Tempest (TEM) Q2 2025: Genomics Revenue Soars 115% as Oncology Volumes Accelerate
Tempest’s Q2 marked a decisive inflection in core genomics, with oncology and hereditary testing volumes both surging well above expectations, and the data business compounding scale with a major foundation model deal. Management’s focus on disciplined investment delivered rapid operating leverage, leaving the company poised for adjusted EBITDA break-even as it enters the back half of 2025. With strong contract visibility, robust pharma demand for AI-driven data, and new reimbursement catalysts on the horizon, Tempest’s multi-pronged model is positioned for sustained growth and margin expansion into 2026.
Summary
- Genomics Volume Outperformance: Oncology and hereditary testing volumes surged, driven by market share gains and sector tailwinds.
- Data Platform Leverage: Foundation model partnerships and robust bookings highlight the data unit’s strategic moat and expanding relevance.
- Disciplined Growth Trajectory: Operating leverage and reinvestment discipline set the stage for long-term profitability and durable expansion.
Performance Analysis
Tempest delivered a step-change in growth across both major business lines, with genomics revenue up sharply and data services outpacing targeted growth rates. Oncology testing volumes jumped 26%—a marked acceleration from the prior quarter’s 20%—while hereditary testing volumes rose 32%, reflecting both internal execution and external market contraction among legacy competitors. The hereditary segment, notably through Ambry, captured share as other players retrenched, and rare/pediatric genetics, though small, posted rapid growth.
The data and services unit, anchored by Insights (data licensing), grew nearly 41%, buoyed by the AstraZeneca-Pathos foundation model deal and a strong pipeline of pharma partnerships. Gross profit surged on scaling volumes and product mix, with adjusted EBITDA loss narrowing significantly as Tempest neared break-even. The company’s convertible notes issuance improved balance sheet flexibility and reduced interest expense, supporting further investment in AI and diagnostics innovation.
- Oncology and Hereditary Testing Drive Core Growth: Broad-based volume gains reflect both execution and favorable market shifts.
- Data Business Scales with Pharma Demand: Large foundation model contracts and robust bookings underpin future visibility.
- Operating Leverage Materializes: Margin expansion and disciplined cost structure move Tempest toward sustainable profitability.
Tempest’s multi-engine model—sequencing diagnostics and data—demonstrated resilience and momentum, with diversified revenue streams and expanding strategic optionality.
Executive Commentary
"We saw significant sequential volume growth across our entire oncology testing compendium. It was widespread. It wasn't just solid or liquid. It was really across the board. It was notable. You know, for us, it's a function of a lot of the things we had put in place in terms of Salesforce efficiency, realigning some of the territories, improvements we had made across our technology stack. And we just saw a bunch of those efforts kind of pay off in Q2."
Eric Lepkovsky, Founder and Chief Executive Officer
"We are making significant investments both on the genomics business, data, and on the AI side. And so we think the level of investment that we're making today is appropriate. We wouldn't accelerate it, obviously, seeing the leverage that we're getting out of the business. But we're certainly not starving the business to kind of show this improvement."
Ben Rodgers, Chief Financial Officer
Strategic Positioning
1. Oncology and Hereditary Sequencing Scale with Market Tailwinds
Tempest’s core genomics business is capturing both organic volume growth and market share, as legacy competitors in hereditary testing retrench and overall demand for risk-based screening expands. The Ambry platform, now recognized as a gold standard, is benefiting from years of investment in turnaround times, analytics, and rare disease capabilities. Management expects the hereditary market to remain underpenetrated, with volumes likely to surpass those in cancer sequencing over time.
2. Data and AI: Foundation Model Partnerships Create Moat
The data business, led by Insights, is now a strategic differentiator, with the AstraZeneca-Pathos foundation model deal driving bookings and contract value. Tempest’s unique repository of over 350 petabytes of clinical molecular data positions it as a partner of choice for pharma seeking to leverage AI for drug development and precision medicine. Management sees minimal competitive threat in data and AI, as most losses are due to customer budget decisions rather than rival offerings.
