Tempus AI's first profit came with $47.1 million of other income and a fifth of data revenue from Pathos AI

Eric Lefkofsky, founder and chief executive of Tempus AI▲+2.20% — Tempus AI, up 2.20 percent today, told analysts on November 2: "This quarter, we made the turn ¹³." The company behind that line, a Chicago genomic-testing and data-licensing firm, had just reported record revenue of $411.5 million, up 23%↗, raised full-year guidance to $1.60–1.605 billion, and booked its first non-GAAP profit: $13.4 million, with adjusted EBITDA of $25.6 million against $1.5 million a year earlier ¹³. The stock closed at $78.48, up 8.7%, valuing Tempus at about $14.3 billion ⁴.

The turn, against the GAAP ledger

The audited-basis lines are quieter. Loss from operations improved 7%, to $56.9 million from $61.0 million ². The net loss narrowed 81% to $14.9 million because other income jumped to $47.1 million from $2.6 million↗: currency gains, marks on marketable securities, and license income from SB Tempus, its Japanese joint venture ². Strip that line out and the pretax loss is about $59.6 million ¹. The non-GAAP profit, in turn, exists only after excluding $50.8 million of stock compensation ¹.

A fifth of the data business is the founder's other company

Of $108.1 million in Data and Applications revenue, $22.1 million came from Pathos AI, the drug-development company Lefkofsky co-founded and chairs ². One dollar in five of the data revenue carrying Tempus's premium multiple was billed to a company its own founder controls.

Pathos owes $200 million in license fees over three years and has settled $17.5 million of them, in two $8.8 million instalments paid in Pathos Series D preferred stock, not cash ². The arm's-length business is real: Bristol Myers Squibb▼−1.56% — Bristol Myers Squibb, down 1.56 percent today is paying up to $137.5 million over five years, bookings top $550 million year to date, and related-party revenue actually fell year over year while the segment grew 33% ¹². The $55 million Alzheimer's tranche still runs through Pathos, as we reported on October 23 ¹².

The vote that prices it, four weeks out

Minimal residual disease (MRD) tests, which look for cancer traces after treatment, reached about 12,000 in the quarter, up 300% from roughly 3,000, inside a test book that grew about 13%, to 244,500 ¹². The assay, NeXT Personal Dx, is made by Personalis, which Tempus agreed on July 20 to buy for $16.25 a share in stock; Personalis holders vote on November 30, and can walk if Tempus's 15-day average price before closing falls below $46 ².

Lefkofsky's own economics warning on the call↗: "when Personalis runs these tests, they lose money" ³. Jefferies▲+0.33% — Jefferies, up 0.33 percent today set Hold at $70 on November 3, BTIG set $100 ⁵⁶, and at 9.9 times sales against a peer group at 7.8↗ ⁷, the multiple keeps assuming the arm's-length data arrives on schedule.