Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the Tempus AI Third Quarter 2025 Financial Results Conference Call. I would now like to turn the conference over to Liz Krutoholow, Vice President, Investor Relations. You may begin.

Thank you. Good afternoon, and welcome to Tempus' Third Quarter 2025 Conference Call. This afternoon, Tempus released results for the quarter ended September 30, 2025. The press release, and overview of the quarter and our latest presentation are available on our IR website. Joining me today from Tempus are Eric Lefkofsky, Founder and CEO of Tempus; and Jim Rogers, CFO. Before we begin, I would like to remind you that during this call, management may make forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. For a discussion of these risks, please refer to our 10-K and other subsequent filings with the SEC. During the call, we will discuss non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. Definitions of these non-GAAP financial measures, along with reconciliations to the most directly comparable GAAP financial measures are included in our earnings release and are available on our IR page. I would now like to turn the call over to Eric.

Thank you. Q3 was a great quarter all around. Our Genomics volume came in super strong with 33% overall growth with Oncology growing at 27% and Hereditary growing at 37%. We expect Hereditary growth to moderate a bit, although we now expect growth to be in the low to mid-20s as opposed to our previous guidance of mid- to high teens. Our genomic growth was across the board. Really all of our assays performed exceptionally well. With MRD reimbursement on track, and our planned regulatory filing of our liquid biopsy xF later this year, we expect additional tailwind in that business, both from a unit perspective and revenue. Our data licensing or Insights business grew 38% in the quarter with an additional $150 million in total contract value, which was a super strong bookings quarter for us across multiple contracts that we highlighted in our letter. This is on top of the multi-hundred million dollar foundation model deal we struck earlier this year. From a bookings perspective, our data licensing business is just performing exceptionally well. The combination of growth in Genomics and growth in our data business allowed us to generate positive adjusted EBITDA for the first time this quarter, which has been a 10-year goal of ours and a key milestone. This was inclusive of several million dollars worth of additional expense from Paige, which is an acquisition we made mid-quarter. Even with that, we generated a positive EBITDA and would have been close to $4 million in adjusted EBITDA without Paige. So the business is doing exactly what we had hoped. We now expect for the year to be slightly positive adjusted EBITDA, and that's even with the additional several million dollars of drag from Paige. Overall, the business is performing well. We're growing at a rapid pace, and we're managing our costs to generate leverage in the business, which is exactly where we want to be. With that, take some questions.

Our first question comes from Ryan MacDonald from Needham.

Congrats on a great quarter. Maybe, Eric, to start just on the Genomics business. Obviously, the Oncology portfolio continuing to perform very well and a great increase in testing volumes there. Can you just talk a little about what you attribute the great strength in the volume growth here? Are we starting to see a broader market and industry shift to more NGS testing that's helping see more patients getting sequenced? Or would you say that you're really starting to see a benefit from the execution changes and sales coverage with the broader portfolio? Just what sort of Tempus-controlled success, if you will, versus broader industry and market tailwinds?

Yes. So at a high level, our success is perhaps slightly different than some others. Our success is predominantly related to the fact that our sales force is more efficient today than it was a year ago. We made significant changes to our sales force when we brought in our MRD portfolio. Any time you make changes to sales forces in this space, it can cause disruptions. We've worked through that. Our sales force is now efficiently trained and performing well, which is contributing to our growth. The second factor is that our technology, which is tightly integrated, allows us to deliver highly contextualized comprehensive results to physicians, is gaining traction as more doctors want results that help them treat patients more effectively. So we're benefiting from those two trends. Broadly, the industry's testing volumes have been healthy as more biomarkers are identified, driving more patients to ensure they are tested. That's a general tailwind for the space. We are not benefiting from one-time benefits, as we have had a comprehensive portfolio for years. Therefore, our unit growth looks healthy and durable.

Our next question comes from Mark Massaro from BTIG.

Congrats on a good quarter. I wanted to ask, Eric, there is a lot of interest in AI and big data, and there's a lot of interest in MRD testing. Could you provide an update on how you plan to go to market in the clinic with MRD, especially considering you have a partner in Personalis? How trained is your sales team, and how quickly do you plan to leverage your large sales team as reimbursement comes in over the coming weeks or months against other significant labs in the space?

Yes. So at a high level, when you have 27% unit growth, we're operating at a unit growth which is quite healthy. We expect sustained long-term growth at about 25% over the next 3 years. We want to ensure consistent growth rather than large spikes followed by declines. I wouldn’t expect us to drastically increase throughput upon receiving MRD reimbursement; rather, we plan to gradually scale that up as reimbursement makes it more feasible. We have a comprehensive portfolio of both naive products and informed products spanning various cancers and intend to leverage our trained sales force accordingly. We will not make any unnatural investments in sales force expansions, but we see MRD as a significant tailwind over the next few years.

Our next question comes from Dan Brennan from TD Cowen.

Congrats on the quarter. Regarding the new contracts, the company hasn't really been disclosing new bookings. You had the Pathos deal earlier in the year, but can you walk us through the $150 million bookings? Why disclose this, and what does the backlog look like now compared to expectations for this year or next year?

Yes. We try to provide some color in previous quarters regarding the size of data deals. This isn't the first time we've called out customer levels or dollar levels. If we think something bundles together worth highlighting, we will call it out. However, we don't want to create noise by disclosing every single contract; these bookings typically span multiple years. Our total contract value remains strong, and we will disclose annual figures at the end of the year, which will reflect positive growth. Our data licensing business is performing well, and our contracts are growing. The differentiation in our data product attracts more clients, indicating strong demand.

