide?

[Tejas Savant, Executive Director / Senior Healthcare Equity Analyst at Morgan Stanley]

Obviously, just two months of contribution here in 1Q, so there will be a mathematical ramp, but beyond that anything to think about in terms of seasonality through the year?

[Eric Lefkofsky, Founder & CEO at Tempus AI]

Yes. So I can start. So, when Ambri does give us a West Coast lab for those that may not recall, we have labs in Chicago, Raleigh, North Carolina and Atlanta. So now with the acquisition of Ambri, we pick up a lab out West. Over time, we will look to have our somatic or CGP assays or comprehensive genomic profiling assays run out of their lab.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

We'll look to bring some of their inherited risk assays into our labs, but there's no immediate plans to do that in the next few quarters. It's more of a longer term initiative to make sure we have appropriate redundancy operating out of all of our big labs across the country. We're fortunate that Tempus already has that in place today between Chicago and Raleigh. So we built a lot of that redundancy, both in terms of operating workflows, in case one lab has a problem or something goes down. Also, we benefit from some of the reimbursement diversity of having those two labs.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

And the California lab of Ambri will give us additional redundancy and additional benefits. So, I would say over the next year or two, we'll look to start moving some of those assays and cross pollinating.

[Jim Rogers, CFO at Tempus AI]

Yes. And then I'll take the second question with regards to seasonality of the Ambre business. I think they experienced the same seasonality that we do with our business and other labs typically around the holidays things slow down. I would say that given where they are at in terms of kind of capturing market share as well as kind of growing the rare and undiagnosed business, we would anticipate kind of revenues growing throughout the year similar to what they do in kind of the Tempest business. So there is some seasonality, but we would just anticipate revenues continuing to grow kind of quarter after quarter, no different than the Memphis business.

[Tejas Savant, Executive Director / Senior Healthcare Equity Analyst at Morgan Stanley]

Got it. And then a quick follow-up on the data side of things. In your prepared remarks, you guys flagged one data delivery project, I think that slipped out in the quarter. Can you just quantify the impact and would that a customer delay? And Jim, on that note, what exactly is the data contribution that you're baking into '25 into your guide?

[Tejas Savant, Executive Director / Senior Healthcare Equity Analyst at Morgan Stanley]

Should we think of that as a base number that's essentially derisked or is there any sensitivity depending on pharma budgets, particularly for the smaller customers who haven't signed those strategic longer term contracts with you?

[Eric Lefkofsky, Founder & CEO at Tempus AI]

Yes, I'll start with the first. So, we had a fairly large data delivery, north of $10,000,000 that we could have pushed to get out potentially in Q4. But the natural kind of timing of that is the early part of this year. And I was just referencing it because it's not that the client had an issue or we had an issue or there was any issue. It's just that in every quarter when you get to our size and you have a data business this large, there are timing of these delivery of these datasets that can slip a month here, a month there.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

They can get pushed up into a quarter, they can get pushed back into a quarter. And so we always have puts and takes and I was just highlighting that. And if that data delivery would have gone out in Q4, we would have you can add a significant amount of revenue to Q4. So it would have been that's why I also said when we talk about $700,000,000 of revenue, it could be $693,000,000 it could be $7.00 $6,000,000 and most of that has nothing to do with the performance of the business or what's going well. It can just be the timing of when tests are ordered or when data is delivered.

[Jim Rogers, CFO at Tempus AI]

And then the second part

[Jim Rogers, CFO at Tempus AI]

of your question, Tejas, around kind of the 25 guide and kind of where the contribution from data is. I'd say the $940,000,000 of total remaining contract value obviously gives us good visibility into 2025. The larger agreements have kind of committed spend and those larger subscriptions get delivered kind of quarterly. The smaller agreements, there's always some subset of those that get signed and delivered in the year, but the majority is under contract as you go into 2025.

[Tejas Savant, Executive Director / Senior Healthcare Equity Analyst at Morgan Stanley]

Got it. That's helpful. Appreciate it.

[Operator]

The next question comes from the line of Rachel Van Stahl with JPMorgan. Please go ahead.

[Casey Woodring, Vice President - Equity Research at J.P. Morgan]

Great. Thank you. This is Casey on for Rachel. Just had one on the new guide for 2025. When backing into the math, it looks like Ambry is now an implied 17% top line growth rate if keeping core tempest at 30%.

