Tempus AI (NASDAQ:TEM) saw its stock decline by 4% after short-selling firm Spruce Point Capital released a scathing report questioning the company’s operations, leadership, and financial disclosures.
The report, based on a forensic investigation, alleged that Tempus AI’s AI-driven products generate only a small fraction of its revenue. In 2024, the company brought in just $12.4 million from AI-related offerings—less than 2% of total revenue, which stood at $693.4 million. In the previous year, that figure was a mere $5.5 million.
Spruce Point also cast doubt on the track record of CEO Eric Lefkofsky, citing his prior associations with firms that faced accounting controversies and bankruptcies. The report further raised red flags about possible circular sales practices, questionable partnerships, and related-party dealings.
Additionally, the short seller criticized Tempus AI’s use of billing code 81479, a catch-all medical billing code with limited oversight. They argued this could artificially boost revenue while potentially compromising patient care, particularly in conjunction with billing practices by Ambry Genetics, a company Tempus acquired.
The report concluded with a stark warning to investors, forecasting a potential 50%–60% drop in share value. It also flagged concerns over aggressive accounting tactics and an overreliance on market valuation. The current analyst consensus target of $66.82 per share suggests minimal upside, further compounding investor worries.
Following the report’s release, Tempus AI’s stock fell, reflecting heightened investor unease about the company’s long-term fundamentals.