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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 OF1934For the quarterly period ended June 30,2024 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF

2、1934For 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 510Chicago,IL 60654(A

3、ddress 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)Name of each

4、exchangeon which registeredClass A common stock,$0.0001 par value pershare 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 1934during the preceding 12 months(or for such

5、 shorter period that the registrant was required to file such reports),and(2)has been subject to such filingrequirements 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 pursuant to Rule 405 of

6、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 suchfiles).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting co

7、mpany,or anemerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growthcompany”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth co

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

9、s a shell company(as defined in Rule 12b-2 of the Exchange Act):Yes No As of August 6,2024,there were 149,274,923 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 Consolidated Financial Statements(

10、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 Statements of Redeemable Conv

11、ertible Preferred Stock,Common Stock and Stockholders Equity(Deficit)7 Notes to Condensed Consolidated Financial Statements 9 Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations 32 Item 3.Quantitative and Qualitative Disclosures about Market Risk 57 Item 4.Con

12、trols and Procedures 58 Part II Other Information 59 Item 1.Legal Proceedings 59 Item 1A.Risk Factors 59 Item 2.Unregistered Sales of Equity Securities and Use of Proceeds 138 Item 3.Defaults Upon Senior Securities 138 Item 4.Mine Safety Disclosures 138 Item 5.Other Information 138 Item 6.Exhibits 1

13、39 Signatures 140 Tempus AI,Inc.Condensed Consolidated Quarterly Financial Statements(Unaudited)June 30,2024Tempus AI,Inc.CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)(in thousands,except share and per share amounts)June 30,2024 December 31,2023 Assets Current Assets Cash and cash equivalents$478

14、,811$165,767 Accounts receivable,net of allowances of$1,092 and$1,115 at June 30,2024 and December 31,2023,respectively 118,106 94,462 Inventory 32,690 28,845 Warrant asset 800 5,070 Prepaid expenses and other current assets 29,704 17,295 Marketable equity securities 11,255 31,807 Deferred offering

15、costs 7,085 Total current assets$671,366$350,331 Property and equipment,net 60,539 61,681 Goodwill 73,345 73,354 Warrant asset,less current portion 1,500 4,930 Intangible assets,net 16,252 21,916 Investments and other assets 7,677 8,971 Warrant contract asset,less current portion 19,077 21,499 Opera

16、ting lease right-of-use assets 13,994 20,530 Restricted cash 861 840 Total Assets$864,611$564,052 Liabilities,Convertible redeemable preferred stock,and Stockholders equity(deficit)Current Liabilities Accounts payable 28,646 54,421 Accrued expenses 85,185 82,517 Deferred revenue 50,905 64,860 Other

17、current liabilities 7,273 8,213 Operating lease liabilities 5,828 6,437 Accrued data licensing fees 3,727 6,382 Accrued dividends 9,797 Total current liabilities$181,564$232,627 Operating lease liabilities,less current portion 27,238 32,040 Convertible promissory note 180,648 193,124 Warrant liabili

18、ty 33,600 34,500 Other long-term liabilities 16,790 19,751 Interest payable 62,608 55,321 Long-term debt,net 261,853 256,541 Deferred revenue,less current portion 2,059 16,768 Total Liabilities$766,360$840,672 Commitments and contingencies(Note 7)Convertible redeemable preferred stock,$0.0001 par va

19、lue,no and 69,803,765 shares authorized at June 30,2024 and December 31,2023,respectively;no and 63,525,953 shares issued and outstanding at June 30,2024 and December 31,2023,respectively;aggregate liquidation preference of$0 and$1,130,429 at June 30,2024 and December 31,2023,respectively 1,105,543

20、The accompanying notes are an integral part of these condensed consolidated financial statements.2Stockholders equity(deficit)Class A Voting Common Stock,$0.0001 par value,1,000,000,000 and 200,228,024 shares authorized at June 30,2024 and December 31,2023,respectively;149,274,923 and58,367,961 shar

21、es issued and outstanding at June 30,2024 and December 31,2023,respectively$15$6 Class B Voting Common Stock,$0.0001 par value,5,500,000 and 5,374,899 shares authorized at June 30,2024 and December 31,2023,respectively;5,043,789 and no shares issued andoutstanding at June 30,2024 and December 31,202

22、3,respectively 1 Non-voting Common Stock,$0.0001 par value,no and 66,946,627 shares authorized at June 30,2024 and December 31,2023,respectively;no shares issued and outstanding at June 30,2024,and 5,205,802 shares issued and 5,060,336 shares outstanding at December 31,2023 0 Treasury Stock,145,466

23、shares at June 30,2024 and December 31,2023,at cost (3,602)(3,602)Additional Paid-In Capital 2,163,911 18,345 Accumulated Other Comprehensive(Loss)Income (94)5 Accumulated deficit (2,061,980)(1,396,917)Total Stockholders equity(deficit)$98,251$(1,382,163)Total Liabilities,Convertible redeemable pref

24、erred stock,and Stockholders equity(deficit)$864,611$564,052 The accompanying notes are an integral part of these condensed consolidated financial statements.3Tempus AI,Inc.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS(Unaudited)(in thousands,except per share amounts)Three M

25、onths Ended June 30,Six Months Ended June 30,2024 2023 2024 2023 Net revenue Genomics$112,324$91,924$214,893$173,982 Data and services 53,645 40,493 96,896 74,059 Total net revenue$165,969$132,417$311,789$248,041 Cost and operating expenses Cost of revenues,genomics 68,324 46,961 121,159 92,241 Cost

26、 of revenues,data and services 22,132 13,807 37,420 25,200 Technology research and development 77,908 23,427 104,975 46,329 Research and development 68,025 22,171 92,365 43,034 Selling,general and administrative 463,072 71,189 542,636 140,236 Total cost and operating expenses 699,461 177,555 898,555

27、 347,040 Loss from operations$(533,492)$(45,138)$(586,766)$(98,999)Interest income 1,718 1,957 2,749 4,381 Interest expense (13,295)(11,712)(26,533)(20,903)Other(expense)income,net (7,048)(766)(6,299)5,622 Loss before provision for income taxes$(552,117)$(55,659)$(616,849)$(109,899)Provision for inc

28、ome taxes (95)(3)(106)(9)Losses from equity method investments (170)(301)Net Loss$(552,212)$(55,832)$(616,955)$(110,209)Dividends on Series A,B,B-1,B-2,C,D,E,F,G,G-3,and G-4 preferred shares (11,540)(10,897)(39,347)(21,566)Cumulative Undeclared Dividends on Series C preferred shares (668)(745)(1,174

29、)(1,466)Net loss attributable to common shareholders,basic and diluted (564,420)(67,474)(657,476)(133,241)Net loss per share attributable to common shareholders,basic and diluted$(6.86)$(1.07)$(9.02)$(2.11)Weighted-average shares outstanding used to compute net loss per share,basic and diluted 82,32

30、5 63,286 72,930 63,257 Comprehensive Loss,net of tax Net loss$(552,212)$(55,832)$(616,955)$(110,209)Foreign currency translation adjustment (43)53 (99)25 Comprehensive loss$(552,255)$(55,779)$(617,054)$(110,184)The accompanying notes are an integral part of these condensed consolidated financial sta

31、tements.4Tempus AI,Inc.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)(in thousands,except share and per share amounts)Six Months Ended June 30,2024 2023 Operating activities Net loss$(616,955)$(110,209)Adjustments to reconcile net loss to net cash used in operating activities Change in f

32、air value of warrant liability$(900)$(5,700)Stock-based compensation 488,313 Gain on warrant exercise (173)Gain on marketable equity securities (2,541)Amortization of original issue discount 691 489 Amortization of deferred financing fees 255 255 Change in fair value of contingent consideration 165

33、Amortization of warrant contract asset 2,422 3,307 Depreciation and amortization 18,348 16,185 Provision for bad debt expense 327 1,376 Change in fair value of warrant asset 7,700 Loss from equity-method investments 301 Amortization of finance right-of-use lease assets 190 Non-cash operating lease c

34、osts 3,252 3,382 Minimum accretion expense 92 187 Impairment of intangible assets 7,359 PIK interest added to principal 4,366 297 Change in assets and liabilities Accounts receivable (23,971)(6,850)Inventory (3,845)(5,101)Prepaid expenses and other current assets (12,409)(1,634)Investments and other

35、 assets 1,294 (4,528)Accounts payable (33,371)(4,195)Deferred revenue (28,669)(19,974)Accrued data licensing fees (2,749)(7,608)Accrued expenses&other (2,805)8,125 Interest payable 7,287 7,611 Operating lease liabilities (4,582)(4,352)Net cash used in operating activities$(198,458)$(121,087)Investin

36、g activities Purchases of property and equipment$(14,116)$(15,906)Proceeds from sale of marketable equity securities 23,098 Business combinations,net of cash acquired(Note 4)(2,869)Net cash provided by(used in)investing activities$8,982$(18,775)Financing activities Proceeds from issuance of common s

37、tock in connection with initial public offering,net of underwriting discountsand 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 (192)Purchase of treas

38、ury stock (3,602)Payment of deferred offering costs (2,714)(151)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)Net cash provided by financing activities$502,631$39,180 Effect of foreign exchang

