TLDR
- Q1 revenue reached $348.1M, reflecting a 36.1% year-over-year increase and surpassing the $345.4M estimate
- Adjusted EPS loss of $0.13 topped the $0.20 consensus forecast, though GAAP loss expanded to $0.70 per share
- 2026 revenue outlook increased to $1.59–$1.60B, with the midpoint failing to exceed Street expectations
- Shares declined 7.2% in extended trading after closing the regular session at $54.07
- Wall Street maintains a “Moderate Buy” rating with an average target price of $71.36
Despite delivering better-than-expected Q1 results, Tempus AI (TEM) saw its shares plummet 7.2% in after-hours trading Tuesday following the release of full-year guidance that underwhelmed Wall Street.
For the quarter ending March 31, the precision medicine company generated $348.1 million in revenue, marking a 36.1% year-over-year jump and exceeding the Street’s $345.4 million projection. Shares finished regular trading at $54.07 before the post-market selloff.
On an adjusted basis, the company posted a loss of $0.13 per share, outperforming the consensus estimate of $0.20. However, the GAAP loss expanded to $0.70 per share — falling short of analyst projections.
The quarterly net loss ballooned to $125.9 million compared to $68.0 million in the year-ago period. This figure incorporated $56.3 million in stock-based compensation expenses and $32.3 million in unrealized losses tied to marketable securities.
The Diagnostics division generated $261.1 million, representing a 34.7% year-over-year improvement. Oncology test volume expanded 28%, while minimal residual disease (MRD) testing experienced explosive growth of approximately 500% year-over-year, reaching roughly 6,500 tests.
Revenue from Data and Applications jumped 40.5% to $87.0 million. The Insights component within this division saw 44.1% growth. This marked the third consecutive quarter where bookings exceeded the $100 million threshold.
Gross profit increased 43.1% year-over-year to $222.0 million. Adjusted EBITDA loss narrowed to $2.8 million from a $16.2 million loss in the comparable quarter last year.
Guidance Underwhelms
Tempus upgraded its full-year 2026 revenue forecast to a range of $1.59–$1.60 billion, implying approximately 25% annual expansion. However, the $1.595 billion midpoint virtually aligned with the analyst consensus of $1.592 billion — offering little upside surprise for investors.
The company maintained its adjusted EBITDA projection at approximately $65 million for the full year. During the earnings call, management emphasized that additional capital raises are unnecessary and indicated free cash flow improvements are expected in Q2.
Certain segments showed signs of deceleration. Hereditary testing experienced a slowdown, though executives anticipate a return to mid-teens growth rates during the second half of 2026. Reimbursement challenges continue to influence the pace of MRD adoption.
Analyst and Insider Activity
Insider selling activity has been notable. Over the past 90 days, company insiders offloaded 563,471 shares valued at roughly $29.8 million. CAO Ryan Bartolucci and EVP Andrew Polovin were among the executives reducing their holdings in February.
Analyst sentiment remains divided. Needham maintains a Buy recommendation with a $75 price target. Morgan Stanley reduced its target from $85 to $70 while preserving an Overweight stance. Guggenheim lowered its objective from $95 to $60, keeping a Buy rating. Jefferies launched coverage with an Underperform rating and a $35 target.
The Street’s consensus rating stands at “Moderate Buy” with an average price objective of $71.36, significantly above current trading levels.
Institutional ownership has increased in recent months. Invesco expanded its holdings by more than 2,900%, while Royal Bank of Canada boosted its position by 201%.
The stock has traded between $41.73 and $104.32 over the past 52 weeks, with its 200-day moving average positioned at $62.91.
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