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1、 UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549 FORM 10-Q (Mark One)QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30,2024 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE

2、 ACT OF 1934 For the transition period from _ to _ Commission File No.001-42130 Tempus AI,Inc.(Exact name of registrant as specified in its charter)Delaware 47-4903308(State or other jurisdiction ofincorporation or organization)(I.R.S.EmployerIdentification No.)600 West Chicago Avenue,Suite 510 Chic

3、ago,IL 60654(Address of Principal Executive Offices,Zip Code)(800)976-5448(Registrants telephone number,including area code)N/A(Former name,former address and former fiscal year,if changed since last report)Securities registered pursuant to Section 12(b)of the Act:Title of each class TradingSymbol(s

4、)Name of each exchangeon which registered Class A common stock,$0.0001 par value per share TEM The Nasdaq Stock Market LLC Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 m

5、onths(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursu

6、ant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a

7、smaller reporting company,or an emerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filerAccelerated filer Non-accelerated filerSmaller reporting compan

8、y Emerging growth company If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whe

9、ther the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act):Yes No As of November 4,2024,there were 152,401,894 shares of Class A common stock and 5,043,789 shares of Class B common stock,each with a par value of$0.0001 per share,outstanding.Page Part I Condensed Consolidate

10、d Financial Statements(unaudited)1 Item 1.Condensed Consolidated Quarterly Financial Statements(Unaudited)1 Condensed Consolidated Balance Sheets 2 Condensed Consolidated Statements of Operations and Comprehensive Loss 4 Condensed Consolidated Statements of Cash Flows 5 Condensed Consolidated Statem

11、ents of Redeemable Convertible Preferred Stock,Common Stock and Stockholders Equity(Deficit)7 Notes to Condensed Consolidated Financial Statements 10 Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations32 Item 3.Quantitative and Qualitative Disclosures about Ma

12、rket Risk49 Item 4.Controls and Procedures49 Part II Other Information 51 Item 1.Legal Proceedings51 Item 1A.Risk Factors51 Item 2.Unregistered Sales of Equity Securities and Use of Proceeds113 Item 3.Defaults Upon Senior Securities114 Item 4.Mine Safety Disclosures114 Item 5.Other Information115 It

13、em 6.Exhibits 116 Signatures 117 1Tempus AI,Inc.Condensed Consolidated Quarterly Financial Statements(Unaudited)September 30,2024 2Tempus AI,Inc.CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)(in thousands,except share and per share amounts)September 30,2024 December 31,2023 Assets Current Assets C

14、ash and cash equivalents$388,006$165,767 Accounts receivable,net of allowances of$1,154 and$1,115 at September 30,2024 and December 31,2023,respectively 145,616 94,462 Inventory 36,138 28,845 Warrant asset 5,070 Prepaid expenses and other current assets 31,335 17,295 Marketable equity securities 78,

15、317 31,807 Deferred offering costs 7,085 Total current assets$679,412$350,331 Property and equipment,net 59,392 61,681 Goodwill 73,365 73,354 Warrant asset,less current portion 4,930 Intangible assets,net 14,289 21,916 Investments and other assets 8,692 8,971 Investment in joint venture 103,699 Warr

16、ant contract asset,less current portion 17,866 21,499 Operating lease right-of-use assets 14,141 20,530 Restricted cash 872 840 Total Assets$971,728$564,052 Liabilities,Convertible redeemable preferred stock,and Stockholders equity(deficit)Current Liabilities Accounts payable 49,027 54,421 Accrued e

17、xpenses 101,985 82,517 Deferred revenue 67,604 64,860 Deferred other income 15,955 Other current liabilities 9,913 8,213 Operating lease liabilities 5,894 6,437 Accrued data licensing fees 2,242 6,382 Accrued dividends 9,797 Total current liabilities$252,620$232,627 Operating lease liabilities,less

18、current portion 26,664 32,040 Convertible promissory note 174,460 193,124 Warrant liability 76,900 34,500 Other long-term liabilities 15,403 19,751 Interest payable 66,529 55,321 Long-term debt,net 264,527 256,541 Deferred other income,less current portion 27,921 Deferred revenue,less current portio

19、n 12,976 16,768 Total Liabilities$918,000$840,672 Commitments and contingencies(Note 8)Convertible redeemable preferred stock,$0.0001 par value,no and 69,803,765 shares authorized at September 30,2024 and December 31,2023,respectively;no and 63,525,953 shares issued and outstanding at September 30,2

20、024 and December 31,2023,respectively;aggregate liquidation preference of$0 and$1,130,429 at September 30,2024 and December 31,2023,respectively 1,105,543 The accompanying notes are an integral part of these condensed consolidated financial statements.3Stockholders equity(deficit)Class A Voting Comm

21、on Stock,$0.0001 par value,1,000,000,000 and 200,228,024 shares authorized at September 30,2024 and December 31,2023,respectively;150,280,363 and 58,367,961 shares issued and outstanding at September 30,2024 and December 31,2023,respectively$15$6 Class B Voting Common Stock,$0.0001 par value,5,500,0

22、00 and 5,374,899 shares authorized at September 30,2024 and December 31,2023,respectively;5,043,789 and no shares issued and outstanding at September 30,2024 and December 31,2023,respectively 1 Non-voting Common Stock,$0.0001 par value,no and 66,946,627 shares authorized at September 30,2024 and Dec

23、ember 31,2023,respectively;no shares issued and outstanding at September 30,2024,and 5,205,802 shares issued and 5,060,336 shares outstanding at December 31,2023 0 Treasury Stock,145,466 shares at September 30,2024 and December 31,2023,at cost (3,602)(3,602)Additional Paid-In Capital 2,184,926 18,34

24、5 Accumulated Other Comprehensive Income 10,208 5 Accumulated deficit (2,137,820)(1,396,917)Total Stockholders equity(deficit)$53,728$(1,382,163)Total Liabilities,Convertible redeemable preferred stock,and Stockholders equity(deficit)$971,728$564,052 The accompanying notes are an integral part of th

25、ese condensed consolidated financial statements.4Tempus AI,Inc.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS(Unaudited)(in thousands,except per share amounts)Three Months Ended September 30,Nine Months Ended September 30,2024 2023 2024 2023 Net revenue Genomics$116,422$96,81

26、5$331,315$270,797 Data and services 64,507 39,242 161,403 113,301 Total net revenue$180,929$136,057$492,718$384,098 Cost and operating expenses Cost of revenues,genomics 60,126 46,540 181,285 138,781 Cost of revenues,data and services 14,964 15,490 52,384 40,690 Technology research and development 3

27、0,680 24,156 135,655 70,485 Research and development 27,348 23,234 119,713 66,268 Selling,general and administrative 101,427 71,426 644,063 211,662 Total cost and operating expenses 234,545 180,846 1,133,100 527,886 Loss from operations$(53,616)$(44,789)$(640,382)$(143,788)Interest income 4,789 1,48

28、3 7,538 5,864 Interest expense (13,761)(12,342)(40,294)(33,245)Other(expense)income,net (11,522)2,287 (17,821)7,909 Loss before provision for income taxes$(74,110)$(53,361)$(690,959)$(163,260)Provision for income taxes (38)(65)(144)(74)Losses from equity method investments (1,692)(1,692)(301)Net Los

29、s$(75,840)$(53,426)$(692,795)$(163,635)Dividends on Series A,B,B-1,B-2,C,D,E,F,G,G-3,and G-4 preferred shares (11,143)(39,347)(32,709)Cumulative undeclared dividends on Series C preferred shares (764)(1,174)(2,230)Net loss attributable to common shareholders,basic and diluted (75,840)(65,333)(733,31

30、6)(198,574)Net loss per share attributable to common shareholders,basic and diluted$(0.46)$(1.03)$(7.04)$(3.14)Weighted-average shares outstanding used to compute net loss per share,basic and diluted 165,612 63,286 104,164 63,267 Comprehensive Loss,net of tax Net loss$(75,840)$(53,426)$(692,795)$(16

31、3,635)Foreign currency translation adjustment 10,302 (54)10,203 (29)Comprehensive loss$(65,538)$(53,480)$(682,592)$(163,664)The accompanying notes are an integral part of these condensed consolidated financial statements.5Tempus AI,Inc.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)(in th

32、ousands,except share and per share amounts)Nine Months Ended September 30,2024 2023 Operating activities Net loss$(692,795)$(163,635)Adjustments to reconcile net loss to net cash used in operating activities Change in fair value of warrant liability$42,400$(8,000)Stock-based compensation 509,351 Gai

33、n on warrant exercise(173)Gain on marketable equity securities(5,119)Losses from equity method investments 1,692 301 Amortization of original issue discount 1,036 778 Amortization of deferred financing fees 383 382 Change in fair value of contingent consideration 165 (400)Amortization of warrant con

34、tract asset 3,633 4,961 Depreciation and amortization 27,788 24,509 Provision for bad debt expense 545 1,538 Change in fair value of warrant asset(18,302)Amortization of finance right-of-use lease assets 283 Non-cash operating lease costs 4,670 5,077 Minimum accretion expense 85 292 Impairment of in

35、tangible assets 7,359 PIK interest added to principal 6,567 2,123 Change in assets and liabilities Accounts receivable(51,699)(25,365)Inventory(7,293)(4,875)Prepaid expenses and other current assets(14,040)(3,665)Investments and other assets(410)(4,378)Accounts payable(24,776)(12,253)Deferred revenu

36、e(1,052)(16,644)Deferred other income 43,876 Accrued data licensing fees(4,250)(8,374)Accrued expenses&other 23,371 20,749 Interest payable 11,208 11,724 Operating lease liabilities(6,655)(6,559)Net cash used in operating activities$(149,794)$(174,072)Investing activities Purchases of property and e

37、quipment$(14,159)$(31,899)Proceeds from sale of marketable equity securities 23,098 Business combinations,net of cash acquired(Note 4)(2,869)Investment in joint venture(95,186)Purchases of marketable equity securities(36,183)Net cash used in investing activities$(122,430)$(34,768)The accompanying no

38、tes are an integral part of these condensed consolidated financial statements.6Tempus AI,Inc.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)(in thousands,except share and per share amounts)Financing activities Proceeds from issuance of common stock in connection with initial public offeri

39、ng,net of underwriting discounts and commissions$381,951$Tax withholding related to net share settlement of restricted stock units(69,918)Issuance of Series G-5 Preferred Stock 199,750 Principal payments on finance lease liabilities (288)Purchase of treasury stock (3,602)Payment of deferred offering

