Earnings Call Transcript - TEM Q2 2025

Operator, Operator

Thank you for joining us for Tempus AI's Second Quarter 2025 Financial Results Conference Call. I will now hand it over to Liz Krutoholow, Vice President of Investor Relations. Please go ahead.

Elizabeth Krutoholow, VP of Investor Relations

Thank you. Good morning, and welcome to Tempus' Second Quarter 2025 Conference Call. This morning, Tempus released results for the quarter ended June 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, which has been furnished to the SEC and is available on our website at investors.tempus.com. I would now like to turn the call over to Eric.

Eric P. Lefkofsky, Founder and CEO

Good morning, everyone. So I'll just provide a quick summary. Q2 was a fantastic quarter. As I mentioned in my letter, the company is hitting its stride as we approach our tenth anniversary, which is great. Revenue increased 89.6% to $314.6 million. Our Genomics revenue increased 115% to $241.8 million on accelerating volume growth in oncology, which increased from about 20% last quarter to 26% this quarter, which was great to see, and our hereditary testing, which was 32% in the quarter. Data and Services revenue increased 35.7% to roughly $73 million, led by Insights, which is our data licensing, which grew almost 41%. Quarterly gross profit was $195 million, roughly 160% increase. And as the business is growing, we continue to be disciplined about the investments we're making. As such, we saw another sequential improvement in adjusted EBITDA, which went from roughly negative $16 million last quarter to a negative $5.6 million this quarter. So we're approaching adjusted EBITDA breakeven. We increased our full year 2025 revenue guidance to $1.26 billion and maintained our adjusted EBITDA forecast of about $5 million for the year, which is roughly a $110 million improvement over last year. We also improved the balance sheet. We issued $750 million of 0.75% convertible notes, which will drive down interest expense and produce significant cash savings. This, along with the fact that our cash and marketable securities finished the quarter at about $290 million, and net of that, paying down some of the debt, as I mentioned, we added about $375 million additional to our balance sheet, leaving it in a really good spot as we approach Q3. So all in, the business is right where we want it to be, and we're making great progress. And with that, happy to take questions.

Operator, Operator

Our first question comes from the line of Daniel Brennan with TD Cowen.

Daniel Brennan, Analyst

Congrats on the quarter. Obviously, ask a multiparter upfront. Maybe first, Eric, can you just elaborate on the strong core Genomic volumes in the quarter? I know in your script, you kind of talked about sales force efficiencies. Just any color where this strength came from, tissue versus blood, broader market share versus share gains? Next, Ambry, really strong quarter there. I know in the script, you talked about volume outlook and the deal model could be too low. Just kind of what are you seeing there? And I know you also talked about the rare kind of genetic disease for kids kind of is that contributing today? And then finally, insights, nice quarter there, 40% growth. Any color on how Pathos is doing? I know you called it out in the written script, that it is contributing. Just wondering how that's going and if there's any color on bookings, that would be terrific, too.

Eric P. Lefkofsky, Founder and CEO

There's a lot to discuss. I'll begin, and Jim can add his thoughts later. We experienced significant sequential volume growth across our oncology testing offerings, which was widespread and not limited to solid or liquid tests. It was quite remarkable. This performance is largely due to the initiatives we implemented, such as enhancing our sales force efficiency, realigning territories, and upgrading our technology. We saw these efforts pay off in the second quarter. The volume growth has been impressive, and it aligns with our expectations. When initiatives start producing results, it gives us confidence in their sustainability. We feel optimistic about our oncology business. The volumes in hereditary testing have exceeded our expectations and show no immediate signs of a slowdown. This growth stems from multiple factors, including a reduction in market share from some historic competitors, allowing us to capture that volume, alongside overall favorable conditions in the market. When we acquired Ambry, we anticipated that this market would expand significantly over time, despite some views that it was reaching maturity. We believe that's inaccurate. There are far more individuals at risk of cancer or disease than those already diagnosed. Therefore, it wouldn’t surprise me if hereditary sequencing volumes are much higher than those related to cancer or any single disease. We're also making substantial strides in the rare and pediatric testing space, where we rank as the second-largest player. While this segment is small, it is growing rapidly, and I expect this business to continue expanding. Overall, our testing business demonstrated strong performance across all areas. Regarding our data business, it's also thriving; we recently signed a significant deal to establish a foundation model, which is exciting. We have good visibility for the remainder of the year, which is where we want to be. We acknowledge that our growth rate won't reach 80% as we previously communicated, aiming for around 25% to 30%. This quarter, we surpassed that target, which is encouraging. In summary, looking at the two main business drivers—sequencing diagnostics and data—we are in a robust position.

