Tempus AI Inc
For the period ended Sep 30, 2024. Filed Nov 4, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 4, 2024
TEM$76.05+8.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0001193125-24-194869
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-04.
0000950170-24-120677
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 136 previous paragraphs and 147 current paragraphs.
90 unchanged; 41 reworded; 12 added; 4 removed; 1 previous and 4 current paragraphs rearranged.
Tables are not compared: 28 previous and 23 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
Current report
Acquisition of Ambry Genetics Corporation
Current report
On November 4, 2024, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with REALM IDx, Inc., a Delaware corporation (“Seller”), and Seller’s ultimate parent, Konica Minolta, Inc., a Japanese corporation, pursuant to which we agreed to purchase all of the outstanding shares of capital stock of Ambry Genetics Corporation, a Delaware corporation (“Ambry”), a leader in genetic testing that aims to improve health by understanding the relationship between genetics and disease (the “Acquisition”). Pursuant to the terms of the Purchase Agreement, consideration for the Acquisition consists of $375.0 million in cash, subject to adjustment for cash, unpaid indebtedness, unpaid transaction expenses and net working capital of Ambry (the “Cash Consideration”), plus the issuance of an aggregate of 4,843,136 shares of the our Class A common stock (the “Stock Consideration”), 2,152,505 of which shares will be subject to a lock-up for a period of one year following the closing date of the Acquisition. In addition, $5.0 million of the Cash Consideration will be held in an escrow account for purposes of satisfying any post-closing purchase price adjustments. The Acquisition is expected to close in the first quarter of 2025, subject to the satisfaction of closing conditions contained in the Purchase Agreement, including receipt of all required regulatory approvals.
Current report
In connection with the Purchase Agreement, we entered into a debt commitment letter, dated November 4, 2024 (the “Commitment Letter”), with Ares, pursuant to which Ares has committed to provide (i) a $100 million senior secured revolving credit facility (the “Revolving Credit Facility”) and (ii) additional term loans in an aggregate principal amount of $200.0 million (the “Additional Term Loan”). We expect to utilize borrowings under the Additional Term Loan and the Revolving Credit Facility to fund the Cash Consideration for the Acquisition and to pay fees and expenses related thereto. Ares’ obligation to provide the contemplated financings is subject to a number of customary conditions contained in the Commitment Letter, including the execution of definitive documentation contemplated by the Commitment Letter and the closing of the Acquisition substantially simultaneously with the initial borrowings under the Additional Term Loan and Revolving Credit Facility.
Current report
The increase in Cost of revenues for the three months ended September 30, 2024, compared to the same period in 2023, was primarily due to $2.0 million of stock-based compensation expenses related to RSUs for which the performance-based vesting condition was satisfied in connection with our IPO, and increases of $8.9 million in material and service costs.
Current report
Comparison of the Nine Months Ended September 30, 2024 and 2023
Current report
The increase in Cost of revenues for the nine months ended September 30, 2024, compared to the same period in 2023, was primarily due to $20.5 million of stock-based compensation expense related to RSUs for which the performance-based vesting condition was satisfied in connection with our IPO, an increase of $16.4 million in material and service costs, $6.6 million in personnel costs, and $3.7 million in cloud expenses.
Current report
The increase in Interest income for the nine months ended September 30, 2024, compared to the same period in 2023, increased primarily due to higher cash on hand as of September 30, 2024 compared to September 30, 2023.
Current report
does not reflect interest income which increases cash available to us;
Current report
excludes depreciation and amortization expense, and although these are non-cash expenses, the asset being depreciated may have to be replaced in the future, increasing our cash requirements;
Current report
does not reflect provision for or benefit from income taxes that reduces cash available to us; and
Current report
excludes change in fair value of warrant liabilities, contingent consideration and warrant asset.
Removed paragraphs (4)
Previous report
The increase in Cost of revenues for the three months ended June 30, 2024, compared to the same period in 2023, was primarily due to $18.5 million of stock-based compensation expenses related to RSUs for which the performance-based vesting condition was satisfied in connection with our IPO, and increases of $4.5 million in material and service costs, $1.7 million in personnel costs, and $1.4 million in cloud expenses.
Previous report
Comparison of the Six months Ended June 30, 2024 and 2023
Previous report
The increase in Cost of revenues for the six months ended June 30, 2024, compared to the same period in 2023, was primarily due to $18.5 million of stock-based compensation expense related to RSUs for which the performance-based vesting condition was satisfied in connection with our IPO, an increase of $6.9 million in material and service costs, $7.0 million in personnel costs, and $3.1 million in cloud expenses.
Previous report
The decrease in Interest income for the six months ended June 30, 2024, compared to the same period in 2023, was primarily due to the interest rate decreases by the U.S. Federal Reserve.