40、 costs(8,587)(574)Dividends paid(5,625)(5,625)Proceeds from long-term debt,net of original issue discount 48,750 Payment of indemnity holdback related to acquisition(813)G-4 Special Payment(2,250)Net cash provided by financing activities$494,508$38,661 Effect of foreign exchange rates on cash$(13)$(

41、24)Net increase(decrease)in Cash,Cash Equivalents and Restricted Cash$222,271$(170,203)Cash,cash equivalents and restricted cash,beginning of period 166,607 303,731 Cash,cash equivalents and restricted cash,end of period$388,878$133,528 Cash,Cash Equivalents and Restricted Cash are Comprised of:Cash

42、 and cash equivalents$388,006$132,706 Restricted cash and cash equivalents 872 822 Total cash,cash equivalents and restricted cash$388,878$133,528 Supplemental disclosure of cash flow information Cash paid during the year for interest$20,899$12,293 Cash paid for income taxes$127$101 Supplemental dis

43、closure of noncash investing and financing activities Dividends payable$5,487$6,912 Purchases of property and equipment,accrued but not paid$6,706$5,049 Deferred offering costs,accrued but not yet paid$179$2,849 Redemption of convertible promissory note$18,664$22,220 Non-voting common stock issued i

44、n connection with business combinations$344$4,305 Operating lease liabilities arising from obtaining right-of-use assets$550$1,097 Conversion of redeemable convertible preferred stock to common stock in connection with initial public offering$1,348,809$Taxes related to net share settlement of restri

45、cted stock units not yet paid$164$Reclassificiation of deferred offering costs to additional paid-in capital upon initial public offering$12,347$Issuance of Series G-3 Preferred Stock$3,809$2,738 Issuance of Series G-4 Preferred Stock$611$The accompanying notes are an integral part of these condense

46、d consolidated financial statements.7Tempus AI,Inc.CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK,COMMON STOCK AND STOCKHOLDERS EQUITY(DEFICIT)(Unaudited)(in thousands,except share and per share amounts)Redeemable ConvertiblePreferred Voting Common Stock Non-Voting Treas

47、ury Additional AccumulatedOther Total Stock Class A Class B Common Stock Stock Paid-in Accumulated Comprehensive Stockholders Units Amount Units Amount Units Amount Units Amount Units Amount Capital Deficit(Loss)Income Deficit Balance at December 31,2023 63,525,953$1,105,543 58,367,961$6$5,205,802$0

48、 (145,466)$(3,602)18,345$(1,396,917)$5$(1,382,163)Issuance of Series G-3 Preferred Stock 66,465 3,809 Issuance of Series G-4 Preferred Stock 10,666 611 Issuance of Series G-5 Preferred Stock 3,489,981 199,750 Common stock issued in connection with business combinations 9,141 0 344 344 Dividends 33,6

49、69 (39,347)(39,347)Issuance of common stock in connection with initial public offering,net of underwriting discounts and other offering costs 11,100,000 1 369,603 369,604 Conversion of redeemable convertible preferred stock to common stock in connection with initial public offering(67,093,065)(1,343

50、,382)71,976,178 7 5,043,789 1 1,357,562 (8,761)1,348,809 Conversion of non-voting common stock to Class A common stock 5,069,477 1 (5,214,943)0 (1)0 Issuance of common stock upon settlement of restricted stock units,net 3,657,288 0 (70,105)(70,105)Issuance of common stock upon settlement of warrant

51、109,459 0 (173)(173)Stock-based compensation expense 509,351 509,351 Foreign currency translation adjustment 10,203 10,203 Net loss (692,795)(692,795)Balance at September 30,2024$150,280,363$15 5,043,789$1$(145,466)$(3,602)$2,184,926$(2,137,820)$10,208$53,728 The accompanying notes are an integral p

52、art of these condensed consolidated financial statements.8Tempus AI,Inc.CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK,COMMON STOCK AND STOCKHOLDERS EQUITY(DEFICIT)(Unaudited)(in thousands,except share and per share amounts)Redeemable ConvertiblePreferred Voting Common S

53、tock Non-Voting Treasury Additional AccumulatedOther Total Stock Class A Class B Common Stock Stock Paid-in Accumulated Comprehensive Stockholders Units Amount Units Amount Units Amount Units Amount Units Amount Capital Deficit(Loss)Income Deficit Balance at December 31,2022 62,692,927$1,026,143 58,

54、367,961$6$4,932,415$0$9,251$(1,138,302)$18$(1,129,027)Issuance of Series G-3 Preferred Stock 47,781 2,738 Foreign currency translation adjustment (29)(29)Dividends 22,756 (32,709)(32,709)Repurchase of Non-voting Common Stock (145,466)(3,602)(3,602)Common stock issued in connection with business comb

55、ination 130,874 0 4,305 4,305 Net loss (163,635)(163,635)Balance at September 30,2023 62,740,708$1,051,637 58,367,961$6$5,063,289$0 (145,466)$(3,602)$13,556$(1,334,646)$(11)$(1,324,697)The accompanying notes are an integral part of these condensed consolidated financial statements.9Tempus AI,Inc.CON

56、DENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK,COMMON STOCK AND STOCKHOLDERS EQUITY(DEFICIT)(Unaudited)(in thousands,except share and per share amounts)RedeemableConvertible Preferred Voting Common Stock Non-Voting Additional AccumulatedOther Total Stock Class A Class B Com

57、mon Stock Treasury Stock Paid-in Accumulated Comprehensive Stockholders Units Amount Units Amount Units Amount Units Amount Units Amount Capital Deficit(Loss)Income Deficit Balance at June 30,2024$149,274,923$15 5,043,789$1$(145,466)$(3,602)2,163,911$(2,061,980)$(94)$98,251 Issuance of common stock

58、upon settlement of restricted stock units,net 1,005,440 (23)(23)Stock-based compensation expense 21,038 21,038 Foreign currency translation adjustment 10,302 10,302 Net loss (75,840)(75,840)Balance at September 30,2024$150,280,363$15 5,043,789$1 (145,466)$(3,602)$2,184,926$(2,137,820)$10,208$53,728

59、RedeemableConvertible Preferred Voting Common Stock Non-Voting Additional AccumulatedOther Total Stock Class A Class B Common Stock Treasury Stock Paid-in Accumulated Comprehensive Stockholders Units Amount Units Amount Units Amount Units Amount Units Amount Capital Deficit(Loss)Income Deficit Balan

60、ce at June 30,2023 62,740,708$1,042,861 58,367,961$6$5,063,289$0 (145,466)$(3,602)13,556$(1,270,077)$43$(1,260,074)Foreign currency translation adjustment (54)(54)Dividends 8,776 (11,143)(11,143)Net loss (53,426)(53,426)Balance at September 30,2023 62,740,708$1,051,637 58,367,961$6$5,063,289$0 (145,

61、466)$(3,602)$13,556$(1,334,646)$(11)$(1,324,697)The accompanying notes are an integral part of these condensed consolidated financial statements.10NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)1.DESCRIPTION OF BUSINESS Company Information Tempus AI,Inc.,together with the subsidiarie

62、s through which it conducts business(the“Company”),is a healthcare technology company focused on bringing artificial intelligence and machine learning to healthcare in order to improve the care of patients across multiple diseases.The Company combines the results of laboratory tests with other multi

63、modal datasets to improve patient care by supporting all parties in the healthcare ecosystem,including physicians,researchers,payers,and pharmaceutical companies.The Company primarily derives revenue from selling comprehensive genetic testing to physicians and large academic research institutions,li

64、censing data to third parties,matching patients to clinical trials,and related services.The Company,based in Chicago,Illinois,was founded by Eric P.Lefkofsky,the Companys CEO and Executive Chairman,and evolved from a business Mr.Lefkofsky founded called Bioin.Bioin originally was established as a li

65、mited liability company.Effective September 21,2015,Bioin converted its legal form to a corporation organized and existing under the General Corporation Law of the State of Delaware.Bioin subsequently changed its legal name to Tempus Health,Inc.in September 2015,to Tempus Labs,Inc.in October 2016 an

66、d to Tempus AI,Inc.in December 2023.Initial Public Offering On June 13,2024,the Companys registration statement relating to its initial public offering(the“IPO”)was declared effective and its Class A common stock began trading on the Nasdaq Global Select Market on June 14,2024.On June 17,2024,the Co

67、mpany completed its IPO in which it issued and sold 11,100,000 shares of Class A common stock,at a public offering price of$37.00 per share.The Company received net proceeds of$382.0 million after deducting underwriting discounts and commissions of$28.7 million.In connection with the closing of the

68、IPO,all shares of the Companys then-outstanding redeemable convertible preferred stock,other than the Companys Series B redeemable convertible preferred stock,converted into an aggregate of 66,309,550 shares of Class A common stock.The Companys Series B redeemable convertible preferred stock convert

69、ed on a one-for-one basis into an aggregate of 5,374,899 shares of Class B common stock.Subsequently,331,110 shares of Class B common stock were automatically converted into shares of Class A common stock,such that there are 5,043,789 shares of Class B common stock outstanding immediately following

70、the IPO.The Company issued an additional 236,719 shares of Class A common stock pursuant to a separate agreement with an investor in the Series G-3 convertible preferred stock.As of June 16,2024,the Companys redeemable convertible preferred stock had accrued$188.2 million of unpaid dividends,which w

71、ere paid in 5,098,799 shares of Class A common stock at the closing of the IPO.Outstanding shares of non-voting common stock were converted on a one-for-one basis into 5,069,477 shares of Class A common stock.The restricted stock units(“RSUs”)granted to employees pursuant to the Companys 2015 Plan a

72、re subject to two vesting conditions.The first is a time-based component.The second vesting condition is the occurrence of a liquidity event.The liquidity event condition related to these awards was satisfied upon the IPO and,as a result,the Company recognized$488.3 million of stock-based compensati

73、on expense for the three months ended June 30,2024.In connection with the IPO,the Company settled an aggregate of 4,568,291 fully vested RSUs(the“IPO Settled RSUs”).To meet the related tax withholding requirements,the Company withheld 1,911,316 shares from the 4,563,164 shares of Class A common stoc

74、k issuable upon settlement of the IPO Settled RSUs.Based on the public offering price of$37.00 per share,the tax withholding obligation was$70.8 million.In connection with the IPO,the Company issued 109,459 shares of Class A common stock upon the automatic net exercise of a warrant issued to Allen&C

