Tempus AI, a medical diagnostics company that uses AI to interpret medical tests to help doctors provide more precise treatment to patients, saw its shares rise as much as 15% in its Nasdaq debut on Friday after going public under the ticker symbol “TEM.”
Tempus AI offered 11.1 million shares on Thursday at $37 apiece, hitting the high end of its initial target price of $35 to $37. The company raised $410 million at an estimated valuation of just over $6 billion. Initial gains had boosted the company’s valuation to $7 billion, but it ended its first day of trading up nearly 9%, giving it a market capitalization of roughly $6.65 billion.
Tempus believes AI can help guide treatment options and care decisions in partnership with patients’ doctors. The company forecast total revenue of $531.8 million in 2023 and a net loss of $214.1 million.
“We’re on a very good trajectory,” Tempus AI CEO Eric Lefkofsky said on CNBC’s “Squawk Box” Friday morning before the stock began trading. “We’re not reinvesting every incremental dollar of gross profit back into the business because our revenue is growing so quickly. We’re improving our leverage every quarter,” he said, adding that he expects the company to be both cash flow and EBITDA positive within the next 12 months.
Tempus AI applies some of the most heavily funded technology concepts – artificial intelligence and data analytics – to building better-informed medical professionals. The shortage of diagnostic tests early in the COVID-19 outbreak was an example of how even a system as mature as our healthcare infrastructure may not be ready for the future.
“We aim to develop Intelligent Diagnostics through the practical application of artificial intelligence (AI) in healthcare to unleash the true power of precision medicine. Intelligent Diagnostics uses AI, including generative AI, to make lab tests more accurate, customizable and personal. We make testing intelligent by connecting lab test results to a patient’s own clinical data to personalize test results,” the Chicago-based company said in its IPO filing.
Twice CNBC Disruptor 50 While the company’s at-home testing kits have been rapidly deployed during the pandemic, the problem Tempus is addressing isn’t COVID-specific. The idea for Tempus came about when Lefkofsky, who is also known as the co-founder of Groupon, became frustrated with the healthcare system after his wife was diagnosed with breast cancer. Oncology is a primary focus, and the company’s genomic tests are designed to understand tumors at a molecular level and tailor treatments for individuals.
Morgan Stanley, J.P. Morgan and Allen & Co. acted as book-running managers for Tempus AI’s IPO.
Investors include Google, Baillie Gifford, Franklin Templeton, NEA and T. Rowe Price, according to PitchBook data.
—CNBC’s Bob Pisani contributed to this report.
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