Operator, Operator

Next question comes from the line of Yuko Oku with Morgan Stanley.

Yuko Oku, Analyst

Given the significant progress you already made in the first half migrating xT volumes to CDx in addition to ASP drag from xM ramp. How should we think about cadence of ASP as we think about the path towards the goal of migrating 40% of xT volume to CDx exiting the year? And then also although you have a whole transcriptome RNA panel, some of your peers are adding additional features on their tissue therapy selection test, such as RNA and epigenomic markers. Is this something that you might look to in the future?

James Rogers, CFO

Yes. So I'll take the first question on kind of ASP and then Eric can speak to kind of future products. So on ASPs, as we mentioned in the letter, we did see an increase in the volume of xT CDx. It was about 20% of our xT volume in Q1 and grew about 28% in Q2. And then as you mentioned, we're kind of targeting to get to 40% by the end of the year. In Q2, we did see a mix shift to some of our lower dollar or lower reimbursement assays, both xM, which we don't have reimbursement for today and then also xG. We would think over the balance of the year as we kind of approach 40%, you would see kind of incremental gains to overall ASPs, and on the xM side, that will continue to grow as well. But we are still gating that volume. So we're not anticipating xM kind of offsetting all of the gains that we have. But we won't see kind of a significant step-up as what we saw in Q1, but we would anticipate kind of small incremental gains over the balance of the year.

Eric P. Lefkofsky, Founder and CEO

And in terms of RNA sequencing, we've been doing whole transcriptome sequencing since the beginning. It's just kind of the way we started when we opened up our lab. We were always doing targeted panel sequencing on the Genomic side, but doing whole transcriptome on the RNA side. And really, we're pioneers in the space of running whole transcriptome sequencing from FFP slides. Our panel is just super comprehensive, not only do we basically report on expression levels on the entire transcriptome, we also do TCR profiling through that assay, BCR profiling, HLA typing. We have a whole body of algorithms that are also produced from that. So at the end of the day, it's just a really comprehensive panel. So I think likely the advancements we'll make will be more on the DNA side going forward as we migrate from targeted panel sequencing to whole genome sequencing over time. We expect if you kind of fast forward 5 or 10 years, my guess is targeted panels will go away largely and people are just doing whole genome and whole transcriptome and layering in other markers like, for example, epigenomic methylation markers throughout those assays.

Operator, Operator

Next question comes from the line of Rachel Vatnsdal with JPMorgan.

Rachel Vatnsdal, Analyst

Perfect. So I just wanted to dig into the trial and insights businesses a little bit. First up, can you just talk about how bookings trended in the quarter for insights and trials? And are you seeing any weakness from pharma due to some of the headlines related to MFN and tariffs or even biotech customers due to the funding constraints? And then on Pathos, just if you could give us some color there. It looks like that was around $16 million of revenue in the quarter. How should we think about that trending for the back half of the year?

Eric P. Lefkofsky, Founder and CEO

Yes. I can start by discussing our bookings for the quarter. They were exceptionally strong, particularly because the AstraZeneca Pathos deal occurred in April. This resulted in a substantial number of bookings in Q2. Our total contract value, which we report annually, is not significant due to that deal. Looking ahead to the latter half of the year, we're in a favorable position with our total contract value ahead of expectations, reflecting our ambitious goals. The clinical trials booking business is not a major contributor to our overall bookings at this time. Our clinical trial matching service, for instance, helps with only a small number of patients enrolled in U.S. trials. While this business may grow in the future, it currently remains small but is crucial for our relationships with biotech, pharma, and healthcare providers. We recently disclosed connections to over 4,500 providers and institutions nationwide, which is impressive. These connections allow us to access and analyze data, generating valuable insights and diagnostics. We're increasingly able to leverage healthcare data from electronic health records to identify suitable clinical trial candidates or highlight unmet care needs. This reinforces our important role in the industry. While the clinical trials and next algorithms businesses are in a good position, they are still relatively small in terms of revenue and bookings.