[Casey Woodring, Vice President - Equity Research at J.P. Morgan]

So maybe just help us walk through kind of how we should think about Ambria in the model in 2025? And then I have one follow-up. Thanks.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

Yes. I mean, so we've historically said and you can see this in the commentary that Jim and I provided that Ambre benefited in 2024 from some ASP headwinds and some fluctuations in the market related to competitors where a lot of volume was moving to their direction. Now, they also have a best in class product that has been outgrowing the market anyway. So, they were going to grow nicely, but they had a couple of things in 2024 that were accelerants to their growth rate. And so in 2025, as they lap those accelerants, you could see a growth rate that might be normally in the kind of low 20s be in the high teens.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

And so we've talked about that last quarter and suspect that could be the case now. Some of this will be able to see how the year plays out, but we are as we've said historically forecasting core tempest to be closer to 30%. Ambre in the high teens, you're whether it's 17 or 19% or whatever like somewhere in that direction. And I suspect that's how things will play out unless there's more accelerants that come their way.

[Casey Woodring, Vice President - Equity Research at J.P. Morgan]

Got it. That's helpful. And then just as a quick follow-up, you mentioned 20% of revenues will fall in 1Q. I understand you have the ADLT percentage of volume kind of growing over the course of the year and other reimbursement tailwinds. Can you just maybe walk us through the quarterly phasing of the guide and maybe what the exit rate looks like?

[Casey Woodring, Vice President - Equity Research at J.P. Morgan]

Thank you.

[Jim Rogers, CFO at Tempus AI]

Yes. So Q4 is always

[Jim Rogers, CFO at Tempus AI]

a very big data delivery quarter for us as we kind of talked about. And so as you get into Q1, Q1 is always kind of in terms of percentage of overall revenue in the year the lowest. And so this what we've guided is consistent with what we've seen in previous years. Specific to ADLT status, again in the commentary that we provided, we'll end the quarter at about 20% of our we expect to end the quarter with about 20% of our XT volume moving over to ADLT. So as we've highlighted in the past, kind of the national launch started in January, but it will take kind of the balance of the year and into next year until we have the vast majority of that test on the ADLT version.

[Jim Rogers, CFO at Tempus AI]

So we guided to the 20% of the revenues in Q1 and we would anticipate some more kind of phasing is what we saw last year.

[Casey Woodring, Vice President - Equity Research at J.P. Morgan]

Got it. Thank you.

[Operator]

The next question comes from the line of Mike Griskel with Bank of America. Please go ahead.

[Michael Ryskin, Analyst at Bank of America]

Great. Thanks for taking my question guys. I want to follow-up really quick to Casey's point right there on Ambre contribution. I just want to get a little deeper into sort of how you think about the model longer term. I mean, you talked about what it was contributing to growth or what it grew in 2024 and some of those accelerants like we just discussed sort of like now it looks like it's high teens in 2025.

[Michael Ryskin, Analyst at Bank of America]

I think you just made some comment of you see longer term as a 20% growth. I just want to make sure I caught that correctly. Just how we flesh it out in our model in 2026 and beyond. Just can you talk about what do you see the Embry business doing longer term? And I've got a follow-up.

[Michael Ryskin, Analyst at Bank of America]

Thanks.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

Yes. I think I would suspect we've told people that kind of long term growth rate for Tempest you should think of us, if we're growing the business long term at 25%, that's a perfectly solid growth rate. We don't we're more focused on long term sustainable growth than we are focused on maximizing short term growth. So you'll see us make that trade all the time. If we can do things that we feel are sustainable and durable, we choose that path instead of kind of picking up a bunch of growth in the current quarter that isn't durable.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

I think interestingly enough, and we've seen some of that this year where I think again in some of Jim's commentary, you talk about lapping a period where maybe we had some ASP, some cash collections in 2023 that we had to lap in 2024. So you get some of these anomalies where your growth rates can bounce around a bit. And we're still even at our size, these aren't this isn't a $100,000,000,000 business where these fluctuations don't make a difference. So at our size, if you pick up an extra $20,000,000 or $30,000,000 of revenue and then you lap that, it can cause some issues. But I would suspect long term, you'll see Ambre's growth rate and our growth rate probably in terms of the genomics business be pretty similar.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

