Q4 2024 Tempus AI Inc Earnings Call
Thank you for standing by. My name is Jason and I will be your conference operator for today.
At this time, I would like to welcome everyone to the 4th Quarter 2024 Financial Results Conference Call.
All lines have been placed on mute to prevent any background noise.
Speaker Change: I will now turn the call over to DZ Krutoholow. Please go ahead.
Thank you, Jason.
Speaker Change: Good afternoon and welcome to Tempest's fourth quarter 2024 conference call.
Speaker Change: This afternoon, Tempest released results for the quarter and year ended December 31, 2024.
Speaker Change: Joining me today from Tempest are Eric Lefkofsky, founder and CEO of Tempest.
Speaker Change: and Jim Rogers, CFO. Before we begin, I would like to remind you that during this call, management may make forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially.
Speaker Change: For discussion of these risks, please visit our 10-K file today, February 24, 2025, as well as any future reports that we file with the SEC. During the call, we will discuss non-GAAP financial measures which are not prepared in accordance with generally accepted accounting principles.
Speaker Change: Definitions of these non-GAAP financial measures, along with reconciliations to the most directly comparable GAAP financial measures, are included in our fourth quarter earnings release, which has been furnished to the SEC and is available on our website at investors.tempest.com
Eric Lefkofsky: I would now like to turn the call over to Eric.
Eric Lefkofsky: Thank you and thanks everyone for joining the call. I'm just going to highlight a few quick bullets and then we'll be happy to take questions.
Eric Lefkofsky: Q4 was a fantastic quarter for Tempest across the board. Our revenue growth accelerated to 35.8% year-over-year in the fourth quarter.
Eric Lefkofsky: Gross profit growth accelerated to 49.7%, so even though our revenues were growing rapidly, our gross profit was actually growing even more rapidly.
Eric Lefkofsky: Q4 finishing a really strong year and so that propelled some of that growth and also is the reason we ended the year with an uptick in total remaining contract value and really record net revenue retention.
Eric Lefkofsky: We also closed the acquisition of Ambry Genetics on February 3rd, which is exciting as we've talked about that historically, but that's now behind us, so we'll have two months this quarter of Ambry's results in our numbers.
Eric Lefkofsky: We also increased our revenue guidance. We had historically given $1.23 billion, but we've upped that to $1.24 billion for 2025 and expect to be just a little bit positive and generate about $5 million of just a little bit.
Eric Lefkofsky: Obviously, you know, we're not providing a range. We give fairly specific numbers, but there's always an implied range, but we feel confident enough that we're increasing our guidance for
2025.
Speaker Change: Finally, I want to just note, if you read the letter Jim and I put out, you'll catch this in a section, but we did extend our Google agreement for another five years. It's kind of an awesome win for us in that.
allows us to avail ourselves of really best-in-class rates.
Speaker Change: and it pushes out the note we have with Google, another five years, and that note, as you'll recall, comes down as we spend on their platform, so it gives us more chance to work that down.
Speaker Change: So, all in, great quarter, you know, it's where we want to be. You want revenues accelerating in terms of growth.
Speaker Change: the kind of leverage we want to see and it's really just nice to be in a position where certainly our two main businesses
Genomics and data are really
Speaker Change: firing on all cylinders and in a period of strength. On that note, I'm happy to...
I take questions.
Speaker Change: We will now open the line for questions. As a reminder, please press star followed by the number 1 on your keypad to join the queue.
Speaker Change: If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your device is not on mute when asking a question.
Speaker Change: The first question comes from the line of Tejas Savant with Morgan Stanley. Please go ahead.
Hey guys, good evening and congrats on today's event.
Speaker Change: Mathematical ramp but beyond that anything to think about in terms of seasonality through the year?
Yes, so I can start. So,
Speaker Change: Ambry does give us a West Coast lab. For those who may not recall, we have labs in Chicago, Raleigh, North Carolina, and Atlanta. So now with the acquisition of Ambry, we pick up a lab out west.
Speaker Change: Over time, we will look to have our somatic or CGP assays or comprehensive genomic profiling assays run out of their lab.
Speaker Change: We'll look to bring some of their inherited risk assays into our labs, but there's no immediate plans to do that, you know, in the next few quarters. It's more of a longer term initiative to make sure we have appropriate redundancy.
Speaker Change: operating out of all of our big labs across the country. We're fortunate that Tempest already has that in place today between Chicago and Raleigh.
Speaker Change: some of the reimbursement diversity of having those two labs. And the California lab of Ambry will give us additional redundancy and additional benefits. So I would say over the next year or two we'll look to start moving some of those assays and cross pollinating.