James Rogers, CFO

Yes. And then on the AZ Pathos deal in terms of kind of contribution in the back half of the year, we obviously didn't get a full quarter's worth of revenue in Q2 given the timing that we signed that deal. So there will be a sequential kind of slight step up, but you would anticipate kind of similar levels in the back half on a quarterly basis.

Operator, Operator

Next question comes from the line of Michael Ryskin with Bank of America.

Michael Ryskin, Analyst

Following up on that last point, you've made significant investments in partnerships with pharmaceutical companies over the past few years. I'm interested in how the future pipeline looks for that, particularly in relation to the data and insights sector. What does the outlook appear to be for major pharmaceutical companies and their willingness to continue investing in data, especially with the increasing number of Genomics vendors entering the market? Additionally, I would like to ask about your focus on profitability and EBITDA improvements this quarter. Can you discuss your investment priorities moving forward and how you plan to allocate resources across different areas of the business?

Eric P. Lefkofsky, Founder and CEO

Yes. I’ll begin, and then Jim can add to this. Regarding our pipeline, it remains exceptionally strong. As we've mentioned before, the only significant market challenge we faced was several years ago when biotech funding largely dried up, leading to the loss of many customers who, in 2022, had abundant cash due to going public. However, we’ve moved past that, and I hope that as market conditions improve, some biotech companies may raise capital again, creating new potential data clients. Concerning big pharma, we maintain a very healthy pipeline of major deals that we anticipate closing in the future. Despite potential cuts to R&D budgets or pressures, data, AI, and technology represent such a small fraction of those substantial budgets that our sector is unlikely to be eliminated from spending considerations. While they might not invest, they would have refrained from doing so even in prosperous times. If they decide to invest in AI or data with a $9 billion R&D budget, a $100 million investment spread over several years won’t be a concern for them. We have not experienced any competitive pressure in our space. When we do lose deals, it’s typically because a company chooses not to proceed rather than due to another competitor with a similar product. Though there are strong competitors in the diagnostic field who effectively sequence patients, we do not encounter the same level of competition in the data and AI sector. This situation has not shifted recently. As for investments, I’ll start and Jim can add his thoughts. This is a question we need to consider carefully. Approaching our tenth anniversary, it is vital for us to grow rapidly while still generating operating leverage and reaching adjusted EBITDA breakeven. I take great pride in our ability to grow at a rate exceeding 30% while still achieving quarter-over-quarter improvement, unlike many others who may not grow as quickly and still struggle with profitability without signs of recovery. We’re effectively growing while being disciplined, and I expect us to maintain this discipline until we reach adjusted EBITDA and cash flow positivity. We are not merely harvesting profits; we are still in a phase of investing heavily in growth, and I foresee continued significant investments in that area over the coming years due to the industry's potential. As frontrunners in integrating AI into diagnostics and healthcare broadly, we do not want to compromise our long-term opportunities for short-term gains.

James Rogers, CFO

Yes. And I would just add that we're not doing anything unnatural to get this leverage in the business. We are making significant investments both on the Genomics business and on the data side and on the AI side. We think the level of investment that we're making today is appropriate. We wouldn't accelerate it. Obviously, seeing the leverage that we're getting out of the business, but we're certainly not starving the business to kind of show this improvement.

Operator, Operator

Next question comes from the line of Ryan MacDonald with Needham & Company.

