Precision medicine company Tempus AI aims to raise $400M in IPO

Editor's Note: This story was initially published May 21. It was updated June 7 with IPO pricing information.

Three years after talks of an IPO surfaced, health tech company Tempus AI lit the fuse and is looking to go public this year.

The Chicago-based company, which provides data and analytics tools for precision medicine, is looking to raise as much as $410.7 million by selling 11.1 million shares at a price range of $35 to $37 a share, according to an updated prospectus filed on Wednesday. The company is targeting a valuation of up to $6.10 billion in its U.S. IPO.

Tempus filed for an IPO with the U.S. Securities and Exchange Commission (SEC) on May 21. 

Founded in 2015, Tempus says it’s built the world’s largest library of clinical and molecular data along with an operating system to make those data accessible and useful for providers to inform patient care. Over the past seven years, Tempus built out capabilities in precision medicine and artificial intelligence to power drug discovery and genomic sequencing. 

The company started in genomics by generating large amounts of molecular data, which in turn gave rise to its data and services business, according to the filing.

The company, led by Groupon co-founder Eric Lefkofsky, expanded the reach of its AI-enabled patient data platform into AI-enabled diagnostics and personalized medicine for cancer, cardiology, neuropsychology and radiology. The company is strategically focused on expanding its capabilities and commercial traction beyond oncology to include other disease categories.

Tempus has pocketed $1.3 billion in funding over nine funding rounds. Two years ago, the tech company banked $200 million in financing rounds, reportedly driving its valuation to $8.1 billion.

In its SEC filing, the company said it aims to "unlock the power of precision medicine by creating Intelligent Diagnostics through the practical application of artificial intelligence in healthcare."

Intelligent Diagnostics use AI, including generative AI, to make laboratory tests more accurate, tailored and personal, according to the company.

The company developed its Tempus Platform, which comprises both a technology platform to free healthcare data from silos and an operating system to make the resulting data useful. "Our goal is to embed AI, including generative AI, throughout every aspect of diagnostics to enable physicians and researchers to make personalized, data-driven decisions that improve patient care," the company said in the filing.

The platform includes proprietary software and dedicated data pipelines that create a network of healthcare institutions through approximately 450 unique data connections across more than 2,000 healthcare institutions. 

Tempus' competitors in the genomics market include certain diagnostics companies, such as Foundation Medicine, Inc., which was acquired by Roche Holdings, Caris Life Sciences, Guardant Health, Neogenomics and ResolutionBio, which Agilent acquired, the company wrote in the S-1 filing, The company also competes with Quest and LabCorp with respect to its precision oncology tests.

Tempus says its offerings have been used by approximately 95% of the largest public pharmaceutical companies based on 2023 revenue. Through March 31, 2024, Tempus AI's offerings have been used by more than 7,000 physicians across hundreds of provider networks, including more than 65% of all academic medical centers in the U.S. Tempus now has more than 200 petabytes of data in its cloud environment, executives wrote in the S-1 filing.

"Between our sequencing and data collection efforts, we are connected in some way to more than 50% of all oncologists practicing in the United States. Our access to broad and diverse data serves as the basis for our ability to train generative AI models, and we believe our relationships with healthcare institutions provide us with proprietary data to deliver on the promise of AI in healthcare," the company wrote in the filing.

The company has about 2,300 employees.

Tempus generated $321 million in revenue in 2022, and that grew to $532 million in revenue in 2023. The company brought in $146 million in the three months ended March 31, 2024.

The company incurred net losses of $290 million and $214 million in 2022 and 2023, respectively.

As of March 31, 2024, Tempus has an accumulated deficit of $1.5 billion.

"To date, we have financed our operations principally from the sale of stock and convertible securities, and revenue from our genomics and data businesses," the company wrote in its filing.

The company said it has devoted "substantially all of its resources to the development and commercialization of its platform and current products and to research and development activities related to platform development and future products."

"We will need to generate substantial revenue to achieve and then sustain profitability, and even if we achieve profitability, we cannot be sure that we will remain profitable for any period of time," the company wrote.

Tempus also disclosed that it anticipates needing to raise additional capital to fund its existing operations, develop its platform, commercialize new products or expand its operations.

In the past several years, Tempus has notched partnerships with global pharmaceutical companies to boost its work in drug discovery and precision oncology. As part of a multiyear strategic collaboration, Pfizer will tap multiple parts of Tempus' AI platform and its data library to advance clinical discovery.

The company has an expanded collaboration with GSK to enable the U.K. pharma giant to leverage its AI-enabled patient data platform. GSK recently paid Tempus $70 million upfront for three more years of partnering.

Tempus also inked a partnership with AstraZeneca to use its AI technologies to advance cancer drug development.

Tempus scooped up three startups in the past five years—clinical lab AKESOgen in 2019, clinical trial company Highline Sciences in 2022 and medical imaging AI developer Arterys, also in 2022.

In October 2022, Tempus picked up $275 million in debt financing to scale its operations and capabilities.

There was speculation going back to 2021 that Tempus was eyeing an IPO. When asked about a potential IPO in February 2023, Lefkofsky said there were no immediate plans and noted the current "fractured" IPO market.

Morgan Stanley, J.P. Morgan, Allen & Company, BofA Securities, TD Cowen, Stifel and William Blair are among the underwriters on Tempus' offering.

Tempus plans for its stock to trade on the Nasdaq Global Select Market under the ticker "TEM."