Tempest (TEM) Q1 2025: Data Contracts Top $1B as Genomics Revenue Jumps 89%
Tempest delivered a record quarter, propelled by surging genomics revenue and a $200 million, three-year data foundation model deal with AstraZeneca and Pathos. The company’s strategic pivot to large-scale data licensing is transforming its business model, as contract value now exceeds $1 billion and new categories of AI-driven oncology solutions emerge. With robust gross profit leverage and EBITDA breakeven in sight, Tempest’s execution signals a new era of scale and data monetization in precision medicine.
Summary
- Data Licensing Scale: Contracted data and modeling revenue now exceeds $1 billion, reshaping Tempest’s long-term growth profile.
- Genomics Outperformance: Genomics revenue and hereditary testing volumes both sharply outpaced internal expectations.
- AI Foundation Model Momentum: The AstraZeneca-Pathos partnership sets a precedent for future multi-party, high-value AI collaborations.
Performance Analysis
Tempest’s Q1 results reflected broad-based strength across genomics, hereditary testing, and data services. Genomics revenue soared, driven by oncology testing unit growth and a strong start from the acquired Ambry hereditary segment. Notably, hereditary testing volumes grew 23%, beating prior expectations of mid-teen growth, as management highlighted expanding indications beyond oncology into cardiovascular and neurodegenerative risk. Data and services revenue, led by the insights/data licensing business, grew 43% year-over-year, with the insights sub-segment up 58%.
Gross profit nearly doubled, as cost discipline and scale in both clinical and data operations produced significant operating leverage. Adjusted EBITDA loss narrowed by over $27 million year-over-year, underscoring the company’s march toward breakeven. The $200 million, three-year AstraZeneca-Pathos agreement for foundation model development not only adds high-visibility revenue, but also validates Tempest’s unique multi-modal data asset as a strategic differentiator. Management raised full-year revenue guidance to $1.25 billion, reflecting increased confidence in both core testing and data monetization.
- Hereditary Testing Upside: Ambry’s outperformance challenges the “commoditization” narrative in hereditary screening.
- Operating Leverage: Gross profit growth outpaced revenue, reflecting improved scale and cost management.
- Data Revenue Visibility: Contracted backlog and new multi-year deals provide multi-year revenue clarity.
Tempest’s results signal both accelerating demand for precision diagnostics and a business model increasingly anchored in data-driven partnerships with pharma.
Executive Commentary
"It also allows us to take our over 300 petabytes of data, which includes this really rich multimodal data set connected to outcomes, and use that to build a foundation model, which is, in addition to the data licensing, which is quite positive for us, also the cost of compute is not small, and AZ and Pathos are covering a significant portion of that."
Eric Lifkoski, Founder & CEO
"We were very fortunate coming into the year. We had, you know, $940 million of real contract value that was yet to be delivered. And so delivering on those subscriptions and then adding additional deals in Q1, obviously the highlight coming in April with the AZ, which pushes the total remaining contract value over a billion dollars for the first time ever."
Jim Rogers, CFO
Strategic Positioning
1. Data Licensing as a Core Growth Engine
Tempest is shifting from a pure diagnostics company to a data-centric platform, with large-scale data and modeling contracts now a core revenue pillar. The $200 million AstraZeneca-Pathos deal exemplifies how Tempest’s multi-modal dataset—spanning over 300 petabytes and 40 million patients—can be leveraged to build AI foundation models for oncology drug discovery and diagnostics. Importantly, the agreement is non-exclusive, enabling Tempest to replicate this model with other pharma partners, compounding future upside.
2. Hereditary Testing Reinvigoration
The Ambry acquisition is delivering above-plan results, disproving market concerns about hereditary testing saturation. Management sees a long runway for growth as genetic risk screening expands into broader populations and additional disease categories. This segment’s volume growth, outpacing guidance, suggests untapped demand and the potential for cross-selling with Tempest’s oncology and MRD (minimal residual disease) offerings.
3. AI-Driven Product Differentiation
Tempest’s investment in AI and data infrastructure is creating a moat in diagnostics, as sequencing becomes commoditized and insight generation becomes the key differentiator. The foundation model project aims to unlock new biomarkers and stratification tools, directly enhancing the clinical value of Tempest’s MRD and therapy selection assays. Management is clear that AI-driven insights will define the next era of personalized medicine.