39、e rates on cash$(90)$28 The accompanying notes are an integral part of these condensed consolidated financial statements.5Net increase(decrease)in Cash,Cash Equivalents and Restricted Cash$313,065$(100,654)Cash,cash equivalents and restricted cash,beginning of period 166,607 303,731 Cash,cash equiva

40、lents and restricted cash,end of period$479,672$203,077 Cash,Cash Equivalents and Restricted Cash are Comprised of:Cash and cash equivalents$478,811$202,266 Restricted cash and cash equivalents 861 811 Total cash,cash equivalents and restricted cash$479,672$203,077 Supplemental disclosure of cash fl

41、ow information Cash paid during the year for interest$13,921$5,691 Cash paid for income taxes$89$41 Supplemental disclosure of noncash investing and financing activities Dividends payable$5,487$4,545 Purchases of property and equipment,accrued but not paid$1,108$2,952 Deferred offering costs,accrued

42、 but not yet paid$6,051$2,917 Redemption of convertible promissory note$12,476$13,926 Non-voting common stock issued in connection with business combinations$344$4,305 Operating lease liabilities arising from obtaining right-of-use assets$892 Conversion of redeemable convertible preferred stock to c

43、ommon stock in connection with initial public offering$1,348,809$Taxes related to net share settlement of restricted 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$3,80

44、9$2,738 Issuance of Series G-4 Preferred Stock$611$The accompanying notes are an integral part of these condensed consolidated financial statements.6Tempus AI,Inc.CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLEPREFERRED STOCK,COMMON STOCK AND STOCKHOLDERS EQUITY(DEFICIT)(Unaudited)(in th

45、ousands,except share and per share amounts)RedeemableConvertible PreferredStock VotingCommon Stock Non-VotingCommon Stock Treasury Stock AdditionalPaid-inCapital AccumulatedDeficit Accumulated OtherComprehensive(Loss)Income TotalStockholdersDeficit Class A Class B Units Amount Units Amount Units Amo

46、unt Units Amount Units Amount Balance at December31,2023 63,525,953$1,105,543 58,367,961$6$5,205,802$0 (145,466)$(3,602)18,345$(1,396,917)$5$(1,382,163)Issuance of Series G-3Preferred Stock 66,465 3,809 Issuance of Series G-4Preferred Stock 10,666 611 Issuance of Series G-5Preferred Stock 3,489,981

47、199,750 Common stock issuedin connection withbusinesscombinations 9,141 0 344 344 Dividends 33,669 (39,347)(39,347)Issuance of commonstock in connectionwith initial publicoffering,net ofoffering costs,underwritingdiscounts andcommissions 11,100,000 1 369,603 369,604 Conversion ofredeemableconvertibl

48、epreferred stock tocommon stock inconnection withinitial publicoffering (67,093,065)(1,343,382)71,976,178 7 5,043,789 1 1,357,562 (8,761)1,348,809 Conversion of non-voting commonstock to Class Acommon stock 5,069,477 1 (5,214,943)0 (1)0 Issuance of commonstock uponsettlement ofrestricted stockunits,

49、net 2,651,848 0 (70,082)(70,082)Issuance of commonstock uponsettlement ofwarrant 109,459 0 (173)(173)Stock-basedcompensationexpense 488,313 488,313 Foreign currencytranslationadjustment (99)(99)Net loss (616,955)(616,955)Balance at June 30,2024$149,274,923$15 5,043,789$1$(145,466)$(3,602)$2,163,911$

50、(2,061,980)$(94)$98,251 RedeemableConvertible PreferredStock VotingCommon Stock Non-VotingCommon Stock Treasury Stock AdditionalPaid-inCapital AccumulatedDeficit Accumulated OtherComprehensive(Loss)Income TotalStockholdersDeficit Class A Class B Units Amount Units Amount Units Amount Units Amount Un

51、its Amount Balance atDecember 31,2022 62,692,927$1,026,143 58,367,961$6$4,932,415$0 0$9,251$(1,138,302)$18$(1,129,027)Issuance of Series G-3Preferred Stock 47,781 2,738 Foreign currencytranslationadjustment 25 25 Dividends 13,980 (21,566)(21,566)Repurchase ofNon-votingCommon Stock (145,466)(3,602)(3

52、,602)Common stock issuedin connection withbusinesscombination 130,874 0 4,305 4,305 Net loss (110,209)(110,209)Balance 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)The accompanying notes are an integral part of these condensed conso

53、lidated financial statements.7Tempus AI,Inc.CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLEPREFERRED STOCK,COMMON STOCK AND STOCKHOLDERS EQUITY(DEFICIT)(Unaudited)(in thousands,except share and per share amounts)RedeemableConvertible PreferredStock VotingCommon Stock Non-VotingCommon Sto

54、ck Treasury Stock AdditionalPaid-inCapital AccumulatedDeficit Accumulated OtherComprehensive(Loss)Income TotalStockholdersDeficit Class A Class B Units Amount Units Amount Units Amount Units Amount Units Amount Balance at March 31,2024 63,603,084$1,134,802 58,367,961$6$5,214,943$0 (145,466)$(3,602)$

55、18,689$(1,489,467)$(51)$(1,474,425)Issuance of Series G-5Preferred Stock 3,489,981 199,750 Dividends 8,830 (11,540)(11,540)Issuance of common stockin connection with initialpublic offering,net ofoffering costs,underwriting discountsand commissions 11,100,000 1 369,603 369,604 Conversion of redeemabl

56、econvertible preferredstock to common stock inconnection with initialpublic offering (67,093,065)(1,343,382)71,976,178 7 5,043,789 1 1,357,562 (8,761)1,348,809 Conversion of non-votingcommon stock to Class Acommon stock 5,069,477 1 (5,214,943)0 (1)0 Issuance of common stockupon settlement ofrestrict

57、ed stock units,net 2,651,848 0 (70,082)(70,082)Issuance of common stockupon settlement ofwarrant 109,459 0 (173)(173)Stock-based compensationexpense 488,313 488,313 Foreign currency translationadjustment (43)(43)Net loss (552,212)(552,212)Balance at June 30,2024$149,274,923$15 5,043,789$1$(145,466)$

58、(3,602)$2,163,911$(2,061,980)$(94)$98,251 RedeemableConvertible PreferredStock VotingCommon Stock Non-VotingCommon Stock Treasury Stock AdditionalPaid-inCapital AccumulatedDeficit Accumulated OtherComprehensive(Loss)Income TotalStockholdersDeficit Class A Class B Units Amount Units Amount Units Amou

59、nt Units Amount Units Amount Balance at March 31,2023 62,740,708$1,034,321 58,367,961$6$5,063,289$0 (145,466)$(3,602)13,556$(1,203,348)$(10)$(1,193,398)Foreign currency translationadjustment 53 53 Dividends 8,540 (10,897)(10,897)Net loss (55,832)(55,832)Balance at June 30,2023 62,740,708$1,042,861 5

60、8,367,961$6 0$5,063,289$0 (145,466)$(3,602)$13,556$(1,270,077)$43$(1,260,074)The accompanying notes are an integral part of these condensed consolidated financial statements.8NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)1.DESCRIPTION OF BUSINESSCompany InformationTempus AI,Inc.,tog

61、ether with the subsidiaries through which it conducts business(the“Company”),is a healthcare technology company focusedon bringing artificial intelligence and machine learning to healthcare in order to improve the care of patients across multiple diseases.The Companycombines the results of laborator

62、y tests with other multimodal 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 genetictesting to physicians and large academic r

63、esearch institutions,licensing 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 abusiness Mr.Lefkofsky founded called Bioin.Bioin originally w

64、as established as a limited liability company.Effective September 21,2015,Bioinconverted its legal form to a corporation organized and existing under the General Corporation Law of the State of Delaware.Bioin subsequentlychanged its legal name to Tempus Health,Inc.in September 2015,to Tempus Labs,In

65、c.in October 2016 and to Tempus AI,Inc.in December 2023.Initial Public OfferingOn June 13,2024,the Companys registration statement relating to its initial public offering(the“IPO”)was declared effective and its Class Acommon stock began trading on the Nasdaq Global Select Market on June 14,2024.On J

66、une 17,2024,the Company completed its IPO in which itissued 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 th

67、e closing of the IPO,all shares of the Companys then-outstanding redeemable convertible preferred stock,other than theCompanys Series B redeemable convertible preferred stock,converted into an aggregate of 66,309,550 shares of Class A common stock.TheCompanys Series B redeemable convertible preferre

68、d stock converted on a one-for-one basis into an aggregate of 5,374,899 shares of Class B commonstock.Subsequently,331,110 shares of Class B common stock were automatically converted into shares of Class A common stock,such that thereare 5,043,789 shares of Class B common stock outstanding immediate

69、ly following the IPO.The Company issued an additional 236,719 shares of ClassA 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 divid

70、ends,which were paid in5,098,799 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

71、2015 Plan are subject to two vesting conditions.The first is atime-based component.The second vesting condition is the occurrence of a liquidity event.The liquidity event condition related to these awards wassatisfied upon the IPO and,as a result,the Company recognized$488.3 million of stock-based c

72、ompensation expense for the six 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 taxwithholding requirements,the Company withheld 1,911,316 shares from the 4,563,164 shares of Class A commo

73、n stock issuable upon settlement of theIPO Settled RSUs.Based on the public offering price of$37.00 per share,the tax withholding obligation was$70.8 million.The Company issued 109,459 shares of Class A common stock upon the automatic net exercise of a warrant issued to Allen&Company LLC(“Allen”),as