I think these things can grow at 25% for a sustainable amount of time. I think the data business and the apps business can grow a bit faster. So core tempest may be benefited by our data and our AI applications that obviously can grow much quicker or can grow quicker. But in terms of core genomics, I think the comprehensive genomic profiling and therapy selection, the minimal visual disease and the inherited risk profiling, these are still businesses with huge amounts of growth. I mean, there's no I believe that many, many people, if not most people will be profiled for risk in the future.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

And the fact that Ambri is a leader in that space, you can do the math in a world where many, many people are profiled or most people are profiled, you're quoting numbers in the hundreds of billions, I'm sorry, in the hundreds of millions. And today they're running a fraction of those tests. So I think they have a lot of headroom and I would suspect their growth rates will start to over time be similar to ours.

[Michael Ryskin, Analyst at Bank of America]

Okay. All right. And then for the follow-up a little bit, I want to touch on the data side of things. One is you kind of talked about the total contract value in some of your prepared remarks, I think nine forty is where you ended the year. It sort of was has been at that ballpark all year in the low 900, but $9.20, 9 30, 9 40.

[Michael Ryskin, Analyst at Bank of America]

So we've always kind of thought of that as a leading indicator of growth. How should we think about that going forward? I mean, there were some remarks in the prepared remarks text that you actually kind of expect it to decline in the future given it's a large number. But, yes, I mean, just why shouldn't that be an indicator of future revenue growth? So wouldn't you like to see that number grow higher?

[Jim Rogers, CFO at Tempus AI]

Yes. So I'll start and

[Jim Rogers, CFO at Tempus AI]

then Eric, you can jump in. I'd say the number did grow higher throughout the course of the year. We also kind of grew the amount of revenue that came out of that was at a record level as well. And so any growth in that number when you're kind of achieving kind of the revenue growth that we saw, you'd be very happy with. The way that we kind of view the total remaining contract value is, is it at a healthy enough level to kind of give you some visibility into the next several years of revenue?

[Jim Rogers, CFO at Tempus AI]

And at the levels that it's at given the amount of revenue that we recognize in a given year, it provides that level of visibility. As we've previously kind of talked about, when we get kind of larger deals, then that can result in some fluctuation of those and you don't sign kind of very large deals every single quarter. We highlighted some of the larger deals that we signed in the quarter with BI and Illumina. And again, we think that it's at a very healthy level for us to achieve the targets that we're looking to achieve.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

Yes. And look, the punch line is, it's lumpy, right? So the fact that it's growing and the fact that it and the fact that our net revenue retention is so high means the core business is really, really strong, right? I mean, in simple terms, if you've got about $1,000,000,000 of total contract value and you deliver $250,000,000 in a year to have the number grow, you had to basically sign more than that. So that's awesome.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

But yes, I mean, in a perfect world, you'd like it to grow by your growth rate. So if you think of it like, yes, we had, if it doesn't if our growth rate is such that, you have to basically, resign all the data you delivered plus another, let's say, whatever 30%, then maybe you'd want it to grow by $75,000,000 and it only grew by $30,000,000 right? But it's still so you might say, well, I wish it grew by $30,000,000 or $40,000,000 more, but you have almost $1,000,000,000 buffer in your data business. So it's going to be lumpy. You're going to have some years where we might sign a $200,000,000 deal for a million dollars deal and it's going to jump right up again.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

It's not going to grow perfectly every quarter. It's not going to grow perfectly every year. So we look at it and say the fact that we're ending the year and we've got more in the tank than when we started and we just took almost $250,000,000 out of the tank means it's super healthy. But long term, you're going to want to manage your growth rate.

[Michael Ryskin, Analyst at Bank of America]

All right. Thanks. I'll get back in the queue.

[Operator]

Next question comes from the line of Ryan MacDonald. Please go ahead.

[Analyst]

Hi, on for Ryan. Thanks for taking the questions. Nice to see the formal announcement around being an in network provider for various Blue Cross Blue Shield plans. Would love to unpack that a bit. What kind of impact do you anticipate going in network to have on volume?

[Analyst]

And maybe more importantly, would love to get a refresher on what that does from a reimbursement perspective?