4. Capital Discipline and Investment Prioritization
Despite rapid growth, Tempest is on track for EBITDA breakeven, balancing profitability with continued investment in core areas: MRD platform expansion, data connectivity, and AI compute capacity. Management is explicit about reinvesting gross profit into high-ROI opportunities, especially those that reinforce the company’s leadership in precision diagnostics and data-driven pharma partnerships.
5. Connectivity and Ecosystem Expansion
The DeepSix acquisition extends Tempest’s provider network, adding over 4,000 clinical connections and enhancing the bidirectional flow of clinical and molecular data. This ecosystem approach strengthens Tempest’s data asset and its value proposition to both providers and pharma, supporting the flywheel of data accumulation and insight generation.
Key Considerations
Tempest’s Q1 marks a strategic inflection, as the company pivots to a dual-engine model of clinical testing and high-value data partnerships. Execution across both legacy and new business lines is accelerating, but the durability of these trends merits scrutiny.
Key Considerations:
- Data Platform Leverage: The non-exclusive nature of the AstraZeneca-Pathos deal positions Tempest to multiply similar partnerships, but commercializing multi-party foundation models at scale remains unproven in healthcare.
- Hereditary Testing Growth: Sustaining above-market growth in hereditary testing will require continued innovation and expansion into new indications.
- MRD Commercialization: MRD volumes are being intentionally metered due to lack of reimbursement, creating pent-up demand but also near-term revenue constraints.
- Revenue Visibility vs. Biotech Volatility: While large pharma contracts anchor data revenue, biotech funding softness may limit upside from smaller accounts.
- Investment Discipline: Management’s commitment to reinvest in AI and data infrastructure must be balanced against the risk of overextension as the company nears profitability.
Risks
Key risks include the potential for delayed or canceled data contracts in a volatile macro and biotech funding environment, as well as execution risk in scaling multi-party foundation model deals. MRD revenue remains gated by reimbursement timelines, while rapid growth in hereditary and genomics testing could face competitive pricing or regulatory headwinds. Investors should monitor the pace of contract conversion and the durability of high growth rates as the business scales.
Forward Outlook
For Q2 2025, Tempest guided to:
- Continued robust revenue growth, anchored by contracted data and hereditary testing momentum
- Ongoing gross profit leverage and narrowing adjusted EBITDA loss
For full-year 2025, management raised guidance:
- Revenue of $1.25 billion, up from prior guidance
Management emphasized several drivers:
- Visibility from over $1 billion in remaining contracted data and modeling value
- Potential upside from new pharma partnerships and sustained hereditary testing strength
Takeaways
Tempest’s Q1 demonstrates a successful transition from diagnostics to a data-first, platform business, with both revenue and contract value inflecting sharply higher.
- Data Licensing as a Growth Catalyst: The AstraZeneca-Pathos deal validates Tempest’s unique data asset and creates a blueprint for additional multi-year, high-value partnerships.
- Hereditary and Genomics Strength: Outperformance in legacy and acquired testing segments signals market share gains and growing demand for comprehensive risk assessment.
- Eyes on AI Monetization: Investors should watch the ramp of foundation model projects, reimbursement progress in MRD, and the pace of new data contracts as key forward levers.
Conclusion
Tempest’s Q1 results reflect a company at the intersection of diagnostics and data, with accelerating revenue, expanding contract value, and clear progress toward profitability. The company’s strategic bets on AI, data licensing, and platform connectivity position it as a pivotal player in the future of precision medicine, though execution and external funding dynamics remain watchpoints.
Industry Read-Through
Tempest’s foundation model partnership with AstraZeneca and Pathos signals that large-scale, multi-modal data assets are emerging as critical infrastructure in biopharma R&D and next-generation diagnostics. As sequencing and molecular testing commoditize, value is shifting to integrated data and AI-driven insights. Competitors in genomics, diagnostics, and data services will need to articulate data monetization strategies and invest in scalable data infrastructure. Pharma’s willingness to sign multi-year, nine-figure data deals suggests a new era of collaboration and competition for access to differentiated clinical-genomic datasets, with implications for CROs, digital health, and AI-first biotech platforms.