Reworded paragraphs (41)
Previous wording
We primarily operate in the United States and generated total revenue of $166.0 and $132.4 million in the three months ended June 30, 2024 and 2023, respectively, and $311.8 million and $248.0 million in the six months ended June 30, 2024 and 2023, respectively. We also incurred net losses of $552.2 and $55.8 million in the three months ended June 30, 2024 and 2023, respectively, and net losses of $617.0 million and $110.2 million in the six months ended June 30, 2024 and 2023, respectively. We generated adjusted EBITDA of $(31.2) million and $(37.0) million, in the three months ended June 30, 2024 and 2023, respectively, and $(75.1) million and $(82.9) million in the six months ended June 30, 2024 and 2023, respectively. Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation of adjusted EBITDA to net loss, the most directly comparable financial measure stated in accordance with generally accepted accounting principles in the United States of America, or GAAP, and for additional information about adjusted EBITDA, a non-GAAP financial measure, see the section titled “Non-GAAP Financial Measure” below.
Current wording
We primarily operate in the United States and generated total revenue of $180.9 and $136.1 million in the three months ended September 30, 2024 and 2023, respectively, and $492.7 million and $384.1 million in the nine months ended September 30, 2024 and 2023, respectively. We also incurred net losses of $75.8 and $53.4 million in the three months ended September 30, 2024 and 2023, respectively, and net losses of $692.8 million and $163.6 million in the nine months ended September 30, 2024 and 2023, respectively. We generated adjusted EBITDA of $(21.8) million and $(36.2) million, in the three months ended September 30, 2024 and 2023, respectively, and $(97.0) million and $(119.1) million in the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
The restricted stock units (“RSUs”) granted to employees are subject to two vesting conditions. The first is a time-based component. The second vesting condition is the occurrence of a liquidity event. The liquidity event condition related to these awards was satisfied upon the effectiveness of the IPO. Upon effectiveness of the IPO, we recognized $488.3 million of stock-based compensation expense during the three months ended June 30, 2024. To meet the related tax withholding requirements, we withheld 1,911,316 shares of the 4,563,164 shares of Class A common stock issued. Based on the IPO public offering price of $37.00 per share, the tax withholding obligation was $70.8 million.
Current wording
The restricted stock units, or RSUs, granted to employees are subject to two vesting conditions. The first is a time-based component. The second vesting condition is the occurrence of a liquidity event. The liquidity event condition related to these awards was satisfied upon the effectiveness of the IPO. Upon effectiveness of the IPO, we recognized $488.3 million of stock-based compensation expense during the three months ended June 30, 2024. To meet the related tax withholding requirements, we withheld 1,911,316 shares of the 4,563,164 shares of Class A common stock issued. Based on the IPO public offering price of $37.00 per share, the tax withholding obligation was $70.8 million.
Previous wording
We expect to maintain high levels of investment in product innovation over the coming years as we continue to develop new laboratory assays, develop algorithms, and expand our Platform into new disease areas. These investments will include laboratory costs incurred in validating new or improving current assays, licensing of data sets to accelerate our efforts in new diseases, and development and validation costs for new Algos products. We invested $68.1 and $22.2 million during the three months ended June 30, 2024 and 2023, respectively, and $92.4 million and $43.0 million during the six months ended June 30, 2024 and 2023, respectively, in research and development. Our ability to develop new products, obtain regulatory approvals when required, launch them into the market, and drive adoption of these products by our customers will continue to play a key role in our results.
Current wording
We expect to maintain high levels of investment in product innovation over the coming years as we continue to develop new laboratory assays, develop algorithms, and expand our Platform into new disease areas. These investments will include laboratory costs incurred in validating new or improving current assays, licensing of data sets to accelerate our efforts in new diseases, and development and validation costs for new Algos products. We invested $27.3 and $23.2 million during the three months ended September 30, 2024 and 2023, respectively, and $119.7 million and $66.3 million during the nine months ended September 30, 2024 and 2023, respectively, in research and development. Our ability to develop new products, obtain regulatory approvals when required, launch them into the market, and drive adoption of these products by our customers will continue to play a key role in our results.
Previous wording
Technology is at the core of everything we do. From receiving orders and ingesting data through our various provider integrations to delivering test results and access to our analytical platform, our Platform plays a key role in driving our business. We will continue to make significant investments in our Platform to continually improve our user experience and allow us to generate, ingest and structure data more efficiently as we expand our offerings. We invested $77.9 million and $23.4 million during the three months ended June 30, 2024 and 2023, respectively, and $105.0 million and $46.3 million during the six months ended June 30, 2024 and 2023, respectively, in technology. We expect to maintain high levels of investment in our technology over the coming years as we continue to develop new features to support our current and future business needs. Our ability to execute on the development of such technology will continue to play a key factor in our results.