74、 further described in Note 8.In connection with the IPO,the Company amended and restated its certificate of incorporation(the“Restated Certificate”),under whichauthorized capital stock consists of 1,000,000,000 shares of Class A common stock,5,500,000 shares of Class B common stock,and 20,000,000 sh

75、aresof preferred stock.2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESPrinciples of Consolidation and Basis of PresentationThe condensed consolidated financial statements include the accounts of Tempus AI,Inc.and its wholly owned subsidiaries.All intercompanyaccounts and transactions have been eliminat

76、ed in consolidation.The condensed consolidated financial statements and accompanying notes wereprepared in accordance with accounting principles generally accepted in the United States of America(“GAAP”)and applicable rules and regulations ofthe U.S.Securities and Exchange Commission(the“SEC”)regard

77、ing interim financial information and include the assets,liabilities,revenue andexpenses 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 significant influence,are accounted for

78、 under the equity method of accounting.Investments in unconsolidated entities inwhich the Company is not able to exercise significant influence are accounted for under the cost method of accounting.Certain information anddisclosures normally included in the annual consolidated financial statements p

79、repared in 9NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)accordance with GAAP have been omitted.Accordingly,the unaudited interim condensed consolidated financial statements should be read inconjunction with the audited consolidated financial statements and notes included in the Co

80、mpanys final prospectus,dated June 13,2024,filed with theSEC pursuant to Rule 424(b)under the Securities Act of 1933,as amended(the“Securities Act”),on June 17,2024(the“Prospectus”)in connectionwith the IPO.The unaudited interim condensed consolidated financial statements have been prepared on the s

81、ame basis as the audited consolidatedfinancial statements and reflect,in managements opinion,all the adjustments of a normal,recurring nature that are necessary for the fair statement ofthe Companys financial position,results of operations,and cash flows for the interim periods,but are not necessari

82、ly indicative of the results expectedfor the full year or any other period.In the opinion of the Company,the accompanying unaudited condensed consolidated financial statements contain all adjustments,consisting ofonly normal recurring adjustments,necessary for a fair statement of its financial posit

83、ion as of June 30,2024 and its results of operations for the threeand six months ended June 30,2024 and 2023,and cash flows for the six months ended June 30,2024 and 2023.The condensed consolidated balancesheet at December 31,2023,was derived from audited annual financial statements but does not con

84、tain all of the footnote disclosures from the annualfinancial statements.The Company believes that its existing cash and cash equivalents and marketable equity securities at June 30,2024 will be sufficient to allow theCompany to fund its current operating plan through at least a period of one year f

85、rom the date of issuance.As the Company continues to incur losses,itstransition to profitability is dependent upon a level of revenues adequate to support the Companys cost structure.Future capital requirements willdepend on many factors,including the timing and extent of spending on research and de

86、velopment 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 theConsolidated Financial Statements”included in the Companys audited consolidated financial statements as of and for t

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

88、anyThe Company is an“emerging growth company”as defined in Section 2(a)of the Securities Act,as modified by the Jumpstart Our BusinessStartups Act of 2012(the“JOBS Act”),and it may take advantage of certain exemptions from various reporting requirements that are applicable to otherpublic companies t

89、hat are not emerging growth companies including,but not limited to,not being required to comply with the auditor attestationrequirements of Section 404 of the Sarbanes-Oxley Act,reduced disclosure obligations regarding executive compensation in its periodic reports andproxy statements,and exemptions

90、 from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval ofany 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 revised financi

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

92、ting standards.The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirementsthat 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 extendedtransition per

93、iod which means that when a standard is issued or revised and it has different application dates for public or private companies,theCompany,as an emerging growth company,can adopt the new or revised standard at the time private companies adopt the new or revised standard.Thismay make comparison of t

94、he Companys condensed consolidated financial statements with another public company which is neither an emerginggrowth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of thepotential differences in accounting standard

95、s used.Use of EstimatesThe preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimatesand assumptions that affect the reported amounts and classifications of assets and liabilities,revenue and expenses,and the related disclos

96、ures ofcontingent assets and liabilities in the condensed consolidated financial statements and accompanying notes.The most significant estimates are relatedto revenue,accounts receivable,stock-based compensation,operating lease liabilities,and the useful lives of property,equipment and intangible a

97、ssets.Actual results could differ from those estimates.10NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)Net Loss Per Share Attributable to Common StockholdersBasic and diluted net loss per share attributable to common stockholders is presented in conformity with the two-class method

98、required forparticipating securities.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 st

99、ock as theholders of its redeemable convertible preferred stock did not have a contractual obligation to share in the Companys losses.Upon IPO,the Companysredeemable convertible preferred stock converted to either Class A or Class B common stock and therefore will be included in allocation of net lo

100、ssattributable to common stockholders as they will share in the Companys losses.Net income is attributed to common stockholders and participatingsecurities based on their participation rights.Basic net loss per share attributable to common stockholders is computed by dividing the net lossattributabl

101、e to common stockholders by the weighted-average number of shares of common stock outstanding during the period.Diluted earnings pershare attributable to common stockholders adjusts basic earnings per share for the potentially dilutive impact of stock options and redeemableconvertible preferred stoc

102、k.As the Company has reported losses for all periods presented,all potentially dilutive securities are antidilutive andaccordingly,basic net loss per share equals diluted net loss per share.Deferred Offering CostsDeferred offering costs consist primarily of accounting,legal,and other fees related to

103、 the IPO.The Company had$7.1 million of deferredoffering costs as of December 31,2023.Prior to the IPO,deferred offering costs were capitalized on the consolidated balance sheets.Upon theconsummation of the IPO,$12.3 million of deferred offering costs were reclassified into additional paid-in capita

104、l as an offset against IPO proceeds.Recently Issued Accounting Pronouncements Not Yet AdoptedIn November 2023,the FASB issued ASU No.2023-07,Segment Reporting(Topic 280),which provides enhanced disclosures about significantsegment expenses.The standard also enhances interim disclosure requirements a

105、nd provides new segment disclosure requirements for entities with asingle reportable segment.The standard is effective for public companies for fiscal years beginning after December 15,2023,and interim periods withinfiscal years beginning after December 15,2024.Retrospective adoption is required for

106、 all prior periods presented.Early adoption is permitted.TheCompany is currently evaluating the effect that this guidance will have on the consolidated financial statements and related disclosures.In December 2023,the FASB issued ASU 2023-09,Income Taxes(Topic 740):Improvements to Income Tax Disclos

107、ures,which requires publicentities,on an annual basis,to provide disclosure of specific categories in the rate reconciliation,as well as disclosure of income taxes paiddisaggregated by jurisdiction.ASU 2023-09 is effective for fiscal years beginning after December 15,2024,with early adoption permitt

108、ed.TheCompany is currently evaluating the effect that this guidance will have on the consolidated financial statements and related disclosures.11NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)3.REVENUE RECOGNITIONThe Company derives revenue from selling lab services(“Genomics”)to phy

109、sicians,academic research institutions,and other parties.TheCompany also derives revenue from the commercialization of data generated in the lab(“Data and services”)through the licensing of de-identifieddatasets to third parties and by providing clinical trial support,such as matching patients to cl

110、inical trials enrolled in its clinical trial network,and relatedservices.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 withCustomers(“ASC 606”).The Comp

111、any commences revenue recognition when control of these products is transferred to customers in an amount thatreflects the consideration the Company expects to be entitled to in exchange for such products.This principle is achieved by applying the five-stepapproach:(i)the Company accounts for a cont

112、ract when 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 anycontract assets are not recognized until such time tha

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

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

115、sults to the ordering party.The Company receives paymentsfrom Medicare,Medicaid,and commercial insurance for clinical orders and directly from research institutions,pharmaceutical companies or other thirdparties for direct bill orders.The Company recognized Genomics revenue of$112.3 million and$91.9

116、 million for the three months ended June 30,2024and 2023,respectively.The Company recognized Genomics revenue of$214.9 million and$174.0 million for the six months ended June 30,2024 and2023,respectively.For clinical orders from Medicare,Medicaid,and commercial insurance,the Company determines trans

117、action price by reducing the standardcharge by the estimated effects of any variable consideration,such as contractual allowance and implicit price concessions.The Company estimates thecontractual allowances and implicit price concessions based on historical collections in relation to established ra

118、tes,as well as known current oranticipated reimbursement trends not reflected in the historical data.Estimates are inclusive of the consideration to which the Company will be entitledat an amount for which it is probable that a reversal of cumulative consideration will not occur.The Company monitors

119、 the estimated amount to becollected at each reporting period based on actual cash collections in order to assess whether a revision to the estimate is required.Payment is typicallydue after the claim has been processed by the payer,generally 30-120 days from date of service.While management believe

120、s that the estimates areaccurate,actual results could differ and the potential impact on the financial statements could be significant.The Company recognized revenue forclinical orders of$101.7 million and$84.4 million for the three months ended June 30,2024 and 2023,respectively.The Company recogni

121、zed revenuefor clinical orders of$195.1 million and$156.9 million for the six months ended June 30,2024 and 2023,respectively.For direct bill orders from research institutions,pharmaceutical companies,or other third parties,the Company determines the transaction pricesbased on established contractua

