Tempus AI NASDAQ: TEM executives said the company’s planned acquisition of Personalis is intended to strengthen its position in minimal residual disease, or MRD, testing, while expanding its biopharma data and profiling capabilities.
On a call with analysts, Tempus said it agreed to acquire all outstanding shares of Personalis not already owned by Tempus at $16.25 per share. The company said the price represents a 6% premium to Personalis’ Friday closing price and a 28% premium to its unaffected 30-day volume-weighted average price.
The consideration is structured as 100% stock, though Tempus has the option to pay up to 50% in cash. Personalis shareholders would receive a floating exchange ratio of Tempus common stock for each Personalis share held at closing, subject to a maximum exchange ratio of 0.3356. Tempus said any cash portion could be financed with cash on hand and additional borrowing procured between signing and closing. The companies expect the transaction to close in late 2026 or early 2027.
Tempus Points to MRD Growth and Reimbursement Momentum
Tempus said Personalis’ NeXT Personal offering has seen strong adoption, with quarter-over-quarter growth of 38%. The company said volumes could become “even more material and higher” as additional sales representatives are equipped to sell the offering and as more indications secure reimbursement.
In response to a question from Kallum Titchmarsh of Morgan Stanley, an executive identified as Eric said Tempus is “quickly gaining market adoption,” citing both overall growth in the MRD market and the performance of Personalis’ assay. He said Tempus expects to embed more of its technology into the MRD offering over time, including hospital connectivity, AI-enabled ordering tools and AI-derived insights.
Eric said Tempus has so far been selective in allowing its sales force to carry the MRD product, with roughly 10% of sales representatives currently involved. He said the company expects to expand that access as more indications receive reimbursement.
Why Tempus Says the Timing Is Right
Asked by Kyle Mikson of Canaccord Genuity why Tempus is pursuing the acquisition now, Eric said the company had reviewed Personalis in 2023 but opted at that time for a commercial agreement because Personalis still faced several years of heavy investment. He said Personalis has since advanced the assay and is entering a phase in which coverage and reimbursement should improve the economics of the tests.
Eric said MRD assays can move from generating little or no revenue in certain uses to producing significant revenue after analytic validity, clinical validity, publication and MolDX approval requirements are met. He said Personalis is now entering that part of the cycle, and Tempus expects its financial profile to improve.
Jim Rogers, CFO and Treasurer of Tempus AI, said the company’s core business has “good tailwinds” from therapy selection volume growth and average selling price improvements. He said Tempus is generating incremental gross profit dollars and had already intended to reinvest a portion of that into the business, with MRD as a major investment area.
Data and Biopharma Opportunities
Tempus said the Personalis portfolio also enhances its biopharma offering through profiling and immuno-oncology capabilities. The company highlighted the potential value of de-identified longitudinal MRD data, saying serial measurements can reveal disease dynamics, treatment response, resistance and recurrence, which may support biomarker discovery, patient selection and trial optimization.
Eric said the prior relationship between the companies gave Tempus broad clinical distribution rights, while Personalis retained its own biopharma business and data rights. After closing, he said Tempus expects to more tightly combine those capabilities, which he said could be “catalytic” to both companies’ pharma businesses.
Rogers added that Tempus already has a large biopharma data business and does sequencing for biopharma customers. He said integrating Personalis’ biopharma business with Tempus’ current offering could help expand overall relationships with biopharma clients.
Financial Targets Remain in Place
Tempus said it will provide more detail on the transaction’s financial impact and outlook during its second-quarter earnings call on July 30. Despite the acquisition, the company said it intends to be adjusted EBITDA and free cash flow positive in 2027.
Asked about margins and reimbursement by Mark Massaro of BTIG, Eric said Tempus was not ready to provide extensive detail on Personalis’ business before a future update, but said Personalis is collecting clinical-side reimbursement dollars. He added that Tempus would not have agreed to the acquisition if it did not believe the margin profile would become “super healthy.”
Elizabeth Krutoholow, Tempus AI’s Vice President of Investor Relations, closed the call by thanking participants and said the company expects to speak with investors again on its July 30 second-quarter call.
About Tempus AI (NASDAQ:TEM)
Tempus is a technology-driven healthcare company that applies artificial intelligence and machine learning to clinical and molecular data in order to advance precision medicine. Its primary focus lies in oncology, where the company offers comprehensive genomic profiling, digital pathology services and data-driven insights to inform personalized cancer care. By integrating DNA and RNA sequencing with structured clinical information, Tempus enables clinicians and researchers to identify targeted treatment options for patients based on the genetic characteristics of their tumors.
The company's core offering centers on a scalable, cloud-based analytics platform that aggregates vast amounts of molecular and clinical data.
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