Tempus AI - Earnings Call - Q4 2024

Executive Summary

• Q4 2024 revenue grew 35.8% year-over-year to $200.7 million; gross profit rose 49.7% to $122.1 million, driven by strength in Data & Services. Adjusted EBITDA improved to $(7.8) million and GAAP net loss narrowed to $(13.0) million.
• Management raised 2025 revenue guidance to approximately $1.24 billion and guided to positive 2025 Adjusted EBITDA of about $5 million; sequential phasing implies ~20% of full-year revenue in Q1 given seasonality.
• Total Remaining Contract Value ended 2024 at $940 million with 140% net revenue retention, supporting visibility into 2025 despite “lumpy” bookings; one >$10 million data delivery slipped from Q4 to early 2025 (timing, not demand).
• Ambry Genetics closed on Feb 3, 2025; combined platform expands hereditary testing and payer relationships. Management models Ambry high-teens growth in 2025 as it laps 2024 accelerants, with Tempus core nearer 30%.
• Reimbursement catalysts: xT CDx received ADLT status at $4,500/test and CMS reimbursement for ECG-AF algorithm at $138; in-network wins with Blue Cross IL/CA and Avalon will support ASPs over time.

What Went Well and What Went Wrong

What Went Well

• Data & Services delivered a strong quarter: revenue up 44.6% YoY to $80.2 million; segment gross margin reached 79.5% GAAP and 80.3% non-GAAP, lifting consolidated gross margin to 60.8%.
• Contracting momentum and retention: 2024 ended with $940 million TCV and 140% net revenue retention; management highlighted larger subscriptions with committed spend and quarterly delivery cadence.
• Guidance and profitability trajectory: 2025 revenue guidance increased to ~$1.24B; company expects to be Adjusted EBITDA positive (~$5M), a ~$110M improvement versus 2024, reflecting operating leverage and mix shift.
  Quote: “Our revenue growth accelerated to 35.8%… gross profit was growing even more rapidly… we expect to be adjusted EBITDA positive and generate about $5 million” — Eric Lefkofsky.

What Went Wrong

• CRO softness and timing of deliveries: Management cited softness in CRO revenues and a >$10M data delivery that naturally timed into early 2025, muting Q4 reported revenue despite underlying demand.
• Seasonality affects Q1 setup: Q1 is typically the lowest revenue quarter (about 20% of FY), particularly as data deliveries are back-half weighted with pharma budget cycles, which may temper near-term growth optics.
• GAAP losses remain: Q4 GAAP net loss was $(13.0)M; full-year GAAP net loss was $(705.8)M, reflecting substantial stock-based compensation ($547.7M for FY), albeit improving quarterly profitability metrics.

Transcript

Operator (participant)

Thank you for standing by. My name is Jason, and I will be your conference operator for today. At this time, I would like to welcome everyone to the fourth quarter 2024 financial results conference call. All lines have been placed on mute to prevent any background noise. After today's presentation, there will be an opportunity to ask questions. If you would like to ask a question during this time, simply press star, followed by the number one, and your keypad to join the queue. I will now turn the call over to Lizzie Krutoholow. Please go ahead.

Lizzie Krutoholow (Head of Investor Relations)

Thank you, Jason. Good afternoon, and welcome to Tempus' fourth quarter 2024 conference call. This afternoon, Tempus released results for the quarter, and year ended December 31st, 2024. Joining me today from Tempus are Eric Lefkofsky, Founder and CEO of Tempus, and Jim Rogers, CFO. Before we begin, I would like to remind you that during this call, management may make forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. For discussion of these risks, please visit our 10-K filed today, February 24th, 2025, as well as any future reports that we file with the SEC. During the call, we will discuss non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles.

Definitions of these non-GAAP financial measures, along with reconciliations to the most directly comparable GAAP financial measures, are included in our fourth quarter earnings release, which has been furnished to the SEC and is available on our website and investors.tempus.com. I would now like to turn the call over to Eric.

Eric Lefkofsky (CEO)

Thank you and thanks, everyone, for joining the call. I'm just going to highlight a few quick bullets, and then we'll be happy to take questions. Q4 was a fantastic quarter for Tempus across the board. Our revenue growth accelerated to 35.8% year-over-year in the fourth quarter. Gross profit growth accelerated to 49.7%, so even though our revenues were growing rapidly, our gross profit was actually growing even more rapidly. We ended the year with $940 million in total remaining contract value and 140% net revenue retention. These were both up pretty materially. And one of the reasons that our gross profit growth was growing so quickly is our Data and Services business just had a really strong Q4, finishing a really strong year, and so that propelled some of that growth.

