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Tempus Stock Declines Despite Q3 Earnings & Revenues Beat Estimates
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Tempus AI, Inc. (TEM - Free Report) reported third-quarter 2024 adjusted loss per share of 25 cents, which beat the Zacks Consensus Estimate of a loss of 27 cents per share by 7.4%.
GAAP loss per share was 46 cents, narrower than prior-year quarter’s loss of $1.03 per share.
Revenues totaled $180.9 million, beating the Zacks Consensus Estimate by 1.8%. The top line also improved 32.9% on a year-over-year basis.
Segmental Analysis
Geonomics
This segment reported sales of $116.4 million, up 20.3% year over year. Growth was driven by the segment’s unit growth acceleration to 23.9% annually, with rising average revenue per clinical test. The segment’s adjusted gross profit totaled $57.4 million, up 14.2% year over year. However, the segment’s adjusted gross margin contracted 260 basis points (bps) to 49.3% compared with the prior-year quarter.
Data and Services
Sales in the segment amounted to $64.5 million, up 64.4% year over year, driven by Insights, or data licensing, which grew 86.6% annually. The segment’s adjusted gross profit totaled $50.5 million, up 112.6% year over year. Segment’s adjusted gross margin expanded 1780 bps to 78.3%.
Adjusted gross profit totaled $107.9 million in the reported quarter, up 45.8% from the year-ago quarter’s level. The adjusted gross margin expanded 520 bps to 59.6%.
Total adjusted operating expenses were $139.3 million, up 17.2% from the year-ago quarter’s level.
Total loss from operations amounted to $53.6 million, expanding 19.7% from a year ago.
Financial Update
Tempus exited the third quarter with cash and cash equivalents and marketable securities of $467.2 million compared with $490.9 million at the second quarter of 2024-end.
Cumulative net cash used in operating activities totaled $149.8 million compared with $174.1 million a year ago.
2024 Guidance
Tempus expects full-year 2024 revenues of approximately $700 million, representing an approximate year-over-year growth of 32%. The Zacks Consensus Estimate for revenues is pegged at $696.7 million.
Wrapping Up
Tempus exited third-quarter 2024 with better-than-expected results, wherein earnings and revenues beat the Zacks Consensus Estimate. The company witnessed strong top-line growth in both its segments. TEM’s Data and Services segment also witnessed significant expansion in adjusted gross margin and impressive top-line growth.
However, the company continues to incur losses at the operating level, which even increased year over year during the reported quarter. Shares of TEM lost 6.1% during after-market trading following its third-quarter results. However, the company’s shares have gained 23% in the past six months compared with the industry’s rise of 8.1%. The broader S&P 500 Index has increased 10.1% in the same time frame.
During the third quarter of fiscal 2024, Tempus announced a multi-year collaboration with BioNTech to leverage Tempus’ TCR dataset in support of BioNTech’s next-generation oncology pipeline. TEM also announced a three-year extension with Merck EMD at the culmination of the last three-year strategic agreement.
Per third-quarter fiscal 2024 press release, TEM announced that it has entered into an agreement to acquire Ambry Genetics, a leader in genetic testing. Under the terms of the agreement, Tempus is likely to pay $375 million in cash and $225 million in shares at closing, of which $100 million will be subject to a lock-up agreement until one-year post-transaction close.
ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.
AngioDynamics’ shares have lost 19.2% year to date against the industry’s 6.1% growth.
Quest Diagnostics has an estimated long-term growth rate of 6.8%. DGX's earnings surpassed estimates in each of the trailing four quarters, with the average being 3.3%.
Quest Diagnostics has gained 42% compared with the industry's 14.9% growth year to date.
RadNet’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 98.2%.
RDNT's shares have surged 93.7% year to date compared with the industry’s 14.8% growth.
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Tempus Stock Declines Despite Q3 Earnings & Revenues Beat Estimates
Tempus AI, Inc. (TEM - Free Report) reported third-quarter 2024 adjusted loss per share of 25 cents, which beat the Zacks Consensus Estimate of a loss of 27 cents per share by 7.4%.
