Tempus AI gears up for IPO. Here’s everything you need to know

The IPO market witnessed stronger activity so far this year compared to the corresponding period last year, with a marked increase in the number of listings. While technology and healthcare companies keep flocking to US stock markets, genetics-testing firm Tempus AI recently filed papers with the Securities and Exchange Commission to go public.

The Offering

Tempus is planning to sell around 11.1 million shares in the initial public offering at an estimated price ranging from $35 per share to $37 per share. Morgan Stanley, JP Morgan Securities, and Allen & Company lead the group of underwriters, who have been granted the option to purchase up to an additional 1.67 million shares. Post-IPO, the stock will trade on the Nasdaq stock market under the symbol TEM.

At the mid-point of the offer price, the IPO is expected to generate net proceeds of about $361 million, or $417 million if the underwriters’ over-allotment option is exercised in full. The management plans to use around $74.5 million of the proceeds for paying federal and state tax withholding and remittance obligations. The remaining amount will mainly be used for general corporate purposes, including working capital, operating expenses, repayment of debt, and capital expenditures.

The Company

Tempus, backed by Japanese investment holding company SoftBank, is a leader in genomic sequencing services and molecular data analysis. Its Intelligent Diagnostics system uses artificial intelligence to bring more accuracy and personalization to laboratory tests. That is achieved through the Tempus Platform which consists of a technology platform to free healthcare data from silos and an operating system to make the resulting data useful. It is estimated that the company’s offerings are used by more than 7,000 physicians across many provider networks.

Founded by Eric Lefkofsky, originally under the name Bioin LLC, Tempus is headquartered in Chicago, Illinois. Lefkofsky is the chairman and chief executive officer of the company. During the pandemic, Tempus played a key role in the care program by offering COVID-19 tests.

Financials

In the three months ended March 2024, Tempus incurred a loss of $93.06 million or $1.47 per share, compared to a loss of $65.77 million or $1.04 per share in the corresponding period last year. The company generated revenues of $145.82 million in the March quarter, up 26% from $115.62 million reported a year earlier.

In the fiscal year ending December 2023, the company generated revenues of $531.82 million, which is up 66% annually. Full-year net loss narrowed to $265.96 million or $4.20 per share from $333.93 million or $5.30 per share in the prior year. In April, Tempus raised about $200 million from an investor affiliated with SoftBank by selling its Series G-5 convertible preferred shares.