Tempus AI Eyes Expansion in Japan

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Recently listed Tempus AI (Nasdaq: TEM) announced their first results since it went public. The company announced a strong performance driving its stock upwards.

Tempus’ Financials

Revenues for the second quarter grew 25% to $166 million and were ahead of the market’s forecast of $160.8 million. Loss per share of $0.63 was also significantly better than the market’s expected loss of $1.30 per share.

By segment, Genomics revenues grew 22% to $112.3 million, and Data and Services revenue grew 33% to $53.6 million. The Data and Services revenue was driven by a 40% growth in its Insights business which includes its data licensing segment.

Tempus expects to end the year with revenues of $700 million, up 32% over the year and an adjusted EBITDA of ($105 million).

Tempus’ Growth Plans

Tempus continues to improve its diagnostic testing capabilities and recently announced the clinical launch of its minimal residual disease (MRD) portfolio including Tempus’ xM tumor-na?ve test and xM tumor-informed (NeXT Personal? Dx) test. These tests are designed to help detect residual disease or early cancer recurrence and monitor for immunotherapy treatment response that will help provide insights for improved patient management strategies.

Similarly, it also received clearance from the FDA for the ECG-AF device that uses AI to help identify patients who may be at increased risk of atrial fibrillation/flutter (AF). Tempus is focused on building tests and offerings that equip physicians with a proactive solution by providing early-stage cancer insights that can help improve patient outcomes.

Tempus recently completed a Joint Venture agreement with SoftBank to help it expand its offerings to Japan. Each of them will invest $90 million to set up SB Tempus, which will start operations in August. SB Tempus will offer three medical services to hospitals using AI to analyze personal medical data to expand footprint in Japan. It will be collecting and analyzing patient data, which will include genomic, pathological, clinical information, and photo images to train its AI models for patients in Japan. It will then provide hospitals with processed data for clinical use and suggested treatment.

In Japan, about 1% of patients have experience with genomic testing compared with approximately 30% in the US, suggesting a big opportunity for growth. In the longer term, the company will expand this capability to include other diseases, such as neuropsychology, radiology, and cardiology.

The market is pleased with Tempus. Its stock is trading at $50.19 with a market capitalization of $7.2 billion. Earlier this year, it had listed at $37 at a valuation of $6 billion. The stock has recovered from the low of $22.89 that it had fallen to in June.

Disclosure:?All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article.

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