It also is the reason we ended the year with an uptick in total remaining contract value and really record net revenue retention. We also closed the acquisition of Ambry Genetics on February 3rd, which is exciting as we've talked about that historically, but that's now behind us, so we'll have two months this quarter of Ambry's results in our numbers, and we also increased our revenue guidance. We had historically given $1.23 billion, but we've upped that to $1.24 billion for 2025 and expect to be just at Adjusted EBITDA positive and generate about $5 million of Adjusted EBITDA. Obviously, we're not providing a range. We give fairly specific numbers, but there's always an implied range, but we feel confident enough that we're increasing our guidance for 2025.

Finally, I want to just note, if you read the letter Jim and I put out, you'll catch this in a section, but we did extend our Google agreement for another five years. It's kind of an awesome win for us in that it allows us to avail ourselves of really best-in-class rates, and it pushes out the note we have with Google another five years. And that note, as you'll recall, comes down as we spend on their platform, so it gives us more chance to work that down. So all in, great quarter. It's where we want to be. You want revenues accelerating in terms of growth. Our gross profits are growing quicker. Our costs are in line. So we're generating the kind of leverage we want to see.

It's really just nice to be in a position where certainly our two main businesses, genomics and data, are really firing on all cylinders and in a period of strength. On that note, I'm happy to take questions.

Operator (participant)

We will now open the line for questions. As a reminder, please press star, followed by the number one, and your keypad to join the queue. If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your device is not on mute when asking a question. The first question comes from the line of Tejas Savant with Morgan Stanley. Please go ahead.

Tejas Savant (Executive Director)

Hey, guys. Good evening. And congrats on closing the Ambry transaction. Eric, just one question there for me. One of the benefits you'd highlighted in terms of bringing Ambry in-house is that it gives you a West Coast lab. So over what time frame could we see you bring some of your somatic workflows to that location? And then, Jim, on the seasonality in the Ambry business, how should we think about what's contemplated in the guide? Obviously, just two months of contribution here in 1Q, so there will be a mathematical ramp. But beyond that, anything to think about in terms of seasonality through the year?

Eric Lefkofsky (CEO)

Yeah. So I can start. So Ambry does give us a West Coast lab for those that may not recall. We have labs in Chicago, Raleigh, North Carolina, and Atlanta. So now with the acquisition of Ambry, we pick up a lab out west. Over time, we will look to have our somatic or CGP assays or comprehensive genomic profiling assays run out of their lab. We'll look to bring some of their inherited risk assays into our labs. But there's no immediate plans to do that in the next few quarters. It's more of a longer-term initiative to make sure we have appropriate redundancy operating out of all of our big labs across the country. We're fortunate that Tempus already has that in place today between Chicago and Raleigh. So we built a lot of that redundancy, both in terms of operating workflows.

In case one lab has a problem or something goes down, also we benefit from some of the reimbursement diversity of having those two labs, and the California lab of Ambry will give us additional redundancy and additional benefits, so I would say over the next year or two, we'll look to start moving some of those assays and cross-pollinating.

Jim Rogers (CFO)

Yeah. And then I'll take the second question with regards to seasonality of the Ambry business. I think they experience the same seasonality that we do with our business and other labs. Typically, around the holidays, things slow down. I would say that given where they're at in terms of kind of capturing market share as well as kind of growing their rare and undiagnosed business, we would anticipate kind of revenues growing throughout the year, similar to what they do in kind of the Tempus business. So there is some seasonality, but we would just anticipate revenues continuing to grow kind of quarter after quarter, no different than the Tempus business.

Tejas Savant (Executive Director)

Got it. And then a quick follow-up on the data side of things. In your prepared remarks, you guys flagged one data delivery project, I think, that slipped out of the quarter. Can you just quantify the impact, and was that a customer delay? And Jim, on that note, what exactly is the data contribution that you're baking into your guide? Should we think of that as a safe number that's essentially de-risked, or is there any sensitivity depending on pharma budgets, particularly for the smaller customers who haven't signed those strategic longer-term contracts with you?

Eric Lefkofsky (CEO)

Yeah. So I'll start with the first. So we had a fairly large data delivery north of $10 million that we could have pushed to get out potentially in Q4, but the natural kind of timing of that is the early part of this year. And I was just referencing it because it's not that the client had an issue or we had an issue or there was any issue. It's just that in every quarter, when you get to our size and you have a data business this large, there are timing of these delivery of these data sets that can slip a month here or a month there. They can get pushed up into a quarter. They can get pushed back into a quarter. And so we always have puts and takes, and I was just highlighting that.

