Tempus AI Stock Plummets 19% Following Bearish Report

CHICAGO, IL — Shares of American health-tech company Tempus AI dropped over 19% on Wednesday after a negative report from hedge fund Spruce Point Capital raised serious concerns about the firm’s financial practices and business model.

The report, released on Tuesday, describes Tempus as potentially facing a 50% to 60% decline in stock value, comparing its situation to tech companies like Tesla and Nvidia. Spruce Point Capital warned investors of an impending ‘inflection point’ that could lead to market underperformance.

Tempus AI specializes in data-driven healthcare solutions, particularly in oncology and genomics. However, the report claims that the company’s growth is overhyped and primarily driven by enthusiastic retail investors. It criticizes Tempus for aggressive accounting practices, financial engineering, and related-party transactions that may prioritize revenue over patient care.

Particularly concerning was the report’s focus on Tempus’s billing practices, specifically its use of billing code 81479, which it described as having minimal oversight and a high risk of misuse. This approach, Spruce Point suggests, could artificially inflate revenue figures.

The report also called into question the leadership at Tempus, pointing to CEO Eric Lefkofsky‘s history with companies that have faced scandals and bankruptcies, such as Groupon and InnerWorkings. Following these allegations, Tempus shares experienced a significant drop, despite being up 58% for the year before the report.

In response to the allegations, Tempus dismissed the claims as “riddled with hypotheticals and inaccuracies,” asserting a solid track record of growth and financial performance. The company remains focused on leveraging AI to improve healthcare outcomes, with Lefkofsky stating, ‘We intend to be long-term shareholders and prioritize shareholder value.’

Despite the sharp decline, Tempus AI retains a Moderate Buy rating from analysts based on six Buy and three Hold recommendations on TipRanks. The stock’s price target is set at $66.25, suggesting a potential upside of 25% from its current levels.