[Jim Rogers, CFO at Tempus AI]

Yes. So I'd say, the announcement that we made about going in network with folks, as a reminder, we're primarily an out of network lab with commercial payers. Medicare and Medicare Advantage represent about 50% of our volume. So about a little bit less than half is commercial payers. So any win that we can get with commercial payers is obviously an uplift to reimbursement.

[Jim Rogers, CFO at Tempus AI]

We don't have a significant concentration among commercial payers. So, no one payer if we go in network kind of materially changes the reimbursement profile. However, chipping away at that 45% or so of commercial volume is important long term as we look to drive ASPs up. So, the biggest ASP tailwinds as we get into 2025 are migrating volume over the ADLT version of the assay, which will primarily kind of impact Medicare Advantage volume, although there's some commercial volume as well. And then for XF, our liquid biopsy, that was going through the GAPO process with Medicare last year.

[Jim Rogers, CFO at Tempus AI]

That resulted in about a $300 uplift in reimbursement from Medicare. And so again another kind of tailwind that we'll have in 2025 that impacts about 50% of our volume. These smaller wins on the commercial side impact a smaller percent.

[Analyst]

Got it. That's helpful, Jim.

[Analyst]

And then maybe on the regulatory environment, there's been a lot of changes at the FDA or proposed changes, some of which could be favorable for AI companies, but also a lot of layoffs that could potentially delay decision making or trial approval. So based on what we've seen today and where you sit, do you see what's going on at the FDA or in the broader federal government as more of a headwind or a tailwind to Tempest?

[Eric Lefkofsky, Founder & CEO at Tempus AI]

I think it's for us it's generally a headwind. I mean, we are AI enabled diagnostics company that is focused on technology. And so, I'm sorry, it's a tailwind meaning it's a benefit. So, for us, we think we benefit as a tech company, as somebody focused on AI. These kind of changes are generally trying to figure out how to get more efficiency, more technology and we think we benefit from that kind of thinking.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

There could be some minor slowdowns related to staffing as people are let go in the FDA, but we don't expect them to be material and we're not reliant on any kind of FDA rulings coming out that would change our business. So net net, we think it's tailwind.

[Analyst]

Got it. Thanks guys.

[Operator]

The next question comes from the line of Dan Brennan with TD Cowen. Please go ahead.

[Dan Brennan, Analyst at Cowen]

Great. Thanks for the questions. I know there's a question or two on the data side, but I was just hoping implicit in the guide. So if we're thinking about core tempest growing 30, presumably we have that level in our model, but we've got data growing in the mid-30s plus with the genomics organic growing in the mid-20s. Does that sound like the right zip code?

[Dan Brennan, Analyst at Cowen]

Or if not, can you help us think through what the right levels of growth for those two businesses are?

[Jim Rogers, CFO at Tempus AI]

Yes. I think that's largely aligned. I think on the genomics side, obviously, you have some ASP tailwinds, so we would anticipate revenues outpacing kind of volume growth in data as it has this year as well kind of growing slightly more quickly than the genomics business. So I think you're on track.

[Dan Brennan, Analyst at Cowen]

Got it. And then just maybe on the margin guide, the $5,000,000 EBITDA margin, which is good. Can you just help break down a little bit in terms of core Ambre versus the core Tempest business? And are there any synergies assumed in order to get to that number? And kind of what would be some of the drivers if you were to beat that number in 2025?

[Eric Lefkofsky, Founder & CEO at Tempus AI]

Yes, I mean, so we've considered it as we've talked about historically, we've considered it a goal to get to being adjusted EBITDA and cash flow positive. So we've been focused on that. And when we think about the investments we make in the forward year, we've been making investments predicated on this idea that our revenue is growing at X level, our gross profit is growing at X level. We can invest this amount in technology, R and D, people, all that good stuff. And we want to generate improvement in the bottom line such that we can flip to being positive.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

We're fortunate that we are about to make that flip, so that's awesome. And our guide for 2025 implies that we're clearly there. But we're not focused in the near term on like harvesting profits or maximizing profits. So to the extent that we are beating EBITDA, you'll likely see us in the near term invest more in growth. And certainly for 2025, that'll be the story.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

We're not going to look to like crush that number because we can. If we're crushing the number, we're going to make investments at least for some large extent back in the business and back into growth.