Current wording
Technology is at the core of everything we do. From receiving orders and ingesting data through our various provider integrations to delivering test results and access to our analytical platform, our Platform plays a key role in driving our business. We will continue to make significant investments in our Platform to continually improve our user experience and allow us to generate, ingest and structure data more efficiently as we expand our offerings. We invested $30.7 million and $24.2 million during the three months ended September 30, 2024 and 2023, respectively, and $135.7 million and $70.5 million during the nine months ended September 30, 2024 and 2023, respectively, in technology. We expect to maintain high levels of investment in our technology over the coming years as we continue to develop new features to support our current and future business needs. Our ability to execute on the development of such technology will continue to play a key factor in our results.
Previous wording
Interest expense consists primarily of interest from our Amended Note and Term Loan Facility (each as defined in “Liquidity and Capital Resources” below), and finance leases. Interest expense related to our convertible debt will continue, but should decrease over time as the principal amount decreases.
Current wording
Interest expense consists primarily of interest from our Amended Note and Term Loan Facility (each as defined in “—Liquidity and Capital Resources”), and finance leases. Interest expense related to our convertible debt will continue, but should decrease over time as the principal amount decreases.
Previous wording
Other (expense) income, net consists of foreign currency exchange gains and losses, gains and losses on marketable equity securities, and any changes in fair value related to our warrant assets and liabilities. Foreign currency exchange gains and losses relate to transactions and asset and liability balances denominated in currencies other than the U.S. dollar. We expect our foreign currency gains and losses to continue to fluctuate in the future due to changes in foreign currency exchange rates. We hold shares of common stock of Recursion recorded within marketable equity securities. These shares are marked to market each reporting period. We issued a warrant to our customer AstraZeneca in conjunction with the signing of the MSA in November 2021. We have a warrant asset related to a November 2023 Commercialization and Reference Laboratory Agreement with Personalis, Inc. The fair value of the warrant assets and liabilities are measured each reporting period.
Current wording
Other (expense) income, net consists of foreign currency exchange gains and losses, gains and losses on marketable equity securities, income from the IP License Agreement (as defined below) with SB Tempus Corp., or SB Tempus, and any changes in fair value related to our warrant assets and liabilities. Foreign currency exchange gains and losses relate to transactions and asset and liability balances denominated in currencies other than the U.S. dollar. We expect our foreign currency gains and losses to continue to fluctuate in the future due to changes in foreign currency exchange rates. We hold shares of common stock of Recursion and Personalis, Inc., or Personalis, which are recorded within marketable equity securities. These shares are marked to market each reporting period. We issued a warrant to our customer AstraZeneca in conjunction with the signing of the MSA in November 2021. We have a warrant asset related to a November 2023 Commercialization and Reference Laboratory Agreement with Personalis, which was exercised in August 2024. The fair value of the warrant assets and liabilities are measured each reporting period.
Previous wording
Losses from equity method investments consist of earnings from our joint venture entered during the third quarter of 2020.
Current wording
Losses from equity method investments consist of earnings from our joint ventures.
Previous wording
The following table sets forth the significant components of our results of operations for the periods presented.
Current wording
The following table sets forth the significant components of our results of operations for the periods presented (in thousands).
Previous wording
The increase in genomics revenue for the three months ended June 30, 2024, compared to the same period in 2023, was primarily due to an increase in the number of oncology NGS tests, which increased from approximately 55,300 tests for the three months ended June 30, 2023 to approximately 66,500 tests for the three months ended June 30, 2024. Also contributing to the increase was the release of $1.2 million for the three months ended June 30, 2024 on a revenue reserve recorded for risks of future reversal of consideration associated with certain government payers, as the risk period the reserve covered has begun to lapse, as compared to an increase of $2.4 million on the same reserve for the three months ended June 30, 2023.
Current wording
The increase in Genomics revenue for the three months ended September 30, 2024, compared to the same period in 2023, was primarily due to an increase in the number of oncology NGS tests, which increased from approximately 55,700 tests for the three months ended September 30, 2023 to approximately 69,000 tests for the three months ended September 30, 2024. Also contributing to the increase was the release of $1.2 million for the three months ended September 30, 2024 on a revenue reserve recorded for risks of future reversal of consideration associated with certain government payers, as the risk period the reserve covered has begun to lapse, as compared to an increase of $2.6 million on the same reserve for the three months ended September 30, 2023.
Previous wording
The increase in Data and services revenue for the three months ended June 30, 2024, compared to the same period in 2023, was driven primarily by $11.6 million from increased demand for our Insights products. Across all Data and services products, the increase in revenue in the three months ended June 30, 2024 is primarily attributable to continued growth from within our existing customer base, as well as adoption of our services by new customers that did not purchase services in the three months ended June 30, 2023.
Current wording
The increase in Data and services revenue for the three months ended September 30, 2024, compared to the same period in 2023, was driven primarily by $23.3 million from increased demand for our Insights products. Across all Data and services products, the increase in revenue in the three months ended September 30, 2024 is primarily attributable to continued growth from within our existing customer base, as well as adoption of our services by new customers that did not purchase services in the three months ended September 30, 2023.