75、ompany LLC(“Allen”),as further described in Note 9.In connection with the IPO,the Company amended and restated its certificate of incorporation(the“Restated Certificate”),under which authorized capital stock consists of 1,000,000,000 shares of Class A common stock,5,500,000 shares of Class B common

76、stock,and 20,000,000 shares of preferred stock.112.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation and Basis of Presentation The condensed consolidated financial statements include the accounts of Tempus AI,Inc.and its wholly owned subsidiaries.All intercompany accounts and tr

77、ansactions have been eliminated in consolidation.The condensed consolidated financial statements and accompanying notes were prepared in accordance with accounting principles generally accepted in the United States of America(“GAAP”)and applicable rules and regulations of the U.S.Securities and Exch

78、ange Commission(the“SEC”)regarding interim financial information and include the assets,liabilities,revenue and expenses of all wholly owned subsidiaries.Investments in unconsolidated entities in which the Company does not have a controlling financial interest,but has the ability to exercise signifi

79、cant influence,are accounted for under the equity method of accounting.Investments in unconsolidated entities in which the Company is not able to exercise significant influence are accounted for under the cost method of accounting.Certain information and disclosures normally included in the annual c

80、onsolidated financial statements prepared in accordance with GAAP have been omitted.Accordingly,the unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Companys final prospectus,dated

81、 June 13,2024,filed with the SEC pursuant to Rule 424(b)under the Securities Act of 1933,as amended(the“Securities Act”),on June 17,2024(the“Prospectus”)in connection with the IPO.The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited co

82、nsolidated financial statements and reflect,in managements opinion,all the adjustments of a normal,recurring nature that are necessary for the fair statement of the Companys financial position,results of operations,and cash flows for the interim periods,but are not necessarily indicative of the resu

83、lts expected for the full year or any other period.In the opinion of the Company,the accompanying unaudited condensed consolidated financial statements contain all adjustments,consisting of only normal recurring adjustments,necessary for a fair statement of its financial position as of September 30,

84、2024 and its results of operations for the three and nine months ended September 30,2024 and 2023,and cash flows for the nine months ended September 30,2024 and 2023.The condensed consolidated balance sheet at December 31,2023,was derived from audited annual financial statements but does not contain

85、 all of the footnote disclosures from the annual financial statements.The Company believes that its existing cash and cash equivalents and marketable equity securities at September 30,2024 will be sufficient to allow the Company to fund its current operating plan through at least a period of one yea

86、r from the date of issuance.As the Company continues to incur losses,its transition to profitability is dependent upon a level of revenues adequate to support the Companys cost structure.Future capital requirements will depend on many factors,including the timing and extent of spending on research a

87、nd development activities and growth related expenditures.Other than described below,there have been no changes to the Companys significant accounting policies described in the“Notes to the Consolidated Financial Statements”included in the Companys audited consolidated financial statements as of and

88、 for the year ended December 31,2023 included in the Prospectus that have had a material impact on the Companys consolidated financial statements and accompanying notes.Reclassification Certain prior year amounts have been reclassified for consistency with the current year presentation.Emerging Grow

89、th Company The Company is an“emerging growth company”as defined in Section 2(a)of the Securities Act,as modified by the Jumpstart Our Business Startups Act of 2012(the“JOBS Act”),and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public c

90、ompanies that are not emerging growth companies including,but not limited to,not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act,reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements,an

91、d exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.Further,Section 102(b)(1)of the JOBS Act exempts emerging growth companies from being required to comply with new or re

92、vised financial accounting standards until private companies(that is,those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934,as amended)are required to comply with the new or revised

93、financial accounting standards.The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.The Company has elected not to opt out of such exten

94、ded transition period which means that when a standard is issued or revised and it has different application dates for public or private companies,the Company,as an emerging growth company,can adopt the new or revised standard at the time private companies adopt the new or revised standard.This may

95、make comparison of 12the Companys condensed consolidated financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential difference

96、s in accounting standards used.Use of Estimates The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and classifications of assets and liabilities,revenue and expens

97、es,and the related disclosures of contingent assets and liabilities in the condensed consolidated financial statements and accompanying notes.The most significant estimates are related to revenue,accounts receivable,stock-based compensation,operating lease liabilities,and the useful lives of propert

98、y,equipment and intangible assets.Actual results could differ from those estimates.Net Loss Per Share Attributable to Common Stockholders Basic and diluted net loss per share attributable to common stockholders is presented in conformity with the two-class method required for participating securitie

99、s.The Company considers all series of its redeemable convertible preferred stock to be participating securities.Prior to the IPO,under the two-class method,the net loss attributable to common stockholders was not allocated to the redeemable convertible preferred stock as the holders of its redeemabl

100、e convertible preferred stock did not have a contractual obligation to share in the Companys losses.Upon IPO,the Companys redeemable convertible preferred stock converted to either Class A or Class B common stock and therefore will be included in allocation of net loss attributable to common stockho

101、lders as they will share in the Companys losses.Net income is attributed to common stockholders and participating securities based on their participation rights.Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by th

102、e weighted-average number of shares of common stock outstanding during the period.Diluted earnings per share attributable to common stockholders adjusts basic earnings per share for the potentially dilutive impact of stock options and redeemable convertible preferred stock.As the Company has reporte

103、d losses for all periods presented,all potentially dilutive securities are antidilutive and accordingly,basic net loss per share equals diluted net loss per share.Deferred Offering Costs Deferred offering costs consist primarily of accounting,legal,and other fees related to the IPO.The Company had$7

104、.1 million of deferred offering costs as of December 31,2023.Prior to the IPO,deferred offering costs were capitalized on the consolidated balance sheets.Upon the consummation of the IPO,$12.3 million of deferred offering costs were reclassified into additional paid-in capital as an offset against I

105、PO proceeds.Equity InvestmentsThe Company uses the equity method to account for investments in which it has the ability to exercise significant influence over the investees operating and financial policies.The Company follows the guidance in ASC 323,InvestmentsEquity Method and Joint Ventures,which

106、prescribes the use of the equity method for investments in joint ventures where the Company has significant influence.The Company records the initial investment at cost and is subsequently adjusted by the Companys share,based on percentage ownership,of the investees net income or loss after the date

107、 of investment.For the Companys foreign-based equity method investment,the proportionate share of the investees income is translated into USD at the average exchange rate for the period and the investment is translated using the exchange rate as of the end of the reporting period.The unrealized gain

108、s and losses associated with the foreign currency translation of the investment are deferred in accumulated other comprehensive income on the Companys consolidated balance sheets.Variable Interest EntitiesA variable interest entity(“VIE”)is an entity that(i)has insufficient equity to permit the enti

109、ty to finance its activities without additional subordinated financial support,(ii)has equity investors who lack the characteristics of a controlling financial interest,or(iii)the entity is established with non-substantive voting rights(i.e.,the entity deprives the majority economic interest holder(

110、s)of voting rights).Under ASC 810,Consolidation,an entity that holds a variable interest in a VIE and meets certain requirements would be considered to be the primary beneficiary of the VIE and required to consolidate the VIE in its consolidated financial statements.In order to be considered the pri

111、mary beneficiary of a VIE,an entity must hold a variable interest in the VIE and have both:the power to direct the activities that most significantly impact the economic performance of the VIE;andthe right to receive benefits from,or the obligation to absorb losses of,the VIE that could be potential

112、ly significant to the VIE.13If the Company is not the primary beneficiary in a VIE,it accounts for the investment or other variable interests in a VIE in accordance with applicable GAAP.Periodically,the Company assesses whether any changes in its interest or relationship with the entity affects its

113、determination of whether the entity is a VIE and,if so,whether it is the primary beneficiary.Recently Issued Accounting Pronouncements Not Yet Adopted In November 2023,the FASB issued ASU No.2023-07,Segment Reporting(Topic 280),which provides enhanced disclosures about significant segment expenses.T

114、he standard also enhances interim disclosure requirements and provides new segment disclosure requirements for entities with a single reportable segment.The standard is effective for public companies for fiscal years beginning after December 15,2023,and interim periods within fiscal years beginning

115、after December 15,2024.Retrospective adoption is required for all prior periods presented.Early adoption is permitted.The Company does not expect the adoption of the new standard to have a material impact on its consolidated financial statements.In December 2023,the FASB issued ASU 2023-09,Income Ta

116、xes(Topic 740):Improvements to Income Tax Disclosures,which requires public entities,on an annual basis,to provide disclosure of specific categories in the rate reconciliation,as well as disclosure of income taxes paid disaggregated by jurisdiction.ASU 2023-09 is effective for fiscal years beginning

117、 after December 15,2024,with early adoption permitted.The Company is currently evaluating the effect that this guidance will have on the consolidated financial statements and related disclosures.3.REVENUE RECOGNITION The Company derives revenue from selling lab services(“Genomics”)to physicians,acad

118、emic research institutions,and other parties.The Company also derives revenue from the commercialization of data generated in the lab(“Data and services”)through the licensing of de-identified datasets to third parties and by providing clinical trial support,such as matching patients to clinical tri

119、als enrolled in its clinical trial network,and related services.The majority of the Companys revenue is generated in North America.The Company accounts for revenue in accordance with Financial Accounting Standards Board(“FASB”)ASC 606 Revenue from Contracts with Customers(“ASC 606”).The Company comm

120、ences revenue recognition when control of these products is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for such products.This principle is achieved by applying the five-step approach:(i)the Company accounts for a contract w

121、hen it has approval and commitment from both parties,(ii)the rights of the parties are identified,(iii)payment terms are identified,(iv)the contract has commercial substance and(v)collectability of consideration is probable.Revenues and any contract assets are not recognized until such time that the

122、 required conditions are met.Disaggregation of Revenue The Company provides disaggregation of revenue based on Genomics and Data and services on the condensed consolidated statements of operations and comprehensive loss,as it believes these best depict how the nature,amount,timing and uncertainty of

123、 revenue and cash flows are affected by economic factors.Genomics The Company generally recognizes revenue for its Genomics product offering when it has met its performance obligation relating to an order.The Company has determined its sole performance obligation to be the delivery of the testing re

124、sults to the ordering party.The Company receives payments from Medicare,Medicaid,and commercial insurance for clinical orders and directly from research institutions,pharmaceutical companies or other third parties for direct bill orders.The Company recognized Genomics revenue of$116.4 million and$96

125、.8 million for the three months ended September 30,2024 and 2023,respectively.The Company recognized Genomics revenue of$331.3 million and$270.8 million for the nine months ended September 30,2024 and 2023,respectively.For clinical orders from Medicare,Medicaid,and commercial insurance,the Company d