122、l rates with the customer,net of any applicable discounts.Payment is typically due between 30 and 60 days following thedate of invoice.The Company recognized Genomics revenue for direct bill orders of$10.6 million and$7.5 million for the three months ended June 30,2024 and 2023,respectively and$19.8

123、 million and$17.1 million for the six months ended June 30,2024 and 2023,respectively.12NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)Data and servicesData and services revenue primarily represents data licensing and clinical trial services that the Company provides to pharmaceutica

124、l andbiotechnology companies.The Companys arrangements with these customers often have terms that span multiple years.However,these contractsgenerally also include customer opt-in or early termination clauses after twelve months without contractual penalty.The customers option to renew isgenerally n

125、ot viewed as 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 Companyrecognizes reven

126、ue for its Data and services product offering when it has met its performance obligation under the terms of the agreement with thecustomer.The Companys two product offerings are as follows:InsightsThe Companys Insights product consists primarily of licensing and analysis of de-identified records.Eac

127、h Insights contract is unique and mayinclude multiple promises,including the delivery of licensed de-identified records,including refreshes,analytical services or access to the Companysenhanced Lens application.The Company evaluates each contract to determine which performance obligations are capabl

128、e of being distinct andseparately identifiable from other promises in the contract and,therefore,represent distinct performance obligations.The actual timing of data deliveriescan be based on a variety of factors,including,but not limited to,the customers requirement and/or the Companys technologica

129、l,operational,andhuman capital capacity;in addition,management assesses relevant contractual terms in contracts with customers and applies significant judgment inidentifying and accounting for all terms and conditions in certain contracts.The transaction price is allocated to the distinct performanc

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

131、ermined that the delivery of de-identified records and,when applicable,analytical services,and access to its enhanced Lensapplication 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 l

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

133、the customer is able to benefit from theprovision of data as it is received.Multi-year data subscriptions Customer licenses an interchangeable maximum number of de-identified records,and the Companyaccounts for the service as a right to access license and one performance obligation.Revenue is recogn

134、ized as access to the dataset isprovided,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 theCompany.The resulting delivery of data,or a report addressing a se

135、ries of questions and analytical results,is considered a singleperformance 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 application unde

136、r asoftware-as-a-service model.Customers do not have the right to take possession of the Lens platform application,and the online softwareproduct is fully functional once a customer has access.Lens subscription revenues are recognized ratably over the contract terms beginningon the date the Companys

137、 service is made available to the customer.For the periods presented,revenue from Lens subscription servicesare not material.13NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)The Company recognized revenue from Insights products of$40.7 million and$29.1 million for the three months en

138、ded June 30,2024 and 2023,respectively and$72.0 million and$51.9 million for the six months ended June 30,2024 and 2023,respectively.TrialsThe Companys Trials product includes TIME clinical trial matching services and other clinical trial services.TIME consists primarily of matching patients to clin

139、ical trial sponsors of a potential match.To the extent the contract requires,the Company mayalso assist in opening the clinical trial site and enrolling the patient in the clinical trial.The Company has determined that,depending on the type ofagreement,the performance obligation of these contracts i

140、s the delivery of a notification or 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 isenrolled in a trial.Concurrently,the customer,which is t

141、he clinical trial sponsor,also receives notification from the Company to establish theperformance 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 ofthe Co

142、mpany,is a contract research organization,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 ontime and m

143、aterials,and revenue is recognized based on hours and materials used as the services are provided.Fixed-price contracts generally represent asingle performance obligation and are recognized over-time using a cost-based input method.Progress on the performance obligation is measured by theproportion

144、of actual costs incurred to the total costs expected to complete the contract.This cost-based method of revenue recognition requires theCompany to make estimates of costs to complete its projects on an ongoing basis.Contract costs principally include direct labor and reimbursableout-of-pocket costs.

145、The Company recognized revenue from Trials products of$10.5 million and$10.6 million for the three months ended June 30,2024 and 2023,respectively and$21.8 million and$20.9 million for the six months ended June 30,2024 and 2023,respectively.For Insights and Trials arrangements,pricing is fixed and t

146、he Company may be compensated through a combination of an upfront payment andperformance-based,non-refundable payments due upon completion of the stated performance obligation(s).Payment is generally due 60 to 90 days afterthe date of service.The Company has no significant obligations for refunds,wa

147、rranties,or similar 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 withoriginal terms of twelve months or less.Cancelable contracted revenue is not considered

148、 a remaining performance obligation.The Company recognizedData and other revenue from pharmaceutical companies,non-for-profits,and researchers of$53.6 million and$40.5 million for the three months endedJune 30,2024 and 2023,respectively and$96.9 million and$74.1 million for the six months ended June

149、 30,2024 and 2023,respectively.Multi-year contract performance obligationsThe 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 C

150、ompanys remaining performance obligations related to multi-yearcontracts was$197.3 million as of June 30,2024,of which the Company expects to recognize approximately 42%as revenue over the next year,and theremaining 34%,19%,and 5%of its remaining performance obligations as revenue in years two,three

151、,and four,respectively.14NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)Contract AssetsTiming of revenue recognition may differ from the timing of invoicing to customers.Certain performance obligations may require payment beforedelivery of the service to the customer.The Company reco

152、gnizes contract assets when the Company has an unconditional right to payment,and whenrevenues earned on a contract exceeds the billings.Contract assets are presented under accounts receivable,net.Accounts receivable as of June 30,2024and December 31,2023 included contract assets of$9.3 million and$

153、2.4 million,respectively.During the fourth quarter of 2021,and in conjunction with the signing of a November 2021 Master Services Agreement(“the MSA”)withcustomer AstraZeneca AB(“AstraZeneca”),the Company recognized a contract asset for consideration payable concurrent with the issuance of thecommon

154、 stock warrant in accordance with ASC 606.The contract asset was initially measured equal to the initial fair value of the warrant liability basedon the authoritative guidance under FASB ASC 718 CompensationStock Compensation.As revenue is recognized over the period of the contractualcommitment of t

155、he MSA,the associated contract asset amortization is recorded as reduction of revenue.At each reporting period,the short-term portionof the warrant asset is adjusted based on the financial commitment and reclassified to Prepaid expenses and other current assets.The following summarizes the warrant c

156、ontract asset presentation as of June 30,2024 and December 31,2023(in thousands):June 30,2024 December 31,2023 Prepaid expenses and other current assets$4,843$4,843 Warrant contract asset,less current portion 19,077 21,499 Total warrant contract asset$23,920$26,342 In November 2023,the Company enter

157、ed into a Commercialization and Reference Laboratory Agreement with Personalis,Inc.(“Personalis”).The Company will pay up to$12.0 million to Personalis over three years as certain milestones are met,$7.0 million of which has been paid as ofJune 30,2024.These payments are treated as contract assets a

158、nd amortized into revenue over the life of the contract.In addition,as consideration for theCompanys obligations to Personalis under the Commercialization and Reference Laboratory Agreement,Personalis issued certain warrants to theCompany to purchase up to an aggregate of 9,218,800 shares of Persona

159、lis common stock,up to 4,609,400 of which are exercisable for cash at any timeprior to December 31,2024 at an exercise price of$1.50 per share,and up to 4,609,400 of which are exercisable for cash at any time prior to December31,2025 at an exercise price of$2.50 per share.Contract asset balances are

160、 offset by deferred revenue generated from issuance of the Personalis warrantasset.As of June 30,2024 and December 31,2023,there was$1.1 million and$0.1 million,respectively,of net contract assets related to this agreementrecorded in Prepaid expenses and other current assets,respectively.Deferred Re

161、venueDeferred revenue consists of billings or cash received for services in advance of revenue recognition and is recognized as revenue when all theCompanys revenue recognition criteria are met.The deferred revenue balance is influenced primarily by upfront contractual payments from theCompanys Data

162、 and Services product offerings and timing of delivery of the Companys de-identified licensed data and clinical test results.The portionof deferred revenue that is anticipated to be recognized as revenue during the succeeding twelve-month period is recorded as deferred revenue,currentand any remaini

163、ng portion is recorded as deferred revenue,non-current.The Company recognized$39.5 million and$26.4 million during the sixmonths ended June 30,2024 and 2023,respectively,that was included in the corresponding deferred revenue balance at the beginning of the periods.4.BUSINESS COMBINATIONSSEngineOn O

164、ctober 3,2023,the Company acquired all of the issued and outstanding interests of SEngine Precision Medicine LLC(“SEngine”),aDelaware limited liability company.The acquisition gives the Company access to SEngines meaningful organoid repository,advanced bioinformaticscapabilities,and PARIS test platf

165、orm.15NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)The acquisition resulted in goodwill of$9.6 million.The aggregate acquisition date fair value of consideration for the SEngine acquisition totaled$9.9 million.Consideration consisted of$2.8 million of cash and$6.3 million of non-vo

166、ting common stock.The transaction also includes contingentconsideration of up to 35,000 additional shares of non-voting common stock if a liquidity event is completed prior to December 31,2027.Thecontingent consideration liability is remeasured at fair value in each period following the closing with

167、in selling,general and administrative expense.Inaccordance 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 workingcapital adjustment less than$0.1 million.The Company issued 429 shares of non-voting common stock to the selli

168、ng corporation in February 2024related to the net working capital adjustment.MpirikOn March 8,2023,the Company acquired all of the issued and outstanding interests of Mpirik,Inc.(“Mpirik”),a cardiology-focused healthcaretechnology company specializing in data-driven patient screening,automated care