[Jim Rogers, CFO at Tempus AI]

And then Dan, on your question around synergies in the guide, no significant synergies kind of built in there. We anticipate kind of running Ambre kind of fully as a standalone business, at least for 2025. And so we're well into '26 before we'd be realizing anything significant.

[Dan Brennan, Analyst at Cowen]

Great. Thank you.

[Operator]

The next question comes from the line of Subramandy with Duggenheim. Please go ahead.

[Subbu Nambi, Managing Director at Guggenheim Securities]

Hey guys, thank you for taking my questions. Eric and Jim, what is embedded in your 2025 guidance, if anything for this year with respect to expectations for improvements in payer coverage for core Tempest Test as a result of ANDRE acquisition and ANDRE payer relationships and contracts? That's one and I have a follow-up.

[Jim Rogers, CFO at Tempus AI]

Yes. So the overlap between the two businesses is relatively small. So with minimal amounts of impact as we kind of migrate the reimbursement over to say Ambri, I think less than $10,000,000 So there's not a ton of overlap in the current business, but there will be some small benefit that we receive as we migrate that reimbursement.

[Subbu Nambi, Managing Director at Guggenheim Securities]

Okay. Got it. And then you most recently announced a commercial agreement at Arterra AI to commercially offer their prostate cancer prognostic test. Could you tell us about a process that leads to an agreement to offer a test like this? And then how do you decide to choose one test versus one provider over competing off offerings?

[Subbu Nambi, Managing Director at Guggenheim Securities]

And what are your priorities in that decision?

[Eric Lefkofsky, Founder & CEO at Tempus AI]

I mean, well, so one of the things that we

[Eric Lefkofsky, Founder & CEO at Tempus AI]

also highlighted in the quarter is we're now connected to 3,000 hospitals or so in The United States or institutions in The United States. And so you're looking at a significant percentage of The United States that's now connected to TEMFIS. And one of the benefits of that connectivity is not just that we can efficiently sequence a lot of patients and help them navigate to the right therapy and produce a lot of data that helps research and development downstream. But it also allows us to connect these AI enabled insights back into The U. S.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

Healthcare system at scale, whether those insights are helping match patients to a clinical trial or close a care gap or deploy an algorithm that can be diagnostically relevant for a patient to make sure they're on the right path. So that connectivity is really at the heart of the proprietary value that Tempest is building. At scale, which we're at now, we can deploy our own algorithms into the market or we can deploy third party algorithms. And so I would suspect you'll see us over time more and more bring third party algorithms onto our platform because of that connectivity. So if somebody develops a really good test that's predictive or prognostic or can help somebody in some way, and especially if it's getting reimbursed and has analytical and clinical validation behind it, we may bring that onto our platform.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

We have a team that reviews these things and makes those decisions. It's typically patient led and physician led, what's best for patients, what do our doctors want. But I think as I've said historically, I would not be surprised if over time we have dozens or hundreds of algorithms running on our platform or thousands at scale, because we have the ability to distribute them in ways others don't.

[Subbu Nambi, Managing Director at Guggenheim Securities]

Thank you for that, Eric. I'll get back in the queue.

[Operator]

Next question comes from the line of Doug Schenkel with Wolfe Research. Please go ahead.

[Doug Schenkel, Managing Director at Wolfe Research LLC]

Good afternoon and thank you for taking my questions.

[Doug Schenkel, Managing Director at Wolfe Research LLC]

Two topics I want to cover. First on MRD, could you just speak to when you are expecting any data readouts on tumor naive or tumor informed, so both products? And I guess related to that, I just want to confirm that there's nothing in revenue guidance related to both given the current state of reimbursement and the need for more data. That's the first topic. The other is on capital deployment.

