Tempus AI, Inc. Announces Proposed Convertible Senior Notes Offering to Optimize Capital Structure and Reduce Interest Expense

Key Terms

convertible senior notes financial

Convertible senior notes are a type of loan that a company issues to investors, which can be turned into company shares later on. They are called "senior" because they are paid back before other debts if the company runs into trouble. This allows investors to earn interest like a loan but also have the chance to own part of the company if its value rises.

capped call transactions financial

Capped call transactions are agreements where investors buy options that give them the chance to benefit if a stock's price goes up, but with a limit on how much they can gain. This helps protect them from paying too much if the stock's price rises a lot, similar to having a maximum limit on a reward. They matter because they help investors manage risk while still allowing some upside potential.

senior secured credit facilities financial

Senior secured credit facilities are loans or lines of credit that a company borrows where lenders have first claim on specified assets if the company cannot pay back its debts. Think of it like a mortgage on a house: the bank holds the deed (collateral) and gets paid before other creditors, which usually makes the loan cheaper for the borrower. Investors watch these arrangements because they affect a company’s cost of borrowing, financial risk, and how available assets are prioritized if the company faces financial trouble.

Rule 144A regulatory

Rule 144A is a regulation that makes it easier for companies to sell private bonds to large investors without going through all the usual rules that apply to public sales. It matters because it helps companies raise money more quickly and privately, often attracting big investors looking for special deals.

qualified institutional buyers financial

Qualified institutional buyers are large organizations, like big investment firms or banks, that are allowed to buy certain types of investment opportunities not available to everyday investors. Their size and experience matter because it ensures they understand and can handle complex financial deals, making markets more efficient and secure.

general unsecured obligations financial

General unsecured obligations are debts a company owes that are not backed by specific collateral and stand on the same level as other unsecured creditors if the company can’t pay. Think of them as IOUs in a group where some people hold pledged items for repayment (secured creditors) and these do not — unsecured holders share whatever is left. Investors care because these claims carry higher risk and typically recover less in a bankruptcy, affecting bond values and credit risk.

private placement financial

A private placement is a way for companies to raise money by selling securities directly to a small group of investors instead of through a public offering. This process is often quicker and less regulated, making it similar to offering a special, exclusive investment opportunity to select individuals or institutions. For investors, it can provide access to unique investment options that are not available on public markets.

- Proceeds expected to be used to repay in full outstanding loans under the senior secured credit facilities, reducing interest expense and enhancing financial flexibility. Additional proceeds expected to be used to pay for capped call transactions to reduce potential dilution and for general corporate purposes.

CHICAGO--(BUSINESS WIRE)-- Tempus AI, Inc. (“Tempus”) (NASDAQ: TEM), a technology company leading the adoption of AI to advance precision medicine and patient care, today announced its intent to offer, subject to market conditions and other factors, $350.0 million aggregate principal amount of Convertible Senior Notes due in 2032 (the “Notes”) in a private placement (the “Offering”) to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). Tempus also intends to grant the initial purchasers of the Notes an option to purchase, within a 13-day period beginning on, and including, the date on which the Notes are first issued, up to an additional $52.5 million aggregate principal amount of Notes.

The Notes will be general unsecured obligations of Tempus, will accrue interest payable semiannually in arrears and will mature on May 15, 2032, unless earlier converted, redeemed or repurchased. Upon conversion, Tempus will pay or deliver, as the case may be, cash, shares of Tempus’ Class A common stock, par value $0.0001 per share (the “Class A common stock”), or a combination of cash and shares of Class A common stock, at its election. The interest rate, initial conversion rate and other terms of the Notes will be determined at the time of pricing of the Offering.

Tempus expects to use the net proceeds from the Offering to repay in full $307.7 million of outstanding loans under its senior secured credit facilities, plus accrued and unpaid interest and other fees, to pay the cost of the capped call transactions described below and for general corporate purposes, which may include acquisitions or strategic investments in complementary businesses or technologies, working capital, operating expenses, capital expenditures and repayment of additional indebtedness. If the initial purchasers exercise their option to purchase additional Notes, Tempus expects to use a portion of the net proceeds from the sale of the additional Notes to enter into additional capped call transactions and for the general corporate purposes described above.