And if that data delivery would have gone out in Q4, we would have. You can add a significant amount of revenue to Q4. So it would have been. That's why I also said when we talk about $700 million of revenue, it could be $693 million. It could be $706 million. And most of that has nothing to do with the performance of the business or what's going well. It can just be the timing of when tests are ordered or when data is delivered.

Jim Rogers (CFO)

And then the second part of your question, Tejas, around kind of the 2025 guide and kind of where the contribution from data is. I'd say the $940 million of total remaining contract value obviously gives us good visibility into 2025. The larger agreements have kind of committed spend, and those larger subscriptions get delivered kind of quarterly. The smaller agreements, there's always some subset of those that get signed and delivered in the year, but the majority is under contract as you go into 2025.

Tejas Savant (Executive Director)

Got it. That's helpful. Appreciate the time, guys.

Operator (participant)

The next question comes from the line of Rachel Vatnsdal with JPMorgan. Please go ahead.

Great. Thank you. This is [Casey] on for Rachel. Just had one on the new guidance for 2025. When backing into the math, it looks like Ambry is now an implied 17% top-line growth rate if keeping core Tempus at 30%. So maybe just help us walk through kind of how we should think about Ambry in the model in 2025. And then I have one follow-up. Thanks.

Eric Lefkofsky (CEO)

Yeah. I mean, so we've historically said, and you can see this in the commentary that Jim and I provided, that Ambry benefited in 2024 from some ASP headwinds and some fluctuations in the market related to competitors where a lot of volume was moving to their direction. Now, they also have a best-in-class product that has been outgrowing the market anyway. So they were going to grow nicely, but they had a couple of things in 2024 that were accelerants to their growth rate. And so in 2025, as they lap those accelerants, you could see a growth rate that might be normally in the kind of low 20s be in the high teens. And so we've talked about that last quarter and suspect that could be the case now.

Some of this will see how the year plays out, but we are, as we've said historically, forecasting core Tempus to be closer to 30%, Ambry in the high teens, whether it's 17% or 19% or whatever, somewhere in that direction, and I suspect that's how things will play out unless there's more accelerants that come their way.

Got it. That's helpful. And then just as a quick follow-up, you mentioned 20% of revenues will fall in 1Q. I understand you have the ADLT percentage of volume kind of growing over the course of the year and other reimbursement tailwinds. Can you just maybe walk us through the quarterly phasing of the guide and maybe what the exit rate looks like? Thank you.

Jim Rogers (CFO)

Yeah. So Q4 is always a very big data delivery quarter for us, as we kind of talked about. And so as you get into Q1, Q1 is always kind of, in terms of percentage of overall revenue in the year, the lowest. And so what we've guided is consistent with what we've seen in previous years. Specific to ADLT status, again, in the commentary that we provided, we expect to end the quarter with about 20% of our xT volume moving over to ADLT. So as we've highlighted in the past, kind of the national launch started in January, but it will take kind of the balance of the year and into next year until we have the vast majority of that test on the ADLT version.

So we guided to the 20% of the revenues in Q1, and we would anticipate a similar kind of phasing as what we saw last year.

Got it. Thank you.

Operator (participant)

The next question comes from the line of Mike Ryskin with Bank of America. Please go ahead.

Mike Ryskin (Managing Director)

Great. Thanks for taking my question, guys. I want to follow up really quick to [Casey's] point right there on Ambry contribution. I just want to get a little deeper into sort of how you think about the model longer term. I mean, you talked about what it was contributing to growth or what it grew in 2024 and some of those accelerants. Like we just discussed, sort of like now it looks like it's high teens in 2025. I think you just made some comment of you see it longer term as a 20% growth, or I just want to make sure I caught that correctly. Just how we flesh it out in our model in 2026 and beyond, just if you talk about what you see the Ambry business doing longer term. And I've got a follow-up. Thanks.

Eric Lefkofsky (CEO)

Yeah. I think I would suspect we've told people that kind of long-term growth rate for Tempus, you should think of us. If we're growing the business long-term at 25%, that's a perfectly solid growth rate. We're more focused on long-term sustainable growth than we are focused on maximizing short-term growth. So you'll see us make that trade all the time. If we can do things that we feel are sustainable and durable, we choose that path instead of kind of picking up a bunch of growth in the current quarter that isn't durable. I think, interestingly enough, and we've seen some of that this year where, I think, again, in some of Jim's commentary, you talk about lapping a period where maybe we had some ASP, some cash collections in 2023 that we had to lap in 2024.