126、etermines transaction price by reducing the standard charge by the estimated effects of any variable consideration,such as contractual allowance and implicit price concessions.The Company estimates the contractual allowances and implicit price concessions based on historical collections in relation

127、to established rates,as well as known current or anticipated reimbursement trends not reflected in the historical data.Estimates are inclusive of the consideration to which the Company will be entitled at an amount for which it is probable that a reversal of cumulative consideration will not occur.T

128、he Company monitors the estimated amount to be collected at each reporting period based on actual cash collections in order to assess whether a revision to the estimate is required.Payment is typically due after the claim has been processed by the payer,generally 30-120 days from date of service.Whi

129、le management believes that the estimates are accurate,actual results could differ and the potential impact on the financial statements could be significant.The Company recognized 14revenue for clinical orders of$105.2 million and$88.3 million for the three months ended September 30,2024 and 2023,re

130、spectively.The Company recognized revenue for clinical orders of$300.3 million and$245.2 million for the nine months ended September 30,2024 and 2023,respectively.For direct bill orders from research institutions,pharmaceutical companies,or other third parties,the Company determines the transaction

131、prices based on established contractual rates with the customer,net of any applicable discounts.Payment is typically due between 30 and 60 days following the date of invoice.The Company recognized Genomics revenue for direct bill orders of$11.2 million and$8.5 million for the three months ended Sept

132、ember 30,2024 and 2023,respectively and$31.0 million and$25.6 million for the nine months ended September 30,2024 and 2023,respectively.Data and services Data and services revenue primarily represents data licensing and clinical trial services that the Company provides to pharmaceutical and biotechn

133、ology companies.The Companys arrangements with these customers often have terms that span multiple years.However,these contracts generally also include customer opt-in or early termination clauses after twelve months without contractual penalty.The customers option to renew is generally not viewed a

134、s a material right,and as a result,the Companys contract period for these agreements is generally considered less than one year.The Company determines the transaction price based on established contractual rates with the customer,net of any applicable discounts.The Company recognizes revenue for its

135、 Data and services product offering when it has met its performance obligation under the terms of the agreement with the customer.The Companys two product offerings are as follows:Insights The Companys Insights product consists primarily of licensing and analysis of de-identified records.Each Insigh

136、ts contract is unique and may include multiple promises,including the delivery of licensed de-identified records,including refreshes,analytical services or access to the Companys enhanced Lens application.The Company evaluates each contract to determine which performance obligations are capable of b

137、eing distinct and separately identifiable from other promises in the contract and,therefore,represent distinct performance obligations.The actual timing of data deliveries can be based on a variety of factors,including,but not limited to,the customers requirement and/or the Companys technological,op

138、erational,and human capital capacity;in addition,management assesses relevant contractual terms in contracts with customers and applies significant judgment in identifying and accounting for all terms and conditions in certain contracts.The transaction price is allocated to the distinct performance

139、obligations and revenue is recognized once the performance obligation has been fulfilled.The standalone selling prices are based on the Companys normal pricing practices when sold separately with consideration of market conditions and other factors,including customer demographics.The Company has det

140、ermined that the delivery of de-identified records and,when applicable,analytical services,and access to its enhanced Lens application are separate and distinct performance obligations.The primary Insights contract types are as follows:Data licensing on a one-time or limited duration basis Customer

141、licenses a specific dataset of records,and the Company accounts for individual licensed data records as a right to use license.Revenue is typically recognized upon delivery of the data to the customer,as the Companys obligations for an individual record is complete once the data has been delivered,a

142、nd the customer is able to benefit from the provision of data as it is received.Multi-year data subscriptions Customer licenses an interchangeable maximum number of de-identified records,and the Company accounts for the service as a right to access license and one performance obligation.Revenue is r

143、ecognized as access to the dataset is provided,ratably over-time,with the measure of progress time-based.Analytical services and other services Services typically involve data analysis and research performed on behalf of the customer by the Company.The resulting delivery of data,or a report addressi

144、ng a series of questions and analytical results,is considered a single performance obligation.Revenue is generally recognized upon the delivery of these services,as defined by the contract.Enhanced Lens application subscription services Customer licenses access to the Companys enhanced Lens applicat

145、ion under a software-as-a-service model.Customers do not have the right to take possession of the Lens platform application,and the online software product is fully functional once a customer has access.Lens subscription revenues are recognized ratably over the contract terms beginning on the date t

146、he Companys service is made available to the customer.For the periods presented,revenue from Lens subscription services are not material.The Company recognized revenue from Insights products of$50.1 million and$26.9 million for the three months ended September 30,2024 and 2023,respectively and$122.1

147、 million and$78.7 million for the nine months ended September 30,2024 and 2023,respectively.15Trials The Companys Trials product includes TIME clinical trial matching services and other clinical trial services.TIME consists primarily of matching patients to clinical trial sponsors of a potential mat

148、ch.To the extent the contract requires,the Company may also assist in opening the clinical trial site and enrolling the patient in the clinical trial.The Company has determined that,depending on the type of agreement,the performance obligation of these contracts is the delivery of a notification or

149、the enrollment of a patient in a clinical trial.As such,revenue is recognized upon one of the following:delivery of a notification to the physician alerting them to a clinical trial match,or once a patient is enrolled in a trial.Concurrently,the customer,which is the clinical trial sponsor,also rece

150、ives notification from the Company to establish the performance obligations delivered or fulfilled for the billing period.In addition to TIME,the Company provides other clinical trial services conducting or supporting studies.Tempus Compass LLC,a subsidiary of the Company,is a contract research orga

151、nization,or CRO,which manages and executes early and late-stage clinical trials,primarily in oncology.Contracts for clinical trial services can take the form of fee-for-service or fixed-price contracts.Fee-for-service contracts are typically priced based on time and materials,and revenue is recogniz

152、ed based on hours and materials used as the services are provided.Fixed-price contracts generally represent a single performance obligation and are recognized over-time using a cost-based input method.Progress on the performance obligation is measured by the proportion of actual costs incurred to th

153、e total costs expected to complete the contract.This cost-based method of revenue recognition requires the Company to make estimates of costs to complete its projects on an ongoing basis.Contract costs principally include direct labor and reimbursable out-of-pocket costs.The Company recognized reven

154、ue from Trials products of$10.1 million and$10.6 million for the three months ended September 30,2024 and 2023,respectively and$31.8 million and$31.5 million for the nine months ended September 30,2024 and 2023,respectively.For Insights and Trials arrangements,pricing is fixed and the Company may be

155、 compensated through a combination of an upfront payment and performance-based,non-refundable payments due upon completion of the stated performance obligation(s).Payment is generally due 60 to 90 days after the date of service.The Company has no significant obligations for refunds,warranties,or sim

156、ilar obligations for Data and services product offerings.The Company has elected the practical expedient,which allows the Company to not disclose remaining performance obligations for contracts with original terms of twelve months or less.Cancelable contracted revenue is not considered a remaining p

157、erformance obligation.The Company recognized Data and other revenue from pharmaceutical companies,non-for-profits,and researchers of$64.5 million and$39.2 million for the three months ended September 30,2024 and 2023,respectively and$161.4 million and$113.3 million for the nine months ended Septembe

158、r 30,2024 and 2023,respectively.Multi-year Contract Performance Obligations The Company has limited multi-year contracts that do not contain early termination or customer opt-in clauses.These contracts contained defined,noncancelable performance obligations that will be fulfilled in future years.The

159、 Companys remaining performance obligations related to multi-year contracts was$208.8 million as of September 30,2024,of which the Company expects to recognize approximately 48%as revenue over the next year,and the remaining 37%,13%,and 2%of its remaining performance obligations as revenue in years

160、two,three,and four,respectively.Contract AssetsTiming of revenue recognition may differ from the timing of invoicing to customers.Certain performance obligations may require payment before delivery of the service to the customer.The Company recognizes contract assets when the Company has an uncondit

161、ional right to payment,and when revenues earned on a contract exceeds the billings.Contract assets are presented under accounts receivable,net.Accounts receivable as of September 30,2024 and December 31,2023 included contract assets of$6.6 million and$2.4 million,respectively.During the fourth quart

162、er of 2021,and in conjunction with the signing of a November 2021 Master Services Agreement(“the MSA”)with customer AstraZeneca AB(“AstraZeneca”),the Company recognized a contract asset for consideration payable concurrent with the issuance of the common stock warrant in accordance with ASC 606.The

163、contract asset was initially measured equal to the initial fair value of the warrant liability based on the authoritative guidance under FASB ASC 718 CompensationStock Compensation.As revenue is recognized over the period of the contractual commitment of the MSA,the associated contract asset amortiz

164、ation is recorded as reduction of revenue.At each reporting period,the short-term portion of the warrant asset is adjusted based on the financial commitment and reclassified to Prepaid expenses and other current assets.16The following summarizes the warrant contract asset presentation as of Septembe

165、r 30,2024 and December 31,2023(in thousands):September 30,2024 December 31,2023 Prepaid expenses and other current assets$4,843$4,843 Warrant contract asset,less current portion 17,866 21,499 Total warrant contract asset$22,709$26,342 In November 2023,the Company entered into a Commercialization and

166、 Reference Laboratory Agreement with Personalis,Inc.(“Personalis”),which was subsequently amended in August 2024.The Company will pay up to$12.0 million to Personalis over three years as certain milestones are met,$8.0 million of which has been paid as of September 30,2024.These payments are treated

167、 as contract assets and amortized into revenue over the life of the contract.Contract asset balances are offset by deferred revenue generated from receipt of warrants for Personalis common stock(see Note 15).As of September 30,2024 and December 31,2023,there was$2.0 million and$0.1 million,respectiv

168、ely,of net contract assets related to this agreement recorded in Prepaid expenses and other current assets,respectively.Deferred Revenue Deferred revenue consists of billings or cash received for services in advance of revenue recognition and is recognized as revenue when all the Companys revenue re

169、cognition criteria are met.The deferred revenue balance is influenced primarily by upfront contractual payments from the Companys Data and Services product offerings and timing of delivery of the Companys de-identified licensed data and clinical test results.The portion of deferred revenue that is a

170、nticipated to be recognized as revenue during the succeeding twelve-month period is recorded as deferred revenue,current and any remaining portion is recorded as deferred revenue,non-current.The Company recognized$53.9 million and$35.7 million during the nine months ended September 30,2024 and 2023,

171、respectively,that was included in the corresponding deferred revenue balance at the beginning of the periods.4.BUSINESS COMBINATIONS SEngine On October 3,2023,the Company acquired all of the issued and outstanding interests of SEngine Precision Medicine LLC(“SEngine”),a Delaware limited liability co

172、mpany.The acquisition gives the Company access to SEngines meaningful organoid repository,advanced bioinformatics capabilities,and PARIS test platform.The acquisition resulted in goodwill of$9.6 million.The aggregate acquisition date fair value of consideration for the SEngine acquisition totaled$9.