Our next question comes from Casey Woodring from JPMorgan.

Congrats on another strong quarter in core Oncology volumes. Given recent competitor reports of strong liquid therapy selection volumes, are you seeing a corresponding increase in xF and a market shift towards liquid? Additionally, can you talk about the potential upside to the Medicare list price for xF and xR post-FDA approval?

Tempus is unique in that we're considered strong across the entire continuum— strong in Hereditary profiling, therapy selection, and MRD monitoring. We had good growth in solid tumor assays, and liquid growth has been solid as well, without an observable seismic shift. We are likely to see more liquid testing with studies like SERENA-6 but currently don’t observe significant shifts. Regarding reimbursement, our xT CDx faced migration issues, with plans to transition major portions over to FDA approved or ADLT versions throughout 2026. We're working on submissions this year, and while we can’t disclose exact reimbursement levels at the moment, we expect ADLT will offer upside from current figures.

From a reimbursement perspective, the long-term tailwinds remain strong. xT CDx will be migrated over to the FDA-approved version. Currently, total reimbursement averages $1,600 for the third quarter, with a modest $20 increase sequentially— still below parity with peers. Upcoming regulatory filings will help close that gap.

Our next question comes from Doug Schenkel from Wolfe Research.

We have a question about Ambry. Ambry continues to perform well and ahead of expectations according to last quarter's growth comprised of share gains and organic expansion. Can you clarify this quarter's mix? Should we therefore consider industry growth in the low double-digit range reasonable?

About 50% of the gain is again from share gains. We expect moderation in Q4, estimating low to mid-20s growth. We cannot speculate on competitors' growth rates, but Ambry remains strong by acquiring new customers and expanding shares with existing ones.

The market is growing stronger than anticipated. While the industry may appear to have flat growth prospects, we're now witnessing growth in low double digits. Our Hereditary business is expected to exceed this with low to mid-20s growth, reflecting our gold standard assays in the market.

ASP trends have been stable, with a slight decline year-over-year due to renegotiation by one of our larger payers. The rare business, while smaller, carries a higher ASP and will continue to scale, influencing ASPs positively.

There are few rare companies. As we grow, we expect to achieve substantial gains in that area over the next 12 to 18 months.

Our next question comes from Michael Ryskin from Bank of America.

Following up on Ambry, regarding your year guidance raise from the Q3 beat, your comments suggest an outlook for Ambry's growth from mid to high teens towards low to mid-20s adding revenue for the year. But is there anything offsetting this in your other business units?

Q3 growth for Ambry was about 32%, predicting sequential growth moderation in Q4. The adjusted growth expectation is not reflected in Q4 due to concerns about the overall performance.

While Ambry is outperforming, we take a cautious approach towards guidance. We prioritize long-term sustainable growth over short-term spikes. The health of our core business growing at a strong rate also mitigates the need to raise expectations artificially.

Our next question comes from Subbu Nambi from Guggenheim.

Can you share updates on your foundation model work with AstraZeneca and Pathos? What milestones should we look out for and what benefits have you observed from the Paige acquisition regarding the foundation model?

The foundation model just finished its pretraining phase successfully. We are entering the large compute phase over the next months, followed by post-training later this year, expecting the first model versions in Q1. The team is pleased with the progress without any red flags. We're enhancing our GPU capacity and positioning Tempus as a tech innovator. Paige's digital pathology work integrates well, providing insights to our foundation model efforts as we leverage combined datasets actively.

Our next question comes from David Westenberg from Piper Sandler.

Looking at the long-term perspective on the reimbursement system, do you believe healthcare will start to reimburse for data interpretation and analysis? Is there a distinction remaining between what you do in the wet lab versus algorithm-driven services?

When considering our long-term growth target of 25%, we focused primarily on growth in our diagnostic and data businesses, which are predictable with good margins. However, forecasting revenues from algorithms and dry lab work is challenging due to poor reimbursement structures. We believe reimbursement will have to evolve to manage healthcare costs effectively. Tempus is well-positioned with many FDA-approved products poised for rapid distribution once reimbursement models change, which could lead to substantial revenue growth.

Our next question comes from Mark Schappel from Loop Capital Markets.

Eric, can you elaborate on how Paige AI will complement or integrate into your genomic diagnostics business?

Paige AI will integrate seamlessly into our diagnostics work. One example is that sometimes sequencing doesn’t yield results, but through digital pathology algorithms, we can provide insights even when NGS fails. In critical scenarios where results are needed quickly, we can enable predictions rapidly through integrated methodologies. We aim for a multimodal approach to leverage all data sources for optimal patient insights, as demonstrated by our extensive investments in various medical data domains.

In interest of time, our final question comes from Dan Arias from Stifel.

Regarding MRD, while you have been cautious about large studies, are you investing in R&D? Is there data projected for next year linked to MRD? What upcoming updates should we expect from Tempus amid incoming high-sensitivity assays?

We continuously put out updates through publications and presentations, reflecting our active engagement. In terms of larger studies, we are running non-small cell lung cancer and colorectal cancer studies, which will yield valuable data next year. We aim to demonstrate the effectiveness of our tumor-naive assay as we progress. As for tumor-informed data, I will leave that to Personalis for their updates, but they are also investing significantly.

Great. Thank you. Thanks all for joining us today. We look forward to updating you again next quarter.

This concludes today's conference call. You may now disconnect.