Previous wording
The increase in Cost of revenues, Genomics for the three months ended June 30, 2024, compared to the same period in 2023, was primarily due to $11.3 million of stock-based compensation expense related to RSUs for which the performance-based vesting condition was satisfied in connection with our IPO, and increases of $4.5 million in material and service costs, an increase of $2.4 million in personnel costs, and an increase of $0.5 million in cloud expenses.
Current wording
The increase in Cost of revenues, Genomics for the three months ended September 30, 2024, compared to the same period in 2023, was primarily due to $1.1 million of stock-based compensation expense related to RSUs for which the performance-based vesting condition was satisfied in connection with our IPO, and increases of $8.9 million in material and service costs.
Previous wording
The increase in Technology research and development expenses for the three months ended June 30, 2024, compared to the same period in 2023, was primarily due to $50.4 million of stock-based compensation expense related to RSUs for which the performance-based vesting condition was satisfied in connection with our IPO, $1.2 million in taxes related to the settlement of RSUs, and an increase of $2.8 million in personnel-related costs associated with the investment in our cloud infrastructure and new lines of business.
Current wording
The increase in Technology research and development expenses for the three months ended September 30, 2024, compared to the same period in 2023, was primarily due to $3.9 million of stock-based compensation expense related to RSUs for which the performance-based vesting condition was satisfied in connection with our IPO, and an increase of $2.4 million in personnel-related costs associated with the investment in our cloud infrastructure and new lines of business.
Previous wording
The increase in Research and development expenses for the three months ended June 30, 2024, compared to the same period in 2023, was primarily due to $42.2 million of stock-based compensation expense related to RSUs for which the performance-based vesting condition was satisfied in connection with our IPO, an increase of $0.7 million in validation and regulatory fees, and an increase of $1.5 million in personnel-related costs for employees in our research and development group.
Current wording
The increase in Research and development expenses for the three months ended September 30, 2024, compared to the same period in 2023, was primarily due to $2.6 million of stock-based compensation expense related to RSUs for which the performance-based vesting condition was satisfied in connection with our IPO, and an increase of $1.4 million in personnel-related costs for employees in our research and development group.
Previous wording
The increase in Selling, general and administrative expenses for the three months ended June 30, 2024, compared to the same period in 2023, was primarily due to $377.1 million of stock-based compensation expense related to RSUs for which the performance-based vesting condition was satisfied in connection with our IPO, $2.6 million in taxes related to the settlement of RSUs, and increases of $4.6 million in personnel-related costs, $1.2 million in software and tools costs, and $0.9 million in cloud storage costs.
Current wording
The increase in Selling, general and administrative expenses for the three months ended September 30, 2024, compared to the same period in 2023, was primarily due to $12.6 million of stock-based compensation expense related to RSUs for which the performance-based vesting condition was satisfied in connection with our IPO, increases of $7.9 million in personnel-related costs and $3.0 million in software and tools costs.
Previous wording
The decrease in Interest income for the three months ended June 30, 2024, compared to the same period in 2023, was not material.
Current wording
The increase in Interest income for the three months ended September 30, 2024, compared to the same period in 2023, was primarily due to higher cash on hand as of September 30, 2024 as compared to September 30, 2023.
Previous wording
The change in Other (expense) income, net for the three months ended June 30, 2024, compared to the same period in 2023, was primarily driven by $3.7 million in expense related to unrealized losses on marketable equity securities, $3.0 million in expense related to the change in fair value of our warrant asset, and a $2.3 million expense for payments to holders of Series G-4 Preferred in an amount equal to 5% of the per share price for each share of Series G-4 preferred stock purchased by such holder, or the Series G-4 Special Payment. These increases in expense were offset by a $2.4 million increase in income related to the change in fair value of our warrant liability.
Current wording
The change in Other (expense) income, net for the three months ended September 30, 2024, compared to the same period in 2023, was primarily driven by a $45.6 million increase in expense related to the change in fair value of our warrant liability, offset by a $2.6 million increase in income related to unrealized gains on marketable equity securities, a $26.0 million increase in income due to gains related to the change in fair value of our warrant asset, and $4.0 in income from the Intellectual Property Agreement, or the IP License Agreement, with SB Tempus.
Previous wording
The increase in provision for income taxes for the three months ended June 30, 2024, compared to the same period in 2023, was not material.
Current wording
The decrease in provision for income taxes for the three months ended September 30, 2024, compared to the same period in 2023, was not material.
Previous wording
The decrease in losses from equity method investments for the three months ended June 30, 2024, compared to the same period in 2023, was due to the exhaustion of our investment in the joint venture we entered into in September 2020.
Current wording
The increase in losses from equity method investments for the three months ended September 30, 2024, compared to the same period in 2023, was due to the losses from the joint venture we entered into in July 2024 (see Note 7 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q).
