Tempus Soars 9% on Trading Debut, Highlighting Investor Interest in Promising AI-Driven Health Tech

Tempus, the genomic testing and data analysis company founded by Eric Lefkofsky, best known for establishing Groupon, made its debut on Nasdaq this past Friday, with shares surging approximately 15% at the opening bell.

On Thursday, the company priced its initial public offering (IPO) at $37 per share, which was the upper limit of its anticipated range of $35 to $37, successfully raising nearly $411 million and achieving a fully diluted valuation exceeding $6 billion. Nonetheless, Tempus previously held a private valuation of $8.1 billion, with PitchBook data suggesting it was valued at $10.25 billion as of late 2022. By the end of its first trading day, shares closed at $40.25, reflecting a nearly 9% increase from the IPO price.

Even with a considerable markdown from its prior valuation, this IPO represents a significant achievement for Tempus, a company navigating the challenges of launching during a relatively subdued climate for public offerings. In 2023, the company reported revenues of $531 million, paired with a net loss of $290 million. However, it has made strides in reducing its operating losses, which declined from 83% in 2022 to 37% in 2023. Lefkofsky expressed optimism to CNBC, projecting that Tempus will reach cash flow and EBITDA positivity by 2025.

Tempus was established in 2015, inspired by Lefkofsky's experience observing the lack of data utilization during his wife’s breast cancer treatment. His vision was to create a company leveraging technology and data derived from genomic sequencing.

Currently, Tempus is rebranding itself as an AI-focused enterprise, although AI revenue represented a modest $5.5 million, or roughly 1% of its 2023 total revenue. In its prospectus, the company acknowledged that its AI product line is still in its early stages but emphasized its goal to “embed AI, including generative AI,” across its diagnostic tools.

Lefkofsky remains the predominant shareholder, owning 30.1% of the company and commanding 65% of shareholder voting power thanks to the dual-class share structure. A firm overseen by Kimberly Keywell, Lefkofsky’s longtime associate's former spouse, holds a 10.2% stake in Tempus. Meanwhile, Scottish asset manager Baillie Gifford maintains a 5.9% ownership, equivalent to $350 million at the IPO price.

Notable early investors in Tempus include NEA, Revolution, and T. Rowe Price. In April, the company secured a $200 million Series G5 investment from SoftBank. This IPO marks the fourth time Lefkofsky has taken a company public; he is particularly recognized for founding Groupon, which went public in 2011 at nearly $13 billion in valuation but is currently trading at under $600 million.