Speaker Change: Yeah, and then I'll take the second question with regards to seasonality of the Ambry business. I think, you know, they experience the same seasonality that we do with our business and other labs, typically around the holidays things slow down. I would say that given where they're at in terms of kind of capturing market share as well as kind of growing their rare and undiagnosed,
Speaker Change: business, we would anticipate kind of revenues growing throughout the year similar to what they do in kind of the Tempest business. So there is some seasonality, but we would just anticipate revenues continuing to grow kind of quarter after quarter, no different than the Tempest business.
Got it.
Speaker Change: The client had an issue where we had an issue or there was any issue. It's just that in every quarter. When you get to our size and you have a.
Speaker Change: Data business. This large there are timing of the delivery of these data sets that can slip a month here a month there.
Speaker Change: You can get pushed off into a quarter. They can get pushed back into a quarter and so we always have puts and takes and I was just highlighting that and if that data delivery would have gone out in Q4.
Speaker Change: We would have.
Speaker Change: And you can add a significant amount of revenue to Q4. So it would've been that's why I also said.
Speaker Change: When we talk about 700 million of revenue.
It could be 693, it could be 706, and most of that has nothing to do with the performance of the business or whats going well you can just be the timing.
Speaker Change: When tests are ordered or when data is delivered.
Speaker Change: And then the second part of your question you asked around kind of the 25 guide and kind of where the contribution from from data is I'd say the $940 million of total remaining contract value, obviously gives us good visibility into 2025.
Speaker Change: The larger agreements.
Speaker Change: I have kind of committed spend in those larger subscription can get delivered quarterly this smaller agreements theres always some subset of those that get signed and delivered in the year, but the majority is under contract.
Speaker Change: You go into 'twenty five.
Speaker Change: Got it that's helpful. I appreciate it.
Brian: The next question comes from the line of Brian <unk> with Jpmorgan.
Speaker Change: Please go ahead.
Speaker Change: Great. Thank you this is casey on for Rachel.
Speaker Change: Just had one on the new guide for 2025.
Speaker Change: Backing into the math it looks like Ambry has now an implied 17%.
Speaker Change: Top line growth rate.
Speaker Change: Keeping core campus.
Speaker Change: 30%, So maybe just help us walk through kind of how we should think about ambry in the model.
Speaker Change: In 2025, and then I have one follow up thanks.
Speaker Change: Yes, I mean, so we've.
Speaker Change: We've historically said in and.
Speaker Change: And you can see this in the commentary that Jim and I provided.
Speaker Change: That ambry benefited.
Speaker Change: In 2024.
Speaker Change: Some ASP headwinds and some fluctuations in the market related to competitors, where a lot of volume was moving to their direction. Now. They also have a best in class product that has been outgrowing the market in any way. So they were going to were going to grow nicely, but they had a couple of.
Speaker Change: Things in 2024 that were accelerants to their growth rate and so in 2025 as they lap those accelerants you could see our growth rate it might be normally in the kind of low <unk> be in the high teens and so we talked about that last quarter and suspect.
Speaker Change: That could be the case now some of this will have to see how the year plays out but we are.
Speaker Change: We've said historically forecasting core tempt us to be closer to 30%.
Brian: And Brian in the high teens.
Brian: Whether it's 17% or 19 or whatever like somewhere in this in that direction and I suspect that's how things will play out unless there's more.
Brian: Accelerants that come their way.
Brian: Okay got it that's helpful. And then just as a quick follow up you mentioned, 20% of revenues will fall and once you understand you have the a DLT percentage of volume kind of growing over the course of the year and other reimbursement tail lines can you just maybe walk us through the quarterly phasing in of the guide and maybe what the exit rate looks like thank you.
Brian: Yes so.
Brian: Q4 is always a very big data delivery quarter for us as we kind of talked about and so as you get into Q1.
Brian: Q1 is always kind of in terms of percentage of overall revenue in the year, the lowest and so what we've guided is consistent with what we've seen in previous years specific to <unk> that is again in the commentary that we provided.
Brian: And the quarter at about 20% of our.
Brian: We expect to end the quarter with about 20% of our XD volume moving over to <unk>. So as we've highlighted in the past.
Brian: Kind of a national launch started in January but it will take kind of the balance of the year and into next year.
Brian: So we have the vast majority of that test on <unk> on <unk>. So.
Brian: We guided to the 20% of the revenues in Q1, and we would anticipate a similar kind of phasing as what we saw last year.
Brian: Okay got it thank you.