[Doug Schenkel, Managing Director at Wolfe Research LLC]

Obviously, you were active at the end of last year with Ambre. As you think about priorities from here, what's the appetite for more M and A based on your balance sheet situation in the current market environment? Thank you.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

Yes. So I can start and Jim can always jump in. So in terms of MRD, obviously, we've taken a tumor naive assay to market. We started in CRC and we've already put out some studies related to that assay. There will be more over time, but there's nothing significant that would like fundamentally change our trajectory.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

We have an assay in market we've submitted for reimbursement unless, MolDX needs something different for reimbursement. We're on a good path to have that assay be reimbursed at some point in late twenty twenty five. And the next step for us will be to take that assay into other disease or into other subtypes, which we will do over time. We're collecting samples now and we'll bring that assay to market. We're consistently refining the assay to make it more sensitive and decrease the lower limit of detection.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

So that work is ongoing and we'll look to bring that to other disease areas over time. But there's no like kind of pivotal study that we need to do something. We're already passed all that and it's already moving. And I think the same is true for Personalis. They have assays in market and not small cell lung and breast and IO.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

And they've already submitted quite a bit. I think they're in the process of submitting across the board for reimbursement and they too have I think quoted that they expect reimbursement to show up sometime later this year, although you have to read their filings to get the most up to date. In terms of guidance, we have a long history of only focusing on what we can see. So until we know that assay is being reimbursed, we're not going to include anything substantive from it. Because again, like we're in a world where it could be later this year, it could be early next year, it could be Q3, it could be Q4, like it's just impossible to tell.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

Once we get reimbursement, we'll start ramping up these assays at much greater scale, because obviously getting paid is a good precursor to ramping them up. And so that's that. In terms of capital, we also said last quarter that we feel pretty good in terms of our genomics footprint. We feel like we've got a really incredible complement, really best in class in a scale that's unique. So, we're not looking to do big things there.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

We consistently look at smaller things on the data side of our world and the AI side of our world. And so, to the extent we find something small that's interesting, we might buy it, but nothing big is on the horizon.

[Operator]

Next question comes from the line of Andrew Brackman with William Blair. Please go ahead.

[Andrew Brackmann, Equity Research Analyst at William Blair & Company, L.L.C]

Hi guys. Good afternoon. Thanks for taking the question. Maybe on the reimbursement front, you obviously had the big win on the ECG algo getting reimbursed earlier this year. I guess bigger picture, does this sort of change how you're sort of viewing payers willingness to potentially expand reimbursement for these AI based diagnostics or how should we sort of be thinking about that as a potential catalyst over the coming year or so?

[Andrew Brackmann, Equity Research Analyst at William Blair & Company, L.L.C]

Thanks.

[Jim Rogers, CFO at Tempus AI]

Yes. I think from our perspective, we're really excited about it just because it does indicate a willingness for people to reimburse for these types of tests that are clinically validated and provide clinical utility. This doesn't mean that we're going to show up at the end of Q1 and have hundreds of our algorithms reimbursed. There's still a long road to go in terms of securing reimbursement for the various kind of different algorithmic diagnostics that we have. We just highlighted this because it's something that we've talked about in the past is that there's a long road, but there are some kind of near term milestones, this being one of them, that demonstrate that it is possible for these types of things to be reimbursed, which is why we're so excited about it.

[Jim Rogers, CFO at Tempus AI]

It.

[Andrew Brackmann, Equity Research Analyst at William Blair & Company, L.L.C]

Great. Thanks for that. And then maybe on the

[Andrew Brackmann, Equity Research Analyst at William Blair & Company, L.L.C]

commercial front, just post Ambry close now, how should we sort of be thinking about any adds or changes to the way that the reps are going to be deployed and incentivize moving forward? Thanks guys.

[Jim Rogers, CFO at Tempus AI]

Yes. So no significant changes. Yes. The Ambre reps typically sell into genetic counselors. Our reps are selling into kind of oncologists.

[Jim Rogers, CFO at Tempus AI]

And so there's not a ton of overlap. And so we don't anticipate there being any significant changes.

[Andrew Brackmann, Equity Research Analyst at William Blair & Company, L.L.C]

Okay.

[Operator]

Next question comes from the line of Mark Schlotow with Loop Capital. Please go ahead.

[Mark Schappel, Managing Director at Loop Capital Markets LLC]

Great. Thank you for taking my

[Mark Schappel, Managing Director at Loop Capital Markets LLC]

question. Eric, the company recently announced the launch of Olivia AI, the app for personal health, the personal health concierge app. I was wondering if you could just discuss the significance of the app and how you plan to monetize it?