So you get some of these anomalies where your growth rates can bounce around a bit. And we're still, even at our size, this isn't a $100 billion business where these fluctuations don't make a difference. So at our size, if you pick up an extra $20 million or $30 million of revenue and then you lap that, it can cause some issues. But I would suspect long-term, you'll see Ambry's growth rate and our growth rate probably in terms of the genomics business be pretty similar. I think these things can grow at 25% for a sustainable amount of time. I think the data business and the apps business can grow a bit faster. So core Tempus may be benefited by our data and our AI applications that obviously can grow much quicker or can grow quicker.

But in terms of core genomics, I think the comprehensive genomic profiling and therapy selection, the minimal residual disease, and the inherited risk profiling, these are still businesses with huge amounts of growth. I mean, I believe that many, many people, if not most people, will be profiled for risk in the future. And the fact that Ambry is a leader in that space, you can do the math. In a world where many, many people are profiled or most people are profiled, you're quoting numbers in the hundreds of billions - I'm sorry, in the hundreds of millions. And today, they're running a fraction of those tests. So I think they have a lot of headroom, and I would suspect their growth rates will start to, over time, be similar to ours.

Mike Ryskin (Managing Director)

Okay. All right. And then for the follow-up a little bit, I want to touch on the data side of things. One is you kind of talked about the total contract value in some of your prepared remarks. I think 940 is where you ended the year. It sort of has been at that ballpark all year in the low 900s, like 920, 930, 940. So we've always kind of thought of that as a leading indicator of growth. How should we think about that going forward? I mean, there were some remarks in the prepared remark text of you actually kind of expect it to decline in the future, given it's a large number. But yeah, I mean, just why shouldn't that be an indicator of future revenue growth? So wouldn't you like to see that number grow higher?

Jim Rogers (CFO)

Yeah, so I'll start in there. You can chime in. I'd say the number did grow higher throughout the course of the year, and we also kind of grew the amount of revenue that came out of that was at a record level as well, so any growth in that number, when you're kind of achieving kind of the revenue growth that we saw, you'd be very happy with. The way that we kind of view the total remaining contract value is, it at a healthy enough level to kind of give you some visibility into the next several years of revenue? And at the levels that it's at, given the amount of revenue that we recognize in a given year, it provides that level of visibility.

As we've previously kind of talked about, when we get kind of larger deals, then that can result in some fluctuation of those, and you don't sign kind of very large deals every single quarter. We highlighted some of the larger deals that we signed in the quarter with BI and Illumina. And again, we think that it's at a very healthy level for us to achieve the targets that we're looking to achieve.

Eric Lefkofsky (CEO)

Yeah. And the punchline is it's lumpy, right? So the fact that it's growing and the fact that our net revenue retention is so high means the core business is really, really strong, right? I mean, in simple terms, if you've got about $1 billion of total contract value and you've delivered $250 million in a year, to have the number grow, you had to basically sign more than that. So that's awesome. But yes, I mean, in a perfect world, you'd like it to grow by your growth rate. So if you think of it like, our growth rate is such that you have to basically sign all the data you delivered plus another, let's say, whatever, 30%, then maybe you'd want it to grow by $75 million, and it only grew by $30 million, right?

But it's still so you might say, "Well, I wish it grew by $30 million or $40 million more." But you have almost a $1 billion-dollar buffer in your data business. So it's going to be lumpy. You're going to have some years where we might sign a $200 million deal from Illumina, and it's going to jump right up again. It's not going to grow perfectly every quarter. It's not going to grow perfectly every year. So we look at it and say, "The fact that we're ending the year and we've got more in the tank than when we started, and we just took almost $250 million out of the tank means it's super healthy." But long-term, you're going to want it to manage your growth rate.

Mike Ryskin (Managing Director)

All right. Thanks. I'll get back in the queue.

Operator (participant)

Next question comes from the line of Ryan MacDonald. Please go ahead.

Ryan MacDonald (Managing Director and Senior Equity Research Analyst)

Hey, on for Ryan. Thanks for taking the questions. Nice to see the formal announcement around being an in-network provider for various Blue Cross Blue Shield plans. Would love to unpack that a bit. What kind of impact do you anticipate going in-network to have on volume? And maybe more importantly, would love to get a refresher on what that does from a reimbursement perspective.