Speaker Change: The next question comes from the line of Mike Briskin with Bank of America. Please go ahead.
Brian: Great.
Mike Briskin: Thanks for taking my question guys.
Speaker Change: I want to follow up really quick to Casey's point right there on Ambry contribution.
Speaker Change: Just wanted to get a little deeper into sort of how you think about the model longer term I mean, you talk about what it was contributing to growth or what it grew in 2024 and some is accelerating like we just discussed it looks like now it looks like it's high teens in 2025, I think you just made some comment of you see longer term is a 20% Roe or so make sure I caught that correctly, just how we flesh.
Speaker Change: That in our model at 26 and beyond just can you talk about.
Speaker Change: You see the Ami business doing longer term and I've got a follow up thanks.
Speaker Change: Yes, I think.
Speaker Change: I would suspect we've told people that kind of long term growth rate for Tempus, you should think of us.
Speaker Change: Knowing the business long term are 25%.
Speaker Change: That's a that's a.
Speaker Change: Perfectly solid growth rate.
Speaker Change: Don't we don't we're more focused on long term sustainable growth. Then we are focused on maximizing short term growth. So youll see us make that trade all the time, if we can do things that we feel are sustainable and durable we choose that path instead of kind of.
Speaker Change: Picking up a bunch of growth in the current quarter that.
Speaker Change: It isn't that isn't durable.
Speaker Change: I think interestingly enough.
Speaker Change: And we've seen some of that this year, where I think again some of Jim's commentary you talk about lapping a period, where maybe we have some ASP.
Speaker Change: Cash collections in 2023 that we had to lap in 2024. So you get some of these anomalies, where your growth rates can can bounce around a bit and.
Speaker Change: We're still.
Speaker Change: Even at our size. These are this isn't a $100 billion business, where these fluctuations don't make a difference so at our size. If you pick up an extra 20 or $30 million of revenue and then you lap that it can cause some issues, but I would suspect.
Speaker Change: Long term youll see average growth rate in our growth rate.
Speaker Change: Probably in terms of the genomics business be pretty similar I think these things can can grow at 25% for us.
Speaker Change: A sustainable amount of time.
Speaker Change: The data business in the apps business.
Speaker Change: Can grow a bit faster.
Speaker Change: Core Tempus may be benefited by by our data and our and our AI applications that obviously.
Speaker Change: <unk> can grow much quicker can grow quicker, but in terms of core genomics I think the comprehensive genomic profiling and therapy selection and minimal residual disease and the inherited risk profiling. These are these are still businesses with huge amounts of growth.
Speaker Change: Hi.
Speaker Change: There's no I believe that.
Speaker Change: Many many people if not most people will be profiled for risk in the future and the fact that ambry as a leader in that space.
Speaker Change: You can do the math.
Speaker Change: In a world where many many people are profile, where most people are profiled youre quoting numbers in the hundreds of billions.
Speaker Change: Im sorry, not in the hundreds of millions.
Speaker Change: And today they are running a fraction of those tests. So I think they have a lot of headroom and I would suspect our growth rates will.
Speaker Change: We will start to over time be similar to ours.
Speaker Change: Okay Alright.
Speaker Change: And then for the <unk>.
Speaker Change: Follow up a little but I want to touch on the data side of things.
Speaker Change: One is you kind of talk about the total contract value in some of your prepared remarks, I think 940 is where you ended the year at sort of was has been at that ballpark all year in the low nine hundreds of 929 39 40.
So we've always kind of thought of that as a leading indicator of growth.
Speaker Change: How should we think about that going forward I mean, there were some remarks in the in the prepared remarks that you actually kind of expect it to decline in the future given it's it's a large number but.
Speaker Change: Yes, I mean, just why why shouldn't that be an indicator of future revenue growth. So wouldn't you like to see that number grow higher.
Speaker Change: Yes, so I'll start and then Eric you can chime in.
Eric Lefkofsky: The number did grow higher.
Speaker Change: The girl of the year, we also kind of through.
Speaker Change: The amount of revenue that came out of that was at a record level as well.
Speaker Change: So any growth in that number when you are kind of achieving kind of the revenue growth that we saw would you'd be very happy with the way that we kind of view. The total remaining contract value is is it at a healthy enough level to kind of give you some visibility into the next several years of revenue and at the levels that it that given the amount of revenue that we've recognized any given year. It provides that.
Speaker Change: That level of visibility as we've previously kind of talked about when we get kind of large larger deals then that can result in some some fluctuation of those that you don't sign kind of very large deals every single quarter.
Speaker Change: Highlighted some of the larger deals that we signed in the quarter with bi in alumina and again, we think that it's at a very healthy level for us.