169、coordination,and clinical research.Mpiriks platform adds to theCompanys existing portfolio to address the way heart disease is detected,diagnosed,and treated,further expanding Tempuss cardiology business.Theacquisition resulted in goodwill of$10.6 million.The aggregate acquisition date fair value of

170、 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 incash with an acquisition date fair value of$0.4 million.In accordance with the terms of the agreement,$0.8 mil

171、lion 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 Companyissued 8,724 shares of non-voting common stock to Mpirik shareholders in March 2024.Cash consideration of$4.7 million is net of

172、a$0.3 million net working capital adjustment.In accordance with the terms of the agreement,thesecurityholders of the acquired business were entitled to receive contingent consideration from the Company payable in an aggregate value of$1.0 million in cash,contingent upon the acquired business reachin

173、g a revenue target of$1.5 million for the twelve-month period ended December 31,2023.The contingent consideration had an acquisition fair value date of$0.4 million,which the Company recognized within Other current liabilities.The contingent consideration was remeasured at fair value in each period f

174、ollowing 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 liability waswritten down to$0.In addition,the Company issued 17,450 performance stock units to cer

175、tain retained Mpirik employees on the closing date of theacquisition.In July 2023,the Companys board of directors approved the removal of the performance-vesting condition,following which performancestock units are treated as restricted stock units.ArterysOn October 3,2022,the Company acquired Arter

176、ys,Inc.(“Arterys”),a company that provides a platform to derive insights from radiologymedical imagines to improve diagnostic decision-making,efficiency,and productivity across multiple disease areas,which resulted in goodwill of$11.1 million.The aggregate acquisition date fair value of consideratio

177、n 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$3.0 million is netof a$1.0 million working capital adjustment paid back to Tempus in March 2023.16NO

178、TES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)5.BALANCE SHEET COMPONENTSProperty and Equipment,netThe following summarizes property and equipment,net as of June 30,2024 and December 31,2023(in thousands):June 30,2024 December 31,2023 Equipment$101,631$91,656 Leasehold improvements 44,

179、000 42,433 Furniture and fixtures 6,633 6,633 Total property and equipment,gross 152,264 140,722 Less:accumulated depreciation (91,725)(79,041)Property and equipment,net$60,539$61,681 Depreciation expense on property and equipment is classified as follows in the accompanying condensed consolidated s

180、tatements of operations forthe three and six months ended June 30,2024 and 2023(in thousands):Three Months Ended June 30,Six Months Ended June 30,2024 2023 2024 2023 Cost of revenue,genomics$3,293$3,222$6,674$6,363 Selling,general and administrative costs 3,122 1,972 6,010 3,891 Total depreciation$6

181、,415$5,194$12,684$10,254 Accrued ExpensesAccrued expenses as of June 30,2024 and December 31,2023,consist of the following(in thousands):June 30,2024 December 31,2023 Accrued compensation and employee benefits$18,532$21,950 Accrued expenses 44,053 37,783 Accrued cloud storage costs 13,723 13,921 Int

182、erest payable 8,877 8,863 Total accrued expenses$85,185$82,517 6.GOODWILL AND INTANGIBLESGoodwillGoodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired.There were no goodwill additions for the three months end

183、ed June 30,2024 and 2023,or for the six months ended June 30,2024.During the six monthsended June 30,2023,goodwill of$10.6 million was recorded in connection with the acquisition of Mpirik.The Company recorded no impairment lossduring the three and six months ended June 30,2024 and 2023.Intangible a

184、ssetsIntangible assets are initially recorded at their acquisition cost,or fair value if acquired as part of a business combination and amortized over theirestimated useful lives.Intangible assets consist of a website domain,customer relationships and trade names acquired as part of a business combi

185、nation,and licensed data acquired by entering into research collaboration agreements.In each license arrangement,the other party provides the Company withspecified data,which currently is used primarily for research and development purposes but may also be licensed to third parties.The asset represe

186、ntsthe Companys right to use these datasets.The Company also recognizes a liability for the associated minimum payments that are presented withinaccrued data licensing fees.17NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)During the six months ended June 30,2023,the Company recorded

187、an additional$3.8 million in licensed data related to de-identified dataobtained through an additional agreement.During the three months ended June 30,2024 and 2023 and the six months ended June 30,2024,theCompany did not record any additions in licensed data.In January 2023,the Company amended a da

188、ta licensing agreement,which reduced the future data license payments the Company owes inexchange for waiving exclusivity rights on the licensed data.The Company remeasured the related licensed data intangible asset to fair value,whichresulted in an impairment of$7.4 million recorded in Research and

189、 development during the six months ended June 30,2023.A$7.9 million gainresulting from the related reduction of future data license payments was also recorded in Research and development during the six months endedJune 30,2023.The impairment resulted in a reduction of$40.1 million and$32.7 million t

190、o gross intangible assets and accumulated amortization,respectively.There were no impairment charges recognized related to intangible assets during the three months ended June 30,2024 and 2023,respectively,or the six months ended June 30,2024.The following table summarizes intangible assets as of Ju

191、ne 30,2024 and December 31,2023(in thousands):June 30,2024 December 31,2023 GrossAmount AccumulatedAmortization Net GrossAmount AccumulatedAmortization Net Customer relationships$20,550$13,913$6,637$20,550$12,219$8,331 Licensed data 19,321 14,868 4,453 19,321 11,469 7,852 Website domain 19 19 19 19

192、Trade names 8,000 2,857 5,143 8,000 2,286 5,714$47,891$31,638$16,252$47,890$25,974$21,916 Amortization of intangible assets is recognized using the straight-line method over their estimated useful lives,which range from three to sevenyears.Amortization expense was$2.8 million and$3.1 million for the

193、 three months ended June 30,2024 and 2023,respectively,and$5.7 million and$6.0 million for the six months ended June 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 ave

194、rage life of the Companys intangibles is approximately six years.7.COMMITMENTS AND CONTINGENCIESLegal MattersFrom time to time in the normal course of business,the Company may be subject to various legal matters such as threatened or pending claims orproceedings.There were no material such matters a

195、s of and for the three and six months ended June 30,2024 and 2023.8.STOCKHOLDERS EQUITYCommon StockPrior to the IPO,the Company had authorized two classes of common stock,voting and non-voting.In March 2021,the Company amended itscertificate of incorporation to bifurcate the voting common stock into

196、 two classes,Class A common stock and Class B common stock.As ofDecember 31,2023,the Company had authorized 200,228,024 shares of Class A common stock,5,374,899 shares of Class B common stock,and63,946,627 shares of non-voting common stock.In April 2024,the Company increased the number of authorized

197、 shares of Class A common stock to204,590,500 in conjunction with the Series G-5 Preferred stock financing(see Note 9,Redeemable Convertible Preferred Stock).In connection with theIPO,the Restated Certificate became effective,which authorized 1,000,000,000 shares of Class A common stock,5,500,000 sh

198、ares of Class B commonstock,and 20,000,000 shares of preferred stock.18NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)Class A common stock and Class B common stock are collectively referred to as“Common Stock”throughout the notes to these unaudited interimcondensed consolidated finan

199、cial 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 Acommon stock is entitled to one vote per share and each share of Class B common stock is entitled to thirty votes per sha

200、re.Prior to the IPO,theCompany also had shares of non-voting common stock authorized and outstanding,which were not entitled to any voting rights.Following the IPO,noshares of non-voting common stock are authorized or outstanding.Each share of Class B common stock is convertible at any time at the o

201、ption 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 aone-to-one basis,upon certain circumstances,including:(1)the sale or transfer of such shares of Class B common

202、 stock,other than to a“controlledentity,”which is any person or entity which,directly or indirectly,is controlled by,or is under common control with,the holder of such shares ofClass B common stock;(2)the trading day that is no less than 90 days and no more than 150 days following the twenty-year an

203、niversary of the filing ofthe 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 isno longer providing services to the Company as an executive officer or member of the board of directors;and(4)the trading day th

204、at is no less than 90days 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 ofthe Companys capital stock(as adjusted for stock splits,stock dividends,combinations,subdivisions and recapitalizations).Once tran

205、sferred 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 units andrestricted stock,all of which have the potential to increase the outstand

206、ing shares of common stock in the future(see Note 10,Stock-BasedCompensation).Upon any liquidation,dissolution,or winding-up,the holders of Class A common stock and Class B common stock will be entitled to shareequally,identically,and ratably in all assets remaining after the payment of any liabilit

207、ies,liquidation preferences,and accrued or declared but unpaiddividends,if any,with respect to any outstanding preferred stock,unless a different treatment is approved by the affirmative vote of the holders of amajority of the outstanding shares of such affected class,voting separately as a class.Co

208、mmon Stock WarrantIn connection with the MSA with AstraZeneca,the Company granted AstraZeneca warrants to purchase$100 million in shares of the CompanysClass A common stock at an exercise price equal to the IPO price of$37.00 per share.The number of shares of Class A common stock issuable uponexerci

209、se of the warrant is 2,702,703,based on the IPO price of$37.00 per share.19NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)The warrant will be automatically cancelled and terminated for no consideration in the event AstraZeneca declines to extend its financial commitmentbefore Decembe

210、r 31,2024.If AstraZeneca exercises the warrant,AstraZeneca will be required to increase its minimum commitment under the MSAfrom$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 Companys Class A common stock at a

