Tempus AI Sees Pricing, Data Growth Fueling Long-Term Expansion

Key Points

• Diagnostics remains Tempus AI’s largest business, with durable demand for genomic profiling and higher average selling prices. FDA approvals could enable ADLT pricing, potentially adding $80 million–$100 million annually for solid-tumor testing and $250 million–$300 million for liquid biopsy if approved.
• Data licensing is expanding rapidly: the business grew about 36% in the latest quarter and added roughly $200 million in contract value. Tempus sees potential for approximately 30% annual oncology-data growth, supported by a repository covering about 50 million patients.
• The planned Personalis acquisition is expected to strengthen Tempus’ molecular residual disease testing and reimbursement position, while a potential role in Merck and Moderna’s personalized melanoma vaccine rollout could provide additional sequencing revenue.

Tempus AI NASDAQ: TEM Founder and CEO Eric Lefkofsky said the company’s second-quarter performance was supported by continued demand for comprehensive genomic profiling and growth in its data-licensing business.

Speaking at Morgan Stanley’s Global Healthcare Conference, Lefkofsky said the diagnostics business, particularly solid-tumor profiling and liquid biopsy testing used for therapy selection, remained the company’s largest business line. He said demand has been durable while average selling prices have increased.

Tempus’ data-licensing business also continued to expand, according to Lefkofsky. He said the business grew about 36% in the most recent quarter and recorded roughly $200 million in total contract value additions. Lefkofsky attributed demand in part to biopharmaceutical companies’ increasing investments in artificial intelligence and related computing infrastructure.

Growth outlook tied to diagnostics pricing and data demand

Lefkofsky reiterated Tempus’ expectation for at least 25% growth over the next several years, saying the company was designed to pursue sustained long-term growth rather than a shorter period of faster expansion.

In diagnostics, he highlighted expected pricing changes for Tempus’ core oncology assays. The company’s solid-tumor test received FDA approval for both tumor-normal and tumor-only testing, which Lefkofsky said will allow the platform to transition to Advanced Diagnostic Laboratory Test, or ADLT, pricing. He said the shift is expected to provide an estimated $80 million to $100 million of incremental annual average selling price, profit and free-cash-flow benefit beginning next year if the company does not reinvest the proceeds.

Tempus’ liquid-biopsy assay is also before the FDA, Lefkofsky said. If approved, he expects the test to receive ADLT pricing and enter the market in the second half of 2027. He said the expected pricing could rise from about $3,200 currently to the mid- to high-$7,000 range, potentially producing $250 million to $300 million in annual uplift.

Lefkofsky also cited faster unit growth and rising prices in molecular residual disease, or MRD, testing. He said the company expects its hereditary testing business, acquired through Ambry Genetics, to return to mid-teens growth toward the end of the year after lapping volume gains associated with Invitae’s bankruptcy.

Personalis acquisition to expand MRD presence

Tempus’ planned acquisition of Personalis is centered on what Lefkofsky described as a best-in-class, whole-genome-based MRD assay with strong sensitivity and specificity. Tempus had previously served as Personalis’ exclusive U.S. distributor.

He said the timing of the acquisition accelerated after Personalis received MolDX reimbursement approvals in lung, breast and immuno-oncology applications and another party expressed interest in buying the company. Lefkofsky expects Personalis’ average selling prices to rise to $1,000 and above as reimbursement expands.

Lefkofsky said Tempus separately won a request-for-proposal process to support the potential national rollout of Merck and Moderna’s V940 personalized melanoma vaccine program if the product receives FDA approval. Personalis has provided sequencing for the clinical trial, while Tempus would manage a significant portion of the expected rollout volume and revenue, he said.

He characterized the program as distinct from a traditional companion diagnostic because sequencing is part of the product’s manufacturing process. The final division of sequencing work between Tempus and Personalis remains under discussion, according to Lefkofsky.

Data licensing seen as long-term opportunity

Lefkofsky said Tempus has licensed oncology data since 2018 and has signed long-term data agreements exceeding $100 million with companies including AstraZeneca, Bristol Myers Squibb, GSK, Merck and BioNTech.

He said biopharma customers use Tempus data for applications including synthetic controls, clinical-trial design, site selection and commercialization planning. Tempus’ data business could grow at roughly 30% annually in oncology under current trends, he said, with further opportunity from expansion into other diseases and potential demand from large technology companies.

The company’s data repository includes de-identified information from approximately 50 million patients, including 10 million cancer patients and 40 million patients outside oncology, Lefkofsky said. He argued that Tempus’ network of hospital connections, data agreements, molecular testing, imaging data and data-harmonization infrastructure creates a competitive advantage, though he acknowledged that customers can license healthcare data from other providers.

On reimbursement, Lefkofsky said Medicare and Medicaid payment for solid-tumor profiling and liquid biopsy has remained stable, while MRD reimbursement is currently led by MolDX and could expand to other Medicare administrative contractors over time.

About Tempus AI (NASDAQ:TEM)

Tempus AI, Inc is a healthcare technology company focused on applying artificial intelligence and data analytics to precision medicine. The company combines molecular testing, clinical data and machine learning to help physicians make more informed treatment decisions and support the development of new therapies.

Tempus provides genomic and diagnostic testing services, including testing intended to identify clinically relevant mutations and other biomarkers. Its technology platform also organizes and analyzes clinical and molecular data, while its AI-enabled tools are designed to assist healthcare professionals with patient care, research and workflow management.

The company serves healthcare providers, patients, pharmaceutical companies and biotechnology researchers, primarily in the United States.

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