Previous wording
The increase in revenue for the six months ended June 30, 2024, compared to the same period in 2023, was due to increased volume and reimbursement of clinical oncology tests performed in Genomics and increased data deliveries in our Data and Services product line.
Current wording
The increase in revenue for the nine months ended September 30, 2024, compared to the same period in 2023, was due to increased volume and reimbursement of clinical oncology tests performed in Genomics and increased data deliveries in our Data and Services product line.
Previous wording
The increase in genomics revenue for the six months ended June 30, 2024, compared to the same period in 2023, was primarily due to an increase in the number of oncology NGS tests, which increased from approximately 103,700 tests for the six months ended June 30, 2023 to approximately 129,200 tests for the six months ended June 30, 2024. Also contributing to the increase was the release of $1.2 million for the six months ended June 30, 2024 on a revenue reserve recorded for risks of future reversal of consideration associated with certain government payers, as the risk period the reserve covered has begun to lapse, as compared to an increase of $4.5 million on the same reserve for the six months ended June 30, 2023.
Current wording
The increase in Genomics revenue for the nine months ended September 30, 2024, compared to the same period in 2023, was primarily due to an increase in the number of oncology NGS tests, which increased from approximately 159,400 tests for the nine months ended September 30, 2023 to approximately 198,200 tests for the nine months ended September 30, 2024. Also contributing to the increase was the release of $2.4 million for the nine months ended September 30, 2024 on a revenue reserve recorded for risks of future reversal of consideration associated with certain government payers, as the risk period the reserve covered has begun to lapse, as compared to an increase of $7.1 million on the same reserve for the nine months ended September 30, 2023.
Previous wording
The increase in Data and services revenue for the six months ended June 30, 2024, compared to the same period in 2023, was driven primarily by $20.1 million from increased demand for our Insights products. Across all Data and services products, the increase in revenue in the six months ended June 30, 2024 is primarily attributable to continued growth from within our existing customer base, as well as adoption of our services by new customers that did not purchase services in the six months ended June 30, 2023.
Current wording
The increase in Data and services revenue for the nine months ended September 30, 2024, compared to the same period in 2023, was driven primarily by $43.4 million from increased demand for our Insights products. Across all Data and services products, the increase in revenue in the nine months ended September 30, 2024 is primarily attributable to continued growth from within our existing customer base, as well as adoption of our services by new customers that did not purchase services in the nine months ended September 30, 2023.
Previous wording
The increase in Cost of revenues, Genomics for the six months ended June 30, 2024, compared to the same period in 2023, was primarily due to $11.3 million of stock-based compensation expense related to RSUs for which the performance-based vesting condition was satisfied in connection with our IPO, an increase of $6.9 million in material and service costs, $6.2 million in personnel costs and $1.0 million in cloud expenses.
Current wording
The increase in Cost of revenues, Genomics for the nine months ended September 30, 2024, compared to the same period in 2023, was primarily due to $12.4 million of stock-based compensation expense related to RSUs for which the performance-based vesting condition was satisfied in connection with our IPO, an increase of $16.4 million in material and service costs, $6.9 million in personnel costs and $1.5 million in cloud expenses.
Previous wording
The increase in Cost of revenues, Data and services for the three months ended June 30, 2024, compared to the same period in 2023, was primarily due to $7.2 million of stock-based compensation expense related to RSUs for which the performance-based vesting condition was satisfied in connection with our IPO, as well as an increase of $0.9 million in cloud expenses.
Current wording
The increase in Cost of revenues, Data and services for the nine months ended September 30, 2024, compared to the same period in 2023, was primarily due to $8.1 million of stock-based compensation expense related to RSUs for which the performance-based vesting condition was satisfied in connection with our IPO, as well as an increase of $2.2 million in cloud expenses.
Previous wording
The increase in Technology research and development expenses for the six months ended June 30, 2024, compared to the same period in 2023, was primarily due to $50.4 million of stock-based compensation expenses related to RSUs for which the performance-based vesting condition was satisfied in connection with our IPO, $1.2 million in taxes related to the settlement of RSUs, and an increase of $7.0 million in personnel-related costs associated with the investment in our cloud infrastructure and new lines of business.
Current wording
The increase in Technology research and development expenses for the nine months ended September 30, 2024, compared to the same period in 2023, was primarily due to $54.4 million of stock-based compensation expenses related to RSUs for which the performance-based vesting condition was satisfied in connection with our IPO, $1.4 million in taxes related to the settlement of RSUs, and an increase of $9.4 million in personnel-related costs associated with the investment in our cloud infrastructure and new lines of business.
Previous wording
The increase in Research and development expenses for the six months ended June 30, 2024, compared to the same period in 2023, was primarily due to $42.2 million of stock-based compensation expenses related to RSUs for which the performance-based vesting condition was satisfied in connection with our IPO, and increases of $1.6 million in validation and regulatory fees and $3.9 million in personnel-related costs for employees in our research and development group.