Speaker Change: The targets that we're looking to achieve.
Speaker Change: Yes.
Speaker Change: Punch line is.
Speaker Change: It's lumpy right. So the fact that it's growing.
Speaker Change: And the fact that it.
Speaker Change: And the fact that.
Speaker Change: Our net revenue retention is so high means the core business is really really strong right I mean in simple terms. If you if you've got about $1 billion of total contract value and deliver $250 million in a year to have the number grow you had basically signed more than that.
Speaker Change: So that's awesome, but yes, I mean in a perfect world you'd like it to grow by your growth rate.
Speaker Change: So if you think of it like yes, we had.
Speaker Change: If it doesn't if our.
Speaker Change: If our growth rate is such that.
Speaker Change: You have to basically.
Speaker Change: First find all the data you delivered plus another let's say whatever 30% than maybe you'd wanted to grow by $75 million and it only grew by $30 million right, but its still so you might say well I wish it grew by $30 million to $40 million more but you have almost $1 billion buffer in your data business. So.
Speaker Change: It's going to be lumpy, you're going to have some years, where we might sign a.
Speaker Change: $200 million deal for them and it's going to jump right up again, it's not going to grill perfectly every quarter, it's not going to go perfectly every year. So we look at it and say the fact that we're ending the year and we've got more in the tank than when we started and we just took almost a quarter billion out of the tank means it's super healthy, but long term youre going to wanted to.
Speaker Change: To manage the growth rate.
Speaker Change: Alright, Thanks, I'll get back in the queue.
Ryan Macdonald: Next question comes from the line of Ryan Macdonald. Please go ahead.
Speaker Change: And Brian Thanks for taking the questions.
Ryan Macdonald: Nice to see the formal announcement around being an in network provider for various Blue Cross Blue Shield plans would love to unpack that a bit what kind of impact do you anticipate going in network tab on volume and maybe more importantly, we'd love to get a refresher on what that does from a reimbursement perspective.
Speaker Change: Yes, so I'd say.
Speaker Change: The announcements that we made about going in network with folks as a reminder, we're primarily an out of network lab with commercial payers.
Speaker Change: Medicare and Medicare advantage represent about 50% of our volume so about a little bit less than half as commercial payors. So any win that we can get with commercial payers is obviously an uplift to reimbursement.
Speaker Change: We don't have a significant concentration among commercial payers. So no one payer if we go in network kind of materially changes.
Speaker Change: The reimbursement profile, however, chipping away at that 45% or so of commercial volume is important long term as we'd like to drive asps up so the biggest tailwind as we get into 2025 are migrating volume over the <unk> LTE version of DSA, which will primarily kind of impact.
Speaker Change: Our Medicare advantage volume, although that some commercial volume as well and then.
Speaker Change: Except for liquid biopsy.
Speaker Change: That was going through the gap fill process with Medicare last year that resulted in about a $300 uplift in.
Speaker Change: Reimbursement from Medicare and so again.
Speaker Change: Another kind of tailwind that we'll have in 2025 that impacts about 50% of our volume is smaller wins on the commercial.
Speaker Change: Side impact of smaller smaller percent.
Jim Rogers: Got it that's helpful. Jim.
Jim Rogers: And then maybe on the regulatory environment, there's been a lot of changes at the FDA. Our proposed changes some of which could be favorable for AI companies, but also a lot of lay off that could potentially delay decision, making or trial approvals. So based on what we've seen today and where you sit do.
Jim Rogers: Do you see what's going on at the FDA or in the broader federal government as more of a headwind or a tailwind of tempus.
Jim Rogers: I think it's for US it's generally a headwind I mean, we are.
Jim Rogers: AI enabled diagnostics company that is that it.
Jim Rogers: It's focused on technology and so.
Jim Rogers: I'm, sorry, it's a tailwind meaning.
Jim Rogers: Meaning it's a it's a.
Jim Rogers: Benefits so.
Jim Rogers: For Us we think we benefit as a tech company as somebody focused on AI.
Jim Rogers: <unk>.
Jim Rogers: These kind of changes are generally trying to figure out how to get more efficiency more technology and we think.
Jim Rogers: We benefit from that kind of thinking there could be some minor slowdowns related to staffing as people are let go in the FDA.
Jim Rogers: But we don't expect them to be material.
Jim Rogers: We're not reliant on any kind of FDA rulings coming out that would that would change our business. So net net we think it's.
Jim Rogers: Its tailwind.
Got it thanks guys.
