Tempus AI Eyes Positive Adjusted EBITDA in 2025: Is It Taking Shape?

Tempus AI TEM is currently in its 10^th year of business and on track to hit a long-anticipated milestone. In its first-quarter 2025 earnings report, the AI-driven healthcare company guided full-year adjusted EBITDA of $5 million, an approximately $110 million improvement over 2024. Impressively, Tempus also showed good progress in the quarter, narrowing the adjusted EBITDA loss by $27.8 million year over year to negative $16.2 million, reflecting disciplined cost management. 

First-quarter revenues increased 75.4% year over year, led by 89% growth in Genomics, a 31% increase in Oncology testing (legacy Tempus clinical) and a $63.5 million contribution from Hereditary testing (legacy Ambry Genetics). Gross profit accelerated at an even higher pace, surging 99.8% year over year, almost double the growth rate seen in the fourth quarter of 2024. The improvement was backed by continued gross margin expansion in both Genomics and Data and services product lines. Together, these developments and cost control are producing good year-over-year operating leverage for the company.

While some older peers are still posting annual losses between $100 million and $200 million, Tempus is riding high on rapid growth rates, margin improvements and an upbeat outlook. The shift to profitability is highly promising for a company that has incurred significant losses since its inception. Tempus plans investments based on the anticipated revenue and gross profit growth. To the extent it beats EBITDA targets, the company aims to reinvest them in growth, such as technology and people, instead of focusing on short-term profit maximization. Tempus’ 2025 is expected to reflect that promise. 

TEM Peer Comparison

Guardant Health GH reported adjusted EBITDA loss of $58.5 million for the first quarter of 2025, a 4.3% improvement year over year. GH’s non-GAAP gross profit grew by $26 million, leading to a 3.2% improvement in margin. For 2025, Guardant Health increased operating expense guidance to the $830-$840 million range from the previous $815-$825 million band, reflecting reinvestment of higher gross profits from Screening.

Myriad Genetics MYGN posted adjusted EBITDA near breakeven in the first quarter of 2025, with a full-year forecast of a $19 million-27 million range. Although revenues declined, MYGN expanded its gross margins by 50 basis points year over year to 69%. Myriad Genetics is moderating its 2025 expenditures to the $575-$595 million range, with the earlier forecast being $555-$565 million.

The Zacks Rundown for TEM

Year to date, Tempus AI shares have climbed 71.8%, outpacing the industry’s 22.9% growth.

Valuation-wise, TEM trades at a forward 12-month sales multiple of 7.36X, lower than its median of 28.64X but above the industry average of 6.03X. It carries a Value Score of F.

The Zacks Consensus Estimate for TEM’s 2025 and 2026 earnings has been showing a mixed picture for the past 90 days. 

TEM stock currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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