Current wording
The increase in Research and development expenses for the nine months ended September 30, 2024, compared to the same period in 2023, was primarily due to $44.8 million of stock-based compensation expenses related to RSUs for which the performance-based vesting condition was satisfied in connection with our IPO, and increases of $2.2 million in validation and regulatory fees and $5.3 million in personnel-related costs for employees in our research and development group.
Previous wording
The increase in Selling, general and administrative expenses for the six months ended June 30, 2024, compared to the same period in 2023, was primarily due to $377.1 million of stock-based compensation expenses related to RSUs for which the performance-based vesting condition was satisfied in connection with our IPO, $2.6 million in taxes related to the settlement of RSUs, and increases of $7.2 million in personnel-related costs, $3.2 million in software and tools costs, and $4.4 million in cloud storage costs.
Current wording
The increase in Selling, general and administrative expenses for the nine months ended September 30, 2024, compared to the same period in 2023, was primarily due to $389.6 million of stock-based compensation expenses related to RSUs for which the performance-based vesting condition was satisfied in connection with our IPO, $3.4 million in taxes related to the settlement of RSUs, and increases of $17.1 million in personnel-related costs, $6.2 million in software and tools costs, and $3.9 million in cloud storage costs.
Previous wording
The increase in Interest expense for the six months ended June 30, 2024, compared to the same period in 2023, was primarily driven by compounding interest on our Amended Note and additional debt entered into under our Term Loan Facility in April and October 2023.
Current wording
The increase in Interest expense for the nine months ended September 30, 2024, compared to the same period in 2023, was primarily driven by compounding interest on our Amended Note and additional debt entered into under our Term Loan Facility in April and October 2023.
Previous wording
The change in Other (expense) income, net for the six months ended June 30, 2024, compared to the same period in 2023, was primarily driven by a $7.7 million expense related to change in fair value of our warrant asset, a $4.8 million increase in expense related to the change in fair value of our warrant liability, and a $2.3 million expense for the Series G-4 Special Payment. These increases in expense were offset by $2.5 million in income related to gains on marketable equity securities.
Current wording
The change in Other (expense) income, net for the nine months ended September 30, 2024, compared to the same period in 2023, was primarily driven by a $50.4 million increase in expense related to the change in fair value of our warrant liability and a $2.3 million expense for the G-4 Special Payment. The increase in expense was offset by $5.1 million in income related to gains on marketable equity securities, a $18.3 increase in income due to the change in fair value of our warrant asset, and $4.0 in income from the IP License Agreement with SB Tempus.
Previous wording
The increase in provision for income taxes for the six months ended June 30, 2024, compared to the same period in 2023, was not material.
Current wording
The increase in provision for income taxes for the nine months ended September 30, 2024, compared to the same period in 2023, was not material.
Previous wording
The decrease in losses from equity method investments for the six months ended June 30, 2024, compared to the same period in 2023, was due to the exhaustion of our investment in the joint venture we entered into in September 2020.
Current wording
The increase in losses from equity method investments for the nine months ended September 30, 2024, compared to the same period in 2023, was due to the losses from the joint venture we entered into in July 2024 (see Note 7 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q).
Previous wording
To supplement our condensed consolidated financial statements prepared and presented in accordance with accounting principles generally accepted in the United States of America, or GAAP, we use adjusted EBITDA, as described below, to facilitate analysis of our financial and business trends and for internal planning and forecasting purposes.
Current wording
To supplement our condensed consolidated financial statements prepared and presented in accordance with accounting principles generally accepted in the United States of America, or GAAP, we use adjusted EBITDA to facilitate analysis of our financial and business trends and for internal planning and forecasting purposes.
Previous wording
EBITDA is defined as earnings before interest, taxes, depreciation and amortization. We define adjusted EBITDA as net income (loss), adjusted to exclude (i) interest income, (ii) interest expense, (iii) depreciation and amortization, (iv) provision for (benefit from) income taxes, (v) losses on equity method investments, (vi) changes in fair value of our warrant liability, warrant asset, marketable equity securities, contingent consideration liabilities and indemnity-related holdback liabilities, (vii) stock-based compensation expense, (viii) employer payroll tax related to stock-based compensation expense, and (ix) the G-4 Special Payment. We use adjusted EBITDA in conjunction with net income or loss, its corresponding GAAP measure, as a performance measure to assess our operating performance and operating leverage in our business. The above items are excluded from our adjusted EBITDA measure because these items arenon-cash in nature, or because the amount and timing of these items is unpredictable, or they are not driven by core results of operations, thereby rendering comparisons with prior periods and competitors less meaningful. We believe adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations, as well as provides a useful measure forperiod-to-period comparisons of our business performance. Moreover, adjusted EBITDA is a key measurement used by our management internally to make operating decisions, including those related to analyzing operating expenses, evaluating performance, and performing strategic planning and annual budgeting.
