Be The Investor ResearchTempus Nears Cash Break-Even as Personalis Raises the Stakes
Tempus sharply reduced quarterly operating cash use, but its $1.5 billion Personalis deal could exchange cash risk for dilution. The final payment mix now matters as much as growth.
Tempus AI moved much closer to operating break-even in the second quarter, but its cash position cannot be assessed without separating operating progress from financing and investment gains. Revenue rose 22% from a year earlier to $382.5 million, adjusted EBITDA turned positive at $8.0 million and the company reported net income of $5.6 million.
The reported profit needs context. It included a $98.5 million unrealized gain on marketable securities and $55.6 million of stock-based compensation and related payroll taxes. Tempus still recorded a $75.9 million operating loss under generally accepted accounting principles. Adjusted EBITDA removes several costs and valuation changes, so it does not mean the business generated free cash.
Cash flow improved sharply nonetheless. Tempus used $80.8 million in operating cash during the first six months of 2026. The first quarter accounted for about $73.3 million of that amount, implying second-quarter operating cash use of roughly $7.5 million. Purchases of property and equipment were $14.3 million over the six-month period, with another $6.8 million used for capitalized software. The direction is encouraging, but one quarter near break-even is not yet a durable trend.
Growth came from both major businesses. Diagnostics revenue increased 20% to $289.3 million, helped by 31% growth in oncology test volume. Data and Applications revenue rose 28% to $93.2 million, while the Insights component grew 36%. Tempus raised its 2026 revenue forecast to $1.595 billion to $1.605 billion and kept its adjusted EBITDA target near $65 million. That outlook excludes the proposed Personalis acquisition.
At June 30, Tempus held $820.7 million of cash and marketable securities. The balance includes $599.6 million of cash and $216.4 million of marketable equity securities, whose value can change. The company also completed a $460 million offering of 0% convertible senior notes due in 2032 and used part of the proceeds to repay older borrowings. Zero current interest reduces near-term cash pressure, but conversion can dilute shareholders and the principal ultimately remains an obligation.
The $1.5 billion agreement to acquire Personalis adds another variable. Personalis shareholders are to receive $16.25 a share, primarily in Tempus stock, while Tempus may choose to pay as much as half of the consideration in cash. The transaction is expected to close in late 2026 or early 2027, subject to shareholder, regulatory and customary approvals. A larger cash component would reduce reserves, while more stock would increase dilution.
The acquisition could deepen Tempus's position in molecular residual disease testing, an area where test volume reached 9,000 in the second quarter, up from 6,500 in the first. Strategic fit does not settle the financing question. Investors need to know the final cash-stock mix, any acquisition debt and the combined company's working-capital needs.
The next report should be judged on operating cash flow, not only adjusted EBITDA. If Diagnostics and Data and Applications continue growing while receivables and expenses stay controlled, Tempus can approach self-funding. If the Personalis purchase consumes substantial cash before that improvement becomes durable, the apparent runway will shorten quickly.