Are the Merck and Gilead deals different in size/scope? And for Jim, how much visibility does the company have in hitting the implied $410 million data revenue guidance, and what are upside levers?

Eric clarified Merck was a very large strategic data and modeling collaboration, similar to existing ones. Gilead was a significant step up from historic levels, demonstrating growth within accounts. Jim Roger added that the $350 million TCV from the year-end call, plus new wins, provides strong visibility for data revenue, and TCV actually increased in Q1, indicating strong backlog growth for future years. “Merck was a very large strategic data and modeling collaboration... Gilead is a bit -- it's a bit different. It's quite large, smaller than Merck, but quite large, but what's cool about it is it represents a very significant step up from their historic levels.”

Updates on XF FDA submission timeline and ADLT pricing. Breakdown of data licensing percentage from oncology versus other areas like rare disease or cardiovascular.

Jim Roger stated no update on XF submission, no impact on 2026 pricing. An amendment for tumor-only testing on an existing FDA-approved assay is expected imminently. Eric Lefkofsky confirmed the vast majority of data licensing is oncology-focused, primarily from therapy selection. He noted recent wins in neurology, including a multimillion-dollar Alzheimer's disease project, indicating future growth drivers beyond oncology. “the vast majority of our data licensing today is oncology and almost entirely, if not entirely, comes from our therapy selection business.”

How to think about Q1 cash flow being down and the progression of free cash flow through the year? Does FDA approval of XT/XR/XF change the ability to bill separately to MACs?

Jim Roger explained Q1 cash flow was elevated due to timing of payables and bonuses, with significant improvement expected in Q2 from normalization and large insights contracts shifting to quarterly payments. Eric Lefkofsky stated that FDA approvals won't impact how tests are ordered or billed, but are expected to drive ASPs higher by about $500 over 1-2 years. “we would anticipate kind of a significant improvement in Q2, driven by one normalization of those payables, but then two, a number of our large insights contracts that kind of had prepayments or deferred revenue that we're burning down kind of flip over to quarterly payments.”

TEM

Tempus AI (TEM) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Health Care· May 5, 2026

Source: earnings call transcript

Executive summary

Tempus AI Q1 FY26 — Strong Revenue Growth and Increased Full-Year Guidance

Tempus AI delivered a strong first quarter, exceeding expectations with robust revenue growth across both diagnostic and data segments, leading to an upward revision of full-year guidance. The company continues to expand its strategic data collaborations with major pharma partners, leveraging its extensive data assets and AI modeling capabilities. While some areas like hereditary testing experienced temporary slowdowns and MRD volume is managed due to reimbursement, management expressed confidence in sustained growth and improving profitability throughout the year.

Highlights

Total revenue grew 36% year-over-year to $348.1 million.
Data and Applications revenue increased 40.5% year-over-year to $87 million, driven by 44% growth in data licensing and modeling.
Third consecutive quarter of bookings north of $100 million for the data business, with TCV rising.
Full-year 2026 revenue guidance increased to $1.5 billion - $1.6 billion, with adjusted EBITDA guidance of $65 million.
Signed a very large strategic collaboration with Merck and expanded relationship with Gilead.

Concerns

Hereditary testing business slowed down, though expected to return to mid-teens growth in H2 FY26.
Q1 FY26 adjusted EBITDA was negative $3 million, though significant improvement is expected throughout the year.
MRD volume expansion is metered due to reimbursement limitations, with 97% of tests being tumor-informed and personal burdening reimbursement.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 Revenue	$1.5 billion to $1.6 billion high materiality	FY26	High
Full-year 2026 Adjusted EBITDA	$65 million high materiality	FY26	High
Hereditary Business Growth Rate	mid-teens medium materiality	H2 FY26	Medium
Incremental ASP Lift	$500 medium materiality	next 1-2 years	Medium
Top-line Growth Rate	25% high materiality	next 3 years	High
Revenue	$2.5 billion to $3 billion medium materiality	in 3 years	Medium
ASPs	30% higher low materiality	future	Low

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Diagnostics Driven by strength in oncology, particularly solid tumor and liquid biopsies. Hereditary business slowed down but expected to return to mid-teens growth in H2 FY26. Oncology unit growth: 28%MRD volume: performing even better (qualitative)	$261.1 million	35%	—	—
Data and Applications Achieved third straight quarter of bookings north of $100 million, with TCV rising and strong visibility. Data licensing and modeling business insights growth: 44%	$87 million	40.5%	—	—

TEM operating KPIs by quarter

TEM operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2025 Q4 FY25	This call Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
Average selling price (ASP) Diagnostics	~$1,640 And then in response to the ASP question, so ASPs in Q4 were around $1,640. Source: earnings call transcript	~$1,740 I do -- we do believe that ASPs are likely to rise years by virtue back that our current ASP sits at around 1740 or something like that, somewhere in that range, 720. Source: earnings call transcript	—	—
Procedures MRD	4,700 We were simply highlighting the really unbelievable strength of our MRD offering on -- the main vector being we ran 4,700 tests. Source: earnings call transcript	6,500 I mean our MRD assay grew 500%, but it was only 6,500 a test. Source: earnings call transcript	~9,000 Even with that, we are delivering growth rates that have exceeded our expectations, running approximately 6,500 tests in Q1 and approximately 9,000 tests in Q2, growing 38% quarter-over-quarter. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Deals & partnerships

Merck Very large strategic data and modeling collaboration.

