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    TEM
    Earnings call· Jun 2026(Q2 FY26)

    Tempus AI Q2 FY26 earnings call TEM

    Jul 30, 2026 Source

    Executive summary

    Tempus AI Q2 FY26 — Strong Revenue Growth, FDA Approval, and Strategic Acquisition

    Tempus AI delivered an exceptional Q2 FY26, marked by robust revenue growth driven by its Diagnostics and Data & Apps segments, alongside a strategic acquisition of Personalis to bolster its MRD testing capabilities. The company secured FDA approval for xT CDx, anticipating significant ASP uplift, and expanded its data licensing business with major pharma deals. Management raised full-year guidance, projecting continued momentum and a path to positive free cash flow by year-end, while navigating the integration of Personalis and the ramp-up of new product offerings.

    Highlights

    8

    • Total revenues increased 22% to $382.5 million.

    • Data and apps revenues grew 28% year-over-year to $93.2 million, with data licensing and modeling insights up 36%.

    • Received FDA approval for tumor-only xT CDx, expected to uplift ASP by $200, equating to approximately $85 million annually starting 2027.

    • Signed large multiyear data licensing and modeling agreements with BioNTech, Daiichi Sankyo, LevelSet Bio, and Insight Pharmaceuticals, contributing to approximately $200 million in total bookings.

    • Completed a $460 million convertible senior notes offering, saving over $30 million annually in interest expense and enabling positive free cash flow by year-end.

    • Adjusted EBITDA improved by $13.6 million year-over-year to $8 million.

    • Acquired Personalis to accelerate MRD testing commercial adoption, a $20 billion+ market.

    • Increased full-year 2026 revenue guidance to $1.595 billion-$1.605 billion (25% growth) and adjusted EBITDA guidance to $65 million ($72 million improvement over 2025).

    Concerns

    1

    • Slower growth in hereditary cancer testing, up 5% to $107.4 million, due to lapping an abnormally high growth period in Q2 2025.

    Guidance & targets

    10
    CategoryTargetConfidence
    Full-year 2026 Revenue
    $1.595 billion to $1.605 billion
    high materiality
    High
    Full-year 2026 Adjusted EBITDA
    approximately $65 million
    high materiality
    High
    Annual Revenue Uplift
    approximately $85 million
    medium materiality
    High
    Incremental ASP lift
    additional $550
    medium materiality
    High
    Total Revenue Uplift
    approximately $400 million
    high materiality
    High
    Free Cash Flow
    positive
    high materiality
    High
    Adjusted EBITDA and Free Cash Flow
    continued improvement
    medium materiality
    High
    Data business growth rate
    close to 30% range plus or minus
    high materiality
    High
    Hereditary growth rates
    mid-teens growth
    medium materiality
    Medium
    xF ADLT price
    $7,500
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Diagnostics
    Slower growth in hereditary cancer testing was offset by higher growth in CGP testing due to acceleration in the business. Hereditary revenue growth was impacted by lapping an abnormally high growth period in Q2 2025.
    Hereditary revenue: $107.4 millionHereditary growth: 5% YoYCGP testing growth: higher (offsetting hereditary)MRD tests in Q2: approximately 9,000MRD tests in Q1: approximately 6,500MRD QoQ growth: 38%
    		$289.3 million20%——
    Data and Apps
    Strong growth driven by data licensing and modeling business insights.
    Data licensing and modeling business insights growth: 36%
    		$93.2 million28%——

    Operational metrics

    11
    Total Revenues
    $382.5 million22% increase YoY
    Q2 FY26

    First quarter fully integrating Ambry results.

    GAAP Net Income
    $5.6 million
    Q2 FY26
    Adjusted EBITDA
    $8 million$13.6 million year-over-year improvement
    Q2 FY26
    Cash, Cash Equivalents and Marketable Securities
    $820.7 millioncompared to $643.8 million last quarter
    Q2 FY26

    As of June 30, 2026.

    Cash used in operating activities
    negative $7.5 millionsignificantly improved
    Q2 FY26
    Interest Expense Savings
    over $30 million
    Annual

    Resulting from $460 million convertible senior notes offering and repayment of Ares Capital loan.

    MRD Sales Force Coverage
    10%
    Q2 FY26

    Percentage of sales force selling MRD today based on reimbursed indications.

    Solid Tumor Algorithm Attach Rate
    45%up from 40% in Q1
    Q2 FY26

    Broad-based across various algorithms.

    Core Volume Growth (Diagnostics)
    31%accelerated
    Q2 FY26

    Driven by algorithm attach rate and data advantage.

    Guardant ADLT Pricing (comparable)
    $83 or $84
    current

    Cited as comparable for their recent assay approval.

    TCV earmarked for 2026 revenue (Data & Insights)
    $350 million
    FY26

    Prior figure mentioned by analyst, not explicitly confirmed by management as current guidance.

    Industry KPIs

    6
    MetricValueDetails
    FCF conversion ROICPositive free cash flow
    Revenue EPS guidanceFY26 revenue $1.595B-$1.605B (25% growth); FY26 adjusted EBITDA $65M ($72M improvement over 2025).USD, %
    Pricing price realization$200USD
    Diagnostics testing demandCGP testing higher growth; Hereditary cancer testing 5% growth YoY; MRD testing 38% QoQ growth (9,000 tests in Q2).%, tests
    M a contribution synergiesPersonalis acquisition
    Segment organic revenue growthDiagnostics 20% YoY; Data and Apps 28% YoY.%

    Product announcements

    2
    ProductTypeDetails
    tumor-only xT CDxlaunch
    GenomeNextlaunch

    Deals & partnerships

    6
    BioNTechLarge multiyear data licensing and modeling agreement.multiyear

    BioNTech joins AstraZeneca, GlaxoSmithKline, Bristol Myers Squibb, and Merck as a key pharma partner.

