Shares of Tempus AI TEM gained 18.4% after it announced an agreement, on Nov. 4, 2024, to acquire Ambry Genetics for $600 million. This acquisition will likely help Tempus revolutionize healthcare by integrating cutting-edge genetic testing with AI-driven insights, especially testing capabilities for inherited cancer risk.
Per the acquisition deal, Tempus AI’s total consideration for Ambry includes $375 million in cash and $225 million in equity. The deal is anticipated to be closed in the first quarter of 2025.
By acquiring Ambry, Tempus can better support healthcare teams from early diagnosis to ongoing patient management, reinforcing its role as a leader in precision medicine. The deal will likely drive TEM’s prospects as it targets a lucrative cancer market.
The company’s shares have surged 45.6% so far this year against the industry’s decline of 13.2%. The S&P 500 Index has risen 25.4% in the same period.
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About Ambry Genetics
Ambry Genetics, headquartered in Aliso Viejo, CA, is a pioneer in genetic testing with a mission to enhance health outcomes by elucidating the relationship between genetics and disease. Known for its expertise in hereditary cancer screening, Ambry provides crucial services that empower clinicians to assess inherited cancer risks.
Ambry serves as Tempus AI’s primary reference lab for hereditary cancer testing, a relationship that has already laid a strong foundation for collaboration between the two companies.
Additionally, Ambry’s comprehensive portfolio spans diagnostics for pediatrics, rare diseases, immunology, reproductive health and cardiology that will likely solidify TEM’s position as a leader in personalized healthcare solutions.
Details of the Agreement
The acquisition agreement involves the transfer of all outstanding shares of Ambry Genetics from its parent company, REALM IDx, Inc., a subsidiary of Japan-based Konica Minolta, Inc., to Tempus AI. The deal will be financed through a $300 million short and long-term debt. Post-acquisition, Ambry will function as a wholly owned subsidiary of Tempus, retaining its current employees and a full suite of testing services.
Strategic Benefits for Tempus AI
The acquisition is a strategic fit for Tempus AI’s broader vision of integrating diagnostic and treatment solutions under one roof. Eric Lefkofsky, CEO of Tempus, highlighted the importance of capturing patients at the early stages of disease, supporting their treatment journey and monitoring disease progression over time. Ambry’s capabilities significantly enhance Tempus’ ability to fulfill this goal by expanding its portfolio of hereditary testing and venturing into new disease categories.
Ambry’s expertise in hereditary cancer screening complements Tempus’ existing offerings. Furthermore, adding Ambry’s capabilities in rare diseases, pediatrics, cardiology and reproductive health broadens Tempus’ reach across multiple specialties. Integrating Ambry’s services allows Tempus to streamline workflows by reducing dependency on multiple laboratories. This unified approach appeals to physicians and healthcare providers who seek comprehensive solutions for patient care.
Ambry is projected to generate $300 million in revenues in 2024, with annual growth exceeding 25%. This acquisition positions Tempus to capture a larger share of the genetic testing market while benefiting from Ambry’s robust revenue stream.
Favorable Industry Prospects for TEM
Per a report by Allied Market Research, the global hereditary cancer testing market size was valued at $3.5 billion in 2021 and is projected to witness a CAGR of 11.6% until 2031 to reach $10.1 billion.
The rise in the geriatric population, the surge in the incidence of cancer worldwide and the increase in government expenditures on healthcare are primary factors that should drive the market until 2031.
This implies a significant opportunity for TEM’s diagnostic business.
Recent Developments
Tempus AI witnessed strong top-line growth in both segments earlier this month. TEM’s Data and Services segment also witnessed a significant expansion in adjusted gross margin and impressive top-line growth.
During the third quarter of fiscal 2024, Tempus announced a multi-year collaboration with BioNTech to leverage Tempus’ TCR dataset in support of BioNTech’s next-generation oncology pipeline. TEM also announced a three-year extension with Merck EMD at the culmination of the last three-year strategic agreement.
Tempus AI, Inc. Price
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TEM’s Zacks Rank & Stocks to Consider
Tempus AI carries a Zacks Rank #3 (Hold) at present.
Some better-ranked stocks from the medical industry are Masimo MASI, AngioDynamics ANGO and Globus Medical GMED.
Masimo, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 13.5% for 2025. You can see the complete list of today’s Zacks #1 Rank stocks here.
MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%. Masimo’s shares have risen 47.6% year to date compared with the industry’s 4.8% growth.
AngioDynamics, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 38.2% for 2025. ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.
AngioDynamics’ shares have lost 12.9% year to date against the industry’s 4.8% growth.
Globus Medical, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 14.1%. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.1%. Its shares have risen 58.9% year to date compared with the industry’s 4.8% growth.
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