Chicago-based Tempus AI Shares Surge 15% in Stock Market Debut

The IPO was priced at $37 per share, at the upper end of the expected range. It raised $410.7 million and valued the company at $6.1 billion.

Chicago-based Tempus AI, a healthcare company leveraging artificial intelligence for precision medicine, saw its shares jump 15% on Friday during its initial public offering (IPO) on the NASDAQ stock exchange. 

The IPO was priced at $37 per share, at the upper end of the expected range. It raised $410.7 million and valued the company at $6.1 billion.

Shares of Tempus opened trading at $42 per share, a strong start that, if the gains held, would push the company's valuation to approximately $7 billion. The shares closed at $40, reflecting a 9% increase. 

This successful debut underscores investors' strong appetite for AI technology companies.

Healthtech IPO Trends

Tempus' IPO follows the recent public offering of healthcare payment software company Waystar, which raised $967.5 million with a market cap of $3.5 billion. 

The IPO market for healthtech companies has been slow, with only two digital health companies going public in 2022 and none in 2023. Tempus and Waystar's successful entries signal a potential revival in the sector.

Founded in 2015 by Groupon cofounder Eric Lefkofsky, Chicago-based Tempus provides AI and data analytics tools for precision medicine. The company has built a vast clinical and molecular data library and an operating system to make this data accessible for patient care. 

Tempus generated $321 million in revenue in 2022, growing to $532 million in 2023. For the first quarter of 2024, the company reported $146 million in revenue. 

However, Tempus has not achieved profitability, posting losses of $290 million in 2022 and $214 million in 2023. As of March 31, 2024, Tempus had an accumulated deficit of $1.5 billion.

What Does Tempus Offer?

Tempus initially focused on genomics, creating a significant molecular data library, which led to its data and services business. 

The company has expanded its AI-enabled patient data platform into diagnostics and personalized medicine for various conditions, including cancer, cardiology, neuropsychology, and radiology. Tempus aims to extend its capabilities beyond oncology into other disease categories.

The company has established numerous partnerships with pharmaceutical giants. Pfizer uses Tempus' AI platform and data library for clinical discovery, while GSK has extended its collaboration with Tempus, paying $70 million upfront for three additional years. Tempus also partnered with AstraZeneca to advance cancer drug development.

However, Tempus faces competition from other genomics companies such as Foundation Medicine, Caris Life Sciences, Guardant Health, Neogenomics, and ResolutionBio. 

In addition, Guardant Health has sued Tempus for allegedly infringing on five patents related to liquid biopsy cancer tests. 

Guardant claims Tempus' liquid biopsy panels use the same technology as Guardant's tests, violating its patents. The lawsuit highlights the competitive and litigious environment in the genomics market.

Future Prospects

With approximately 2,300 employees, Tempus continues to grow its footprint in precision medicine and AI. 

The company claims more than 7,000 physicians across hundreds of provider networks use its technology platform, including over 65% of all academic medical centers in the US Tempus also counts 95% of the largest public pharmaceutical companies as its customers.

Tempus trades under the ticker symbol "TEM," its IPO was underwritten by major financial institutions, including Morgan Stanley, J P Morgan, Allen & Company, BofA Securities, TD Cowen, Stifel, and William Blair.