Tempus Conference Call on Acquisition of Personalis | July 20, 2026

Thanks, Liz. This morning we announced that Tempus has entered into a definitive agreement to acquire Personalis. With the terms of the agreement, Personalis shareholders will receive consideration of $16.25 per common share, representing $1.5 billion net of Tempus's existing ownership interest. MRD represents a $20 billion plus market and is one of the fastest growing segments in oncology diagnostics. It is transformative for cancer care, allowing clinicians to detect disease recurrence earlier than traditional imaging, enabling more informed treatment decisions when cancer recurs. We've been the exclusive distributor of Personalis analysis tumor informed MRD assay, Next Personalis, since 2023, which we believe is a best-in-class assay given its ultra sensitivity. By combining Personalis analysis tumor informed assay with our tumor naive offering, xM, we're able to offer solutions that meet each oncologist's MRD needs and provide a wide variety of solutions across tumor types. Bringing Personalis testing portfolio under one roof accelerates commercial adoption of Personalis while strengthening the multimodal data flywheel that differentiates our business with longitudinal patient data providing insights. Our partnership with Personalis has been very successful. Next Personalis is now reimbursed across multiple use cases in breast, non-small cell lung cancer, and IO monitoring. As we've discussed historically, we phased our rollout of the assay based upon reimbursement of various indications, and we're on track with growth rates that have exceeded our expectations, having run about 6,500 tests in Q1 of this year and roughly 9,000 tests in Q2, growing 38% quarter over quarter. And that's just the tests that we distribute for Personalis. They sell some of their own tests, which makes that even higher. This growth is exceptional when you consider that only 10% of our salesforce is currently selling MRD solutions today. So when you think about that kind of 38% quarter-over-quarter growth rate, it puts it into context. Going forward, we believe volumes could be even more material and higher as we equip additional sales reps with our offering and as more indications secure reimbursement. In addition to strengthening our MRD leadership, the Personalis portfolio enhances our biopharma offering through profiling and IDL capabilities. The potential addition of identified longitudinal MRD data also creates really interesting opportunities to enrich our models and provide differentiated insights for our biopharma clients. Serial measurements reveal disease dynamics, treatment response, resistance, and recurrence, which are helpful for biomarker discovery, patient selection, and trial optimization. With reimbursement in place and more coming, Personalis is exiting a period of heavy investment and losses. Given the improving financial profile, we felt now was the right time to pursue a strategic acquisition. Under the agreement, Tempus will acquire all outstanding shares of Personalis not already owned by Tempus AI at a price of $16.25 per share, representing a 6% premium to Friday's closing price and a 28% premium to the unaffected 30-day VWAP. Consideration will be structured as 100% stock, with Tempus having the option to elect payment in up to 50% cash. Personalis shareholders will receive a floating exchange ratio of Tempus common stock for each share of Personalis common stock at closing, subject to a maximum exchange ratio of 0.3356. Cash consideration can be financed with cash on hand and ordinary borrowing we procure at signing and closing. Both parties expect the close of the transaction to be late 2026 or early 2027. We'll provide additional detail on the transaction's financial impact on our outlook during our Q2 earnings call on July 30th, which is in about a week from now. But as we've highlighted in previous calls, there's a certain amount of discretionary investment that we are able to make each year given that we have increasing gross profit dollars from the growth of our core business across NGS selection volumes increasing, ASP tailwinds, which we've discussed, and continued growth and strength in our data business. And we'll utilize some of those investment dollars to drive our MRD offering growth while continuing to demonstrate leverage in the business both from an adjusted EBITDA and cash flow perspective. Even with this acquisition, we intend to be EBITDA and free cash flow positive in 2027. Thank you for your time this morning and for your continued interest in Tempus and our evolving story. Thank you.

Yeah, I would say the growth in terms of percentages is pretty extraordinary. Anytime you have a business that's growing almost 40% quarter over quarter, those would be exceptional year-over-year growth rates. These are quarter-over-quarter growth rates. So I think it's safe to say that we are quickly gaining market adoption. And I think that over the last several quarters has been both a function of the market. The overall MRD market is growing, it's a very healthy market and one that's growing pretty rapidly, I think as evidenced not just by our growth but by others. But I also think that given the really fantastic performance of Personalis's asset in their suite of products, you're going to see more market shift. And this really speaks to the Tempus real flywheel getting humming. It's a function of a best-in-class diagnostic test, combined with all the other technology attributes we have, from a broad connectivity to hospitals all over the country to a whole suite of AI-enabled solutions that make ordering our products easier, to a variety of AI insights we're able to deliver through the models we build. And I would suspect all of those will be more tightly embedded into our MRD offering over time, and as they continue to get more and more indications covered, we will dramatically expand our sales force that can sell it.

Yeah, I think we looked at Personalis back in 2023 and decided to do a commercial deal in large part because we could see that there were several years of significant investment that they were going to have to make. And in fact, I think you can see from their financials they made those investments in '23, '24, '25. So now we're almost at the end of '26. So I think it was kind of the right decision for us to let them make those investments and get the assay to this point. The point that it's at now is it is beginning to get, and will continue to get, I would assume, very broad coverage. And the economics of these assays begin to turn pretty dramatically once they are covered more broadly. So unlike other assays where you can get coverage quicker, here you have to basically demonstrate analytic validity and clinical validity, you have to publish, you have to get Moldex approval, and then all of a sudden one day you just turn on reimbursement. So you go from like zero revenue for some of these tests to significant revenue, and they are now entering that part of the cycle where their financials should improve dramatically. So that's why it was the right time for us to decide to acquire them. And in terms of it being a proven test in the market, I think it is widely considered, if not the best, one of the best tests in the market today. And so as the financial profile of this asset gets better, I think you'll see pretty dramatic expansion and really strong operating results in terms of revenue.

