Tempus AI, Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Genomics volume had strong growth across all assays, with Oncology and Hereditary segments performing well. Hereditary growth is revised to low to mid-20s from previous mid- to high teens.
• Data licensing/Insights business grew 38% in Q3 with significant contract value, including a multi-hundred million dollar foundation model deal.
• Generated positive adjusted EBITDA for the first time, inclusive of Paige acquisition expense. Expect full year to be slightly positive adjusted EBITDA despite Paige drag.
• MRD reimbursement is on track, and there's a planned regulatory filing of liquid biopsy xF later this year.
• Ambry growth is about 50% from share gains, expected to moderate in Q4 to low to mid-20s.

Segment Performance

• Genomics: Genomics volume grew 33% overall. Oncology grew 27%, Hereditary grew 37% (expected to moderate to low to mid-20s from previous mid- to high teens). MRD reimbursement is on track, and there's a planned regulatory filing of liquid biopsy xF later this year.
• Data Licensing/Insights: Grew 38% in Q3 with an additional $150 million in total contract value, on top of a multi-hundred million dollar foundation model deal earlier this year.

Guidance

• Genomics growth across all assays, with Hereditary growth revised to low to mid-20s from previous mid- to high teens.
• Data licensing/Insights business had strong bookings quarter with $150 million in total contract value.
• Expect full year to be slightly positive adjusted EBITDA despite Paige acquisition drag.

Risks

• Uncertainty around reimbursement for data interpretation and analysis, which could impact growth in certain algorithm-based areas.
• Competition in genomics and data licensing spaces could affect market share and growth rates.

Question and Answer

• Q: On Genomics volume growth, what's driving it? **A: Sales force efficiency and integrated technology delivering contextualized results to physicians, with general market tailwinds from increased biomarker testing.
• Q: Update on MRD go-to-market? **A: Will leverage sales force, with well-trained subset in MRD, expecting sustained long-term growth in MRD space.
• Q: Details on $150 million data licensing bookings? **A: Data licensing business has strong bookings, multi-year deals, total contract value in good spot, with differentiated data product.
• Q: Ambry growth mix and industry baseline? **A: Ambry growth about 50% share gains, expected to moderate in Q4; industry growth in low double digits, Ambry's Hereditary growth in low to mid-20s above industry.
• Q: Foundation model with AstraZeneca and Pathos? **A: Foundation model in pretraining phase, entering large compute phase, Paige acquisition brings digital pathology expertise, teams connected for progress.
• Q: Reimbursement for data interpretation? **A: Hopeful healthcare system will reimburse for data interpretation, Tempus well-positioned with many algorithms, scalable if reimbursed.
• Q: Paige AI synergy with diagnostics? **A: Paige complements diagnostics by enhancing sequencing when it fails, predicting mutations, enabling quick result delivery through multimodal data approach.
• Q: MRD R&D data next year? **A: Expect data next year from tumor-naive assay in CRC and non-small cell lung cancer studies.