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UNC-Chapel Hill AI Boot Camp Case Study

Tempus AI: Using Artificial Intelligence to Predict and Create Successful Patient Treatment Plans

Overview and Origin

Eric Lefkofsky founded Tempus in 2015 after his wife was diagnosed with breast cancer. He has said he wanted to use data to create better treatments for patients and improve their overall recoveries.

Lefosky is a co-founder and Chairman of Groupon and is a founding partner of a venture capital company named Lightbank.

Tempus AI's legal name is Tempus Labs, Inc.

Financials

Tempus AI had its initial public offering (IPO) on NASDAQ on June 14, 2024 under the ticker symbol TEM.

Tempus's valuation at IPO was $6.1 billion, and they offered 11.1 million shares of stock at $37.00 per share. On the day of the IPO, they raised $410.7 million, with shares closing at $40 per share, up roughly 9%.

Before its IPO exit, Tempus AI had 16 investors and had raised $1.3 billion over 13 rounds of funding. They were a series G company with two rounds of debt financing. See the Tempus financial data on Crunchbase and the Tempus listing on the NASDAQ exchange for more information on their current financials and market positions.

Business Activities

What Tempus Does

Tempus collects large datasets of medical diagnostics and clinical research findings for clinicians and researchers. They make this data available via web applications and API integrations for other tools, including EHRs.

Tempus is also working to integrate AI into its technology stack, focusing on providing analysis, pattern matching, and predictive treatment and recovery plans for patients.

Target Customers and Total Addressable Market

Tempus' customers are researchers, clinicians, pharmaceutical companies, and organizations building EHRs.

I was unable to find definitive information about the market size for these sets of customers. That said, the target market is extensive and spans the healthcare domain.

  • Universities
  • Physician specialists, such as oncologists
  • EHR companies, whose customers are typically private physician offices and hospitals
  • Medical researchers

Unique Capabilities in the Tempus Portfolio

Tempus provides both a set of tools and means to directly access and analyze their large aggregated dataset and direct integration to several EHRs. Their unfair advantage is compounded by their time in the industry, strong backing by investors, and rapid revenue growth in the last year (up 65%). The company's IPO has provided additional market and public visibility for its technology and strategic AI messaging.

How Tempus Uses AI

Tempus has documented its AI approaches at a high level on its website through case studies. AI is integrated into several of their products. Our Technology - Tempus website

  • One - A clinical AI assistant leveraging generative AI and machine learning to retrieve patient information and give real-time updates on new clinical trial results.
  • Pixel - Image analysis by AI, using machine learning to assist with faster and more accurate reviews of patients' diagnostic imaging, such as CT scans, MRIs, and X-rays.
  • Next - Aggregation and analysis of individual patients and larger population trends and treatment plans.

In a case study posted on the Tempus website, they highlight how the John Brancaccio St. Francis Hospital and Heart Center in New York were able to use Tempus Next to glean patient health insights from large sets of data.

The [Tempus Next] platform is customizable, allowing the user to filter out any information they don’t need and focus on the exact targets of their searches. It also learns from its users as time goes on, remembering the details of previous searches to improve the customization process. As a result, referring clinicians learned to trust the platform’s discoveries and saw it as a helpful quality initiative. Identifying patients with Valvular Heart Disease: A partnership between St.Francis and Tempus

The Tempus Next product uses natural language processing and machine learning to analyze physicians' searches and interactions in the web application. It then uses multimodal patient data and data from clinical trials and established clinical guidelines to suggest potential treatment plans for a specific patient.

Landscape

How Tempus Fits into the Field of Health Data and Medical Diagnostics

Tempus is a medical data and diagnostics company, primarily focused on oncology and cancer diagnosis and treatment. They provide access to large datasets and analysis for that data to clinicians and research organizations.

Innovations in the Medical Diagnostics Field

In the last 10 years, the industry has begun to move toward providing better aggregation of various datasets to help inform more efficient and accurate patient treatment of conditions like cancer. MYCIN, likely the first system designed to evaluate public health data, was created at Stanford University in the late 1970s to improve treatment for infectious diseases (The MYCIN Experiments - Stanford University). It used a simple rules-based approach to identify patterns and suggest treatment. These types of models have begun to be applied in AI neural networks in the last 5 years by companies like Tempus.

