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Highlights:
- Tempus reports 33% YoY revenue growth to $180.9M, driven by strong data services and genomics unit performance.
- The company announces the acquisition of Ambry Genetics for $600M, expected to add over $40M in EBITDA.
- Full-year 2024 revenue guidance of ~$700M maintained despite net loss and rising operating expenses.
Tempus, a leader in healthcare technology and data-driven solutions, reported its financial results for Q3 2024, showcasing robust growth in key areas, despite facing challenges related to increasing operating expenses and a higher net loss. The company also made a significant strategic move by acquiring Ambry Genetics, a leading genetics testing company, for $600 million, which will enhance Tempus' position in hereditary cancer screening and expand its capabilities into new disease categories.
Tempus’ Q3 2024 revenue increased by 33% year-over-year (YoY), totaling $180.9 million. The growth was driven by a strong performance in its data services business, which saw a remarkable 64.4% YoY increase in revenue. This rapid expansion in data services reflects the growing demand for Tempus' data analytics solutions, particularly in the medical field, where big data is playing an increasingly vital role in patient care and treatment optimization.
The genomics unit also contributed to the strong revenue growth, with a 23.9% increase in revenue YoY. However, while the genomics business grew substantially, the company faced a slight decline in its genomics gross margin, which decreased from 51.9% in Q3 2023 to 49.3% in the most recent quarter. Despite this, the increase in overall revenue more than offset the margin decline, reflecting the broader success of Tempus' business.
One of the most significant developments for Tempus during Q3 was the announcement of its acquisition of Ambry Genetics for $600 million. The deal was structured as $375 million in cash and $225 million in Tempus stock. Ambry Genetics, a well-established leader in genetic testing, is expected to generate over $300 million in revenue and contribute more than $40 million in EBITDA in 2024. This acquisition marks a key step for Tempus in expanding its testing capabilities, especially in the hereditary cancer screening market.
By acquiring Ambry, Tempus will be able to offer a more comprehensive suite of diagnostic tools and services, positioning itself as a more prominent player in the rapidly expanding field of genetics and personalized medicine. This strategic move also aligns with Tempus' focus on expanding into new disease categories, potentially driving additional growth in the future.
Despite the positive revenue growth and strategic acquisition, Tempus posted a net loss of $75.8 million for Q3 2024, widening from a net loss of $53.4 million in Q3 2023. This increase in losses was partly due to $22.2 million in stock-based compensation and rising operating expenses, which were up 17.2% YoY. Additionally, the company took on approximately $300 million in debt to finance the Ambry acquisition, which will add to its interest obligations in the coming quarters.
On a positive note, Tempus reported an adjusted EBITDA improvement of $14.4 million YoY, signaling stronger operational efficiencies despite the loss. The company’s data services business achieved a gross margin of 78.3%, a significant improvement from 60.5% in the prior year, underscoring the profitability of its data services offerings.
For the full year, Tempus maintained its 2024 revenue guidance at approximately $700 million, reflecting confidence in its ability to continue growing despite the current financial challenges.