Ryan MacDonald, Analyst

Eric and Jim, congratulations on the great quarter. I have a couple of questions, one about the data business and one about Genomics. On the data side, it's exciting to hear that you're starting to build the foundational model and conducting training. I'm curious about the additional demand you're experiencing from other partners looking to develop something similar. You're projecting the first version to be ready by early '26, but with the rapid pace of AI investment, can other partners wait for the proof of concept to be released in early '26? Regarding the Genomics side, it seems that the MRD portfolio is well-received in the industry. When can we expect to see a significant breakthrough with reimbursement from MolDx, and will that be in the second half of '25 or in '26?

Eric P. Lefkofsky, Founder and CEO

Yes, I can start. That's a significant question that we're also considering. We're in deep discussions with several parties interested in developing models similar to what AstraZeneca and Pathos are working on. However, we haven't made any announcements yet. One of the key questions we have for that group is whether they can afford to remain inactive in a landscape where these models could be transformative not only for their R&D portfolios but also for the drugs they have on the market. This is an aspect that seems to be overlooked. We touched on it briefly in our letter. We anticipate that this model will utilize a vast amount of data. We recently announced that we possess over 350 petabytes of connected clinical molecular data, which is a massive repository. Essentially, you’re performing computations for months on a cluster of over 1,000 H200s, which signifies substantial capacity. We are processing hundreds of billions of tokens, enabling us to identify associations that would have been impossible without such extensive computation. These associations may reveal insights such as when a patient has a specific mutation; although standard care might suggest drugs X, Y, or Z, typically half the population does not respond to these treatments. Within that group, there are varying degrees of response, with some patients being super responders and others not responding at all. Currently, treatment approaches are quite rudimentary; if I have a mutation or a biomarker, I might receive a drug approval and get treated regardless of individual response. AI and these foundational models should provide insights to both physicians and patients on who is likely to respond or not, which I believe will fundamentally alter treatment practices and probably will happen quicker than clinical guidelines can catch up, as those guidelines are structured for human considerations, not AI. I anticipate that AI will cause significant disruptions in the industry, and with any disruption, one must consider whether they want to be a disruptor or risk being disrupted. It’s encouraging to see AstraZeneca taking a leading role in this area, and I expect others to follow, ultimately seeing wide adoption. I can't envision a future where organizations decide they don't need that kind of data and stick solely to traditional methods. In the long run, I believe many will develop or adopt similar models and shift substantial investment from traditional chemistry and biology to data and AI, which I expect will benefit us significantly. However, we lack visibility on the timing of this transition; it could happen in one quarter or take longer, and we don't have clarity on that. What we do see is that our current business is performing well due to past agreements, allowing us to grow without needing new deals in the immediate future. Regarding MRD, I’ll hand it over to Jim, who can discuss the volumes, while I focus on the broader MRD portfolio we have, which is quite diverse, covering both tumor-naive and tumor-informed offerings across various disease areas such as breast cancer, lung cancer, and CRC. We have a wide range of assays in this exciting and growing market. However, we are experiencing volume increases pending reimbursement, and Jim can provide more context on that.

James Rogers, CFO

Yes. So we've previously disclosed that we anticipate getting reimbursement by the end of 2025. So no changes on our assay. Obviously, Personalis has publicly disclosed kind of their timing as well. So built into the guide is not a meaningful uptick of MRD revenue for '25. We would anticipate that occurring more in '26.

Operator, Operator

Next question comes from the line of Dan Arias with Stifel.

Daniel Arias, Analyst

Jim, on data, can you just maybe orient us on expectations for the back half year. Solid growth, obviously, in the quarter, but it is sequentially ticking down slightly out of the end of last year, and the comp steps up quite a bit in 3Q and 4Q; 3Q is actually a pretty stiff compare. So where do you think growth lands in the back half of the year? Is 30-plus still kind of okay to model?

James Rogers, CFO

For the year, we've discussed around 30% growth in the data business, possibly slightly higher. Typically, Q4 is our largest revenue quarter, and we usually see a decline in Q1 followed by gradual improvement throughout the year. As Eric mentioned, we don’t expect the business to grow at 40% indefinitely. We anticipate it stabilizing around or just above 30% for the year.

