Tempus AI (TEM) Morgan Stanley 24th Annual Global Healthcare Conference summary

Financial performance and growth outlook

• Diagnostic business anchored by strong demand in comprehensive genomic profiling, with durable unit growth and rising ASPs, especially in therapy selection and liquid biopsy.

• Data licensing business grew 36% last quarter, with three consecutive quarters of $100M+ TCV, driven by biopharma's migration to AI solutions.

• Expectation of at least 25% annual growth for the next several years, with potential to over-deliver due to robust demand and pricing improvements.

• FDA approvals for solid tumor and anticipated liquid biopsy assays enable migration to higher ADLT pricing, adding $80M–$100M and $250M–$300M in annual revenue, respectively.

• MRD business shows strong unit growth and rising ASPs, supporting long-term revenue visibility.

Strategic acquisitions and partnerships

• Acquisition of Personalis accelerates entry into MRD with a best-in-class, whole genome-based assay, expected to benefit from rising ASPs and strong unit growth.

• Personalis' recent reimbursement approvals and competitive acquisition process prompted an earlier deal close.

• Partnership with Merck and Moderna on the V940 melanoma vaccine positions the company as a key sequencing provider for clinical trials and future commercial rollout.

• Winning the national RFP for sequencing in the melanoma vaccine program ensures significant revenue and strengthens platform adoption.

Market trends and business drivers

• Oncology genomics market expected to expand with increased physician penetration, earlier stage testing, and more comprehensive profiling, including RNA and MRD.

• Anticipated broad sequencing of newly diagnosed cancer patients and post-therapy monitoring, with similar trends expected in rare diseases and immunological conditions.

• Reimbursement for solid tumor profiling and liquid biopsy is stable, with national coverage and ADLT pricing supporting margins; MRD reimbursement expected to expand.

• Margins in the space could reach 80% over the next decade, normalizing to 60% longer term.