Tempus AI: What Comes First — Cancer Treatment or Profitability?

The company delivered a strong Q1 2025 report — but under the surface, a deeper tension remains: can Tempus cure cancer and turn a profit at the same time?

It was a good day for CEO Eric Lefkofsky. He announced Tempus’s flagship deal with longtime partner AstraZeneca. The $200M agreement isn’t fully reflected in the current results — but even without it, the numbers looked strong. Revenue jumped 75.4% year-over-year to $255.7 million, gross profit nearly doubled, and for a company once trading at $90 and backed by Nancy Pelosi, the momentum seemed to return—on paper.

But behind every promising report is a deeper dependency. Tempus is still unprofitable, with a $61.6 million net loss last quarter, and the business model leans heavily on forming deep commercial partnerships with major pharma players. Without them, the path to profitability remains theoretical.

Soild growth

It’s a solid set of numbers. Revenue increased 75.4% year-over-year to $255.7 million in Q1 2025. Gross profit rose 99.8% YoY to $155.2 million, reflecting continued margin expansion in both its Genomics and Data & Services segments. The company processed approximately 75,000 oncology tests during the quarter, while expanding its footprint in hereditary and other segments following the Ambry integration.

Operating expenses jumped to $223.9 million, driven by Ambry’s integration, stock-based compensation, and amortization of acquired intangibles. Net loss came in at $61.6 million — still large, but notably down from $94.5 million a year earlier. Gross margins remained steady in the low 60% range.

Importantly, Tempus raised its full-year 2025 revenue guidance to $1.25 billion — representing approximately 80% growth YoY. Management also projected positive adjusted EBITDA of $5 million for the full year, an improvement of $110 million over 2024.

The platform for Big Pharma

This positions Tempus not just as a diagnostics firm, but as a platform company with expanding financial visibility and traction. It’s the kind of report that turns heads — and not just among retail traders. Once trading at $90 and backed by none other than Nancy Pelosi, the company became a favorite among growth-focused institutional investors.

But as with many momentum stocks, sentiment turned sharply. Shares fell amid macro pressure — notably, tariff-related volatility that hit high-growth names across the board.

The question now isn’t whether the business is growing — it is — but whether investors actually understand what kind of business this is. Tempus isn’t just another diagnostics company. It’s a data infrastructure play wrapped in a clinical shell.

The race against cancer

So what exactly is Tempus, and why has it become central to the pharma-data conversation?

Tempus operates on two levels. First, it runs a clinical diagnostics business focused primarily on oncology. Physicians order genetic tests that help guide treatment decisions, and these tests are often reimbursed through Medicare or private insurance.

Example: Tempus’s xT-CDx test is FDA-approved and reimbursed by Medicare at $4,500. ASP (average selling price) is around $1,590 and climbing as more tests move into the reimbursed category. xT-CDx test is a broad next-generation sequencing (NGS) panel that analyzes hundreds of cancer-related genes in tumor tissue to identify actionable mutations.

Second — and more strategically — Tempus is a data infrastructure platform for pharma. It sells anonymized but highly detailed molecular and clinical datasets, as well as lab-grown tumor models (organoids), which pharma companies use to develop and validate new therapies.

This second business is more scalable and capital-intensive — and it’s what gives Tempus the potential to evolve into a foundational R&D platform for drug development.

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Why Tempus needs anchor Pharma clients

Maintaining this infrastructure is costly. Training AI models on high-dimensional, multi-omics data requires significant compute spend. Organoid development and biobanking aren’t cheap either.

Tempus can’t sustain these operations on testing revenue alone. That’s why it actively pursues long-term pharma deals — deals like AstraZeneca’s — that help fund the system. On the earnings call, Lefkofsky made it clear: Tempus isn’t betting on small biotech clients. It needs contracts with large pharmaceutical companies to scale its platform meaningfully.

So far, though:

• Nothing of $200M AstraZeneca deal has been recognized

• The deal spans three years and likely involves milestone-based payments

• The company may be targeting breakeven as a condition tied to internal financial structure or even external covenants

Eric Lefkofsky has been explicit that Tempus wants cash, not equity — likely referring to avoiding stock-based payments from partners like Pathos. The company is focused on monetizing access, — and that’s a positive sign, especially given that the AstraZeneca agreement is non-exclusive.

What is Pathos and why does it matter?

To deepen integration with pharma and extend its data platform into drug discovery, Tempus spun off a separate company: Pathos.

Pathos is focused on developing new cancer drugs using the real-world data and biological models Tempus has built. It’s partially backed by AstraZeneca and other VCs. Astra, in effect, This move is strategic. It creates a situation where:

• Tempus supplies data + models

• Pathos uses them to develop drugs

• Pharma companies like Astra get early-stage access to both

In other words, Tempus offers pharma clients a full-stack platform: diagnostics, data, biological modeling, and now R&D execution — without pharma needing to do any of it in-house.

It’s a neat solution for companies like Astra, which can fund Pathos, license Tempus, and offload expensive internal R&D efforts in one coordinated pipeline.

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Where does Tempus stand today?

So far, only two major deals are public:

• AstraZeneca: $200M over three years

• Bristol Myers Squibb: a smaller, exploratory agreement involving organoid models

Tempus says it’s in talks with 19 of the top 20 pharma firms. But until those convert into revenue, it’s difficult to value Tempus as a platform play.

Right now, the company remains a hybrid: part diagnostics business, part infrastructure vendor, part data platform. It's worth noting that AstraZeneca has been a long-standing partner, and is in active competition with Roche. The next catalyst for Tempus is clear: landing additional large-scale deals beyond the existing Astra tie-up. A breakthrough cancer drug could become for Astra what Zepbound was for Eli Lilly — a franchise-defining moment and commercial tailwind.

If no new partnerships materialize, Tempus risks becoming more of a captive infrastructure partner to Astra rather than a broadly adopted industry platform. And with the likely return of a Trump administration, which is unlikely to expand federal healthcare spending, reimbursement rates for diagnostic tests could face renewed pressure.

If the Astra deal is the first of several, Tempus’s upside is real. If not, the current valuation starts to look stretched. That brings us to the key question: what is Tempus actually worth?