Daniel Arias, Analyst

Okay. So just to be clear, that's like a 20% growth rate for the next two quarters or so; you're basically kind of halving where you are today?

James Rogers, CFO

It will grow slightly. It will grow faster than that. I'm saying it's not going to be 40%.

Eric P. Lefkofsky, Founder and CEO

We don't want to provide guidance by business unit on a quarterly basis going forward. However, the data business is performing well.

Operator, Operator

Next question comes from the line of Mark Massaro with BTIG.

Mark Massaro, Analyst

Congrats on the good quarter. I wanted to ask a question about your liquid biopsy business. I recognize that xT and tissue is the majority of the volume, but there was a large company in the space earlier this year that put out some compelling data around the possibility of increasing time points in liquid. So my question is on your xF franchise. What are you seeing in terms of demand as far as time points go? And how do you believe you're positioned competitively recognizing that there is another player that's pretty large in the space? But how do you think that you're positioned to compete directly against them?

Eric P. Lefkofsky, Founder and CEO

Yes. I mean, so at a super high level, obviously, our growth rate in liquid has been dramatically faster than the rest of the market because we're at real scale. I think we've disclosed historically it represents about one-third of our volume, give or take or something like that; yes, 25% to 30%. So it's a significant component of our volume, and we've grown much faster than the market. So net-net, that franchise from a therapy selection perspective is in a really strong spot based on historic performance. We have an assay that we believe is completely competitive with others in the market in terms of size and breadth and so on and so forth. The kind of multiple time point treatment response monitoring space that is certainly emerging is one that we, too, are looking at. We have a portfolio across not just measuring minimal residual disease but also looking at treatment response monitoring. And over time, we would suspect that this will be a bigger part of the market, but it also requires reimbursement. So you're kind of in the same boat with PRM that we're in with MRD, which is until you have payers paying for it, you have to gate volume. Otherwise, you're just going to run a bunch of tests and not generate any revenue. We have been more disciplined than that. I think over time, these will produce lots of additional tailwinds to our unit volume, but they require reimbursement. Right now, they're small, but we have a super competitive product set.

Mark Massaro, Analyst

Okay. And then my second one is just on Ambry. Certainly, a lot stronger than we were modeling. I think you alluded to other players in the space, either exiting or perhaps just not having the same level of focus in the past. I'm curious, did you guys make any investments into your commercial team in Q2 or prior to that? Because I'm just trying to get a sense for some of the puts and takes to explain the strong growth in the quarter.

Eric P. Lefkofsky, Founder and CEO

The growth can be seen as evenly divided between the market share we are gaining from competitors who are struggling and the progress we are making independently, thanks to having an excellent product. We are reaping the benefits of years of investment in building a top-tier hereditary platform that is recognized as the gold standard by a large portion of the market. Increasingly, major systems are transitioning to Ambry because it is regarded as the best in the field, and there is a desire for everything that comes along with it, including fast turnaround times, exceptional error rates, advanced technology, thorough analysis, and a quality experience. It is a truly outstanding product. Additionally, there have been significant investments in rare diseases and pediatrics. We are very optimistic about the growth of that product offering, which is still relatively small, but I believe it will become a major contributor in the coming years. The foundation of the business and the growth seems robust and sustainable. However, we will remain cautious and not commit to guaranteeing a 30% growth rate for the next five years; we will continue to adopt a conservative approach until we can observe how these factors unfold.

Operator, Operator

Next question comes from the line of Andrew Brackmann with William Blair.

Andrew Brackmann, Analyst

Tempus has been active on the business development front this year. It seems like more and more transactions or partnerships are happening in the space. Products are finding better homes. So for you guys, how should we think about your appetite to continue to do acquisitions or partnerships over, call it, the near to intermediate term?

