Tempus AI (TEM) Stock Drops 7% After Earnings — Here’s Why a Beat Wasn’t Enough

TLDR

• Tempus AI posted Q1 revenue of $348.1M, up 36.1% year-over-year, beating estimates of $345.4M
• Adjusted loss of $0.13 per share beat the $0.20 consensus, but GAAP loss widened to $0.70 per share
• Full-year 2026 revenue guidance raised to $1.59–$1.60B, but the midpoint barely matched analyst expectations
• TEM stock dropped 7.2% in after-hours trading, closing the regular session at $54.07
• Analysts maintain a “Moderate Buy” consensus with an average price target of $71.36

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Tempus AI (TEM) beat revenue and adjusted earnings estimates in Q1, but the stock dropped 7.2% in after-hours trading Tuesday after its full-year guidance landed at the low end of expectations.

Tempus AI, Inc., TEM

The company reported revenue of $348.1 million for the quarter ended March 31, up 36.1% year-over-year and ahead of the $345.4 million analyst estimate. TEM closed the regular session at $54.07 before the after-hours drop.

The adjusted loss per share came in at $0.13, better than the $0.20 consensus. But on a GAAP basis, the loss widened to $0.70 per share — worse than expected.

The net loss for the quarter deepened to $125.9 million, up from $68.0 million in Q1 2025. That included $56.3 million in stock compensation and $32.3 million in unrealized losses on marketable securities.

Diagnostics revenue hit $261.1 million, a 34.7% year-over-year gain. Oncology testing volume grew 28%, and minimal residual disease testing surged around 500% year-over-year to roughly 6,500 tests.

Data and Applications revenue rose 40.5% to $87.0 million. The Insights segment within that unit grew 44.1%. It was also the third straight quarter where bookings topped $100 million.

Gross profit climbed 43.1% year-over-year to $222.0 million. Adjusted EBITDA improved to a loss of $2.8 million from a loss of $16.2 million in the same period last year.

Guidance Underwhelms

Tempus raised its full-year 2026 revenue outlook to $1.59–$1.60 billion, representing around 25% annual growth. The midpoint of $1.595 billion essentially matched the analyst consensus of $1.592 billion — giving the market little reason to cheer.

The company kept its adjusted EBITDA guidance at roughly $65 million for the full year. Management said on the call that no additional financing is needed and that free cash flow should improve in Q2.

There were some softer spots in the quarter. Hereditary testing slowed, though management expects it to return to mid-teens growth in the second half of the year. Reimbursement dynamics are also pacing the MRD ramp.

Analyst and Insider Activity

Insiders have been selling. In the last 90 days, insiders sold 563,471 shares worth approximately $29.8 million. CAO Ryan Bartolucci and EVP Andrew Polovin were among those trimming their positions in February.

On the analyst side, the picture is mixed. Needham holds a Buy with a $75 target. Morgan Stanley cut its target from $85 to $70 but kept an Overweight rating. Guggenheim lowered its target from $95 to $60, maintaining Buy. Jefferies initiated with an Underperform and a $35 target.

The current analyst consensus sits at “Moderate Buy” with an average price target of $71.36, well above where the stock is trading.

Institutional interest picked up in recent quarters. Invesco raised its position by over 2,900%, and Royal Bank of Canada increased its stake by 201%.

The stock’s 52-week range runs from $41.73 to $104.32, and its 200-day moving average stands at $62.91.

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