Current wording
EBITDA is defined as earnings before interest, taxes, depreciation and amortization. We define adjusted EBITDA as net income (loss), adjusted to exclude (i) interest income, (ii) interest expense, (iii) depreciation and amortization, (iv) provision for (benefit from) income taxes, (v) losses on equity method investments, (vi) changes in fair value of our warrant liability, warrant asset, marketable equity securities, contingent consideration liabilities and indemnity-related holdback liabilities, (vii) stock-based compensation expense, (viii) employer payroll tax related to stock-based compensation expense, (ix) the G-4 Special Payment, and (x) amortization of deferred other income from our IP License Agreement with SB Tempus. We use adjusted EBITDA in conjunction with net income or loss, its corresponding GAAP measure, as a performance measure to assess our operating performance and operating leverage in our business. The above items are excluded from our adjusted EBITDA measure because these items are non-cash in nature, or because the amount and timing of these items is unpredictable, or they are not driven by core results of operations, thereby rendering comparisons with prior periods and competitors less meaningful. We believe adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations, as well as provides a useful measure for period-to-period comparisons of our business performance. Moreover, adjusted EBITDA is a key measurement used by our management internally to make operating decisions, including those related to analyzing operating expenses, evaluating performance, and performing strategic planning and annual budgeting.
Previous wording
Because of these limitations, we consider, and you should consider, adjusted EBITDA alongside other financial performance measures, including net loss and our other GAAP results. A reconciliation of our adjusted EBITDA to net loss, the most directly comparable financial measure stated in accordance with GAAP, is provided below. Investors are encouraged to review the related GAAP financial measures and the reconciliation of thenon-GAAP financial measure to their most directly comparable GAAP financial measure.
Current wording
Because of these limitations, we consider, and you should consider, adjusted EBITDA alongside other financial performance measures, including net loss and our other GAAP results. A reconciliation of our adjusted EBITDA to net loss, the most directly comparable financial measure stated in accordance with GAAP, is provided below. Investors are encouraged to review the related GAAP financial measures and the reconciliation of the non-GAAP financial measure to their most directly comparable GAAP financial measure.
Previous wording
We have funded our operations to date principally from the sale of stock, convertible debt, term debt, and sales of our products. As of June 30, 2024, we had cash, cash equivalents and restricted cash of $479.7 million. In April 2024, we sold an aggregate of 3,489,981 shares of our Series G-5 convertible preferred stock at a price per share of $57.3069, for an aggregate purchase price of approximately $200.0 million in a private placement to an accredited investor. In June 2024, we completed our IPO, which resulted in net proceeds of $382.0 million after deducting underwriting discounts and commissions of $28.7 million.
Current wording
We have funded our operations to date principally from the sale of stock, convertible debt, term debt, and sales of our products. As of September 30, 2024, we had cash, cash equivalents and restricted cash of $388.9 million. In April 2024, we sold an aggregate of 3,489,981 shares of our Series G-5 convertible preferred stock at a price per share of $57.3069, for an aggregate purchase price of approximately $200.0 million in a private placement to an accredited investor. In June 2024, we completed our IPO, which resulted in net proceeds of $382.0 million after deducting underwriting discounts and commissions of $28.7 million.
Previous wording
Cash used in operating activities during the six months ended June 30, 2024 was $198.5 million, which resulted from a net loss of $617.0 million and a net change in our operating assets and liabilities of $103.8 million, offset by non-cash charges of $522.3 million. Non-cash charges primarily consisted of $18.3 million of depreciation and amortization, $3.3 million of non-cash operating lease costs, a decrease in the fair value of the warrant asset of $7.7 million, and stock-based compensation of $488.3 million. The net change in our operating assets and liabilities was primarily the result of decreases in accounts payable and deferred revenue of $33.4 million and $28.7 million, respectively, and a $24.0 million increase in accounts receivable.
Current wording
Cash used in operating activities during the nine months ended September 30, 2024 was $149.8 million, which resulted from a net loss of $692.8 million and a net change in our operating assets and liabilities of $31.7 million, offset by non-cash charges of $574.7 million. Non-cash charges primarily consisted of $509.4 million of stock-based compensation, a $42.4 million increase in the fair value of the warrant liability, and $27.8 million of depreciation and amortization, offset by an increase in the fair value of the warrant asset of $18.3 million. The net change in our operating assets and liabilities was primarily the result of a $51.7 million increase in accounts receivable due to increased sales and timing of customer payments, a decrease in accounts payable of $24.8 million, and an increase in prepaid expenses and other current assets of $14.0 million, offset by a $43.9 million increase in deferred other income related to the IP License Agreement with SB Tempus, a $23.4 million increase in accrued expenses and other, primarily due to increased cloud spend and payroll taxes from RSU settlements, and an increase in interest payable of $11.2 million as we continue to accrue interest on our Amended Note.