GAAP loss per share was 46 cents, narrower than prior-year quarter’s loss of $1.03 per share.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Revenue Details
Revenues totaled $180.9 million, beating the Zacks Consensus Estimate by 1.8%. The top line also improved 32.9% on a year-over-year basis.
Segmental Analysis
Geonomics
This segment reported sales of $116.4 million, up 20.3% year over year. Growth was driven by the segment’s unit growth acceleration to 23.9% annually, with rising average revenue per clinical test. The segment’s adjusted gross profit totaled $57.4 million, up 14.2% year over year. However, the segment’s adjusted gross margin contracted 260 basis points (bps) to 49.3% compared with the prior-year quarter.
Data and Services
Sales in the segment amounted to $64.5 million, up 64.4% year over year, driven by Insights, or data licensing, which grew 86.6% annually. The segment’s adjusted gross profit totaled $50.5 million, up 112.6% year over year. Segment’s adjusted gross margin expanded 1780 bps to 78.3%.
Tempus AI, Inc. Price, Consensus and EPS Surprise
Tempus AI, Inc. price-consensus-eps-surprise-chart | Tempus AI, Inc. Quote
Margins
Adjusted gross profit totaled $107.9 million in the reported quarter, up 45.8% from the year-ago quarter’s level. The adjusted gross margin expanded 520 bps to 59.6%.
Total adjusted operating expenses were $139.3 million, up 17.2% from the year-ago quarter’s level.
Total loss from operations amounted to $53.6 million, expanding 19.7% from a year ago.
Financial Update
Tempus exited the third quarter with cash and cash equivalents and marketable securities of $467.2 million compared with $490.9 million at the second quarter of 2024-end.
Cumulative net cash used in operating activities totaled $149.8 million compared with $174.1 million a year ago.
2024 Guidance
Tempus expects full-year 2024 revenues of approximately $700 million, representing an approximate year-over-year growth of 32%. The Zacks Consensus Estimate for revenues is pegged at $696.7 million.
Wrapping Up
Tempus exited third-quarter 2024 with better-than-expected results, wherein earnings and revenues beat the Zacks Consensus Estimate. The company witnessed strong top-line growth in both its segments. TEM’s Data and Services segment also witnessed significant expansion in adjusted gross margin and impressive top-line growth.
However, the company continues to incur losses at the operating level, which even increased year over year during the reported quarter. Shares of TEM lost 6.1% during after-market trading following its third-quarter results. However, the company’s shares have gained 23% in the past six months compared with the industry’s rise of 8.1%. The broader S&P 500 Index has increased 10.1% in the same time frame.
During the third quarter of fiscal 2024, Tempus announced a multi-year collaboration with BioNTech to leverage Tempus’ TCR dataset in support of BioNTech’s next-generation oncology pipeline. TEM also announced a three-year extension with Merck EMD at the culmination of the last three-year strategic agreement.
Per third-quarter fiscal 2024 press release, TEM announced that it has entered into an agreement to acquire Ambry Genetics, a leader in genetic testing. Under the terms of the agreement, Tempus is likely to pay $375 million in cash and $225 million in shares at closing, of which $100 million will be subject to a lock-up agreement until one-year post-transaction close.
Image Source: Zacks Investment Research
TEM’s Zacks Rank and Key Picks
Tempus currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are AngioDynamics (ANGO - Free Report) , Quest Diagnostics (DGX - Free Report) and RadNet (RDNT - Free Report) . While AngioDynamics sports a Zacks Rank #1 (Strong Buy), Quest Diagnostics and RadNet carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.
AngioDynamics’ shares have lost 19.2% year to date against the industry’s 6.1% growth.
Quest Diagnostics has an estimated long-term growth rate of 6.8%. DGX's earnings surpassed estimates in each of the trailing four quarters, with the average being 3.3%.
Quest Diagnostics has gained 42% compared with the industry's 14.9% growth year to date.
RadNet’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 98.2%.
RDNT's shares have surged 93.7% year to date compared with the industry’s 14.8% growth.