3. Operating Leverage and Investment Discipline
Tempest is achieving rare operating leverage at scale, with gross profit margins expanding as volumes and product mix improve. The company balances aggressive investment in genomics, data, and AI with a disciplined approach to cost, prioritizing sustainable growth over short-term optimization. This discipline is central to Tempest’s ability to approach adjusted EBITDA break-even while still investing in future growth engines.
4. Pipeline Optionality and Strategic M&A
Tempest remains opportunistic but disciplined in M&A, focusing on synergistic assets that fill strategic gaps without derailing organic momentum. The company’s broad diagnostic portfolio and deep data assets reduce the need for transformative deals, but management is monitoring the evolving landscape for selective tuck-in opportunities.
Key Considerations
This quarter’s results underscore Tempest’s ability to execute on multiple fronts, leveraging both structural market shifts and internal operational improvements. The company’s dual-engine model—sequencing diagnostics and data—provides diversified growth and resilience, with multiple future catalysts in the pipeline.
Key Considerations:
- Volume and Share Gains in Core Genomics: Execution on salesforce realignment and technology upgrades drove broad-based growth, especially as legacy competitors exited or lost focus.
- Data Business Visibility and Moat: The AstraZeneca-Pathos deal and robust bookings pipeline highlight Tempest’s unique data assets and deep pharma relationships.
- Reimbursement as a Future Catalyst: Key products like MRD (minimal residual disease) and treatment response monitoring are poised for significant growth once payer reimbursement is secured.
- Balanced Capital Allocation: Recent convertible notes issuance strengthens the balance sheet, enabling continued investment in AI, diagnostics, and select M&A without sacrificing profitability goals.
Risks
Tempest’s outlook is subject to reimbursement timing for new assays, especially in MRD and monitoring, as well as broader macro risks tied to pharma R&D budgets and regulatory shifts in AI/algorithm reimbursement. While management reports limited competitive threat in data, the rapid evolution of AI in healthcare could attract new entrants or shift customer priorities. Execution risk remains in sustaining high growth rates as the business scales, particularly given the law of large numbers and the need for ongoing investment discipline.
Forward Outlook
For Q3 2025, Tempest guided to:
- Continued sequential volume growth in oncology and hereditary testing
- Stable to slightly improving ASPs as XT-CDX mix increases
For full-year 2025, management raised revenue guidance and maintained adjusted EBITDA targets:
- Revenue: $1.26 billion
- Adjusted EBITDA: $5 million (approaching break-even, $110 million YoY improvement)
Management highlighted several factors that will shape the next quarters:
- Visibility from large data contracts and foundation model partnerships underpins growth in the data unit
- Reimbursement decisions for MRD and AI-based algorithms will determine the pace of new product scaling
Takeaways
Tempest’s Q2 results confirm the company’s strategic positioning as both a genomics and data leader, with strong execution, disciplined investment, and expanding optionality across business lines.
- Genomics and Data Synergy: Both units are performing above expectations, with cross-pollination between diagnostics and data driving network effects and customer stickiness.
- Margin and Leverage Inflection: Rapid improvement in adjusted EBITDA signals a sustainable path to profitability, even as Tempest continues to invest for long-term growth.
- Watch for Reimbursement and AI Adoption: The timing of payer decisions and pharma adoption of AI-driven models will determine the next phase of growth and margin expansion.
Conclusion
Tempest enters the second half of 2025 with strong momentum, a de-risked balance sheet, and clear visibility into future growth levers. The company’s combination of genomics scale, data platform differentiation, and disciplined execution positions it well to capitalize on both near-term and long-term opportunities as reimbursement, AI, and market expansion converge.
Industry Read-Through
Tempest’s results signal accelerating consolidation and competitive shakeout in the genomics testing market, with share migrating to platforms that combine best-in-class diagnostics, data, and AI capabilities. The rapid adoption of foundation models for pharma R&D points to a secular shift in how drugmakers leverage real-world molecular data, suggesting that data-rich diagnostics firms will increasingly become strategic partners rather than commodity vendors. Reimbursement hurdles for AI and new assays remain an industry-wide gating factor, but the operational leverage and diversified growth model Tempest demonstrates may become the new standard for scaled precision medicine players.