Eric P. Lefkofsky, Founder and CEO

Yes. I mean, so I think we have historically been opportunistic but not overly acquisitive. We try to bring the same discipline to the companies we look at whether it's from a business development or corporate development perspective as we've been in terms of running the business. We don't want to derail all of the good organic momentum we have. We're not interested in like taking a turn and going left after we've been going straight for a long time. I would suspect we'll continue to do that. There are certainly some companies out there that have interesting products or interesting teams or interesting data sets that we look at, whether it's in our applications business, whether it's in our data business or in our diagnostics business. But we continue to be measured and disciplined. If you look at our last six or seven years in the companies we've acquired, my guess is we'll take a similar approach generally going forward. The market is changing pretty dynamically. We're also mindful of as these chess pieces move around; we don't want to find ourselves in a worse position than we otherwise be in.

Operator, Operator

Next question comes from the line of Doug Schenkel with Wolfe Research.

Douglas Schenkel, Analyst

Just a couple of cleanups. Perhaps a follow-up to Andrew's question. Is there a good rule of thumb for how to approach partnerships versus organic growth? How much of it is focused on technology and how much on ROI? It would be helpful to get more specifics on your thought process regarding this. My second question is another follow-up on MRD. Recognizing that this will be a larger part of the story as we move into next year, I am curious about how significant MRD will be as a percentage of oncology volumes in the coming years and how that will influence the gross margin trajectory over time.

Eric P. Lefkofsky, Founder and CEO

I will begin, and Jim can add later. We are not aiming to acquire a company unless we have a clear plan to achieve positive adjusted EBITDA. We want to avoid any acquisition that would substantially hinder our progress, where we would have to backtrack significantly. Our approach is that if we choose to purchase something, we want to ensure it aligns with our organic growth strategies. While it is not impossible to deviate, we generally maintain this perspective. Furthermore, we are quite confident in our current diagnostic portfolio. We believe we have a highly comprehensive program that covers hereditary factors, solid and liquid treatment selection, minimal residual disease monitoring, and response tracking. We feel we have a broad array of offerings, although we might consider additional investments in diagnostics in the future. Currently, we are in a strong position. Some areas we might explore include data or application businesses, but again, we are not looking to make any moves that would significantly alter our operational plans. You can expect us to be careful and disciplined in our acquisitions; we aim for them to be synergistic, filling strategic gaps within the company without leading to major setbacks.

James Rogers, CFO

I would just add on that front. A lot of the companies that we historically have looked at were investments that we would have made internally. And so they have an asset that is obviously additive to what we're building here at Tempus. A lot of those are kind of plug-and-play technology companies that we've looked at.

Eric P. Lefkofsky, Founder and CEO

In general, I believe it's important to highlight that AI is set to cause significant disruption in our industry. We need to carefully consider what our environment will look like with large language models and generative AI driving remarkable changes. While we can share our current strategy, we must remain flexible to adapt as the market evolves. I want to ensure there's clarity around our intentions without being held to specific statements, as we have a plan but are adept at adjusting based on market insights. Regarding MRD, we have confidence in our portfolio for both naive and informed MRD. While it remains a growing area with significant potential, it currently represents a minor portion of our business due to a lack of reimbursement, which limits our ability to scale it. We anticipate that once reimbursement is secured, we'll increase our investments in it for 2026 and 2027, and expect it to contribute positively to our unit growth. At this moment, we are fortunate to see substantial growth without this aspect. Our strategy for data growth aligns with our approach to genomics and ASP; as our business is growing rapidly and generating significant operating leverage with high gross margins, we do not feel rushed to quickly increase our ASP or unit growth. We're experiencing strong performance, and as noted in my letter, our focus is on sustaining this momentum over the next several years. Our management team's priority is to develop and market products that will consistently grow over extended periods. When we encounter additional favorable circumstances, we will aim to be measured in our approach to scaling and launching these offerings, adhering to our disciplined practices.

James Rogers, CFO

I would just add from a margin perspective with the kind of launch of MRD. Obviously, we're gaining volumes today given we don't have reimbursement. As we do get reimbursement to the extent there's any margin impact, we would be mindful of that to continue in the second half than we are in terms of profitability. The same kind of discipline, as Eric described that we have today, will continue is that even once we have reimbursement to maintain margins.