[Eric Lefkofsky, Founder & CEO at Tempus AI]

The app will get monetized on a per month subscription like similar to like ChatGPT. I think it's currently $12 per month. And it's starting off small. We just released the app to a broader audience. We need to get user feedback.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

We need to make changes and improve things. You don't really know how these things scale until you start getting folks engaged. But we're super excited at the potential to bring our core technology platform that allows us to make sense of all this multimodal data and make diagnostics intelligent. We're excited to bring that to patients at scale. We think them being able to kind of move around all their healthcare data in their phone and have it stored in a secure locker and able to talk to that data and get all kinds of insights using our AI engine is pretty awesome.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

So, small early, but could be transformative.

[Mark Schappel, Managing Director at Loop Capital Markets LLC]

Great. Thanks. And as a follow-up, could you just walk us through your top, say, two or three investment priorities for the business in the coming year?

[Eric Lefkofsky, Founder & CEO at Tempus AI]

Our priorities are to stay focused on what's been working and make sure that we're kind of fed down in terms of building our genomics business and our data business and pulling our connected network to grow our applications business.

[Mark Schappel, Managing Director at Loop Capital Markets LLC]

Thank you.

[Operator]

Next question comes from the line of Dan Arias with Stifel. Please go ahead.

[Dan Arias, Managing Director at Stifel Financial Corp]

Yes. Hi guys. Thanks for getting me in here. Jim, on the data side, the $300,000,000 in renewals that you've talked about for Astra and for GSK, can you just remind us on what the timing is for that renewal coming up? And is there any change in the confidence around that happening with the terms that exist here for the initial agreement?

[Jim Rogers, CFO at Tempus AI]

Yes. So just a reminder, those kind of $300,000,000 of opt ins that we've highlighted in the total remaining contract value are kind of the last eighteen months or so of the AstraZeneca and GSK agreements. There's no updates for still several years away from kind of hitting those renewals and kind of no change in our confidence in terms of them.

[Dan Arias, Managing Director at Stifel Financial Corp]

Okay. But is that still

[Eric Lefkofsky, Founder & CEO at Tempus AI]

sort of the The range of those renewals is like 27 to 29%. So we're still years away.

[Jim Rogers, CFO at Tempus AI]

Yes.

[Dan Arias, Managing Director at Stifel Financial Corp]

Okay. Okay.

[Dan Arias, Managing Director at Stifel Financial Corp]

And then Jim, just on AMBRI pricing and hereditary has obviously not been static. Is there an implicit ASP assumption that you can share maybe not necessarily the exact dollar amount per se, but just more like change year over year that you're baking in? And then if I could speak on the second one on here. Eric, the accelerants that you called out as being meaningful for Ambri, is that cash collection solely? Is that what you're referring to?

[Dan Arias, Managing Director at Stifel Financial Corp]

Or are there other items that you saw as one off there?

[Jim Rogers, CFO at Tempus AI]

Yes. So on the accelerants in terms of reimbursement was cash collections, just the increase in their collection rates. And then in terms of ASPs, we haven't disclosed specific ASPs related to Ambry. They are puts and takes like there are everywhere else. So they'll have new in network contracts, which may change in one way, increase cash flow collection the other way.

[Jim Rogers, CFO at Tempus AI]

So puts and takes, but no significant changes kind of year over year on the ASP side for Ambridge.

[Dan Arias, Managing Director at Stifel Financial Corp]

Okay. Thank you.

[Operator]

The next question comes from the line of David Westenberg with Piper Sandler. Please go ahead.

[David Westenberg, Managing Director & Senior Research Analyst at Piper Sandler Companies]

Hi. Thank you for taking the question. So just I'm going to talk about maybe about the seasonality of the business generally. I think you said 20% of the revenue is the expectation in Q1. I know that there is you are expecting a little bit less, I think only two months of contribution from Ambry.

[David Westenberg, Managing Director & Senior Research Analyst at Piper Sandler Companies]

But can you just kind of remind us the normal seasonality in the business as we go through the year?

[Jim Rogers, CFO at Tempus AI]

Yes. So I'd say on the there's kind of different seasonality for the different kind of product lines, right? Genomics, we follow the same seasonality that you see from other kind of labs. Obviously, the end of the year in terms of the number of orders that are being placed around the holidays is low. So January tends to be kind of a slow start.