In connection with the pricing of the Notes, Tempus expects to enter into privately negotiated capped call transactions with one or more of the initial purchasers or affiliates thereof and/or other financial institutions (the “Option Counterparties”). The capped call transactions will cover, subject to customary adjustments, the number of shares of Class A common stock initially underlying the Notes. The capped call transactions are expected generally to reduce the potential dilution to the Class A common stock upon any conversion of Notes and/or offset any cash payments Tempus is required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap.

In connection with establishing their initial hedges of the capped call transactions, Tempus expects the Option Counterparties or their respective affiliates will enter into various derivative transactions with respect to the Class A common stock and/or purchase shares of Class A common stock concurrently with or shortly after the pricing of the Notes, including with, or from, as the case may be, certain investors in the Notes. This activity could increase (or reduce the size of any decrease in) the market price of the Class A common stock or the Notes at that time.

In addition, the Option Counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to the Class A common stock and/or purchasing or selling Class A common stock or other securities of Tempus in secondary market transactions following the pricing of the Notes and prior to the maturity of the Notes (and are likely to do so during the 20 trading day period beginning on the 21^st scheduled trading day prior to the maturity date of the Notes, or, to the extent Tempus exercises the relevant election under the capped call transactions, following any repurchase, redemption or conversion of the Notes). This activity could also cause or avoid an increase or a decrease in the market price of the Class A common stock or the Notes which could affect a noteholder’s ability to convert the Notes and, to the extent the activity occurs during any observation period related to a conversion of Notes, it could affect the number of shares, if any, and value of the consideration that a noteholder will receive upon conversion of its Notes.

The Notes and any shares of Class A common stock issuable upon conversion of the Notes have not been and will not be registered under the Securities Act, any state securities laws or the securities laws of any other jurisdiction, and unless so registered, may not be offered or sold in the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws.

This press release is neither an offer to sell nor a solicitation of an offer to buy any of these securities nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification thereof under the securities laws of any such state or jurisdiction.

About Tempus

Tempus is a technology company advancing precision medicine through the practical application of artificial intelligence in healthcare. With one of the world’s largest libraries of multimodal data, and an operating system to make that data accessible and useful, Tempus provides AI-enabled precision medicine solutions to physicians to deliver personalized patient care and in parallel facilitates discovery, development and delivery of optimal therapeutics. The goal is for each patient to benefit from the treatment of others who came before by providing physicians with tools that learn as the company gathers more data.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, regarding, among other things, the proposed Offering, including statements concerning the proposed terms of the Notes and the capped call transactions, the anticipated completion, timing and size of the proposed Offering of the Notes and the capped call transactions, the anticipated use of proceeds from the Offering, the impact of the Offering on Tempus’ future interest expense and financial flexibility, and the potential impact of the foregoing or related transactions on dilution to holders of the Class A common stock and the market price of the Class A common stock or the Notes or the conversion price of the Notes. These forward-looking statements are based on Tempus’ current assumptions, expectations and beliefs and are subject to substantial risks, uncertainties, assumptions and changes in circumstances that may cause Tempus’ actual results, performance or achievements to differ materially from those expressed or implied in any forward-looking statement. These risks include, but are not limited to market risks, trends and conditions. These and other risks are more fully described in Tempus’ filings with the Securities and Exchange Commission (“SEC”), including in the section entitled “Risk Factors” in its Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 24, 2026, as well as other filings Tempus may make with the SEC in the future. Tempus undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law.

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Tempus Communications
Hanah Heintzelman
media@tempus.com

Tempus Investor Relations
Elizabeth Krutoholow
Elizabeth.krutoholow@tempus.com

Source: Tempus AI, Inc.