173、9 million.Consideration consisted of$2.8 million of cash and$6.3 million of non-voting common stock.The transaction also includes contingent consideration of up to 35,000 additional shares of non-voting common stock if a liquidity event is completed prior to December 31,2027.The contingent considera

174、tion liability is remeasured at fair value in each period following the closing within selling,general and administrative expense.In accordance with the terms of the agreement,$1.4 million in equity was held back and is payable on October 3,2024,which is net of a net working capital adjustment less

175、than$0.1 million.The Company issued 429 shares of non-voting common stock to the selling corporation in February 2024 related to the net working capital adjustment.Mpirik On March 8,2023,the Company acquired all of the issued and outstanding interests of Mpirik,Inc.(“Mpirik”),a cardiology-focused he

176、althcare technology company specializing in data-driven patient screening,automated care coordination,and clinical research.Mpiriks platform adds to the Companys existing portfolio to address the way heart disease is detected,diagnosed,and treated,further expanding Tempuss cardiology business.The ac

177、quisition resulted in goodwill of$10.6 million.The aggregate acquisition date fair value of consideration for the Mpirik acquisition totaled$9.7 million.Consideration was made up of$4.6 million of non-voting common stock,$4.7 million of cash,and contingent consideration payable in cash with an acqui

178、sition date fair value of$0.4 million.In accordance with the terms of the agreement,$0.8 million in cash consideration and$0.3 million in equity consideration was held back and paid on March 11,2024.In accordance with the equity consideration held back,the Company issued 8,724 shares of non-voting c

179、ommon stock to Mpirik shareholders in March 2024.Cash consideration of$4.7 million is net of a$0.3 million net working capital adjustment.In accordance with the terms of the agreement,the securityholders of the acquired business were entitled to receive contingent consideration from the Company paya

180、ble in an aggregate value of$1.0 million in cash,contingent upon the acquired business reaching a revenue target of$1.5 million for the 17twelve-month period ended December 31,2023.The contingent consideration had an acquisition fair value date of$0.4 million,which the Company recognized within Othe

181、r current liabilities.The contingent consideration was remeasured at fair value in each period following the closing within selling,general and administrative expense.Mpirik did not achieve the revenue target for the twelve-month period ended December 31,2023.As such,the contingent consideration lia

182、bility was written down to$0.In addition,the Company issued 17,450 performance stock units to certain retained Mpirik employees on the closing date of the acquisition.In July 2023,the Companys board of directors approved the removal of the performance-vesting condition,following which performance st

183、ock units are treated as restricted stock units.Arterys On October 3,2022,the Company acquired Arterys,Inc.(“Arterys”),a company that provides a platform to derive insights from radiology medical imagines to improve diagnostic decision-making,efficiency,and productivity across multiple disease areas

184、,which resulted in goodwill of$11.1 million.The aggregate acquisition date fair value of consideration for the Arterys acquisition totaled$8.3 million,net of cash acquired of$0.3 million.Consideration was made up of$4.9 million of non-voting common stock and$3.0 million of cash.Cash consideration of

185、$3.0 million is net of a$1.0 million working capital adjustment paid back to Tempus in March 2023.185.BALANCE SHEET COMPONENTS Property and Equipment,Net The following summarizes property and equipment,net as of September 30,2024 and December 31,2023(in thousands):September 30,2024 December 31,2023

186、Equipment$105,674$91,656 Leasehold improvements 45,598 42,433 Furniture and fixtures 6,633 6,633 Total property and equipment,gross 157,905 140,722 Less:accumulated depreciation (98,513)(79,041)Property and equipment,net$59,392$61,681 Depreciation expense on property and equipment is classified as f

187、ollows in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30,2024 and 2023(in thousands):Three Months Ended September 30,Nine Months Ended September 30,2024 2023 2024 2023 Cost of revenue,genomics$3,723$3,366$10,397$9,729 Selling,general

188、 and administrative costs 3,065 2,038 9,075 5,929 Total depreciation$6,788$5,404$19,472$15,658 Accrued Expenses Accrued expenses as of September 30,2024 and December 31,2023,consist of the following(in thousands):September 30,2024 December 31,2023 Accrued compensation and employee benefits$25,378$21

189、,950 Accrued expenses 45,504 37,783 Accrued cloud storage costs 22,039 13,921 Interest payable 9,064 8,863 Total accrued expenses$101,985$82,517 6.GOODWILL AND INTANGIBLES Goodwill Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and

190、intangible assets acquired.There were no goodwill additions for the three months ended September 30,2024 and 2023,or for the nine months ended September 30,2024.During the nine months ended September 30,2023,goodwill of$10.6 million was recorded in connection with the acquisition of Mpirik.The Compa

191、ny recorded no impairment loss during the three and nine months ended September 30,2024 and 2023.Intangible assets Intangible assets are initially recorded at their acquisition cost,or fair value if acquired as part of a business combination and amortized over their estimated useful lives.Intangible

192、 assets consist of a website domain,customer relationships and trade names acquired as part of a business combination,and licensed data acquired by entering into research collaboration agreements.In each license arrangement,the other party provides the Company with specified data,which currently is

193、used primarily for research and development purposes but may also be licensed to third parties.The asset represents the Companys right to use these datasets.The Company also recognizes a liability for the associated minimum payments that are presented within accrued data licensing fees.During the th

194、ree and nine months ended September 30,2024,the Company recorded$0.7 million in licensed data related to de-identified data obtained through an amended agreement.During the nine months ended September 30,2023,the Company recorded$3.8 million in licensed data related to de-identified data obtained th

195、rough an additional agreement.During the three months ended September 30,2023,the Company did not record any additions in licensed data.19In January 2023,the Company amended a data licensing agreement,which reduced the future data license payments the Company owes in exchange for waiving exclusivity

196、 rights on the licensed data.The Company remeasured the related licensed data intangible asset to fair value,which resulted in an impairment of$7.4 million recorded in Research and development during the nine months ended September 30,2023.A$7.9 million gain resulting from the related reduction of f

197、uture data license payments was also recorded in Research and development during the nine months ended September 30,2023.The impairment resulted in a reduction of$40.1 million and$32.7 million to gross intangible assets and accumulated amortization,respectively.There were no impairment charges recog

198、nized related to intangible assets during the three months ended September 30,2024 and 2023,respectively,or the nine months ended September 30,2024.The following table summarizes intangible assets as of September 30,2024 and December 31,2023(in thousands):September 30,2024 December 31,2023 Gross Amo

199、unt Accumulated Amortization Net Gross Amount Accumulated Amortization Net Customer relationships$20,550$14,760$5,790$20,550$12,219$8,331 Licensed data 20,010 16,387 3,623 19,321 11,469 7,852 Website domain 19 19 19 19 Trade names 8,000 3,143 4,857 8,000 2,286 5,714$48,579$34,290$14,289$47,890$25,97

200、4$21,916 Amortization of intangible assets is recognized using the straight-line method over their estimated useful lives,which range from three to seven years.Amortization expense was$2.7 million and$2.9 million for the three months ended September 30,2024 and 2023,respectively,and$8.3 million and$

201、8.9 million for the nine months ended September 30,2024 and 2023,respectively,and is recorded in cost of revenues,research and development,or selling,general and administrative expense,depending on use of the asset.The weighted average life of the Companys intangibles is approximately six years.7.JO

202、INT VENTURESB TempusOn May 18,2024,the Company entered into a Joint Venture Agreement(the Joint Venture Agreement)with SoftBank Group Corporation(SoftBank)to form SB Tempus Corp.(the Joint Venture or SB Tempus).The Joint Venture closed on July 18,2024,at which time the Company and SoftBank each cont

203、ributed 15 billion($95.2 million).Each party received 50%of SB Tempuss outstanding capital stock and board seats.SB Tempus will engage in certain business activities in Japan similar to those conducted by the Company in the United States,including performing clinical sequencing,organizing patient da

204、ta,and building a real world data business in Japan.SB Tempus is considered a VIE as the Company does not have sufficient equity at risk and is entitled to receive residual returns of SB Tempus through its equity stake.Decisions that significantly impact the economic performance of SB Tempus require

205、 the consent of both the Company and SoftBank.Therefore,the Company concluded that neither party is deemed to have predominant control over SB Tempus,and the Company is not considered to be the primary beneficiary.The Companys maximum exposure to loss from SB Tempus is equal to the carrying value of

206、 the Companys investment.As of September 30,2024,the carrying value of the investment in SB Tempus was$103.7 million.The Companys share of losses from SB Tempus are recorded in other(expense)income,net.In connection with entering into the Joint Venture Agreement,the Company entered into a Data Licen

207、se Agreement(the Data License Agreement),under which the Company granted SB Tempus a limited,non-exclusive,transferable license with a limited right to sublicense certain de-identified data for certain specified uses solely in Japan.Under the Data License Agreement,SB Tempus paid the Company 7.5 bil

208、lion($47.9 million)in exchange for the license to an initial records batch,which is recorded in deferred revenue and will be recognized into data and services revenue over the term of the license subscription which ends on March 31,2026.In addition,on July 18,2024,the Company and SB Tempus entered i

209、nto an Intellectual Property Agreement(the IP License Agreement)under which SB Tempus paid the Company an additional 7.5 billion($47.9 million)in exchange for a non-exclusive license to certain of the Companys technologies for certain specified uses solely in Japan.The payment is recorded in deferre

210、d other income and will be amortized into other(expense)income,net over three years,based on the estimated time for SB Tempus systems and technologies to diverge from the Companys.208.COMMITMENTS AND CONTINGENCIES Legal Matters From time to time in the normal course of business,the Company may be su

211、bject to various legal matters such as threatened or pending claims or proceedings.There were no material such matters as of and for the three and nine months ended September 30,2024 and 2023.9.STOCKHOLDERS EQUITYCommon Stock Prior to the IPO,the Company had authorized two classes of common stock,vo

212、ting and non-voting.In March 2021,the Company amended its certificate of incorporation to bifurcate the voting common stock into two classes,Class A common stock and Class B common stock.As of December 31,2023,the Company had authorized 200,228,024 shares of Class A common stock,5,374,899 shares of