[Jim Rogers, CFO at Tempus AI]

The more when people are typically on vacation, there's some slowness. So we're no different than other labs on the genomic side. On the data side, we typically tend to be back half of the year weighted. A lot of our kind of conversations and deliveries kind of align with farmer budgeting cycles, which typically follow kind of the calendar year. So if you went back historically, we're not anticipating a change in kind of the trends that we saw in 2024 and previously.

[Jim Rogers, CFO at Tempus AI]

And again, we would anticipate kind of the phasing in 2025 being similar to what it was in 2024.

[David Westenberg, Managing Director & Senior Research Analyst at Piper Sandler Companies]

That's very helpful. I was I'd appreciate that there is some of that little writing and lagging that gets into January. So then just on the contract revenue of that $940,000,000 I appreciate the color you gave earlier with Mike's question about the lumpiness of that. How should we think about the long term basis on the correlation between those? Should those grow at kind of same speed over the longer term?

[David Westenberg, Managing Director & Senior Research Analyst at Piper Sandler Companies]

But of course, data and services is going to be lumpy and then the farmer revenue maybe you're going to recognize more in a like a linear kind of basis. I don't know. I'm just I'm actually asking. And then historically, like it's been a smaller portion of a lot of the company's business, but they've kind of said like revenue is expected in like this revenue would be the value is expected in the next two years or some sort of recognition period. Is there a recognition period for that?

[David Westenberg, Managing Director & Senior Research Analyst at Piper Sandler Companies]

Thank you so much.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

Yes. So the bulk of our total remaining contract value is made up of data. And as we've just talked about with AstraZeneca and GSK, these people can sign multiyear deals, five year deals, four year deals, six year deals, whatever it is. So these are multiyear deals. And if you sign a big deal, what happened if you were like we have certain investors who've been in tempest for a long time, so they could see the total remaining contract value, which was maybe a few hundred million dollars at one point.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

Then we signed some of these big deals and it jumped up to $700,000,000 or $800,000,000 or $900,000,000 So, you have years where the total remaining contract value grew by 200% or 300%. So, yes, long term, if you look at a ten year horizon, your total remaining contract value should equal eventually the data you deliver and it should grow at a similar growth rate. But if the bookings of your bookings number grows by 200%, it's not going to grow by 30% for the next three years like magically. Like in other words, it can be lumpy. Some years it can grow by 200%, some years it can grow by 0%.

[Eric Lefkofsky, Founder & CEO at Tempus AI]

But in the aggregate, it should it's going to have to basically match your data deliveries. But we had some very large contracts that got signed, great for us. And so we feel like we're in a good spot. The fact that we're still growing that number even off of periods of really high rapid bookings growth is again indicative of the fact that our data business is firing on all cylinders. So and in terms of the horizon, again, if you look at the size of our total remaining contract value and the size of our data business, I don't know, direction of the data business is about $250,000,000 and there's $940,000,000 so it's multiple years.

[David Westenberg, Managing Director & Senior Research Analyst at Piper Sandler Companies]

Very helpful. Thank you.

[Operator]

That concludes our Q and A session. I will now turn the call over to Lizzie Cortohalo for the closing remarks.

[Operator]

Do you have any closing remarks?

[Eric Lefkofsky, Founder & CEO at Tempus AI]

If not, I'm happy just to jump in and thank everyone for joining the call. And we'll see you next quarter.

Participants

Executives

• Elizabeth Krutoholow, VP - IR and Competitive Intelligence
• Eric Lefkofsky, Founder & CEO
• Jim Rogers, CFO

Analysts

• Tejas Savant, Executive Director / Senior Healthcare Equity Analyst at Morgan Stanley
• Casey Woodring, Vice President - Equity Research at J.P. Morgan
• Michael Ryskin, Analyst at Bank of America
• Analyst
• Dan Brennan, Analyst at Cowen
• Subbu Nambi, Managing Director at Guggenheim Securities
• Doug Schenkel, Managing Director at Wolfe Research LLC
• Andrew Brackmann, Equity Research Analyst at William Blair & Company, L.L.C
• Mark Schappel, Managing Director at Loop Capital Markets LLC
• Dan Arias, Managing Director at Stifel Financial Corp
• David Westenberg, Managing Director & Senior Research Analyst at Piper Sandler Companies