Jim Rogers (CFO)

Yeah. So I'd say the announcements that we made about going in-network with folks, as a reminder, we're primarily an out-of-network lab with commercial payers. Medicare and Medicare Advantage represent about 50% of our volume. So about a little bit less than half is commercial payers. So any win that we can get with commercial payers is obviously an uplift to reimbursement. We don't have a significant concentration among commercial payers. So no one payer, if we go in-network, kind of materially changes the reimbursement profile. However, chipping away at that 45% or so of commercial volume is important long-term as we look to drive ASPs up. So the biggest ASP tailwinds as we get into 2025 are migrating volume over the ADLT version of the assay, which will primarily kind of impact Medicare and Medicare Advantage volume, although some commercial volume as well.

Then for xF, our liquid biopsy, that was going through the gap fill process with Medicare last year. That resulted in about a $300 uplift in reimbursement from Medicare. So again, another kind of tailwind that we'll have in 2025 that impacts about 50% of our volume. These smaller wins on the commercial side impact a smaller percentage.

Ryan MacDonald (Managing Director and Senior Equity Research Analyst)

Got it. That's helpful, Jim. And then maybe on the regulatory environment, there's been a lot of changes at the FDA or proposed changes, some of which could be favorable for AI companies, but also a lot of layoffs that could potentially delay decision-making or trial approvals. So based on what we've seen today and where you sit, do you see what's going on at the FDA or in the broader federal government as more of a headwind or a tailwind to Tempus?

Eric Lefkofsky (CEO)

I think for us, it's generally a headwind. I mean, we are an AI-enabled diagnostics company that is focused on technology, and so I'm sorry, it's a tailwind, meaning it's a benefit, so for us, we think we benefit as a tech company, as somebody focused on AI. These kind of changes are generally trying to figure out how to get more efficiency, more technology, and we think we benefit from that kind of thinking. There could be some minor slowdowns related to staffing as people are let go in the FDA, but we don't expect them to be material, and we're not reliant on any kind of FDA rulings coming out that would change our business, so net-net, we think it's tailwind.

Ryan MacDonald (Managing Director and Senior Equity Research Analyst)

Got it. Thanks, guys.

Operator (participant)

The next question comes from the line of Dan Brennan with TD Cowen. Please go ahead.

Dan Brennan (Senior Equity Research Analyst)

Great. Thanks for the questions. I know there's a question or two on the data side, but I was just hoping implicit in the guide. So if we're thinking about core Tempus growing 30%, presumably we have that level in our model, but we've got data growing in kind of the mid-30s%+ with the genomics organic growing in the mid-20s%. Does that sound like the right zip code? Or if not, can you help us think through what the right levels of growth for those two businesses are?

Jim Rogers (CFO)

Yeah. I think that's largely aligned. I think on the genomics side, obviously, you have some ASP tailwinds, so we would anticipate revenues outpacing kind of volume growth. And data as it has this year as well, kind of growing slightly more quickly than the genomics business. So I think you're on track there.

Dan Brennan (Senior Equity Research Analyst)

Got it. And then just maybe on the margin guide, the $5 million EBITDA margin, which is good, can you just help break down a little bit in terms of core Ambry versus the core Tempus business? And are there any synergies assumed in order to get to that number? And kind of what would be some of the drivers if you were to beat that number in 2025?

Eric Lefkofsky (CEO)

Yeah. I mean, so we've considered it, as we've talked about historically, we've considered it a goal to get to being Adjusted EBITDA and cash flow positive. So we've been focused on that. And when we think about the investments we make in the forward year, we've been making investments predicated on this idea that our revenue is growing at X level, our gross profit's growing at X level. We can invest this amount in technology, R&D, people, all that good stuff. And we want to generate improvement in the bottom line such that we can flip to being positive. We're fortunate that we are about to make that flip, so that's awesome. And our guide for 2025 implies that we're clearly there. But we're not focused in the near term on harvesting profits or maximizing profits.

To the extent that we are beating EBITDA, you'll likely see us in the near term invest more in growth. And certainly for 2025, that'll be the story. We're not going to look to crush that number because we can. If we're crushing the number, we're going to make investments, at least for some large extent, back into business and back into growth.

Jim Rogers (CFO)

And then, Dan, on your question around synergies in the guide, no significant synergies kind of built in there. We anticipate kind of running Ambry kind of fully as a standalone business, at least for 2025. And so we're well into 2026 before we'd be realizing anything significant.

Dan Brennan (Senior Equity Research Analyst)

Great. Thank you.

Operator (participant)

The next question comes from the line of Subbu Nambi with Guggenheim. Please go ahead.

