Chicago-based billionaire and serial entrepreneur Eric Lefkofsky saw his health analytics and precision medicine company Tempus AI go public on the Nasdaq on Thursday, with shares priced at $37 each. The company’s market capitalization currently stands at $6.1 billion, lower than its last private valuation of $8.5 billion. Lefkofsky, who holds an estimated 33% stake in the company, saw his net worth rise to approximately $3.9 billion. The successful IPO could pave the way for other private competitors in the health analytics space to also go public after a lull in IPO activity.
Founded in 2015, Tempus initially focused on oncology, providing personalized treatment options based on analyzing cancer patients’ tumor samples. Over the years, the company has expanded its services to include other disease areas such as neuropsychiatry, radiology, and cardiology. With a customer base of over 2,000 healthcare providers and partnerships with 19 of the world’s largest pharmaceutical companies, Tempus aims to use artificial intelligence to analyze healthcare data and personalize care in major disease areas globally. Despite losing $214 million on $532 million in revenue in 2023, the company remains optimistic about its long-term prospects.
Tempus received $10 million in initial funding from Lightbank, a venture capital firm co-founded by Lefkofsky and his business partner Brad Keywell. Subsequent investments from prominent firms like Google, New Enterprise Associates, and Revolution, among others, have totaled over $1.3 billion. Looking ahead, Tempus may use part of the proceeds from its IPO to pay down a $266 million loan. Lefkofsky’s 33% stake in the company is unusual in the tech industry where outside investments often dilute founder stakes, and he holds approximately 65% of voting control through his ownership of all supervoting shares.
Despite its impressive revenue growth, Tempus is still losing money and has $450 million in debt. Analysts caution that the company will need to break even sooner rather than later to succeed in the public markets. However, Lefkofsky remains optimistic about Tempus’ future profitability, pointing to its two-pronged business model of genomics and related testing, as well as data and services. The company’s ability to monetize its data, which improves with more patient samples analyzed, could be key to achieving profitability.
As Tempus faces competition from established players like Guardant Health and Neogenomics, as well as legal challenges such as a lawsuit filed by Guardant over patent infringement, Lefkofsky remains focused on growing the company and expanding its pharmaceutical collaborations. He sees potential in monetizing services like AI models for doctors to assist in patient care decisions. Despite the challenges ahead, Lefkofsky views Tempus as a unique opportunity for him as the first company he founded and led as CEO at its public offering. He emphasizes the importance of building a strong foundation for sustainable long-term growth, rather than rushing into international expansion.