New collaboration, similar in magnitude to existing large strategic agreements.

Gilead Expanded relationship, significant step up from historic levels.

Represents a substantial increase in engagement, moving towards a more strategic level.

AstraZeneca Collaboration for building foundation models.

Leveraging Tempus's data for AI model building.

unspecified Building a multimodal model in Alzheimer's disease. multimillion dollar

Represents a recent win in neurology, diversifying data licensing beyond oncology.

Risks & headwinds

Hereditary testing business slowdown Q1 FY26

slowed down a bit

Mitigation:Expected to return to mid-teens growth in H2 FY26 due to lapping extreme growth rates and new product entry (RARE).

MRD reimbursement limitations current

roughly 97% of our tests are tumor informed

Mitigation:Metering volume expansion in coordination with partners; aggressive rollout planned as reimbursement improves.

Elevated cash flow from operations in Q1 Q1 FY26

a little bit elevated in Q1

Mitigation:Expected significant improvement in Q2 driven by normalization of payables and large insights contracts flipping to quarterly payments.

What to watch in Q2 FY26

Hereditary Business Growth Rate

H2 FY26

Current slowed down a bit

Target mid-teens

Why it matters

Verifying the rebound in this segment is crucial for overall diagnostic revenue growth and meeting full-year expectations.

We expect that business to return to mid-teens in the second half of the year.

Find out whether TEM delivers this. Inve re-checks your case every morning.

Q&A highlights

How are discussions with large pharma trending regarding AI and identified data, and what is the outlook for contract renewals and extensions?

Eric Lefkofsky stated that core big data relationships are strong, with a history of renewing agreements at or above historical levels. The company is adding new large names like Merck (strategic collaboration) and expanding existing ones like Gilead. He emphasized the growing trend of pharma building models with Tempus's 500+ petabyte database, leveraging GPUs for R&D programs.

“we've now -- we're adding just some really big new names to that prestigious group. This quarter alone, we added Merck, who signed a very large strategic collaboration with us. We expanded our relationship with Gilead.”

asked by Kallum Titchmarsh · answered by Eric Lefkofsky

2 min read 6 chapters

Detailed narrative

Data & Applications Business Momentum

The Data and Applications segment demonstrated significant strength, growing 40.5% year-over-year to $87 million. This was primarily fueled by a 44% increase in data licensing and modeling business insights. The company achieved its third consecutive quarter of bookings exceeding $100 million, indicating robust demand and strong future visibility for this segment.

Strategic Pharma Collaborations

Tempus AI continues to deepen its relationships with major pharmaceutical companies. Notably, a new large strategic data and modeling collaboration was signed with Merck, and the existing relationship with Gilead was significantly expanded. These deals, alongside ongoing collaborations with AstraZeneca, GSK, and BMS, highlight the increasing adoption of Tempus's de-identified data and AI model-building platform by big pharma for R&D programs.

Diagnostic Segment Performance

The diagnostic revenue reached $261.1 million, marking a 35% year-over-year increase. This growth was largely driven by strong performance in oncology, with unit growth of 28% across solid tumor and liquid biopsies, and even better performance in MRD volumes. While the hereditary business experienced a temporary slowdown, it is anticipated to rebound to mid-teens growth in the second half of FY26.

FDA Approvals and ASP Outlook

The company is actively pursuing further FDA approvals for its main assays. While the XF submission is awaiting feedback with no expected impact on 2026 pricing, an amendment for tumor-only testing on an existing FDA-approved assay is expected imminently. Management anticipates an incremental ASP lift of approximately $500 over the next 1-2 years as more assays achieve FDA approval, building on the current ASP of around $1720-$1740.

MRD Reimbursement and Growth Strategy

The Minimal Residual Disease (MRD) assay showed robust growth, albeit from a smaller base. The company is strategically metering the expansion of its MRD sales force due to current reimbursement limitations, as 97% of these tests are tumor-informed, placing the reimbursement burden on personal.

As reimbursement improves, Tempus plans to more aggressively roll out its MRD offerings, positioning itself as a formidable player in the US market.

Algorithm Integration and Physician Adoption

Tempus highlights a 40% attach rate for its algorithms on solid tumor assays, including tools for homologous recombination deficiency, tumor origin prediction, and immune profiling. These technology-enabled assets are increasingly relied upon by physicians to make data-driven decisions and improve patient care, contributing to the company's differential growth rates compared to competitors.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.