Tempus AI Turns Non-GAAP Profit on Surging Genomics and Data

Tempus AI TEM reported non-GAAP profit in the third quarter of 2025 as genomics testing and data services gained momentum. The stock carries a Zacks Rank #3 (Hold) with a VGM Score of D. It is weak on Value but stronger on Momentum.  Revenue rose 84.7% year over year to $334.2 million, while adjusted EBITDA improved to $1.5 million. GAAP losses persisted but narrowed on a per share basis.Business Mix and Growth DriversGenomics revenue more than doubled year over year to $252.9 million in the third quarter, powered by oncology testing at $139.5 million and hereditary testing at $102.6 million. Data and services revenue increased 26.1%, with Insights up 37.6%. Clinical tests delivered climbed to 217,000, up 33% year over year, reflecting broad demand across oncology and hereditary use cases.The company’s diagnostics momentum extends beyond a single period. Management noted durable growth across oncology and the addition of Ambry hereditary testing, supported by improved average selling prices in oncology and rising contributions from Insights within data.Pricing Catalysts That Can Lift Unit EconomicsManagement is migrating a large share of xT CDx volume to FDA-approved and Advanced Diagnostic Laboratory Test tracks and plans further FDA submissions. The company expects to submit xT for FDA approval by the end of 2025, with the xR assay thereafter, creating a framework for ADLT pricing into 2026. These steps, together with incremental progress in minimal residual disease reimbursement, are designed to lift average selling prices and unit economics over time.While reimbursement improved sequentially in the quarter, average realized pricing remains well below parity with peers until approvals are secured. The minimal residual disease (MRD) ramp is described as measured, with uplift expected to accrue quarter by quarter.Bookings to Revenue Timing MattersCustomer demand for its Data & Services offerings is strong, with multi-quarter deals, mid-20% booking growth year over year and about $150 million in new contracts. However, bookings are recognized over multi-year periods and are typically back weighted, which can mute near-term revenue recognition and quarterly margin improvement.This elongated conversion profile can constrain reported growth even when underlying demand is healthy. As a result, quarterly revenue and margin cadence may not fully capture the momentum building in Insights and broader data services.Profit Path and Operating Leverage CheckpointsGuidance calls for sharply higher 2025 revenue of about $1.265 billion for the consolidated Tempus AI and Ambry business, implying roughly 80% annual growth and positive adjusted EBITDA for the full year. Cost discipline, portfolio integration, sales force efficiency and improving average selling prices are the driving factors. GAAP losses continue, reflecting non-cash items and acquisition effects, but the trajectory improved versus last year.Image Source: Zacks Investment ResearchManagement expects approximately $20 million of adjusted EBITDA in the fourth quarter of 2025, with the full year slightly positive considering Paige’s quarterly loss impact. We anticipate continued EPS improvement through 2026 and a potential positive EPS in 2027.Balance Sheet and Investment CapacityTempus AI ended the third quarter with $764.3 million in cash and marketable securities, supporting continued investment in AI compute and regulatory initiatives. This liquidity profile equips Tempus AI to pursue approvals, reimbursement expansion and data platform growth without sacrificing operational flexibility.What the Rank Implies for Near-Term PerformanceTempus AI carries a Zacks Rank #3 (Hold) and a VGM Score of D, with component Style Scores of Value F, Growth C and Momentum B. That combination typically signals expectations for market-like performance over the next one to three months. Investors should monitor estimate revisions tied to ADLT-linked pricing, FDA decisions and MRD reimbursement progress.Among peers, 10x Genomics TXG and Doximity DOCS also screen as Neutral in our coverage framework, offering reference points on momentum and valuation across medical information and genomics tools.Key Risks to MonitorPricing remains below peers until regulatory approvals are finalized, and the bookings-to-revenue lag can obscure near-term growth and margin trends. GAAP losses, together with execution complexity around MRD and integration, present additional pressure points. Successful navigation of regulatory, reimbursement and integration milestones is central to sustaining the profit trajectory. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report 10x Genomics (TXG): Free Stock Analysis Report Doximity, Inc. (DOCS): Free Stock Analysis Report Tempus AI, Inc. (TEM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks