Tempus AI, the precision-medicine startup from Eric Lefkofsky, raised $410 million in an initial public offering, valuing the company at nearly $6.2 billion.
The Chicago-based firm said today it sold 11.1 million Class A common shares for $37 each, the high end of its previously disclosed share price range. Tempus, which first filed to go public on May 20, had planned to sell the stock for $35 to $37 apiece.
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Tempus shares are expected to begin trading under ticker TEM after the stock market opens Friday morning.
The company said today it is also granting underwriters a 30-day option to purchase an additional 1.6 million shares of Class A common stock at the IPO price.
At its $6.2 billion valuation, Tempus’ IPO marks the largest local venture-backed IPO since 2020, when health insurance marketplace GoHealth raised about $900 million at a valuation of $6.7 billion. (GoHealth quickly declined and is valued at $230 million.)
Northbrook-based safety-testing firm UL Solutions went public more recently in April and was well-received by investors, though was only valued at $5.8 billion a the time of its IPO. UL’s stock rose 25% in its stock market debut, closing at $34.05, and his since risen. At the market close today, UL Solutions was trading at $41. But unlike Tempus, UL Solutions is a mature company with a track record of profitability.
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Tempus generated revenue of $320.7 million and $531.8 million in the years ended Dec. 31, 2022 and 2023, but also incurred net losses of $289.8 million and $214.1 million, respectively, U.S. Securities & Exchange Commission filings show. As of March 31, Tempus had accumulated a deficit of $1.5 billion, and the company disclosed it anticipates needing to raise additional capital to fund existing operations, develop its platform and commercialize new products.
As Crain’s reported June 5, Lefkofsky, Tempus’ founder and CEO, is not giving up control of the company despite selling shares to the public.
He owns 39% of Tempus common stock but all of it is super-voting Class B stock, which gets 30 votes per share. As the company goes public, Lefkofsky holds 30% of the common stock but still has 65% of the voting power.
Tempus, founded in 2015, provides genomic-sequencing services to treat cancers and other conditions. The company’s database includes 7.7 million clinical records and is used by more than 7,000 physicians across hundreds of provider networks and more than 65% of all academic medical centers in the U.S. Tempus employs 2,300 people, many of them in Chicago.
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Tempus IPO talks first surfaced in 2021, not long after the company raised $200 million from investors at a valuation of $8 billion, bringing its total funding to more than $1 billion. But that was before a COVID-era IPO market chill that tanked the number of companies testing public market waters.
Instead of going public that year, Tempus raised $275 million in a combination of equity and debt financing.
Investors over various funding rounds have included Baillie Gifford, Franklin Templeton, Google, venture-capital fund NEA and Novo Holdings.
Tempus' offering is being led by Morgan Stanley, J.P. Morgan and Allen & Co.
This story first appeared in Crain's Chicago Business.
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