    Daiichi SankyoLarge data licensing and modeling agreement.
    LevelSet BioLarge data licensing and modeling agreement.
    Insight PharmaceuticalsLarge data licensing and modeling agreement.
    PersonalisAgreement to acquire Personalis, a minimal residual disease (MRD) testing company.

    Transaction structured as 100% stock with Tempus having option to elect payment in cash capped at 50% of consideration. Intention to finance large portion with debt to minimize shareholder dilution.

    Ares CapitalRepayment of outstanding loan.

    Repaid using proceeds from $460 million convertible senior notes offering.

    Risks & headwinds

    2
    Slower growth in hereditary cancer testingQ2 FY26

    5% YoY growth in Q2 FY26, compared to abnormally high growth in Q2 FY25.

    Mitigation: Offset by higher growth in CGP testing; management aims for mid-teens hereditary growth by year-end.

    Personalis acquisition termination risk due to stock priceNear-term, until deal closes.

    Shares trading below $46 (analyst's observation).

    Mitigation: Management believes Personalis strongly desires the deal to close; Tempus has the option to use cash for up to 50% of the consideration to minimize dilution, and intends to use debt financing.

    What to watch in Q3 FY26

    5

    Personalis ASP improvement

    2027
    CurrentEarly on the ASP curve, with first couple of indications approved.
    TargetContinued improvement as additional indications secure coverage.

    Why it matters

    Improved ASPs are crucial for Personalis' profitability and for Tempus to ramp up MRD sales force without negative margins.

    On ASP, obviously, they've gotten coverage in several indications over the last several quarters. And so there's been improvement on the Personalis front. They have more indications that are coming down the pipeline as well. And so over time⏳, obviously, we would anticipate ASPs to continue to improve as they secure coverage and additional indications.

    Q&A highlights

    7

    Seeking clarity on Personalis' ASP improvement trajectory and how incremental MRD data will enhance Tempus' data offering for biopharma clients.

    Management explained that Personalis' ASPs are expected to improve with additional indications securing coverage, and volumes will increase by expanding the sales force. Eric highlighted that MRD data is becoming crucial for biopharma clients to understand study endpoints and patient recurrence earlier than traditional scans, making it a compelling component of their data offering.

    “Almost every major biopharma client we have that's running large studies is trying to understand the endpoint of those studies... And more and more, you're getting earlier signals from these kind of MRD tests that are showing signs of cancer recurring 6 months or 12 months before a scan.”

    asked by Kallum Titchmarsh · answered by James Rogers, Eric Lefkofsky

    2 min read6 chapters

    Detailed Narrative

    01

    Q2 FY26 Performance Overview

    Tempus reported a strong second quarter with total revenues increasing 22% year-over-year to $382.5 million. This marks the first quarter fully integrating Ambry's results. The Diagnostics business contributed $289.3 million, up 20%, driven by accelerated CGP testing growth offsetting slower hereditary cancer testing. Data and Apps revenue grew 28% to $93.2 million, with data licensing and modeling insights up 36%.

    02

    Strategic FDA Approvals and Pipeline

    The company received FDA approval for tumor-only xT CDx, enabling migration of its solid tumor DNA portfolio to unified ADLT pricing. This is projected to yield an estimated $200 ASP uplift, translating to approximately $85 million annually starting 2027. Furthermore, the liquid biopsy, xF, is currently under FDA review, with an anticipated approval in late 2027, expected to provide an additional $550 incremental ASP lift. The combined impact of xT CDx and xF approvals is projected to generate approximately $400 million in revenue uplift by 2028.

    03

    Advancements in AI and Data Licensing

    Tempus successfully delivered the first version of its foundation model to AstraZeneca, which demonstrated predictive capabilities for patient response in clinical trials. This milestone underscores the company's AI leadership. The data licensing business saw significant expansion with new multiyear agreements signed with BioNTech, Daiichi Sankyo, LevelSet Bio, and Insight Pharmaceuticals, contributing to $200 million in total bookings this quarter. These deals, following Merck last quarter, highlight the increasing instrumental role of Tempus' data and modeling capabilities for pharmaceutical partners.

    04

    Financial Strengthening and Capital Allocation

    Tempus completed a $460 million offering of 0.0% convertible senior notes due 2032, using proceeds to repay an Ares Capital loan. This transaction is expected to save over $30 million annually in interest expense, positioning the company to achieve positive free cash flow by year-end. The company ended the quarter with a strong cash position of $820.7 million, up from $643.8 million last quarter, and significantly improved cash used in operating activities to negative $7.5 million.

    05

    Personalis Acquisition and MRD Market

    Tempus announced the acquisition of Personalis, aiming to accelerate its commercial adoption of minimal residual disease (MRD) testing, a market estimated at over $20 billion. The acquisition is structured as a stock transaction with an option for up to 50% cash, with Tempus intending to finance a large portion with debt to minimize dilution. Despite the acquisition, Tempus expects continued improvement in adjusted EBITDA and free cash flow in 2027. MRD test volumes grew 38% quarter-over-quarter, reaching approximately 9,000 tests in Q2, even with only 10% of the sales force currently selling the product.

    06

    GenomeNext Launch and Rare Disease Outlook

    The launch of GenomeNext, a whole genome sequencing product, has shown promising early results, exceeding initial expectations by 50% in its first month. While currently small in volume, it is not cannibalizing the whole exome business. Management is cautiously optimistic💬 about its contribution to hereditary growth rates, aiming for mid-teens growth by year-end, but notes that the oncology testing and data businesses are currently overperforming.

    AI-generated summary of the company’s earnings call. Not investment advice.