213、Class B common stock,and 66,946,627 shares of non-voting common stock.In April 2024,the Company increased the number of authorized shares of Class A common stock to 204,590,500 in conjunction with the Series G-5 Preferred stock financing(see Note 10,Redeemable Convertible Preferred Stock).In connect

214、ion with the IPO,the Restated Certificate became effective,which authorized 1,000,000,000 shares of Class A common stock,5,500,000 shares of Class B common stock,and 20,000,000 shares of preferred stock.Class A common stock and Class B common stock are collectively referred to as“Common Stock”throug

215、hout the notes to these unaudited interim condensed consolidated financial statements unless otherwise noted.The rights of the holders of Class A common stock and Class B common stock are identical,except with respect to voting.Each share of Class A common stock is entitled to one vote per share and

216、 each share of Class B common stock is entitled to thirty votes per share.Prior to the IPO,the Company also had shares of non-voting common stock authorized and outstanding,which were not entitled to any voting rights.Following the IPO,no shares of non-voting common stock are authorized or outstandi

217、ng.Each share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock.Under the Restated Certificate,any holders shares of Class B common stock will convert automatically into Class A common stock,on a one-to-one basis,upon certain circum

218、stances,including:(1)the sale or transfer of such shares of Class B common stock,other than to a“controlled entity,”which is any person or entity which,directly or indirectly,is controlled by,or is under common control with,the holder of such shares of Class B common stock;(2)the trading day that is

219、 no less than 90 days and no more than 150 days following the twenty-year anniversary of the filing of the Restated Certificate,which was filed with the Secretary of State of the State of Delaware on June 17,2024;(3)the date on which Mr.Lefkofsky is no longer providing services to the Company as an

220、executive officer or member of the board of directors;and(4)the trading day that is no less than 90 days and no more than 150 days following the date that Mr.Lefkofsky and his controlled entities hold,in the aggregate,fewer than 10,000,000 shares of the Companys capital stock(as adjusted for stock s

221、plits,stock dividends,combinations,subdivisions and recapitalizations).Once transferred and converted into Class A common stock,the Class B common stock may not be reissued.The Company issues stock-based awards to its employees in the form of stock options,restricted stock units,performance stock un

222、its and restricted stock,all of which have the potential to increase the outstanding shares of common stock in the future(see Note 11,Stock-Based Compensation).Upon any liquidation,dissolution,or winding-up,the holders of Class A common stock and Class B common stock will be entitled to share equall

223、y,identically,and ratably in all assets remaining after the payment of any liabilities,liquidation preferences,and accrued or declared but unpaid dividends,if any,with respect to any outstanding preferred stock,unless a different treatment is approved by the affirmative vote of the holders of a majo

224、rity of the outstanding shares of such affected class,voting separately as a class.21Common Stock Warrant In connection with the MSA with AstraZeneca,the Company granted AstraZeneca warrants to purchase$100 million in shares of the Companys Class A common stock at an exercise price equal to the IPO

225、price of$37.00 per share.The number of shares of Class A common stock issuable upon exercise of the warrant is 2,702,703,based on the IPO price of$37.00 per share.The warrant will be automatically cancelled and terminated for no consideration in the event AstraZeneca declines to extend its financial

226、 commitment before December 31,2024.If AstraZeneca exercises the warrant,AstraZeneca will be required to increase its minimum commitment under the MSA from$220 million to$320 million through December 2028.On December 8,2023,the Company issued Allen a warrant to purchase 150,000 shares of the Company

227、s Class A common stock at a price per share of$10.00.The warrant was issued as compensation for Allens assistance with the issuance of the Companys Series G-4 preferred stock,and as such has been treated as an issuance cost and presented net of proceeds from Series G-4 preferred stock in Convertible

228、 redeemable preferred stock on the Companys consolidated balance sheet.In connection with the IPO,the Company issued 109,459 shares of Class A common stock upon the net exercise of the warrant.Treasury Stock In January 2023,the Company repurchased 145,466 shares of non-voting common stock previously

229、 issued to the former owners of AKESOgen,Inc.,which the Company acquired in December 2019.These shares were accounted for as treasury stock.The Company records treasury stock at cost.10.REDEEMABLE CONVERTIBLE PREFERRED STOCK In January 2023,the Company issued 47,781 shares of Series G-3 convertible

230、preferred stock as payment of paid-in-kind dividends.In January 2024,the Company issued 66,465 shares of Series G-3 convertible preferred stock and 10,666 shares of Series G-4 convertible preferred stock as payment of paid-in-kind dividends.In October 2023,the Company issued 785,245 shares of Series

231、 G-4 convertible preferred stock(“Series G-4 Preferred”)for aggregate proceeds of$45.0 million.Each share had a par value of$0.0001.Under the terms of Series G-4 Preferred,holders receive an amount equal to 5%of the per share original issue price for each share of Series G-4 Preferred(the“G-4 Specia

232、l Payment”),in the event that following an IPO,the average of the last trading price on each trading day during the ten day trading period beginning on the first day of trading of the Companys Class A common stock is less than 110%of the price per share of Class A common stock sold in the IPO.Follow

233、ing the Companys IPO,the average ten day trading price was less than 110%of the price per share of Class A common stock sold in the IPO.As such,holders of Series G-4 Preferred were owed an aggregate payment of$2.3 million,which was made in July 2024.In April 2024,the Company issued 3,489,981 shares

234、of Series G-5 convertible preferred stock(“Series G-5 Preferred”)for aggregate proceeds of$200.0 million.Each share has a par value of$0.0001.The Company will use the proceeds for working capital and general corporate purposes.In connection with the IPO,all of the Companys then-outstanding shares of

235、 redeemable convertible preferred stock and accrued but unpaid dividends were automatically converted into 71,976,178 shares of Class A voting common stock and 5,043,789 shares of Class B voting common stock.22Redeemable convertible preferred stock outstanding as of December 31,2023 consisted of the

236、 following(in thousands,except share amounts):As of December 31,2023 Series Year Shares Liquidation Carrying Preferred Issued Authorized Outstanding Amount Value Series A 2015 10,000,000 10,000,000$10,500$10,000 Series B 2016 5,374,899 5,374,899 10,500 10,000 Series B-1 2016 2,500,000 2,500,000 10,5

237、00 10,000 Series B-2 2017 4,191,173 4,191,173 31,500 30,000 Series C 2017 9,779,403 9,779,403 86,757 70,000 Series D 2018 8,534,330 8,534,330 105,107 104,145 Series E 2018 6,630,905 6,630,905 151,621 151,621 Series F 2019 8,077,674 8,077,674 261,722 261,722 Series G 2020 2,537,290 2,537,290 119,928

238、119,928 Series G-2*2020/2021 3,453,139 3,453,139 197,889 197,889 Series G-3*2022/2023 4,362,476 1,661,895 98,891 95,238 Series G-4*2023 4,362,476 785,245 45,514 45,000 Total convertible preferred stock 69,803,765 63,525,953 1,130,429 1,105,543 *Excludes amounts related to the conversion of convertib

239、le note*Excludes amounts related to embedded conversion features 11.STOCK-BASED COMPENSATION 2015 Stock Plan In 2015,the Company adopted the Tempus AI,Inc.2015 Stock Plan(the“2015 Plan”),which has been amended and restated numerous times to increase the aggregate shares authorized to be issued to em

240、ployees,consultants,and directors of the Company.As of December 31,2023,there were 28,115,750 shares authorized under the 2015 Plan.On January 18,2023,the Company approved a two-year extension of the expiration date of RSUs for then-current employees whose RSUs would otherwise expire in 2023 or 2024

241、.The Company accounted for the extension as a stock compensation modification,which resulted in an increase in unrecognized compensation cost of$35.3 million at the time the extension was approved and an additional$12.2 million as the extensions occurred.The RSUs approved for the two-year extension

242、were fully vested as of the IPO date.As such,the Company recognized the full impact of the expiration extension in stock-based compensation in the three months ended June 30,2024.After the IPO,no further grants will be made under the 2015 Stock Plan.2024 Equity Incentive Plan In February 2024,the Co

243、mpanys board of directors adopted,and in April 2024,the Companys stockholders approved,the 2024 Equity Incentive Plan(the“2024 Plan”),which became effective in connection with the IPO in June 2024.The 2024 Plan provides for the grant of incentive stock options,(“ISOs”)nonstatutory stock options,stoc

244、k appreciation rights,RSUs,restricted stock unit awards(“RSAs”),performance-based awards(“PSUs”)and other awards.The maximum number of shares of Class A common stock that may be issued under the 2024 Plan is 7,430,000 shares of the Companys Class A common stock and will automatically increase on Jan

245、uary 1 of each year,beginning on January 1,2025 and continuing through and including January 1,2034 in an amount equal to either(i)a number of shares of the Companys Class A common stock(the“Evergreen Increase”),such that the sum of(x)the remaining number of shares available under the 2024 Plan and(

246、y)the Evergreen Increase is equal to 5%of the total number of shares of common stock(both Class A and Class B)outstanding on December 31 of the preceding calendar year,or(ii)a lesser number of shares determined by the Companys board of directors prior to the applicable January 1.The maximum number o

247、f shares that may be issued upon the exercise of ISOs under the 2024 Plan is 22,290,000 shares.23Restricted Stock Units The majority of RSUs vest over a period of three to five years,with a cliff vest after one year and ratable quarterly vesting thereafter.RSUs granted prior to the IPO were also sub

248、ject to liquidity event vesting condition,as defined in the grant agreement,which was satisfied in connection with the IPO.The table below summarizes restricted stock unit activity for the nine months ended September 30,2024:Restricted Stock Units Weighted-Average Grant DateFair Value Unvested at De

249、cember 31,2023 20,788,500$26.47 Granted 3,028,130$37.64 Vested and settled (5,568,547)$20.11 Vested and not yet settled (10,620,792)$26.72 Forfeited (799,238)$30.08 Expired (147,376)$0.28 Unvested at September 30,2024 6,680,677$36.92 Stock-based compensation is classified as follows in the accompany

250、ing condensed consolidated statements of operations for the three and nine months ended September 30,2024 and 2023(in thousands):Three Months Ended September 30,Nine Months Ended September 30,2024 2023 2024 2023 Cost of revenues,genomics$1,083$12,410$Cost of revenues,data and services 916 8,145 Tech

251、nology research and development 3,929 54,363 Research and development 2,554 44,787 Selling,general and administrative 12,556 389,646 Total stock-based compensation$21,038$509,351$12.DEBT Term Loan Facility On September 22,2022,the Company entered into a Credit Agreement with Ares Capital Corporation

252、(“Ares”)for a senior secured loan(the“Term Loan Facility”)in the amount of$175 million,less original issue discount of$4.4 million and deferred financing fees of$2.6 million.On April 25,2023,the Company entered into an amendment to the Credit Agreement,which was accounted for as a debt modification.