Previous wording
Cash used in operating activities during the six months ended June 30, 2023 was $121.1 million, which resulted from a net loss of $110.2 million and a net change in our operating assets and liabilities of $38.5 million, offset by non-cash charges of $27.6 million. Non-cash charges primarily consisted of $16.2 million of depreciation and amortization, $3.4 million of non-cash operating lease costs, amortization of the warrant contract asset of $3.3 million, $7.4 million of impairment of intangible assets, and a decrease in the fair value of the warrant liability of $5.7 million. The net change in our operating assets and liabilities was primarily the result of a $6.9 million increase in accounts receivable, and a $20.0 million decrease in deferred revenue.
Current wording
Cash used in operating activities during the nine months ended September 30, 2023 was $174.1 million, which resulted from a net loss of $163.6 million and a net change in our operating assets and liabilities of $49.6 million, offset by non-cash charges of $39.2 million. Non-cash charges primarily consisted of $24.5 million of depreciation and amortization, $5.1 million of non-cash operating lease costs, amortization of the warrant contract asset of $5.0 million, $7.4 million of impairment of intangible assets, and a decrease in the fair value of the warrant liability of $8.0 million. The net change in our operating assets and liabilities was primarily the result of a $25.4 million increase in accounts receivable, and a $16.6 million decrease in deferred revenue.
Previous wording
Cash provided by investing activities during the six months ended June 30, 2024 was $9.0 million, which was the result of proceeds from the sale of marketable equity securities of $23.1 million, offset by purchases of property and equipment of $14.1 million.
Current wording
Cash used in investing activities during the nine months ended September 30, 2024 was $122.4 million, which was the result of the investment in the joint venture in July 2024 of $95.2 million, purchases of marketable equity securities of $36.2 million, and purchases of property and equipment of $14.2 million, offset by proceeds from the sale of marketable equity securities of $23.1 million.
Previous wording
Cash used in investing activities during the six months ended June 30, 2023 was $18.8 million, which was the result of purchases of property and equipment of $15.9 million, which related primarily to the expansion of our Chicago office for additional laboratory space.
Current wording
Cash used in investing activities during the nine months ended September 30, 2023 was $34.8 million, which was the result of purchases of property and equipment of $31.9 million, which related primarily to the expansion of our Chicago office for additional laboratory space.
Previous wording
Cash provided by financing activities during the six months ended June 30, 2024 was $502.6 million, which was the result of proceeds from the issuance of common stock in connection with our IPO, net of underwriting discounts and commissions of $382.0 million, and the issuance of Series G-5 Preferred Stock of $199.8 million, offset by $69.9 million of taxes paid related to the net settlement of a portion of the RSUs outstanding as of June 30, 2024 for which the service-based vesting condition was satisfied before June 14, 2024 and for which the performance-based vesting condition was satisfied in connection with the IPO, or the RSU Net Settlement.
Current wording
Cash provided by financing activities during the nine months ended September 30, 2024 was $494.5 million, which was the result of proceeds from the issuance of common stock in connection with our IPO, net of underwriting discounts and commissions of $382.0 million, and the issuance of Series G-5 Preferred Stock of $199.8 million, offset by $8.6 million of payments of deferred offering costs, $5.6 million of dividend payments, and $69.9 million of taxes paid related to the net settlement of a portion of the RSUs outstanding as of June 1, 2024 for which the service-based vesting condition was satisfied before June 14, 2024 and for which the performance-based vesting condition was satisfied in connection with the IPO, or the RSU Net Settlement.
Previous wording
Cash provided by financing activities during the six months ended June 30, 2023 was $39.2 million, which was primarily due to proceeds from long-term debt, net of original issue discount of $48.8 million.
Current wording
Cash provided by financing activities during the nine months ended September 30, 2023 was $38.7 million, which was primarily due to proceeds from long-term debt, net of original issue discount of $48.8 million, offset by $5.6 million of dividend payments, and $3.6 million in purchase of treasury stock.
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Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Current report — wording carried from elsewhere
Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation of adjusted EBITDA to net loss, the most directly comparable financial measure stated in accordance with generally accepted accounting principles in the United States of America, or GAAP, and for additional information about adjusted EBITDA, a non-GAAP financial measure, see "—Non-GAAP Financial Measure."
Current report — wording carried from elsewhere
The decrease in Cost of revenues, Data and services for the three months ended September 30, 2024, compared to the same period in 2023, was not material.
Current report — wording carried from elsewhere
Fair value changes include gains and losses related to quarterly fair value adjustments of our warrant liability, warrant asset, marketable equity securities, contingent consideration liabilities, and indemnity-related holdback liabilities.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
The increase in Cost of revenues, Data and services for the six months ended June 30, 2024, compared to the same period in 2023, was primarily due to $7.2 million of stock-based compensation expense related to RSUs for which the performance-based vesting condition was satisfied in connection with our IPO, as well as an increase of $2.1 million in cloud expenses.