Speaker Change: The next question comes from the line of Dan Brennan Peter Cohen. Please go ahead.
Speaker Change: Great. Thanks for thanks for the questions.
Speaker Change: I know there was a question or two on the data side I was just hoping implicit in the guide.
Speaker Change: So if we're thinking about core temporary growing 30.
Speaker Change: Presumably we have that level in our model, but we've got data growing in kind of the mid 30, plus with the genomics organic growing in the mid <unk> does that sound like the right Zip code.
Speaker Change: If not can you help us think through what the right levels of growth for those two businesses are.
Speaker Change: Yes, I think that's largely aligned I think on the genomics side, obviously you have some ASP tailwind. So we would anticipate revenues outpacing volume growth.
Speaker Change: And data as it has.
Speaker Change: This year as well kind of growing slightly more quickly than that.
Speaker Change: Then the genomics business, so I think youre on track.
Speaker Change: Got it and then just maybe on the margin guide of $5 million EBITDA margin, which is good can you just help break down a little bit in terms of core ambry versus the core temperance business and are there any synergies assumed in order to get to that number and kind of what would be some of the drivers. If you were to beat that number and 25.
Speaker Change: Yes, I mean, so we've considered it.
Speaker Change: As we've talked about historically, we considered it a day.
Speaker Change: Our goal to get to being adjusted EBITDA and cash flow positive. So we've been focused on that.
Speaker Change: And when.
Speaker Change: When we think about the investments we make in the forward year, we've been making investments.
Speaker Change: Predicated on this idea that our revenue is growing at X level, our gross profits growing at X level. We can invest this amount in technology R&D people all that good stuff and we wanted to generate improvements in the bottom line is such that we can.
Speaker Change: Flip to being positive.
Speaker Change: Fortunate that we are.
Speaker Change: To make that flips so that's awesome.
Speaker Change: And our guidance for 2025.
Speaker Change: So we're clearly there, but we're not focused in the near term. Unlike harvesting profits are maximizing profits.
Speaker Change: So to the extent that we are beating.
Speaker Change: EBITDA youll likely see us in the near term invest more in growth and certainly for 2020 that'll be the story we're.
Speaker Change: We're not going to look to like crush that number because we can if we're crushing the number we're going to make investments at least for.
Speaker Change: Some large extent back in the business and back into growth.
Speaker Change: And then Dan on your question around the synergies and the guide no significant synergies kind of built in there we anticipate kind of running ambry.
<unk> as a standalone business at least for 2025.
Speaker Change: And so we're well into 'twenty six before we'd be realizing anything significant.
Speaker Change: Great. Thank you.
Speaker Change: The next question comes from the line of.
Speaker Change: Mandy.
Speaker Change: Thanks Duncan Heng. Please go ahead.
Speaker Change: Hey, guys. Thank you for taking my questions.
Speaker Change: Eric.
Speaker Change: Jim what is in data and in your <unk> guidance, if anything for this year with respect to expectations for improvements in payer coverage for courts and justice.
Speaker Change: As those of ANZ acquisition, and Henry payer relationships and contracts with one and I have a follow up.
Speaker Change: Yes.
Speaker Change: Overlap between the two businesses is relatively small.
Speaker Change: Yeah.
Speaker Change: Minimal amounts of impact as we kind of migrate.
Speaker Change: The reimbursement over to Sam.
Speaker Change: Less than $10 million.
Speaker Change: There's not a ton of overlap in the current business, but there will be some small benefit that we received as we migrate that that reimbursement.
Speaker Change: Okay got it and then you most recently announced a commercial agreement at <unk> to commercially offer their prostate cancer prognostic test could you tell us about the process that leads to an agreement to offer a test like this and then how do you decide to choose one Tesla is one provider over competing offerings in what is what are your thoughts there.
Speaker Change: And that decision.
Speaker Change: Yes.
Speaker Change: So what are the things that we.
Speaker Change: Also highlighted in the quarters, we're now connected to 3000.
Speaker Change: Hospitals are shown in the United States or institution that I states and so youre looking at.
Speaker Change: A significant percentage of the United States, that's now connected the tempus.
Speaker Change: And one of the benefits of that connectivity is not just that we can efficiently sequence a lot of patients and help them navigate to the right therapy and produce a lot of data that helps research adult Ms downstream, but it also allows us to connect.
Speaker Change: These AI enabled insights back into the U S health care system at scale, whether those insights are helping match patients to a clinical trial or close of care gap.
Speaker Change: We're deploying algorithm that can be diagnostic Lee relevant for a patient to make sure. They are on the right the right.
Speaker Change: He passed so that connectivity is really at the heart.