Subbu Nambi (Managing Director)

Hey, guys. Thank you for taking my questions. Eric and Jim, what is embedded in your 2025 guidance, if anything, for this year with respect to expectations for improvements in payer coverage for core Tempus tests as a result of Ambry acquisition and Ambry payer relationships and contracts? That's one, and I have a follow-up.

Jim Rogers (CFO)

Yeah. So the overlap between the two businesses is relatively small. So it's a minimal amount of impact as we kind of migrate the reimbursement over to Ambry. Think less than $10 million. So there's not a ton of overlap in the current business, but there will be some small benefit that we receive as we migrate that reimbursement.

Subbu Nambi (Managing Director)

Okay. Got it. And then you most recently announced a commercial agreement with ArteraAI to commercially offer their prostate prognostic test. Could you tell us about the process that leads to an agreement to offer a test like this? And then how do you decide to choose one test versus one provider over competing offerings? And what are your priorities in that decision?

Eric Lefkofsky (CEO)

I mean, well, so one of the things that we also highlighted in the quarter is we're now connected to 3,000 hospitals or so in the United States or institutions in the United States. And so you're looking at a significant percentage of the United States that's now connected to Tempus. And one of the benefits of that connectivity is not just that we can efficiently sequence a lot of patients and help them navigate to the right therapy and produce a lot of data that helps research and development downstream, but it also allows us to connect these AI-enabled insights back into the U.S. healthcare system at scale, whether those insights are helping match patients to a clinical trial or close a care gap or deploy an algorithm that can be diagnostically relevant for a patient to make sure they're on the right path.

So that connectivity is really at the heart of the proprietary value that Tempus is building. At scale, which we're at now, we can deploy our own algorithms into the market, or we can deploy third-party algorithms. And so I would suspect you'll see us over time more and more bring third-party algorithms onto our platform because of that connectivity. So if somebody develops a really good test that's predictive or prognostic or can help somebody in some way, and especially if it's getting reimbursed and has analytical and clinical validation behind it, we may bring that onto our platform. We have a team that reviews these things and makes those decisions. It's typically patient-led and physician-led. What's best for patients? What do our doctors want?

But I think, as I've said, historically, I would not be surprised if over time we have dozens or hundreds of algorithms running on our platform or thousands at scale because we have the ability to distribute them in ways others don't.

Subbu Nambi (Managing Director)

Thank you for that, Eric. I'll get back in the queue.

Operator (participant)

The next question comes from the line of Doug Schenkel with Wolfe Research. Please go ahead.

Doug Schenkel (Managing Director, Senior Research Analyst, and Head of Life Science and Diagnostic Tools)

Good afternoon, and thank you for taking my questions. Two topics I want to cover. First, on MRD, could you just speak to when you are expecting any data readouts on tumor-naive or tumor-informed? So both products. And I guess related to that, I just want to confirm that there's nothing in revenue guidance related to both, given the current state of reimbursement and the need for more data. So that's the first topic. The other is on capital deployment. Obviously, you were active at the end of last year with Ambry. As you think about priorities from here, what's the appetite for more M&A based on your balance sheet situation and the current market environment? Thank you.

Eric Lefkofsky (CEO)

Yeah. So I can start, Jim. So in terms of MRD, obviously, we've taken a tumor-naive assay to market. We started in CRC, and we've already put out some studies related to that assay. There will be more over time, but there's nothing significant that would fundamentally change our trajectory. We have an assay in market. We've submitted for reimbursement. Unless MolDX needs something different for reimbursement, we're on a good path to have that assay be reimbursed at some point in late 2025. And the next step for us will be to take that assay into other disease areas, into other subtypes, which we will do over time. We're collecting samples now, and we'll bring that assay to market. We're consistently refining the assay to make it more sensitive and decrease the lower limit of detection.

That work is ongoing, and we'll look to bring that to other disease areas over time. There's no kind of pivotal study that we need to do something. We're already past all that, and it's already moving. I think the same is true for Personalis. They have assays in market and non-small cell lung and breast and I/O. They've already submitted quite a bit. I think they're in the process of submitting across the board for reimbursement. They too have, I think, quoted that they expect reimbursement to show up sometime later this year, although you have to read their filings to get the most up-to-date. In terms of guidance, we have a long history of only focusing on what we can see. Until we know that assay is being reimbursed, we're not going to include anything substantive from it.