211、 price pershare of$10.00.The warrant was issued as compensation for Allens assistance with the issuance of the Companys Series G-4 preferred stock,and assuch has been treated as an issuance cost and presented net of proceeds from Series G-4 preferred stock in Convertible redeemable preferred stock o

212、nthe Companys consolidated balance sheet.In connection with the IPO,the Company issued 109,459 shares of Class A common stock upon the netexercise of the warrant.Treasury StockIn January 2023,the Company repurchased 145,466 shares of non-voting common stock previously issued to the former owners of

213、AKESOgen,Inc.,which the Company acquired in December 2019.These shares were accounted for as treasury stock.The Company records treasury stock at cost.9.REDEEMABLE CONVERTIBLE PREFERRED STOCKIn January 2023,the Company issued 47,781 shares of Series G-3 convertible preferred stock as payment of paid

214、-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 convertiblepreferred stock as payment of paid-in-kind dividends.In October 2023,the Company issued 785,245 shares of Series G-4 convertible preferred stock(“S

215、eries 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 shareoriginal issue price for each share of Series G-4 Preferred(the“G-4 Special Payment”),in the event that follow

216、ing an IPO,the average of the lasttrading 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 lessthan 110%of the price per share of Class A common stock sold in the IPO.Following the Companys IPO,the average ten d

217、ay trading price was lessthan 110%of the price per share of Class A common stock sold in the IPO.As such,holders of Series G-4 Preferred are owed an aggregate payment of$2.3 million,which is recorded in Accrued expenses as of June 30,2024.In April 2024,the Company issued 3,489,981 shares of Series G

218、-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.20NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)In connection with

219、the IPO,all of the Companys then-outstanding shares of redeemable convertible preferred stock and accrued but unpaiddividends 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.Redeemable convertible preferred stock

220、outstanding as of December 31,2023 consisted of the 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,

221、500 10,000 Series B-1 2016 2,500,000 2,500,000 10,500 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

222、 261,722 Series G 2020 2,537,290 2,537,290 119,928 119,928 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 *Excl

223、udes amounts related to the conversion of convertible note*Excludes amounts related to embedded conversion features 10.STOCK-BASED COMPENSATION2015 Stock PlanIn 2015,the Company adopted the Tempus AI,Inc.2015 Stock Plan(the“2015 Plan”),which has been amended and restated numerous times toincrease th

224、e aggregate shares authorized to be issued to employees,consultants,and directors of the Company.As of December 31,2023,therewere 28,115,750 shares authorized under the 2015 Plan.On January 18,2023,the Company approved a two-year extension of the expiration date for active employees whose RSUs expir

225、e either in 2023or 2024.The Company accounted for the extension as a stock compensation modification,which resulted in an increase in unrecognized compensationcost of$47.5 million and$35.3 million for the three and six months ended June 30,2024 and 2023,respectively.During the three and six months e

226、nded June 30,2024,the Company granted 1,647,906 and 1,933,606 RSUs,respectively.Restricted Stock UnitsThe RSUs granted under the 2015 Plan are subject to two vesting conditions.The first is a time-based component.The majority of the awards areeligible to vest over a four-year period,with 20%of the a

227、wards being eligible to vest after one year and the remaining awards becoming eligible to veston a quarterly basis thereafter.The second vesting condition is the occurrence of a liquidity event,as defined in the grant agreement,which was satisifedin connection with the IPO.The table below summarizes

228、 restricted stock unit activity under the 2015 Plan for the six months ended June 30,2024:Restricted Stock Units Weighted-AverageGrant Date Fair Value Unvested at December 31,2023 20,788,500$26.47 Granted 1,933,606$37.59 Vested and settled (4,563,164)$11.93 Vested and not yet settled (10,870,652)$24

229、.46 Forfeited (457,785)$25.58 Expired (147,376)$0.28 Unvested at June 30,2024 6,683,129$36.77 21NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)Stock-based compensation is classified as follows in the accompanying condensed consolidated statements of operations for the three and sixmo

230、nths ended June 30,2024 and 2023(in thousands):Three months ended June 30,Six months ended June 30,2024 2023 2024 2023 Cost of revenues,genomics$11,327$11,327$Cost of revenues,data and services 7,229 7,229 Technology research and development 50,434 50,434 Research and development 42,233 42,233 Selli

231、ng,general and administrative 377,090 377,090 Total stock-based compensation$488,313$488,313$Total unrecognized stock-based compensation expense related to RSUs was$125.3 million as of June 30,2024 and is expected to be recognizedover a weighted-average period of 1.4 years.No further grants will be

232、made under the 2015 Plan.2024 Equity Incentive PlanIn February 2024,the Companys board of directors adopted,and in April 2024,the Companys stockholders approved,the 2024 Equity IncentivePlan(the“2024 Plan”),which became effective in connection with the IPO in June 2024.The 2024 Plan provides for the

233、 grant of incentive stockoptions,(“ISOs”)nonstatutory stock options(“NSOs”),stock appreciation rights,RSUs,restricted stock unit awards(“RSAs”),performance-basedawards(“PSUs”)and other awards.The maximum number of shares of Class A common stock that may be issued under the 2024 Plan is 7,430,000shar

234、es of the Companys Class A common stock and will automatically increase on January 1 of each year,beginning on January 1,2025 and continuingthrough and including January 1,2034 in an amount equal to either(i)a number of shares of the Companys Class A common stock(the“EvergreenIncrease”),such that th

235、e sum of(x)the remaining number of shares available under the 2024 Plan and(y)the Evergreen Increase is equal to 5%of thetotal 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 numberof shares determined by the Companys

236、 board of directors prior to the applicable January 1.The maximum number of shares that may be issued uponthe exercise of ISOs under the 2024 Plan is 22,290,000 shares.11.DEBTTerm Loan FacilityOn September 22,2022,the Company entered into a Credit Agreement with Ares Capital Corporation(“Ares”)for a

237、 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.OnApril 25,2023,the Company entered into an amendment to the Credit Agreement,which was accounted for as a debt modification.The amendment

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

239、nt with Ares which provided an additional$35.0 million in term debt.The Company received$34.1 million in cash,which is the aggregateprincipal amount of$35.0 million less original issue discount of$0.9 million.Terms of the second amendment are consistent with existing terms of theCredit Agreement.The

240、 proceeds of the Term Loan Facility will be used for working capital and general corporate purposes,to finance growthinitiatives,to pay for operating expenses,and to pay the related transaction costs.The Term Loan Facility is due at maturity on September 22,2027 andis subject to quarterly interest p

241、ayments for Base Rate Loans and at the end of the applicable interest rate period for Secured Overnight Financing Rate(“SOFR”)Loans.22NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)After the first three months from the effective date,each quarter,the Company has the option to convert

242、 the borrowing type to either a Base RateBorrowing,which bears interest based on a Base Rate,defined as the greatest of the(a)the“Prime Rate”appearing the“Money Rates”section of theWall Street Journal or another national publication selected by the Agent,(b)the Federal Funds Rate plus 0.50%,(c)Term

243、SOFR for a one-month tenorin effect on such 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 inter

244、est at oneof the following rates:(i)the 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 tothe outstanding principal balance on each interest payment date (ii)the Base Rate plus an Applicable Rate of 6.25%per annum (iii)the s

245、um of the Term SOFR for the interest period plus an Applicable rate of 5%per annum plus 3.25%per annum paid in-kind by addingthe 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%pe

246、r annumIn addition,the Term Loan Facility 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 inves

247、tments,and acquisitions.The Company is required to maintain a minimum liquidity of at least$25 million and maintain specified amounts ofconsolidated revenues for the trailing twelve-month period ending on the last day of each fiscal quarter.Minimum consolidated revenues increase eachquarter.For the

248、years ended December 31,2024 and 2025,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 June 30,2024.All obligations under the Term Loan Facility are guaranteed by t

249、he Company and secured by substantially 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 andunamortized amounts have been offset against long-term debt in the consolidated balance

250、 sheets.As of June 30,2024 and December 31,2023,theunamortized original issue discount was$4.5 million and$5.1 million,respectively,and the unamortized deferred financing fees were$1.6 million and$1.9 million,respectively.Through June 30,2024,the Company has not made any principal repayments on the

251、Term Loan Facility.Through June 30,2024,the Companymade$13.9 million in interest payments.As of June 30,2024,the interest rate on the Term Loan Facility was 10.3%.As of June 30,2023,the interestrate on the$175 million originally borrowed under Term Loan Facility was 9.89%and 10.07%on the$50 million

252、borrowed under the amended CreditAgreement.The Company recognized interest expense of$9.2 million and$18.3 million related to the Term Loan Facility during the three and six monthsended June 30,2024,respectively.The Company recognized interest expense of$6.9 million and$12.0 million related to the T

253、erm Loan Facility duringthe three and six months ended June 30,2023,respectively.23NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)Convertible Promissory NoteOn June 22,2020,in connection with entry into an agreement for use of Google LLCs,or Googles,Google Cloud Platform,the Company

254、issuedGoogle a convertible promissory note,or the Note,in the original principal amount of$330.0 million.On November 19,2020,in connection with SeriesG-2 convertible preferred stock financing,the Company issued Google$80 million of Series G-2 preferred stock,at a 10%discount to the purchaseprice per