Speaker Change: The proprietary value the Tempest is building.
Speaker Change: At scale, which we're at now we can deploy our own algorithms into the market, where we can deploy third party algorithms and and so I would suspect youll see us over time more and more to bring third party algorithms onto our platform because of that connectivity. So somebody develops or really good test that's predictive or park.
Speaker Change: Gnostic what can help somebody in some way.
Speaker Change: And especially if it's getting reimbursed and has analytical and clinical validation behind it we may bring it onto our platform.
Speaker Change: We have a team that reviews. These things that makes those decisions. It's typically patient led in physician led.
Speaker Change: Best for patients and doctors want, but I think as I've said, historically I would not be surprised if over time, we have.
Speaker Change: Dozens or hundreds of algorithms running on our platform.
Speaker Change: <unk>.
Speaker Change: At scale.
Speaker Change: Because we have we have the ability to distribute them in ways others don't.
Speaker Change: Thank you for that any okay back in the queue.
Speaker Change: Our next question comes from the line of Doug Schenkel with Wolfe Research. Please go ahead.
Doug Schenkel: Good afternoon, and thank you for taking my questions.
Doug Schenkel: Two topics I want to cover first on <unk> could you just speak to.
Doug Schenkel: When you are expecting any.
Doug Schenkel: Any data readouts.
Doug Schenkel: On tumor naive or tumor informed so both both products.
And I guess related to that I, just want to confirm that there was nothing in the revenue guidance related to both given the current state of reimbursement.
Doug Schenkel: The need for more data.
Doug Schenkel: The first topic the other is on capital deployment.
Doug Schenkel: Obviously, you were active at the end of last year with Ambry as you think about priorities from here whats the appetite for more M&A based on your balance sheet situation and the current current market environment. Thank you.
Doug Schenkel: Yes, so I can start shopping so.
Doug Schenkel: In terms of MRV, obviously, we've taken a tumor naive assay to market we started in CRC.
Doug Schenkel: And we've already put out.
Doug Schenkel: Some some studies related to that assay, there will be more over time.
Doug Schenkel: But there is nothing.
Doug Schenkel: Significance that would fundamentally change our trajectory, we havent acetate markets, we have submitted for reimbursement unless.
Doug Schenkel: <unk> need something different for reimbursement.
Doug Schenkel: On a good path to to have that FCB reimbursed at some point in late 2025, and the next step for us will be to take that assay into other.
Doug Schenkel: Disease.
Doug Schenkel: <unk>, which we which we will do over time collecting samples now and we'll bring that assay to market.
Doug Schenkel: Just in the refining the asti to make it more sensitive.
Doug Schenkel: Decrease the lower number to protection. So that work is ongoing and we will look to bring that other disease areas over time, but there is no like kind of a pivotal study that we need to.
Doug Schenkel: Do something we're already already passed all of that and it's already moving and I think the same is true for personnel.
Doug Schenkel: They have assays in market in non small cell lung and breast and Io.
Doug Schenkel: And they've already debated quite a bit I think they are in the process of submitting a across the board.
Doug Schenkel: For reimbursement and they too is I think quoted that they expect.
Doug Schenkel: Reimbursement to show upside later this year, although you have to read their filings to get most of the most up to date.
Doug Schenkel: In terms of the guidance.
Doug Schenkel: Yes.
Doug Schenkel: We have a long history of only focusing on what we can see so until we until we know that assay is being reimbursed.
Doug Schenkel: We're not going to include anything substantive from it.
Doug Schenkel: Because again like we're in a world where it could be later this year. It could be early next year could be Q3 could be Q4 like it's just impossible to tell once we get.
Doug Schenkel: Get reimbursement will start wrapping up these assays at much greater scale.
Doug Schenkel: Because obviously, you're getting paid is a good precursor to ramping them up.
Doug Schenkel: <unk>.
Doug Schenkel: And so thats not in terms of capital.
Doug Schenkel: We also said last quarter that.
Doug Schenkel: We feel pretty good in terms of our genomics footprint, we feel like we've got a really incredible complement really best in class and a scale thats unique.
Doug Schenkel: So we're not looking to two.
Doug Schenkel: Two big things there.
Doug Schenkel: We consistently look at smaller.
Doug Schenkel: Smaller things on the data side of our world in the AI side of our world and so to the extent, we find something small that's interesting we might buy it but nothing big has on the rest.
Andrew Backman: Next question comes from the line of Andrew Backman.
Speaker Change: Blair. Please go ahead.
Andrew Backman: Hi, guys. Good afternoon, thanks for taking the questions.