Because again, we're in a world where it could be later this year, it could be early next year, it could be Q3, it could be Q4. It's just impossible to tell. Once we get reimbursement, we'll start ramping up these assays at much greater scale because obviously getting paid is a good precursor to ramping them up. And so that's that. In terms of capital, we also said last quarter that we feel pretty good in terms of our genomics footprint. We feel like we've got a really incredible complement, really best in class on a scale that's unique. So we're not looking to do big things there. We consistently look at smaller things on the data side of our world and the AI side of our world.

And so to the extent we find something small that's interesting, we might buy it, but nothing big is on the horizon.

Operator (participant)

Next question comes from the line of Andrew Brackman with William Blair. Please go ahead.

Andrew Brackmann (Healthcare Research Analyst)

Hi, guys. Good afternoon. Thanks for taking the question. Maybe on the reimbursement front, you obviously had the big win on the ECG algo getting reimbursed earlier this year. I guess bigger picture, does this sort of change how you're sort of viewing payers' willingness to potentially expand reimbursement for these AI-based diagnostics? Or how should we sort of be thinking about that as a potential catalyst over the coming year or so? Thanks.

Jim Rogers (CFO)

Yeah. I think from our perspective, we're really excited about it just because it does indicate a willingness for people to reimburse for these types of tests that are clinically validated and provide clinical utility. This doesn't mean that we're going to show up at the end of Q1 and have hundreds of our algorithms reimbursed. There's still a long road to go in terms of securing reimbursement for the various kind of different algorithmic diagnostics that we have. We just highlighted this because it's something that we've talked about in the past is that there's a long road, but there are some kind of near-term milestones, this being one of them, that demonstrate that it is possible for these types of things to be reimbursed, which is why we're so excited about it.

Andrew Brackmann (Healthcare Research Analyst)

Great. Thanks for that. And then maybe on the commercial front, just post-Ambry close now, how should we sort of be thinking about any adds or changes to the way that the reps are going to be deployed and incentivized moving forward? Thanks, guys.

Jim Rogers (CFO)

Yeah. So no significant changes. Yeah. The Ambry reps typically sell into genetic counselors. Our reps are selling into kind of oncologists. And so there's not a ton of overlap. And so we don't anticipate there being any significant changes.

Andrew Brackmann (Healthcare Research Analyst)

Thanks, guys.

Operator (participant)

Next question comes from the line of Mark Schappel with Loop Capital. Please go ahead.

Mark Schappel (Managing Director)

Great. Thank you for taking my question. Eric, the company recently announced the launch of olivia AI, the app for personal health, the personal health concierge app. I was wondering if you could just discuss the significance of the app and how you plan to monetize it.

Eric Lefkofsky (CEO)

The app will get monetized on a per-month subscription, similar to ChatGPT. I think it's currently $12 per month. And it's starting off small. We just released the app to a broader audience. We need to get user feedback. We need to make changes and improve things. You don't really know how these things scale until you start getting folks engaged. But we're super excited at the potential to bring our core technology platform that allows us to make sense of all this multimodal data and make diagnostics intelligent. We're excited to bring that to patients at scale. We think them being able to kind of move around all their healthcare data in their phone and have it stored in a secure locker and be able to talk to that data and get all kinds of insights using our AI engine is pretty awesome.

Small, early, but could be transformative.

Mark Schappel (Managing Director)

Great. Thanks. And as a follow-up, could you just walk us through your top, say, two or three investment priorities for the business in the coming year?

Eric Lefkofsky (CEO)

Our priorities are to stay focused on what's been working and make sure that we're kind of heads down in terms of building our genomics business and our data business and deploying our connected network to grow our applications business.

Mark Schappel (Managing Director)

Thank you.

Operator (participant)

Next question comes from the line of Dan Arias with Stifel. Please go ahead.

Dan Arias (Managing Director)

Yeah. Hi, guys. Thanks for getting me in here. Jim, on the data side, the $300 million in renewals that you've talked about for Astra and for GSK, can you just remind us on what the timing is for that renewal coming up? And is there any change in the confidence around that happening with the terms that exist here for the initial agreement?

Jim Rogers (CFO)

Yeah. So just a reminder, though, kind of $300 million of opt-ins that we've highlighted in the total remaining contract value are kind of the last 18 months or so of the AstraZeneca and GSK agreements. There's no updates. We're still several years away from kind of hitting those renewals and kind of no change in our confidence in terms of them renewing.

Dan Arias (Managing Director)

Okay. But is that.

Eric Lefkofsky (CEO)

The range of those renewals is like 27-29. So we're still years away.