255、 share in such financing,in partial satisfaction of the outstanding principal amount under the Note,and the Company amended and restated theterms of the Note.The amended 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

256、 principal amount is automatically reduced each year based on a formula taking into account the aggregate value of the Google Cloud Platformservices used by the Company.The Company accounts for the principal reductions as an offset to its cloud and compute spend within selling,generaland administrat

257、ive in its condensed consolidated statements of operations and comprehensive loss.The outstanding principal and accrued interest underthe Amended Note,or the Outstanding Amount,is due and payable on the earlier of(1)March 22,2026,which is the maturity date of the AmendedNote,(2)upon the occurrence a

258、nd during the continuance of an event of default,and(3)upon the occurrence of an acceleration event,which includesany termination by the Company of its Google Cloud Platform agreement.The Company generally may not prepay the Outstanding Amount,except thatthe Company may,at its option,prepay the Outs

259、tanding Amount in an amount such that the principal amount remaining outstanding after suchrepayment is$150.0 million.If the Amended Note is outstanding at the maturity date,Google may,at its option,convert the then outstanding principal amount and interestaccrued under the Amended Note into a numbe

260、r of shares of the Companys Class A common stock equal to the quotient obtained by dividing(1)theOutstanding Amount on the maturity date,by(2)the average of the last trading price on each trading day during the twenty day period endingimmediately prior to the maturity date.The Company concluded that

261、 one of the conversion features meets the definition of an embedded derivative that is required to be accounted for asa separate unit of accounting.The fair value of the embedded derivative is not material and was therefore not bifurcated.As such,upon issuance of theNote the Company recorded a promi

262、ssory note of$330.0 million.The Company recognized interest expense of$3.7 million and$3.8 million during thethree months ended June 30,2024 and 2023,respectively.The company recognized interest expense of$7.3 million and$7.6 million during the sixmonths ended June 30,2024 and 2023,respectively.12.N

263、ET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERSBasic net loss per share is calculated by dividing the net loss by the weighted average number of outstanding shares of Common Stock eachperiod.The Companys Class A common stock and Class B common stock share equally in distributed and undistribut

264、ed earnings;therefore,noallocation to participating securities or dilutive securities is performed.Diluted net loss per share is calculated by giving effect to all potential dilutiveCommon Stock equivalents,which includes stock options,RSUs,RSAs,PSUs,and preferred stock.Because the Company incurred

265、net losses eachperiod,the basic and diluted calculations are the same.The Company used the if-converted method to calculate diluted EPS.As the Company had netlosses in the three and six months ended June 30,2024 and 2023,all potentially dilutive common stock equivalents have been excluded from theca

266、lculation of diluted net loss per share attributable to common stockholders as their effect is anti-dilutive.24NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)The following table presents the calculation for basic and diluted net loss per share(in thousands,except share and per share

267、data):Three Months Ended June 30,Six Months Ended June 30,2024 2023 2024 2023 Numerator:Net loss$(552,212)$(55,832)$(616,955)$(110,209)Dividends on Series A,B,B-1,B-2,C,D,E,F,G,G-3,and G-4 preferred shares (11,540)(10,897)(39,347)(21,566)Cumulative Undeclared Dividends on Series C preferred shares (

268、668)(745)(1,174)(1,466)Net loss attributable to common stockholders$(564,420)$(67,474)$(657,476)$(133,241)Denominator:Weighted-average common shares outstanding,basic and diluted 82,325 63,286 72,930 63,257 Net loss per share attributable to common stockholders,basic and diluted$(6.86)$(1.07)$(9.02)

269、$(2.11)The following outstanding shares of common stock equivalents were excluded from the calculation of diluted net loss per share for each period,asthe impact of including them would have been anti-dilutive.As disclosed in Note 8,the Company issued a warrant for$100 million in shares of theCompan

270、ys Class A common stock.As per the terms of the warrant,potentially dilutive shares are based on the latest equity financing price.As of June 30,2024 2023 Stock options outstanding 210,000 210,000 AstraZeneca warrant 2,702,703 1,744,991 Mpirik holdback liability 8,724 SEngine holdback liability 41,0

271、07 Sengine contingent consideration 35,000 Unvested RSUs 6,683,129 Total potentially dilutive shares 9,671,839 1,963,715 As disclosed in Note 10,the RSUs issued under the 2015 Plan include a triggering liquidation performance condition prior to vesting.As such,asof June 30,2023,these are treated as

272、contingently issuable shares and are excluded from potentially dilutive shares as the liquidation performancecondition was not yet satisfied.As the liquidation performance condition was satisfied upon completion of the IPO,as of June 30,2024,these shares areincluded in potentially dilutive shares.As

273、 disclosed in Note 11,contingent upon certain financing events,the Amended Note will be converted to shares at the holders option,based onthe 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 aretreated as cont

274、ingently issuable shares and will be excluded from potential dilutive impact.As disclosed in Note 9,the Companys Series G-3 Preferred,Series G-4 Preferred and Series G-5 Preferred contain embedded conversion featuresresulted in the issuance of additional shares of Class A common stock upon completio

275、n of the IPO.The number of shares issued related to these featureswas dependent upon the IPO price.As such,prior to the IPO,these are treated as contingently issuable shares.Subsequent to the completion of the IPOin June 2024,the additional shares of Class A common stock are included in the weighted

276、-average common shares outstanding.13.INCOME TAXESAccounting for income taxes for interim periods generally requires the provision for income taxes to be determined by applying an estimate of theannual effective tax rate for the full fiscal year to income or loss before income taxes,adjusted for dis

277、crete items,if any,for the reporting period.TheCompany updates its estimate of the annual effective tax rate each quarter and makes a cumulative adjustment in such period.25NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)Income tax expense(benefit)for the three and six months ended Ju

278、ne 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 netoperating loss carryforwards and other book versus tax differences,was maintained.14.FAIR VALUE MEASUREMENTSThe c

279、arrying amounts of financial instruments,including cash and cash equivalents,accounts receivable,finance lease obligations,minimumroyalties,accounts payable,and accrued expenses approximate fair value due to the short maturity of these instruments.The carrying amounts of therelated party receivable,

280、finance lease obligations,and minimum royalties approximate fair value because the interest rates used fluctuate with marketinterest 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

281、 assets and liabilities measured at fair value and their classification in the valuation hierarchyare summarized below:Marketable equity securitiesThe Company holds marketable equity securities,that are all publicly traded shares of Recursion Pharmaceuticals,Inc.(“Recursion”)Class A common stock,whi

282、ch have quoted prices in active markets and are classified as short-term.The securities aremeasured at fair value each reporting period.The Company classifies the marketable equity securities as Level 1 as they are valued using quotedmarket prices at each reporting period.During the three months end

283、ed June 30,2024,the Company did not sell any shares of Recursion Class A common stock.During the six monthsended June 30,2024,the Company sold 1,725,902 shares of Recursion Class A common stock at a weighted average price of$13.38 for$23.1 million.Changes in fair value are recorded in earnings withi

284、n other(expense)income,net on the condensed consolidated statement ofoperations and comprehensive loss.The following summarizes the portion of unrealized gains recorded during the three and six months ended June 30,2024 that relate to marketablesecurities held as of June 30,2024(in thousands):Three

285、Months Ended Six Months Ended June 30,2024 June 30,2024 Net(loss)gain during the period on marketable equity securities$(3,705)$2,541 Less:Net gain recognized during the period on marketable equity securities sold during the period (6,081)Unrealized gain recognized during the period on marketable eq

286、uity securities still held at thereporting date$(3,705)$(3,540)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 target of$1.5 million for the twelve-month pe

287、riod ended December 31,2023.See Note4,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 connectionwith the SEngine acquisition,the amount of which is determi

288、ned based on the per share price of the Companys non-voting common stock in aliquidity 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 discussion of that acquisition.Liabilities for

289、contingent consideration are measured at fair value each reporting period,with the acquisition date fair value included as part of theconsideration transferred in the related business combination and subsequent changes in fair value recorded in earnings within operating expenseon the condensed conso

290、lidated statements of operations and comprehensive loss.The Company used a risk-neutral simulation model and optionpricing framework to value the contingent consideration.Prior to the IPO,the Company classified the contingent consideration liabilities asLevel 3 due to the lack of relevant observable

291、 market data over fair value inputs such as probability-weighting of payment outcomes.Subsequentto the IPO completed in June 2024,the Company classified the contingent consideration arrangement of up to 35,000 additional shares ofnon-voting common stock as Level 1 as the shares are valued using a qu

292、oted market price.Warrant assetAs discussed in Note 3,the Company received warrants from Personalis.The warrant assets are measured at fair value eachreporting period using a Black-Scholes option pricing model,which takes into consideration the price and volatility of Personalis Class A commonstock.