Andrew Backman: On the reimbursement front, you obviously had the big win on the ECG outlook getting reimbursed earlier. This year I guess bigger picture does this sort of change how you are sort of viewing payers' willingness to potentially expand reimbursement for the AI based diagnostics or how should we sort of be thinking about that as a potential catalyst over the coming year or so.
Andrew Backman: Yes, I think from our perspective, we're really excited about it just because it does indicate a willingness for people to reimburse for these types of tests that are clinically validated and provide clinical utility.
Andrew Backman: This doesn't mean that we're going to show up at the end of Q1 and have one hundreds of our algorithms reimbursed. There is still a long road to go in terms of securing reimbursement for the various kind of different algorithmic diagnostics that we have.
Andrew Backman: We just highlighted this because it's something that we've talked about in the past is that there's a long road, but there are some kind of near term milestones this being one of them.
Andrew Backman: Demonstrate that it is possible for these types of things to be reimbursed, which is why we're so excited about it.
Speaker Change: Great. Thanks for that and then maybe on the commercial front just post Ambry close now how should we sort of be thinking about any ads or changes to the way that the reps aren't going to be deployed and incentivize moving forward. Thanks guys.
Andrew Backman: Yes, yes.
Andrew Backman: Yes.
Every reps typically sell into genetic counselors are reps are selling into the kind of oncologists. So there's not a ton of overlap and so we don't anticipate there being any significant changes.
Andrew Backman: Thanks, guys.
Speaker Change: Next question comes from the line of Mark Schappell.
Speaker Change: Capital. Please go ahead.
Mark Schappell: Great. Thank you for taking my question, Eric The company recently announced the launch of Olivia AI the App.
Speaker Change: For personal health the personal health cost shares that I was wondering if you just discuss the significance of the App and how you plan to monetize it.
Mark Schappell: The.
Mark Schappell: The App will get monetize setup.
Mark Schappell: Per month subscription like similar to like GTT.
Mark Schappell: I think it is currently $12 per per.
Mark Schappell: Per month.
Mark Schappell: And.
Mark Schappell: Starting off small we just released the app.
Mark Schappell: Two.
Mark Schappell: To a broader audience, we need to get user feedback we need to make changes and improve proof things you don't really know.
How these things scale until you start getting folks engaged but we're super excited at the potential to bring our our core technology platform that allows us to make sense of all this multimodal data and make diagnostics intelligent we're excited.
Mark Schappell: Bring that to patients at scale, we think them being able to kind of move around all of their health care data in their phone and.
Mark Schappell: Abbott store to secure locker and be able to talk to that data and get all kinds of insights using our AI engine is pretty awesome. So small early but could be transformative.
Great Thanks, and as a follow up could you just walk us through your top two.
Speaker Change: Two or three investment priorities for the business in the coming year.
Speaker Change: Our priority sort of stay focused on what's been working.
Speaker Change: And make sure that we.
We're kind of heads down in terms of building our genomics business in our data business.
Speaker Change: Deploying our connected network to grow our applications business.
Thank you.
Speaker Change: Next question comes from the line of Dan <unk>.
Speaker Change: Yes with Stifel. Please go ahead.
Speaker Change: Yeah, Hi, guys. Thanks for getting me in here Jim on the on the data side, the $300 million in renewals that you've talked about for Astra and for GSK can you just remind us on what the timing is for that renewal coming up and is there any change in the confidence around that happening with the terms that exist here for the initial agreement.
Speaker Change: Yes, So just a reminder of the $300 million of opt ins that we have.
Speaker Change: Highlighted in the <unk>.
Speaker Change: Eliminating contract value or kind of the last.
Speaker Change: 18 months or so of the Astrazeneca and GSK agreements.
Speaker Change: No updates, we're still several years away from hitting those those renewals.
Speaker Change: And kind of no no change in our <unk>.
Speaker Change: Confidence in terms of of them separately.
Speaker Change: Okay, but is that the <unk>.
Speaker Change: Range of those.
Speaker Change: The range of those renewals is like 27% 29%.
We still use a way yes.
Speaker Change: Okay.
Speaker Change: And then Jim just on Ambry pricing hereditary has obviously not been static is there an implicit ASP assumption that you can share maybe not necessarily the exact dollar amount per se, but just more like change year over year that you are baking in and then if I could sneak out.
Eric Lefkofsky: Second one on here, Eric the accelerants that you've called out as being meaningful for angry.
Speaker Change: Is that cash collection. So Lee is that what youre, referring to or are there other items that you saw as one off there.
