Tempus AI to Acquire Ambry Genetics in $600M Deal Expands Genetic Testing 

Tempus AI said it will buy Ambry Genetics for $600 million, gaining the leading genetic testing provider for hereditary cancer through the deal. The company will pay $375 million in cash and $225 million in Tempus equity for Ambry Genetics. The acquisition will probably even bolster the inherited cancer risk testing of Tempus, although it will also open up avenues for new disease categories, such as pediatrics, rare diseases, immunology, reproductive health, and cardiology.

Improving Hereditary Cancer Testing

Ambry Genetics, headquartered in Aliso Viejo, California has been a long-standing partner to Tempus, serving as the company’s reference lab for hereditary cancer screening. Ambry stands tall as a provider of most complete genetic testing services and is ahead of others in the area of inherited cancer risk detection. With this acquisition, Tempus will enhance its access to a deeper and wider portfolio of testing, thereby setting the company on a path to expand its footprint in the rapidly expanding market for genetic testing.

According to him, the acquisition would prove to be a significant addition to the company’s hereditary testing capabilities, which have been at the core of its business model. “Hereditary testing is one of our major categories,” Lefkofsky said in an earnings call with investors Monday. He emphasized that the ability to detect diseases, such as cancer early on, combined with monitoring will provide the best care for patients. Lefkofsky said that the strategy is to catch them early in the process and support them during treatment, as well as help manage the disease over time.

The acquisition of Ambry also fits well into the strategic vision to provide more comprehensive and integrated services to physicians and healthcare teams as outlined by Tempus. As more and more patients require genetic testing, says Lefkofsky, oncologists and care teams will need labs that offer more than just a variety of services at the early diagnosis stage but even throughout ongoing care. “More and more physicians are going to want to work with labs that can manage the entire patient journey-not just a single aspect of treatment,” he added.

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Entering New Disease Categories

Besides giving it a boost in hereditary cancer testing, Tempus views the acquisition as an opportunity to expand into important areas of healthcare. The company would expect to use Ambry’s expertise to expand into wide new categories of genetic testing, including pediatrics, rare diseases, immunology, reproductive health, and cardiology.

Diversification of Testing Services: This aligns with the mission of Tempus to advance precision medicine, allowing for more genetically informed and personal treatment options. Specifically, the company has been established very strongly in the sphere of oncology, but its acquisition of Ambry diversifies offerings and supports more areas of healthcare, thereby creating bigger market reach.

For Ambry, it means a wholly owned subsidiary of Tempus, while maintaining the brand identity and continuing all its range of genetic testing services. ‘There is absolutely no impact on our customers. We will maintain all our operations and retain all our employees,’ Ambry CEO Tom Schoenherr wrote to customers as he attempted to reassure them about the acquisition. “Ambry will continue to operate as it always has, providing high-quality testing and services, while benefiting from the expanded resources and capabilities Tempus brings to the table,” Schoenherr wrote.

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Financial Details and Projected Growth

Tempus will use a combination of cash and equity to fund its purchase, with the $375 million raised in cash being supplemented by $225 million issued Tempus shares over the course of the next year. The company will top this up with short- and long-term debt topped by $300 million. Still, despite such a large capital expenditure, the acquisition should yield strong returns as Ambry’s revenues build from these levels.

Ambry is expected to be $300 million by the end of 2024 and has been growing at more than 25% per year. This strong growth, therefore, represents the rising demand for genetic testing services, and most of such services are in oncology and other niche areas. With the growing markets for genetic testing, Tempus believes that this acquisition will strengthen its market position and drive its growth for years ahead.

The merger is anticipated to close in the first quarter of 2025, subject to regulatory approvals and other closing conditions. Once consummated, this transaction is expected to accelerate Tempus’s growth in the precision medicine market, offering a more robust portfolio of services to providers and patients.

Future Strategy of Healthcare 

The acquisition of Ambry Genetics would be a strategic move by Tempus towards further consolidating its leadership position in AI-driven health solutions. The merger would bring together the genius of Ambry and the scope of Tempus to offer more comprehensive data insights to healthcare providers to make better-informed decisions when diagnosing and treating patients.

The deal also reflects the continuing convergence of AI, genetics, and precision medicine and growing importance of testing related to genetics and personalized health care. Its evolving portfolio will position Tempus at the vanguard of these advancements, reshaping the future of medicine and patient outcomes across multiple disease areas ,according to medtechdrive