Tempus AI’s (TEM) better-than-expected first-quarter results were overshadowed by a full-year forecast that failed to impress Wall Street, sending shares of the precision medicine firm down 7.2% in extended trading.
The company reported a 36.1% year-over-year jump in revenue to $348.1 million, surpassing the $345.4 million consensus estimate. While its adjusted loss of $0.13 per share was narrower than the $0.20 loss analysts had projected, the updated full-year revenue guidance of $1.59 to $1.60 billion offered little upside to the $1.592 billion consensus, spooking investors focused on the path to profitability.
The results highlight a conflict for investors: top-line growth remains robust, but the company’s GAAP net loss expanded to $125.9 million from $68.0 million a year earlier. The post-market stock decline suggests investors are prioritizing a clear and accelerated path to profitability over revenue beats for the AI-driven diagnostics company.
Growth in Data and Diagnostics
Tempus AI’s growth was broad-based across its two main segments. The Diagnostics division, its largest, generated $261.1 million, a 34.7% year-over-year improvement driven by a 28% expansion in oncology test volume.
The higher-margin Data and Applications segment saw revenue climb 40.5% to $87.0 million. A key growth driver was the explosive adoption of the company’s minimal residual disease (MRD) testing, which saw volumes increase by approximately 500% year-over-year to roughly 6,500 tests in the quarter. This rapid uptake signals strong clinical demand for Tempus's technology in monitoring cancer recurrence, a competitive area that includes players like Guardant Health and Foundation Medicine.
Operationally, Tempus showed progress in managing costs. Adjusted EBITDA loss narrowed significantly to $2.8 million from a $16.2 million loss in the same quarter last year. The company also maintained its full-year adjusted EBITDA projection of approximately $65 million.
Guidance and Analyst Outlook
Despite the strong quarter, the company's guidance proved to be the focal point. The new full-year revenue forecast, implying 25% annual growth, was seen as conservative. Management noted a slowdown in hereditary testing but expects a rebound in the second half of the year.
Wall Street remains divided on the stock. Following the report, Morgan Stanley and Guggenheim trimmed their price targets to $70 and $60, respectively, though both maintained buy-equivalent ratings. In contrast, Jefferies holds an Underperform rating with a $35 price target. The consensus rating among analysts is a “Moderate Buy” with an average price objective of $71.36, suggesting significant upside from its post-earnings levels.
This article is for informational purposes only and does not constitute investment advice.
