Tempus AI (TEM) 25th Annual Needham Virtual Healthcare Conference summary

Business overview and technology differentiation

• Focused on leveraging data and AI to improve healthcare, starting in oncology, with expansion into cardiology and other areas.

• Operates large sequencing labs and integrates with over 5,500 institutions to access and contextualize clinical and molecular data.

• Differentiation comes from combining molecular and clinical data, structuring and harmonizing it, and providing tools like Lens for partners to interrogate data.

• Offers AI-enabled diagnostics, clinical trial matching, and algorithmic diagnostics, with ongoing expansion of AI applications.

Diagnostics segment performance and growth

• Diagnostics revenue is split between oncology (therapy selection, MRD) and hereditary testing, with oncology showing 29% growth in Q4.

• Oncology market penetration has increased to 55% of cancer patients sequenced, with further growth expected from guideline changes and increased adoption.

• ASP expansion initiatives include migration to FDA-approved assays, liquid biopsy portfolio submission, and improved commercial payer reimbursement.

• Hereditary segment growth is moderating after competitor disruption, with rare disease testing representing a future growth opportunity.

Reimbursement and regulatory landscape

• Employs multiple strategies to mitigate reimbursement risk, including lab diversification and seeking FDA approvals for broader coverage.

• Well positioned to adapt to regulatory changes such as CRUSH RFI and potential nationalization of MolDx.

• Commercial payer reimbursement remains fragmented, with ongoing efforts to improve coverage and ASPs.