Dan Arias (Managing Director)

Yep. Okay. Okay. And then, Jim, just on Ambry, pricing hereditary has obviously not been static. Is there an implicit ASP assumption that you can share? Maybe not necessarily the exact dollar amount per se, but just more like change year-over-year that you're baking in. And then if I could speak a second one on here. Eric, the accelerants that you called out as being meaningful for Ambry, is that cash collection solely? Is that what you're referring to? Or are there other items that you saw as one-off there?

Jim Rogers (CFO)

Yeah. So on the accelerants in terms of reimbursement was cash collections, just the increase in their collection rates. And then in terms of ASPs, we haven't disclosed specific ASPs related to Ambry. They are puts and takes like there are everywhere else. So they'll have new in-network contracts, which may change in one way, increase cash collections the other way. So puts and takes, but no significant changes kind of year-over-year on the ASP side for Ambry.

Dan Arias (Managing Director)

Okay. Thank you.

Operator (participant)

Next question comes from the line of David Westenberg with Piper Sandler. Please go ahead.

David Westenberg (Senior Research Analyst)

Hi. Thank you for taking the question. So I'm going to talk about maybe the seasonality of the business generally. I think you said 20% of the revenue is the expectation in Q1. I know that you are expecting a little bit less, I think only two months of contribution from Ambry. But can you just kind of remind us the normal seasonality of the business as we go through the year?

Jim Rogers (CFO)

Yeah. So I'd say there's kind of different seasonality for the different kind of product lines, right? Genomics, we follow the same seasonality that you see from other kind of labs. Obviously, the end of the year in terms of the number of orders that are being placed around the holidays is low. So January tends to be kind of a slow start, similar to when people are typically on vacation. There's some slowness. So we're no different than other labs on the genomic side. On the data side, we typically tend to be back half of the year weighted. A lot of our kind of conversations and deliveries kind of align with pharma budgeting cycles, which typically follow kind of the calendar year. So if you went back historically, we're not anticipating a change in kind of the trends that we saw in 2024 and previously.

Again, we would anticipate kind of the phasing in 2025 being similar to what it was in 2024.

David Westenberg (Senior Research Analyst)

That's very helpful. I appreciated that there is some of that little writing lag that gets into January. So then just on the contract revenue of that $940 million, I appreciate the color you gave earlier with Mike's question about the lumpiness of that. How should we think about the long-term basis on the correlation between those? Should those grow at kind of the same speed over the longer term? But of course, Data and Services are going to be lumpy. And then the pharma revenue, maybe you're going to recognize more on a linear kind of basis. I don't know. I'm actually asking. And then historically, it's been a smaller portion of a lot of the other companies' business, but they've kind of said revenue is expected in this revenue would be the value is expected in the next two years or some sort of recognition period.

Is there a recognition period for that? Thank you so much.

Eric Lefkofsky (CEO)

Yeah. So the bulk of our total remaining contract value is made up of data. And as we've just talked about with AstraZeneca and GSK, these people can sign multi-year deals, five-year deals, four-year deals, six-year deals, whatever it is. So these are multi-year deals. And if you sign a big deal, what happened? If you were like we have certain investors who've been in Tempus for a long time, so they could see the total remaining contract value, which was maybe a few hundred million dollars at one point. And we signed some of these big deals, and it jumped up to $700 million or $800 million or $900 million. So you have years where the total remaining contract value grew by two or 300%.

So yes, long-term, if you look at a 10-year horizon, your total remaining contract value should equal eventually the data you deliver, and it should grow at a similar growth rate. But if the bookings, if your bookings number grows by 200%, it's not going to grow by 30% for the next three years magically. In other words, it can be lumpy. Some years it can grow by 200%. Some years it can grow by 0%. But in the aggregate, it's going to have to basically match your data deliveries. So we had some very large contracts that got signed. Great for us. And so we feel like we're in a good spot. The fact that we're still growing that number, even off of periods of really high rapid bookings growth, is again indicative of the fact that our data business is firing on all cylinders.

And in terms of the horizon, again, if you look at the size of our total remaining contract value and the size of our data business, I don't know. Directionally, our data business was about $250 million, and there's $940 million. So it's multiple years.

David Westenberg (Senior Research Analyst)

Very helpful. Thank you.

Operator (participant)

That concludes our Q&A session. I will now turn the call over to Lizzie Krutoholow for the closing remarks.

Eric Lefkofsky (CEO)

Do you have any closing remarks? If not, I'm happy just to jump in and thank everyone for joining the call, and we'll see you next quarter.