Key insights
- Tempus AI is set to report third-quarter earnings, with analysts anticipating its first quarterly profit. Investors will scrutinize the sustainability of its data revenue, given customer concentration and potential competition, but positive developments include expanded collaborations with Bristol Myers Squibb and Pathos AI, potentially worth up to $192.5 million. The company's dual-platform business model combining diagnostics with data and software licensing is under focus.
Tempus AI Inc. will report third-quarter results before the market opens Monday, with analysts expecting the precision medicine company to post its first quarterly profit since going public—a closely watched milestone as questions mount about the durability of its data business.
Wall Street expects earnings of one cent a share, which would mark a sharp turnaround from the four-cent loss reported in the second quarter. Analysts surveyed rate the stock a Buy, with a mean price target of $75.06, though that implies modest downside from the current price of $77.84. EPS estimates have declined 5.21% over the past two months, though they ticked up slightly in the past week.
The expected profit would represent a 109% year-over-year improvement, though from a low base, and comes as the company navigates a critical stretch for its dual-platform business model combining diagnostics with data and software licensing.
What Investors Are Watching
The sustainability of Tempus’s data revenue will be under scrutiny. Goldman Sachs analyst Evie Koslosky, who initiated coverage with a Neutral rating this month, noted that the company’s top five customers represent 59% of revenue, with several key contracts up for renewal over the next one to two years. The analyst flagged "potential near-term risks" as diagnostic peers enter data monetization and Tempus lacks exclusive electronic health record data rights.
Pharma partnership momentum offers a counterpoint. Tempus disclosed last week that an expanded collaboration with Bristol Myers Squibb and a separate neurology deal with Pathos AI could deliver up to $192.5 million in aggregate payments over roughly five years. H.C. Wainwright analyst Yi Chen wrote the "larger commitment from an established pharmaceutical partner bolsters the commercial value" of Tempus’s data and analytical tools.
Investors will also look for insight on the diagnostics pricing trajectory. According to analyst commentary, recent FDA approval of the xT companion diagnostic assay is expected to deliver a roughly $200 average selling price uplift and $85 million in annualized revenue starting in 2027. A potential approval of the xF liquid biopsy assay in the second half of 2027 could unlock an additional $400 million in incremental revenue by 2028.
Recent Results
In the second quarter, Tempus reported a loss of four cents a share, beating the eight-cent loss analysts had forecast. Revenue reached $382.5 million, up more than 50% year-over-year, reflecting growth in both diagnostics volume and data licensing.
The company also announced this month that its xR RNA sequencing assay received European Union certification, a regulatory milestone that could support broader international adoption.
Whether the expected third-quarter profit represents a sustainable inflection point or a temporary milestone will help determine if Tempus can justify a valuation that has carried shares from their June 2024 IPO price near $37 to a 52-week high above $90 earlier this year.
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