Yeah. So, I should show up. I think Jim makes the most compelling point. I just want to highlight it, which is we're fortunate that we have this high growth business that just generates lots of gross profit dollars, and we look for what are the best places to invest that. And as you mentioned, this in our opinion is the best place. So we're kind of thrilled that we're able to lean into growth and position the business for long-term success.

Yeah. So I learned a long time ago I'm not smart enough to remember four questions in a row, so I'll cover some part of that. The pieces I can recall. So yes, we have a limited, roughly around 10% of our sales force selling the MRD product today. We will continue to ungate that and invest in additional salespeople in the field. It's more a function of the balancing act between when they get additional categories reimbursed and so on and so forth. So I think they've got a really strong R&D portfolio which they've disclosed in their own investor meetings, so you can get some sense as to when various things are coming to market. And it's going to line up here likely in '27. Somewhere, it's hard to know when, early, late, whatever, but at some point you'll get to this tipping point where the revenue generated from the assay is high enough that you can more completely unlock and fully unshackle the salesforce. And so we'll just keep people informed as to how that's going. But we expect really strong growth rates. We said this in our investor day a month ago or so. We expect really strong MRD growth rates to continue. And when you have a business growing 40% quarter over quarter, that gets very big very quickly, and we expect that to continue. As it relates to data, yes, the deal was originally structured where we had broad clinical distribution rights, but they had their own biopharma business. They had their own data rights. And so post-closing, we will more tightly couple these things together, and I suspect it will be catalytic to both their pharma business and our pharma business. So I think there'll be some really nice data benefits as we fully bring in these MRD time points in the way that they do. And then finally, I haven't seen anything as it relates to our own tumor naive product. We have told folks over the last several quarters that we were seeing the market had shifted really pretty dramatically to tumor informed in terms of volume, and that tumor informed part of our business represented I don't know, 95% plus, high 90s of our orders we were receiving, and I suspect that will continue for some period. I still believe tumor naive has an important place. We'll continue to invest in tumor naive. We'll continue to bring it to other indications. We're working on a more sensitive version of our assay now, and that's moving along well. But the market is just really leaning into these ultra sensitive tumor informed assays that have incredibly low limits of detection. And we're kind of excited to ride that wave for the next several years. But longer term, I suspect both will do quite well. And then Dan, I think on your final question around their biopharma business, obviously we also have a large data business with biopharma, but we also do some sequencing for biopharma as well. And so again, we can integrate that business with the current offering and think that can be helpful in expanding the overall relationship with biopharma.

I'll cover the market share. Jim can take reimbursement. I don't think we're prepared to go too deep on reimbursement largely because they've got a roadmap, but you shouldn't cover it in a second. On the penetration side, we have been very judicious with who we let carry the MRD product within our world. We have hundreds of sales reps in the field across hereditary profiling and comprehensive genomic profiling or therapy selection. And so we've been very restrictive in terms of which of our accounts can order MRD and how, and so on and so forth. So I would say most things are underpenetrated or not fully penetrated. And it really does come down to the balancing act of reimbursement across enough indications that you're able to generate an ASP high enough that you're not losing money on every test. And what's happened to them is they're just beginning that pendulum is starting to turn, and you'll see ASPs of this particular test will rise pretty precipitously over the next year, and you'll go from losing money to breaking even then making money. And it's in that journey that we'll start to penetrate these accounts more fully, but they're kind of highly underpenetrated.

I think I'll just quickly say the portfolio at this point is kind of holistically complementary. And now, post the closing of Personalis, it would be very complete. You have this range of assays from best-in-class 'Am I at risk of getting cancer?' to best-in-class 'I have cancer, how should I be treated?' whether that's from a tissue biopsy or a liquid biopsy, to 'I'm post treatment and I need to be monitored' across a variety of subtypes and indications. What's the best test to order for that monitoring and for that early detection of recurrence? And so we just have a really incredible portfolio. Obviously, in our world, I think that portfolio with this acquisition is as good as it gets. The only place that we still have work to do is on the MRD naive side, where we're just earlier in that game. And so we'll continue to try to make investments there, figure out how to get those assays over time up to the same quality as what Personalis has been able to develop on the tumor informed side. But it feels to us like we have a really strong portfolio across diagnostics, and we're in an interesting position in a world where these kinds of tests will be ordered far more often, I think, across all different categories we're in, both in cancer and then increasingly in non-cancer. And so I would be very surprised if a decade from now we're not sequencing multiples of the number of patients we sequence today clinically. And so in a world where we're going to generate an incredible amount of molecular data, it's going to become increasingly important for health and wellness and helping people fight disease. The data is going to become increasingly critical for biopharma to make decisions. You want the best portfolio, you want scale, and you want to be in the best position to win in that world. And we think this helps us, and we are. So couldn't be more excited.

So I'm hesitant to go too deep into some of the intricacies of Personalis before they provide some of that color. They are collecting dollars on the clinical side, those funds are flowing. So there's certainly no issues there. In terms of long-term margin target, we'll provide more color on our call in a week, but obviously we wouldn't have made the decision to acquire them if we didn't believe the margin profile was going to be super healthy. We're financially disciplined in that regard. We try to be conscientious when we're buying assets that we pay the right price, and as we said historically, we believe a business like ours that is 10 plus years old should be generating a ton of cash flow and one day significant operating income, and we're on that journey, so we don't intend to go backwards. And for Plus, the timing, as we talked about a few minutes ago, was really important. And the reason we didn't do this a year or two ago is we wanted to be at the point in the curve where this was going to quickly turn into a really healthy business from a gross profit perspective and a margin perspective. And they're getting close to that.