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Market • Management • Money
Investment Analysis Framework
Tempus AI (NASDAQ: TEM) is the leading AI-enabled precision medicine platform, transforming healthcare through data-driven insights. Founded by Groupon's Eric Lefkofsky, the company has built the world's largest clinical and molecular database—350+ petabytes of data across 40+ million de-identified records—to power personalized treatment decisions for both providers and life sciences companies.
The Investment Thesis: Tempus sits at the intersection of three massive, high-growth markets: Healthcare AI ($45B TAM, 40% CAGR), Precision Medicine ($141B TAM, 11.7% CAGR), and Genomic Sequencing ($28B TAM, 14% CAGR). The company's platform creates a flywheel effect—more data improves AI algorithms, which attracts more customers, generating more data.
Key Metrics (2025): $1.27B revenue (83% growth), $316M data/application revenue (31% growth), >$1.1B total contract value, 126% net revenue retention, and partnerships with 95% of top 20 pharma companies.
Tempus operates a comprehensive AI-enabled precision medicine platform with three main revenue streams:
Genomic Testing: Next-generation sequencing across oncology, neurology, cardiology, radiology, and dermatology. Covers tumor profiling, pharmacogenomics, and companion diagnostics.
Clinical Decision Support: David, their generative AI co-pilot, integrates into EHR systems (first deployed at Northwestern Medicine).
Clinical Trial Matching: AI-powered patient matching to clinical trials based on molecular profiles and eligibility criteria.
Data Licensing: Access to 40M+ de-identified research records with matched molecular and clinical data.
Research Platform: Target identification, biomarker discovery, clinical trial design and execution.
CRO Services: Full-service clinical research organization through Tempus Studies.
Companion Diagnostics: Biomarker validation and regulatory approval support.
• 65% of all Academic Medical Centers in the US connected to Tempus
• 50%+ of US oncologists connected through sequencing and trial matching
• 95% of top 20 pharma oncology companies partner with Tempus
• 250+ biopharma partnerships
• 40,000+ patients identified for clinical trial enrollment
| Company | Focus Area | Tempus Differentiation |
|---|---|---|
| Foundation Medicine (Roche) | Genomic profiling, companion diagnostics | Broader multimodal data (genomics + clinical + imaging), AI-powered insights |
| Flatiron Health (Roche) | Oncology real-world data | Deeper molecular data integration, broader therapeutic areas |
| Guardant Health | Liquid biopsy, circulating tumor DNA | Comprehensive tissue + liquid biopsy + clinical data platform |
| Illumina | Sequencing technology, equipment | End-to-end platform from sequencing to clinical insights |
Serial Entrepreneur: Co-founded Groupon (IPO 2011, peak $30B market cap), InnerWorkings (IPO 2006), Echo Global Logistics, and Lightbank venture capital firm.
Net Worth: ~$2 billion, providing financial stability and long-term thinking
Personal Mission: Founded Tempus after his wife's cancer diagnosis, driving authentic commitment to the mission
"We are building the next-generation operating system for precision medicine, using AI to help doctors make smarter treatment decisions and help pharmaceutical companies develop better drugs faster."
Strengths:
Peter Barris - Chairman & General Partner, New Enterprise Associates (lead investor)
Jennifer Doudna, PhD - Nobel Prize winner, CRISPR pioneer, UC Berkeley
Scott Gottlieb, MD - Former FDA Commissioner, deep regulatory expertise
David R. Epstein - Former CEO, Seagen (sold to Pfizer for $43B)
Wayne A. I. Frederick, MD, MBA - Surgery expert focused on health equity
Ted Leonsis - Co-founder, Revolution Growth (AOL founder)
Genomic Testing
(Provider Revenue)
Data Licensing
(Life Sciences)
Platform & Services
(Pharma Partnerships)
Based on current financial data from public precision medicine, genomics, and healthcare AI companies:
| Company | Ticker | TTM Revenue ($M) | Gross Margin | TTM Growth | EV/Revenue | Market Cap ($M) |
|---|---|---|---|---|---|---|
| Tempus AI | TEM | $1,105 | 61.7% | 59.4% | 8.0x | $8,830 |
| Guardant Health | GH | $903 | 63.8% | 22.1% | 14.6x | $13,200 |
| Natera | NTRA | $2,117 | 63.7% | 24.7% | 13.6x | $28,800 |
| Veracyte | VCYT | $495 | 70.6% | 11.1% | 5.6x | $2,780 |
| Exact Sciences | EXAS | $3,082 | 69.4% | 11.7% | 6.4x | $19,600 |
| Veeva Systems | VEEV | $3,080 | 75.7% | 12.1% | 9.2x | $28,300 |
| Health Catalyst | HCAT | $316 | 47.5% | 3.1% | 0.4x | $129 |
| Phreesia | PHR | $463 | 68.2% | 10.3% | 1.5x | $716 |
| Schrodinger | SDGR | $257 | 58.2% | 23.8% | 3.3x | $838 |
Source: StockAnalysis.com, FMP. Feb 2026. Median EV/Revenue: 6.0x
Current Valuation: $8.8B (171M shares @ $51.10)
Current Revenue: $1.11B (TTM actual)
Current Multiple: 8.0x EV/Revenue
Median Multiple: 6.0x EV/Revenue
Hold Period: 5 years
Cost of Capital: 30% (VC hurdle rate)
| Scenario | 2030 Revenue ($B) | Exit Multiple | Exit EV ($B) | MOIC | IRR |
|---|---|---|---|---|---|
| Bear Case | $2.8 | 4.0x | $11.2 | 1.3x | 5% |
| Base Case | $3.5 | 6.0x | $21.0 | 2.4x | 19% |
| Bull Case | $5.0 | 8.0x | $40.0 | 4.5x | 35% |
Recommendation: HOLD - Trading at premium to median comps, modest upside potential
Risk-Adjusted Return: 19% probability-weighted IRR (base case)
Valuation Reality: 8.0x EV/Revenue vs 6.0x median - premium justified by growth but limits upside
Price Target: $39 per share (-24% from current $51.10) based on median 6.0x multiple
Monitor: Revenue acceleration above 25% to justify current premium, margin expansion, competitive positioning
Tempus AI represents a compelling opportunity at the intersection of healthcare's digital transformation and AI's maturation. The company has built dominant positions in precision medicine data and analytics, with strong network effects and switching costs protecting market share.
Key Investment Merits:
Risk Considerations:
Terminal Assessment: This is exactly the type of asset that fits a growth portfolio—proven management, defensible business model, clear financial trajectory, and positioned for the next wave of healthcare innovation. The data moat is real, the market opportunity is massive, and the execution track record gives confidence in continued growth.