293、The Company classifies the warrant asset as Level 2 as they are valued using observable market prices of Personalis Class A commonstock.26NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)Warrant liabilityAs discussed in Note 8,the Company issued a$100 million warrant to AstraZeneca.The

294、 warrant liability is measured at fairvalue each reporting period,using a Black-Scholes option pricing model.The following table summarizes the assumptions used in the model as ofJune 30,2024:Expected term(in years)2.50 Risk-free interest rate 4.51%Expected volatility 55.00%Expected dividend yield 0

295、.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 theexpected term.The 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

296、carrying values as of June 30,2024 and December 31,2023.Estimates of the fair values of the Term Loan Facility and the Note are classified as Level 3due to the lack of relevant observable market data over fair value inputs.The following tables summarize assets and liabilities that are measured at fa

297、ir value on a recurring basis as of June 30,2024 and December 31,2023(in thousands):Fair Value Measurement at Reporting Date Using June 30,2024 Quoted Price inActive Market forIdentical Assets(Level 1)Significant OtherObservable Inputs(Level 2)SignificantUnobservable Inputs(Level 3)Assets Marketable

298、 equity securities$11,255$11,255$Warrant asset$2,300$2,300$Liabilities Warrant liability$33,600$33,600 Contingent consideration$940$940$Fair Value Measurement at Reporting Date Using December 31,2023 Quoted Price inActive Market forIdentical Assets(Level 1)Significant OtherObservable Inputs(Level 2)

299、SignificantUnobservable Inputs(Level 3)Assets Marketable equity securities$31,807$31,807$Warrant asset$10,000$10,000$Liabilities Warrant liability$34,500$34,500 Contingent consideration$775$775 27NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)The following tables provide a reconcilia

300、tion of the beginning and ending balances for the assets and liabilities measured at fair value usingsignificant unobservable inputs(Level 3)(in thousands):Warrant Liability ContingentConsideration Balance at December 31,2023$34,500$775 Change in fair value of warrant liability (900)Change in fair v

301、alue of contingent consideration 194 Transfer out of Level 3 (969)Balance at June 30,2024$33,600$Warrant Liability ContingentConsideration Balance at December 31,2022$42,500$Contingent consideration from Mpirik acquisition 400 Change in fair value of warrant liability (5,700)Balance at June 30,2023$

302、36,800$400 For the three months ended June 30,2024 and 2023,the Company recognized a gain of$1.7 million and expense of$0.7 million,respectively,inother(expense)income,net due to the change in the fair value of warrant liability determined by Level 3 valuation techniques.For the six months endedJune

303、 30,2024 and 2023,the Company recognized a gain of$0.9 million and$5.7 million,respectively,in other expense,net due to the change in the fairvalue of warrant liability determined by Level 3 valuation techniques.15.RELATED PARTIESIn 2018,the Company received$1.5 million from a related party for assu

304、ming an office lease from such party.The liability is amortized throughthe right-of-use asset as a reduction of rent expense over the lease term.The Company had a remaining related liability of$0.7 million as of June 30,2024 and December 31,2023.The Company subleases a portion of office space to thi

305、s related party on a month-to-month basis.Sublease incomereceived from the related party was insignificant for the three and six months ended June 30,2024 and 2023.Strategic InvestmentOn August 19,2021,the Company entered into a related party arrangement with Pathos AI,Inc.(“Pathos”)for the purpose

306、of furthering thecommercialization efforts of drug development.Tempus received a warrant to purchase 23,456,790 shares,or approximately 19%of the currentoutstanding equity in Pathos,for$0.0125 per share.The warrant will automatically exercise upon a change of control(as defined therein)or upon anIPO

307、 of Pathos securities.The Company also has an optional exercise election window during the last 10 days of the 20 year term of the warrantagreement.Pursuant to this master agreement,the Company granted Pathos a limited,non-exclusive,revocable,non-transferable right and license,without right of subli

308、cense,to access and download certain de-identified records from the Companys proprietary database.Pathos in turn agreed tocertain license fees depending on the number of de-identified records it elects to license during the term of the master agreement.Pathos also agreed topay the Company a subscrip

309、tion fee equal to$0.4 million per year for access to the Companys Lens product.The Company recognized$0.1 million and$0.2 million in revenue for this access fee in the three and six months ended June 30,2024 and 2023,respectively.The master agreement provides for aninitial term of five years,with a

310、subsequent five-year renewal provision unless the agreement is terminated.Either party may terminate the agreementafter the initial five-year term by prior written notice to the other party.In 2022,the Company entered into two additional related party arrangements with Pathos for both sequencing and

311、 other data services.TheCompany recognized less than$0.3 million in revenue for both arrangements for both the three and six months ended June 30,2024 and 2023.In 2023,the Company entered into an additional related party arrangement with Pathos for other data services.The Company recognized less tha

312、n$0.1 million inrevenue for both the three and six months ended June 30,2024 and 2023.28NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)As of June 30,2024 and December 31,2023,there was no amount due to related parties.As of both June 30,2024 and December 31,2023,theamount due from re

313、lated parties was less than$0.1 million.16.SUBSEQUENT EVENTSJapan Joint VentureOn May 18,2024,the Company entered into a Joint Venture Agreement(the“Joint Venture Agreement”),by and among SoftBank GroupCorporation(“SoftBank”),SoftBank Group Japan Corporation,the Company and Pegasos Corp.(the“Joint V

314、enture”),pursuant to which the JointVenture will engage in certain business activities in Japan similar to those conducted by the Company in the United States,including performing clinicalsequencing,organizing patient data,and building a real world data business in Japan.The Joint Venture closed on

315、July 18,2024.The Company andSoftBank capitalized the Joint Venture with 30,000,000,000(approximately$191.1 million based on foreign exchange rates as of July 18,2024),splitevenly between the two parties and each received 50%of the Joint Ventures outstanding capital stock and board seats.In connectio

316、n with entering into the Joint Venture Agreement,the Company entered into the following agreements with the Joint Venture:a DataLicense Agreement(the“Data License Agreement”),which became effective immediately upon signing the Joint Venture Agreement;an IntellectualProperty License Agreement(the“IP

317、License Agreement”)and a Services Agreement,each of which became effective on July 18,2024 upon closing.Under the Data License Agreement,the Company granted the Joint Venture a limited,non-exclusive,transferable license with a limited right tosublicense certain de-identified data for certain specifi

318、ed uses solely in Japan.Under the Data License Agreement,the Joint Venture paid the Company7,500,000,000(approximately$47.8 million based on foreign exchange rates as of July 18,2024)in exchange for the license to the Initial RecordsBatch(as defined in the Data License Agreement)and an additional 7,

319、500,000,000(approximately$47.8 million based on foreign exchange rates as ofJuly 18,2024)pursuant to the IP License Agreement in exchange for a non-exclusive license with respect to certain of the Companys technologies forcertain specified uses solely in Japan.Under the Services Agreement,the Compan

320、y will provide the Joint Venture with certain services.The foreign exchange gain/loss on the exchange of funds on July 18,2024 upon closing of the Joint Venture was not material.29 NOTE REGARDING FORWARD-LOOKING STATEMENTSThis Quarterly Report on Form 10-Q contains forward-looking statements about u

321、s and our industry that involve substantial risks anduncertainties.All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q,including statements regardingour future results of operations or financial condition,business strategy and plans and objectives

322、 of management for future operations,are forward-looking statements.In some cases,you can identify forward-looking statements because they contain words such as“anticipate,”“believe,”“contemplate,”“continue,”“could,”“estimate,”“expect,”“intend,”“may,”“plan,”“potential,”“predict,”“project,”“should,”“

323、target,”“will”or“would”or the negative of these words or other similar terms or expressions.These forward-looking statements contained in this Quarterly Report onForm 10-Q include,but are not limited to,statements concerning the following:the evolving treatment paradigm for cancer,including physicia

324、ns use of molecular data and targeted oncology therapeutics and the marketsize for our current and future products;our ability to expand our business beyond oncology into new disease areas;estimates of our addressable market and our expectations regarding our revenue,expenses,capital requirements an

325、d operating results;our ability to develop new products and services,including our goals and strategy regarding development and commercialization of AIApplications;our ability to maintain and grow our datasets,including in new disease areas and geographies;any expectation that the growth of our data

326、sets will improve the quality of our products and services and accelerate their adoption;our ability to capture,aggregate,analyze or otherwise utilize genomic data in new ways and in additional diagnostic modalities;any expectation that we will continue to commercialize de-identified records and lic

327、ense them to multiple customers;the acceptance of our publications in peer-reviewed journals or of our presentations at scientific and medical conference presentations;the implementation of our business model and strategic plans for our products,technologies and businesses;competitive companies and

328、technologies and our industry;the potential of Intelligent Diagnostics to be disruptive across a broad set of disease areas and the clinical trial process;our ability to manage and grow our business by expanding our sales to existing customers or introducing our products to new customers;third-party

329、 payer reimbursement and coverage decisions,including our strategy to increase reimbursement;our ability to establish and maintain intellectual property protection for our products or avoid claims of infringement;potential effects of evolving and/or extensive government regulation;the timing or like

330、lihood of regulatory filings and approvals;our ability to hire and retain key personnel;our ability to expand internationally,including through the Joint Venture in Japan;our ability to successfully acquire businesses,form joint ventures or make investments in companies or technologies;our ability t

331、o protect and enforce our intellectual property rights,including our trade secret protected proprietary rights in our platform;our ability to service or pay down existing or future debt obligations;our anticipated cash needs and our needs for additional financing;anticipated trends and challenges in

332、 our business and the markets in which we operate;and the expiration or release of lock-up agreements or market standoff agreements,anticipation of such events,and sales of shares of ourClass A common stock by our stockholders.You should not rely on forward-looking statements as predictions of futur

333、e events.We have based the forward-looking statements contained in thisQuarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect ourbusiness,financial condition and operating results.The outcome of the events described in these forward-looking statements is subject to risks,uncertainties and other factors described