253、The amendment to the Credit Agreement increased the Term Loan Facility by an aggregate principal amount of$50 million,less original issue discount of$1.3 million and increased the interest rate on the Term Loan Facility by 25 basis points.On October 11,2023,the Company signed a second amendment to i

254、ts Credit Agreement with Ares which provided an additional$35.0 million in term debt.The Company received$34.1 million in cash,which is the aggregate principal amount of$35.0 million less original issue discount of$0.9 million.Terms of the second amendment are consistent with existing terms of the C

255、redit Agreement.The proceeds of the Term Loan Facility will be used for working capital and general corporate purposes,to finance growth initiatives,to pay for operating expenses,and to pay the related transaction costs.The Term Loan Facility is due at maturity on September 22,2027 and is subject to

256、 quarterly interest payments for Base Rate Loans and at the end of the applicable interest rate period for Secured Overnight Financing Rate(“SOFR”)Loans.After the first three months from the effective date,each quarter,the Company has the option to convert the borrowing type to either a Base Rate Bo

257、rrowing,which bears interest based on a Base Rate,defined as the greatest of the(a)the“Prime Rate”appearing the“Money Rates”section of the Wall Street Journal or another national publication selected by the Agent,(b)the Federal Funds Rate plus 0.50%,(c)Term SOFR for a one-month tenor in effect on su

258、ch day plus 1.00%in each instance as of such day and(d)2.00%,or a SOFR Borrowing,which bears interest based on Term SOFR.Additionally,the Company may make either a PIK election or a Cash election.Based on these elections,the Term Loan Facility will bear interest at one of the following rates:(i)the

259、sum of the Base Rate plus an Applicable Rate of 4%per annum plus 3.25%per annum paid in-kind by adding the accrued interest to the outstanding principal balance on each interest payment date(ii)the Base Rate plus an Applicable Rate of 6.25%per annum 24(iii)the sum of the Term SOFR for the interest p

260、eriod plus an Applicable rate of 5%per annum plus 3.25%per annum paid in-kind by adding the accrued interest to the outstanding principal balance on each interest payment date(iv)the Term SOFR for the interest period in effect plus the Applicable Rate of 7.25%per annum In addition,the Term Loan Faci

261、lity contains customary representations and warranties,financial and other covenants,and events of default,including but not limited to,limitations on earnout,milestone,or deferred purchase obligations,dividends on preferred stock and stock repurchases,cash investments,and acquisitions.The Company i

262、s required to maintain a minimum liquidity of at least$25 million and maintain specified amounts of consolidated revenues for the trailing twelve-month period ending on the last day of each fiscal quarter.Minimum consolidated revenues increase each quarter.For the years ended December 31,2024 and 20

263、25,the Company is required to generate consolidated revenues of$459.1 million and$594.1 million,respectively.The Company was in compliance with all covenants of the Credit Agreement as of September 30,2024.All obligations under the Term Loan Facility are guaranteed by the Company and secured by subs

264、tantially all of the assets of the Company.The original issue discount of$6.5 million and deferred financing fees of$2.6 million are amortized over the term of the underlying debt and unamortized amounts have been offset against long-term debt in the consolidated balance sheets.As of September 30,20

265、24 and December 31,2023,the unamortized original issue discount was$4.1 million and$5.1 million,respectively,and the unamortized deferred financing fees were$1.5 million and$1.9 million,respectively.Through September 30,2024,the Company has not made any principal repayments on the Term Loan Facility

266、.During the nine months ended September 30,2024,the Company made$20.9 million in interest payments.The Company recognized interest expense of$9.4 million and$27.7 million related to the Term Loan Facility,which represented an effective interest rate of 3.5%and 10.3%,during the three and nine months

267、ended September 30,2024,respectively.The Company recognized interest expense of$7.9 million and$19.9 million related to the Term Loan Facility,which represented an effective interest rate of 3.4%and 9.7%,during the three and nine months ended September 30,2023,respectively.Convertible Promissory Not

268、e On June 22,2020,in connection with entry into an agreement for use of Google LLCs,or Googles,Google Cloud Platform,the Company issued Google a convertible promissory note,or the Note,in the original principal amount of$330.0 million.On November 19,2020,in connection with Series G-2 convertible pre

269、ferred stock financing,the Company issued Google$80 million of Series G-2 preferred stock,at a 10%discount to the purchase price per share in such financing,in partial satisfaction of the outstanding principal amount under the Note,and the Company amended and restated the terms of the Note.The amend

270、ed and restated Note,or the Amended Note,has a principal amount of$250.0 million,and bears interest at the rate set forth therein.The principal amount is automatically reduced each year based on a formula taking into account the aggregate value of the Google Cloud Platform services used by the Compa

271、ny.The Company accounts for the principal reductions as an offset to its cloud and compute spend within selling,general and administrative in its condensed consolidated statements of operations and comprehensive loss.The outstanding principal and accrued interest under the Amended Note,or the Outsta

272、nding Amount,is due and payable on the earlier of(1)March 22,2026,which is the maturity date of the Amended Note,(2)upon the occurrence and during the continuance of an event of default,and(3)upon the occurrence of an acceleration event,which includes any termination by the Company of its Google Clo

273、ud Platform agreement.The Company generally may not prepay the Outstanding Amount,except that the Company may,at its option,prepay the Outstanding Amount in an amount such that the principal amount remaining outstanding after such repayment is$150.0 million.If the Amended Note is outstanding at the

274、maturity date,Google may,at its option,convert the then outstanding principal amount and interest accrued under the Amended Note into a number of shares of the Companys Class A common stock equal to the quotient obtained by dividing(1)the Outstanding Amount on the maturity date,by(2)the average of t

275、he last trading price on each trading day during the twenty day period ending immediately prior to the maturity date.The Company concluded that one of the conversion features meets the definition of an embedded derivative that is required to be accounted for as a separate unit of accounting.The fair

276、 value of the embedded derivative is not material and was therefore not bifurcated.As such,upon issuance of the Note the Company recorded a promissory note of$330.0 million.The Company recognized interest expense of$3.9 million and$4.1 million during the three months ended September 30,2024 and 2023

277、,respectively.The company recognized interest expense of$11.2 million and$11.7 million during the nine months ended September 30,2024 and 2023,respectively.2513.NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS Basic net loss per share is calculated by dividing the net loss by the weighted aver

278、age number of outstanding shares of Common Stock each period.The Companys Class A common stock and Class B common stock share equally in distributed and undistributed earnings;therefore,no allocation to participating securities or dilutive securities is performed.Diluted net loss per share is calcul

279、ated by giving effect to all potential dilutive Common Stock equivalents,which includes stock options,RSUs,RSAs,PSUs,and preferred stock.Because the Company incurred net losses each period,the basic and diluted calculations are the same.The Company used the if-converted method to calculate diluted E

280、PS.As the Company had net losses in the three and nine months ended September 30,2024 and 2023,all potentially dilutive common stock equivalents have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is anti-dilutive.The following ta

281、ble presents the calculation for basic and diluted net loss per share(in thousands,except share and per share data):Three Months Ended September 30,Nine Months Ended September 30,20242023 2024 2023 Numerator:Net loss$(75,840)$(53,426)$(692,795)$(163,635)Dividends on Series A,B,B-1,B-2,C,D,E,F,G,G-3,

282、and G-4 preferred shares (11,143)(39,347)(32,709)Cumulative undeclared dividends on Series C preferred shares (764)(1,174)(2,230)Net loss attributable to common stockholders$(75,840)$(65,333)$(733,316)$(198,574)Denominator:Weighted-average common shares outstanding,basic and diluted 165,612 63,286 1

283、04,164 63,267 Net loss per share attributable to common stockholders,basic and diluted$(0.46)$(1.03)$(7.04)$(3.14)The following outstanding shares of common stock equivalents were excluded from the calculation of diluted net loss per share for each period,as the impact of including them would have b

284、een anti-dilutive.As disclosed in Note 9,the Company issued a warrant for$100 million in shares of the Companys Class A common stock.As per the terms of the warrant,potentially dilutive shares are based on the latest equity financing price.As of September 30,2024 2023 Stock options outstanding 210,0

285、00 210,000 Convertible preferred stock 62,740,708 Astrazeneca warrant 2,702,703 1,744,991 Mpirik holdback liability 8,724 SEngine holdback liability 41,007 SEngine contingent consideration 35,000 Unvested RSUs 6,680,677 Total potentially dilutive shares 9,669,387 64,704,423 As disclosed in Note 11,t

286、he RSUs issued prior to the IPO include a liquidity event performance condition prior to vesting.As such,as of September 30,2023,these are treated as contingently issuable shares and are excluded from potentially dilutive shares as the liquidity event performance condition was not yet satisfied.As t

287、he liquidity event performance condition was satisfied upon completion of the IPO,as of September 30,2024,these shares are included in potentially dilutive shares.As disclosed in Note 12,contingent upon certain financing events,the Amended Note will be converted to shares at the holders option,based

288、 on the amount outstanding at the maturity date,which is subject to reduction based on services used by us prior to the maturity date.As such,these are treated as contingently issuable shares and will be excluded from potential dilutive impact.As disclosed in Note 10,the Companys Series G-3 Preferre

289、d,Series G-4 Preferred and Series G-5 Preferred contain embedded conversion features resulted in the issuance of additional shares of Class A common stock upon completion of the IPO.The number of shares issued related to these features was dependent upon the IPO price.As such,prior to the IPO,these

290、are treated as contingently 26issuable shares.Subsequent to the completion of the IPO in June 2024,the additional shares of Class A common stock are included in the weighted-average common shares outstanding.14.INCOME TAXES Accounting for income taxes for interim periods generally requires the provi

291、sion for income taxes to be determined by applying an estimate of the annual effective tax rate for the full fiscal year to income or loss before income taxes,adjusted for discrete items,if any,for the reporting period.The Company updates its estimate of the annual effective tax rate each quarter an

292、d makes a cumulative adjustment in such period.Income tax expense(benefit)for the three and nine months ended September 30,2024 and 2023 is less than$0.2 million.Due to the Companys history of losses in the United States,a full valuation allowance on all of the Companys deferred tax assets,including

