Tempus AI's Data Growth Lifts Margins, but Valuation Raises the Bar

Tempus AI's third-quarter results showed faster growth in its higher-margin data business and a sharp improvement in adjusted profitability, giving investors more evidence that the company can scale beyond diagnostic testing. Revenue rose 23% from a year earlier to $411.5 million, slightly above the $409.3 million consensus cited by TIKR, while adjusted earnings were $0.07 per share compared with an expected adjusted loss of $0.08.

The accounting picture still needs careful reading. Tempus reported a GAAP net loss of $14.9 million, down from $80.0 million a year earlier, while adjusted EBITDA increased to $25.6 million from $1.5 million. The gap between reported and adjusted results included $50.8 million of stock-based compensation and related payroll taxes, partly offset by $42.8 million of unrealized gains. The adjusted per-share figure is therefore not interchangeable with reported earnings.

Data and applications revenue grew 33% to $108.1 million, faster than the 20% increase in diagnostics revenue to $303.5 million. That mix matters because the data and applications gross margin was 71.5%, compared with 62.4% for diagnostics. Total gross margin reached 64.8%, showing how a larger data contribution can lift profitability even while the diagnostics business remains the main revenue source.

Oncology testing provided the strongest operating signal. Tempus said oncology unit growth accelerated to 32%, while minimal residual disease testing rose more than 300% to roughly 12,000 tests. Those gains are meaningful, but they do not settle the competitive question. The original TIKR analysis noted that Natera added about 34,000 minimal residual disease tests sequentially in its second quarter and that Guardant Health's oncology clinical volume grew 63% in the same period. The measures and periods are not identical, so they are useful as competitive context rather than a direct market-share calculation.

Commercial bookings exceeded $550 million through the first nine months of 2026, including a five-year oncology data agreement with Bristol Myers Squibb. Tempus also continues to pursue its acquisition of Personalis, which would broaden its cancer-testing portfolio. The transaction remains subject to Personalis shareholder approval and other closing conditions, so investors should treat the planned combination as a proposal in progress, not a completed expansion.

Management raised full-year revenue guidance to between $1.600 billion and $1.605 billion and reiterated an adjusted EBITDA outlook of about $65 million. TIKR calculated that the EBITDA goal implies roughly $34 million in the fourth quarter, above the third-quarter level. Reaching it would require another step up in operating leverage rather than simply maintaining the current run rate.

Liquidity is substantial, but so are the financing claims against it. Tempus ended September with $854.4 million of cash and marketable securities. Its balance sheet also carried about $1.175 billion of convertible senior notes on a net basis. That combination gives the company room to invest, yet it makes continued margin expansion and disciplined use of equity compensation important for shareholders.

The market is already pricing in a large part of the growth story. TIKR put the shares at about 7.3 times forward sales after the earnings move, above their one-year average of 6.6 times. The quarter strengthened the case for Tempus as a scaled healthcare data platform, but the valuation leaves less room for a slowdown in testing volume, data bookings or the path to adjusted profitability.