A 2019 survey of over 300,000 physicians found that "89.9% of office-based physicians used an electronic health record (EHR) system." National Electronic Health Survey Records Survey Results and Products - National Electronic Health Survey Records Survey - 2019 and Public use file national weighted estimates: National Electronic Health Records Survey, 2019.

Because EHRs are now so prevalent, integrating datasets and analysis into those systems is a large business opportunity and is well-fit for AI.

In 2019, Thomas Davenport and Ravi Kalakota noted data collection of test results, genetic abnormalities, DNA profiles, and treatments was not the main problem preventing doctors and patients from having better diagnostics. Rather, the problem of solving how doctors and patients get access to that data and how it is correlated is critical. As more physicians adopt EHRs, it's essential they can access both data and analysis of that information through their EHRs.

"But whether rules-based or algorithmic in nature, AI-based diagnosis and treatment recommendations are sometimes challenging to embed in clinical workflows and EHR systems. Such integration issues have probably been a greater barrier to broad implementation of AI than any inability to provide accurate and effective recommendations; and many AI-based capabilities for diagnosis and treatment from tech firms are standalone in nature or address only a single aspect of care." The potential for artificial intelligence in healthcare, NIH June 2019

What are the other major companies in this field?

There are two types of companies investing in this field.

  1. EHR companies, such as Epic
  2. Medical data aggregators and analyzers, such as Genuity Science

Here are some of the top companies in this field:

EHRs

  • Epic (Epic Genomics Module and Aura)
  • Cerner
  • CureMD
  • Meditech
  • NextGen
  • Veradigm (formally known as, Allscripts)
  • Flatiron’s OncoEMR
  • iKnowMed
  • McKesson

Medical data aggregators

  • OpGen
  • Genuity Science

Results

How Tempus is Performing in the Market

Tempus, being a privately-held company, has disclosed limited details regarding the extent of its products' adoption within the healthcare provider and life sciences sectors.

As it prepares for its fist quarterly report following its June 2024 IPO, Tempus will be required to give its shareholders more visibility into its financials and business processes. Their pre-IPO filings show they had a net loss of $289.8 million in 2023, which was roughly $70 million more than their net loss in 2022. However, their revenue continues to grow, increasing by 65.8% in 2023. With the IPO showing the market is optimistic about their growth and the stock continuing to grow ($66.18 as of August 23, 2024 - a nearly 66% increase), its outlook is promising.

What Makes Tempus Unique in the Market

Tempus is one of the few companies providing analysis and proactive for large populations across many types of clinical areas of focus. Their competitor OpGen, for instance, focuses on infectious diseases. OpGen is listed on the NASDAQ stock exchange OpGen Stock. Their public financials show their stock has been flat for several years now. As of June 13, 2024, their stock is trading at $2.45. Their revenue was up roughly 48% year-over-year, which was achieved by cutting their operational costs by 45%. At the same time, their net income was down almost 62%.

If their stock continues to perform well over 6 months, it could indicate that a more general and broad approach to aggregating and analyzing essential health data is more successful than very targeted solutions, such as those provided by OpGen (infections diseases) and Genuity (inflammatory and cardiovascular diseases).

Recommendations

I recommend Tempus improve its external marketing materials on its website to make it much easier for people to see demos of their products. You have to share your personal information click through several pages to get to case studies today, for instance. And these case studies are not showing the product - they're sharing results. Results matter, but video demos go a long way to help potential customers and investors understand if Tempus is a good fit for them.

Tempus should also include clear information on their website about how their EHR integrations work and which features are available in the EHR from their other products.

For new capabilities, Tempus should add natural language processing and machine learning features to its Next product for patients. These capabilities should be integrated into EHRs, enabling a patient to quickly search across their health records, get clear explanations of what test results mean and potential health conditions, and give them actionable treatment next steps, such as behavioral changes. For example, "Based on your health data, you could reduce your risk of heart attack by 50% if you add 15 minutes of walking per day into your daily routine."

Patients want direct access to their health profiles. Companies like Tempus have a unique opportunity to help physicians make more actionable treatment plans based on AI and to foster their patients to feel more in control of those plans.

Research and Resources

This case study was informed from the following resources. To see the full set of research, see the research data in this repository.