Speaker Change: Yes, so on the on the accelerant that in terms of reimbursement was cash collections just the increase in their collect collection rates.
Speaker Change: And then in terms of Asp's, we haven't disclosed specific ASP related to Ambry.
Speaker Change: B.
Speaker Change: Our puts and takes like there are everywhere else. So they will have new in network contracts, which may change at one way increased cash collections. The other way so puts and takes but no significant changes kind of year over year.
Speaker Change: On the SP side forever.
Speaker Change: Okay. Thank you.
Speaker Change: The next question comes from the line of David Steinberg with Piper Sandler. Please go ahead hi.
David Steinberg: Hi, Thank you for taking the question.
David Steinberg: So just I'm going to talk about maybe about the seasonality of the business generally I think you said, 20% of the revenue is the expectation in Q1.
David Steinberg: Know that there is you are expecting a little bit less I think only two contribution two months of contribution from Ambry, but can you just remind us the normal seasonality of the business is.
As we go through the year.
David Steinberg: Yes, so I'd say on the there's kind of different seasonality for the different kind of product lines right genomics. We followed the same seasonality that you would see from other kind of labs, obviously the end of the year in terms of the number of orders that are being placed around the holidays is low so January tends to be kind of a slow.
David Steinberg: Some more when people are typically on vacation there is some some slowdown so we're no different than other labs on the genomic side on the data side, we typically tend to be back half of the year weighted.
A lot of our kind of conversation to deliveries kind of align with Barbara budgeting cycles, which typically follow up kind of the calendar year. So if you went back historically, we're not anticipating a change in kind of the trends that we saw in 2024 previously and again, we would anticipate kind of the phasing in 25 being similar to what it was.
David Steinberg: Yeah.
Speaker Change: That's very helpful.
Speaker Change: I appreciate it that there is something a little brighter and lag if it gets into January.
Speaker Change: So then just on the.
Speaker Change: Contract revenue.
Of that 900 $940 million I. Appreciate the color you gave earlier with <unk> question about the Lumpiness of that how should we think about the long term basis on the correlation between those should those kind of the same speed over the longer term, but of course data and services is going to be lumpy and then.
Speaker Change: Pharma revenue, maybe youre going to recognize more of that.
Speaker Change: A linear kind of basis I don't know I'm, just I'm actually asking and then.
Speaker Change: Historically it's.
Speaker Change: It's been a smaller portion of a lot of the company's business, but they've kind of said like revenue is expected Mike.
Speaker Change: This revenue would be the value is expected in the next.
Speaker Change: Two years or some sort of recognition period is there a recognition period for that thank you so much.
Speaker Change: Yes.
Speaker Change: The bulk of our total remaining contract value is made up of data.
And as we've just talked about with Astrazeneca and GSK and these people can sign multi year.
Speaker Change: Deals five five year deals for your deal secured deals whatever it is so these are multi year deals and if you signed a big deal.
Speaker Change: What happened.
Speaker Change: If you were like if we have certain investors who've been.
Speaker Change: Tempus for a long time, so they could see the total remaining contract value, which.
Speaker Change: Maybe a few hundred million dollars and.
Speaker Change: One point and we signed some of these big deals and it jumped up to $700 million or $800 million and $900 million. So.
Speaker Change: Have years, where the total remaining contract value grew by two or 300%. So yes long term.
Speaker Change: If you look at a 10 year horizon.
Speaker Change: Your total remaining contract value should equal eventually the data you deliver the end.
Speaker Change: It should grow at a similar growth rate, but if the if the bookings of your bookings number grows by 200%.
Speaker Change: It's not going to grow by 30% for next three years like magically like in other words it can be lumpy. Some years. It can grow by 200%. Some years you can grow by zero percent, but in the aggregate should it's going to have to basically match your data deliveries.
Speaker Change: We had a we had some very large contracts that got signed great for us.
Speaker Change: And so we feel like we're in a good spot. The fact that we're still growing that number even off of periods of really high rapid bookings growth.
Speaker Change: Again indicative of the fact that our data business is firing on all cylinders.
Speaker Change: So and in terms of the horizon.
Speaker Change: Again, if you look at the size of our total remaining contract value and the size of our data business.
Speaker Change: Directionally our data business is about 250.
Speaker Change: And there is 940, so it's multiple years.
Speaker Change: Very helpful. Thank you.
Speaker Change: This concludes our Q&A session I will now turn the call over to Lindsay for Thermo Fisher for closing remarks.
Speaker Change: If you have any closing remarks, if not I'm happy just to jump in and thank everyone for joining the call and we will see an export.
Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect have a nice day.
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