293、 net operating loss carryforwards and other book versus tax differences,was maintained.15.FAIR VALUE MEASUREMENTS AND MARKETABLE EQUITY SECURITIESFair Value MeasurementsThe carrying amounts of financial instruments,including cash and cash equivalents,accounts receivable,finance lease obligations,min

294、imum royalties,accounts payable,and accrued expenses approximate fair value due to the short maturity of these instruments.The carrying amounts of the related party receivable,finance lease obligations,and minimum royalties approximate fair value because the interest rates used fluctuate with market

295、 interest rates or the fixed rates are based on current rates offered to the Company for debt with similar terms and maturities.The valuation methodologies used for the Companys assets and liabilities measured at fair value and their classification in the valuation hierarchy are summarized below:Mar

296、ketable equity securitiesThe Company holds marketable equity securities,all of which are publicly traded shares of common stock,which have quoted prices in active markets and are classified as short-term.The securities are measured at fair value each reporting period.The Company classifies the marke

297、table equity securities as Level 1 as they are valued using quoted market prices at each reporting period.Contingent considerationThe Company was subject to a contingent consideration arrangement to make a cash payment in an aggregate value of$1.0 million,contingent upon Mpirik reaching a revenue ta

298、rget of$1.5 million for the twelve-month period ended December 31,2023.See Note 4,Business Combinations,for further discussion of that acquisition.The Company is also subject to a contingent consideration arrangement of 35,000 additional shares of non-voting common stock in connection with the SEngi

299、ne acquisition,the amount of which is determined based on the per share price of the Companys non-voting common stock in a liquidity event completed prior to December 31,2027.The contingent consideration has an acquisition fair value date of$0.8 million.See Note 4,Business Combinations for further d

300、iscussion of that acquisition.Liabilities for contingent consideration are measured at fair value each reporting period,with the acquisition date fair value included as part of the consideration transferred in the related business combination and subsequent changes in fair value recorded in earnings

301、 within operating expense on the condensed consolidated statements of operations and comprehensive loss.The Company used a risk-neutral simulation model and option pricing framework to value the contingent consideration.Prior to the IPO,the Company classified the contingent consideration liabilities

302、 as Level 3 due to the lack of relevant observable market data over fair value inputs such as probability-weighting of payment outcomes.Subsequent to the IPO completed in June 2024,the Company classified the contingent consideration arrangement of up to 35,000 additional shares of non-voting common

303、stock as Level 1 as the shares are valued using a quoted market price.Warrant assetThe Company received warrants from Personalis,which were exercised in August 2024.The warrant assets are measured at fair value each reporting period using a Black-Scholes option pricing model,which takes into conside

304、ration the price and volatility of Personalis Class A common stock.Changes in fair value are recorded in other(expense)income,net.For the three months ended September 30,2024,the Company recognized a gain of$26.0 million in other(expense)income,net due to the change in fair value of the warrant asse

305、t.For the nine months ended September 30,2024,the Company recognized a gain of$18.3 million in other(expense)income,net due to the change in fair value of the warrant asset.The Company classifies the warrant asset as Level 2 as they are valued using observable market prices of Personalis Class A com

306、mon stock.27Warrant liabilityAs discussed in Note 9,the Company issued a$100 million warrant to AstraZeneca.The warrant liability is measured at fair value each reporting period,using a Black-Scholes option pricing model.The following table summarizes the assumptions used in the model as of Septembe

307、r 30,2024:September 30,2024 Expected term(in years)2.25 Risk-free interest rate 4.14%Expected volatility 55.00%Expected dividend yield 0.00%The Company classifies the warrant liability as Level 3 due to the lack of relevant observable market data over fair value inputs such as the expected term.The

308、Term Loan Facility and the Note were not recorded at fair value.The fair values of the Term Loan Facility and the Note approximated their carrying values as of September 30,2024 and December 31,2023.Estimates of the fair values of the Term Loan Facility and the Note are classified as Level 3 due to

309、the lack of relevant observable market data over fair value inputs.The following tables summarize assets and liabilities that are measured at fair value on a recurring basis as of September 30,2024 and December 31,2023(in thousands):Fair Value Measurement at Reporting Date Using September 30,2024 Qu

310、oted Price in Active Market for Identical Assets(Level 1)Significant Other Observable Inputs(Level 2)Significant Unobservable Inputs(Level 3)Assets Marketable equity securities$78,317$78,317$Liabilities Warrant liability$76,900$76,900 Contingent consideration$940$940$Fair Value Measurement at Report

311、ing Date Using December 31,2023 Quoted Price in Active Market for Identical Assets(Level 1)Significant Other Observable Inputs(Level 2)Significant Unobservable Inputs(Level 3)Assets Marketable equity securities$31,807$31,807$Warrant asset$10,000$10,000$Liabilities Warrant liability$34,500$34,500 Con

312、tingent consideration$775$775 The following tables provide a reconciliation of the beginning and ending balances for the assets and liabilities measured at fair value using significant unobservable inputs(Level 3)(in thousands):Warrant Liability Contingent Consideration Balance at December 31,2023$3

313、4,500$775 Change in fair value of warrant liability 42,400 Change in fair value of contingent consideration 194 Transfer out of Level 3 (969)Balance at September 30,2024$76,900$28 WarrantLiability ContingentConsideration Balance at December 31,2022$42,500$Contingent consideration from Mpirik acquisi

314、tion 400 Change in fair value of warrant (8,000)Change in fair value of contingent consideration (400)Balance at September 30,2023$34,500$-For the three months ended September 30,2024 and 2023,the Company recognized a loss of$43.3 million and a gain of$2.3 million,respectively,in other(expense)incom

315、e,net due to the change in the fair value of warrant liability determined by Level 3 valuation techniques.For the nine months ended September 30,2024 and 2023,the Company recognized a loss of$42.4 million and a gain of$8.0 million,respectively,in other(expense)income,net due to the change in the fai

316、r value of warrant liability determined by Level 3 valuation techniques.Marketable Equity Securities The Company holds marketable equity securities,which are all publicly traded shares of Recursion Pharmaceuticals,Inc.(Recursion)Class A common stock and Personalis common stock.Recursion shares were

317、received as payment of accounts receivable.During the three months ended September 30,2024,the Company did not sell any shares of Recursion Class A common stock.During the nine months ended September 30,2024,the Company sold 1,725,902 shares of Recursion Class A common stock at a weighted average pr

318、ice of$13.38 per share for aggregate proceeds of$23.1 million.As consideration for the Companys obligations to Personalis under the Commercialization and Reference Laboratory Agreement entered into with Personalis in November 2023,Personalis issued warrants to the Company to purchase up to an aggreg

319、ate of 9,218,800 shares of Personalis common stock,up to 4,609,400 of which were exercisable for cash at any time prior to December 31,2024 at an exercise price of$1.50 per share,and up to 4,609,400 of which were exercisable for cash at any time prior to December 31,2025 at an exercise price of$2.50

320、 per share.In August 2024,the Company exercised the warrants in full at their respective exercise prices for an aggregate of 9,218,800 shares of Personalis common stock at an aggregate purchase price of$18.4 million.Concurrently,the Company entered into an Investment Agreement with Personalis,pursua

321、nt to which the Company purchased an additional 3,500,000 shares of Personalis common stock for$17.7 million.The Company owns less than 20%of Personalis outstanding common stock and has no significant influence or control over Personalis.Changes in fair value of marketable equity securities are reco

322、rded in earnings within other(expense)income,net on the condensed consolidated statement of operations and comprehensive loss.The following summarizes the portion of unrealized gains recorded during the three and nine months ended September 30,2024 that relate to marketable equity securities held as

323、 of September 30,2024(in thousands).There were no marketable equity securities outstanding as of September 30,2023.Three Months Ended Nine Months Ended September 30,2024 September 30,2024 Net gain during the period on marketable equity securities$2,578$5,119 Less:Net gain recognized during the perio

324、d on marketable equity securities sold during the period (6,081)Unrealized loss(gain)recognized during the period on marketable equity securities still held at the reporting date$2,578$(962)2916.RELATED PARTIES In 2018,the Company received$1.5 million from a related party for assuming an office leas

325、e from such party.The liability is amortized through the right-of-use asset as a reduction of rent expense over the lease term.The Company had a remaining related liability of$0.6 million and$0.7 million as of September 30,2024 and December 31,2023,respectively.The Company subleases a portion of off

326、ice space to this related party on a month-to-month basis.Sublease income received from the related party was insignificant for the three and nine months ended September 30,2024 and 2023.Strategic Investment On August 19,2021,the Company entered into a related party arrangement with Pathos AI,Inc.(“

327、Pathos”),which was subsequently amended on February 12,2024,for the purpose of furthering the commercialization efforts of drug development.Tempus received a warrant to purchase 23,456,790 shares,or approximately 19%of the current outstanding equity in Pathos,for$0.0125 per share.The warrant will au

328、tomatically exercise upon a change of control(as defined therein)or upon an IPO of Pathos securities.The Company also has an optional exercise election window during the last 10 days of the 20 year term of the warrant agreement.The master agreement provides for an initial term of five years,measured

329、 from February 2024,with a subsequent five-year renewal provision unless the agreement is terminated.Either party may terminate the agreement after the initial five-year term by prior written notice to the other party.In addition,the Company has entered into various agreements with Pathos,encompassi

330、ng access to the Companys Lens product,sequencing,clinical research organization and other data services.The Company has recognized$2.4 million and$2.6 million for the three and nine months ended September 30,2024,respectively.The Company has recognized$0.1 million and$0.6 million for the three and

331、nine months ended September 30,2023,respectively.As of September 30,2024,the amount due to related parties was less than$0.1 million and as of December 31,2023,there was no amount due to related parties.As of September 30,2024 and December 31,2023,the amount due from related parties was$2.0 million

332、and less than$0.1 million,respectively.17.SUBSEQUENT EVENTS On November 4,2024,the Company entered into a Securities Purchase Agreement(the“Purchase Agreement”)with REALM IDx,Inc.,a Delaware corporation(“Seller”),and Sellers ultimate parent,Konica Minolta,Inc.,a Japanese corporation,pursuant to whic

333、h the Company agreed to purchase all of the outstanding shares of capital stock of Ambry Genetics Corporation,a Delaware corporation(“Ambry”),a leader in genetic testing that aims to improve health by understanding the relationship between genetics and disease(the“Acquisition”).Pursuant to the terms of the Purchase Agreement,consideration for the Acquisition consists of$375.0 million in cash,subje