Eric P. Lefkofsky, Founder and CEO

Yes. Just to add some color, we're in a great spot, right? We have a business that has lots of growth drivers. We have a business that has lots of little additional pockets of potential future tailwind or accelerants in the future, which is amazing, right? We have a data business that has a lot going on that could be catalytic. We have an apps business that has lots going on that could be catalytic. We've got MRD that could be catalytic. We have other products coming to market that could be catalytic, entering new areas in terms of rare and peds that could be catalytic. There's like many, many things here that certainly over time, should drive and propel our growth rate. But again, I would much rather have a company that grows at 25% for a decade than one that grows at 50% this year and 10% next year. We really want long-term sustained growth. As we think about all the amazing things happening here, we think about layering them in a way that produces that sustainable growth.

Operator, Operator

Next question comes from Subbu Nambi with Guggenheim Securities.

Subbu Nambi, Analyst

One is on the recently published paper that showed an AI algorithm that was developed to better stratify diabetes risk for patients with HbA1c levels. Could you talk about the development of this algo and any expectation as to when and where could you commercially offer it? Along those lines, as you think about the possibility of moving your Insights business into other areas than cancer, how should we think about it longer term?

Eric P. Lefkofsky, Founder and CEO

So really quickly with all of our algorithms. We have a very broad portfolio of algorithms. I think as we mentioned, we don't talk about it a lot for a whole bunch of reasons. But as you can see from this quarter's letter, we're a part of something like 2,000 publications and posters and papers and on and on. We have very, very deep scientific and mathematical efforts. We have a very large product and engineering teams, very large number of PhDs and MDs. It's like over 1,000 technical people here working every day. These are large teams, and we work on lots of algorithms and these things get published and they enter market. The challenge with all of our algorithms is we suffer most of them is that we suffer at the present moment from a fundamental flaw in the U.S. healthcare system. Not blaming anyone, but it is a fundamental flaw, which is we don't have a mechanism today as a system to reimburse for AI or algorithms. We have mechanisms to reimburse for kind of wet lab work. You've got chemistry, you've got biology, I can pay for it. If you have an AI insight, it's much harder. The system is wrestling with that right now. I suspect over time they will find a way to pay for these AI and data products, in particular, algorithms because they can do amazing things. Once in a while you see pockets where it does get paid for. For example, we've discussed historically that it was really nice to see Medicare, in particular, CMS paying for our FDA-approved algorithms that sit on top of electrocardiograms, of which we now have two: we have atrial fibrillation approved and low ejection fraction, and those get reimbursed at a stated rate of about $120 per algorithm. So that's great. We suspect over time, hundreds of these things will be paid for as they should be because not only do they produce unbelievable patient benefit, but they also produce unbelievable economic benefit. You can pay for lots of tests at $50 or $100. If they save a $100,000 heart attack or a $200,000 stroke, it doesn't take a lot to be really accretive to the overall healthcare system. Until they get paid for, these things are all going to be relatively nascent in terms of our overall financials, and we've called that out. So even though AI is influencing every part of our business from diagnostics to data, the pure AI-based algorithm part of our business is going to be small until they're paid for. Once they're paid for, if they scale, they'll be really nice economic surprises. But again, we don't forecast that until we see it. In terms of new disease areas, we have very large data sets in cardiology, in radiology, and in pathology, in neuropsych is also a growing data set, but nothing compares to the size of the data set we have in oncology. Most of our data products in AI are in that space. Over time, we would suspect that generating molecular data and producing biomarkers diagnostically will be equally important across most major disease areas; I can't imagine why it wouldn't. Those will be drivers of our diagnostic business long term and our data business. But again, today, most of diagnostics is in oncology, and most of the data comes from oncology.

Operator, Operator

Seeing no further questions, that concludes our Q&A session. I'd like to turn the call back over to Liz Krutoholow for closing remarks.

Elizabeth Krutoholow, VP of Investor Relations

Thank you all for joining us today. We're available for any follow-up questions. We look forward to updating you again next quarter.

Operator, Operator

Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect.