Tempus AI, Inc. Goodwill & Intangibles Disclosure
Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. As disclosed in Note 2, goodwill is tested for impairment at least annually as of October 1st. The changes in the carrying amount of goodwill for the years ended December 31, 2025 and 2024 were as follows (in thousands):
Balance as of December 31, 2023 |
|
73,354 |
|
Foreign exchange rate adjustment |
|
(11 |
) |
Balance as of December 31, 2024 |
$ |
73,343 |
|
Goodwill related to business combinations |
$ |
396,731 |
|
Foreign exchange rate adjustment |
|
137 |
|
Balance as of December 31, 2025 |
$ |
470,211 |
|
There was no goodwill impairment for the years ended December 31, 2025, 2024 and 2023.
Intangible assets are initially recorded at their acquisition cost, or fair value if acquired as part of a business combination and amortized over their estimated useful lives. Intangible assets consist of a website domain, customer relationships, trade names, capitalized software and developed technology acquired as part of a business combination, and licensed data acquired by entering into research collaboration agreements. In each license arrangement, the other party provides the Company with specified data, which is used for research and development purposes and may also be licensed to third parties. The asset represents the Company’s right to use these datasets. The Company also recognizes a liability for the associated minimum payments that are presented within Accrued data licensing fees on the consolidated balance sheets.
In January 2023, the Company amended a data licensing agreement, which reduced the future data license payments the Company owes in exchange for waiving exclusivity rights on the licensed data. The Company remeasured the related licensed data intangible asset to fair value, which resulted in an impairment of $7.4 million recorded in and development during the year ended December 31, 2023. A $7.9 million gain resulting from the related reduction of future data license payments was also recorded in Research and development during the year ended December 31, 2023. There were no impairment charges recognized related to intangible assets during the years ended December 31, 2025 and 2024, respectively.
The following table summarizes intangible assets as of December 31, 2025 and 2024 (in thousands):
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||||||||||||||||||
|
|
Gross |
|
|
Accumulated Amortization |
|
|
Net |
|
|
Gross |
|
|
Accumulated Amortization |
|
|
Net |
|
||||||
Customer relationships |
|
$ |
254,550 |
|
|
$ |
48,722 |
|
|
$ |
205,828 |
|
|
$ |
20,550 |
|
|
$ |
15,606 |
|
|
$ |
4,944 |
|
Licensed data |
|
|
28,601 |
|
|
|
22,954 |
|
|
|
5,647 |
|
|
|
20,010 |
|
|
|
17,828 |
|
|
|
2,182 |
|
Website domain |
|
|
19 |
|
|
|
— |
|
|
|
19 |
|
|
|
19 |
|
|
|
— |
|
|
|
19 |
|
Trade names |
|
|
41,000 |
|
|
|
8,892 |
|
|
|
32,108 |
|
|
|
8,000 |
|
|
|
3,429 |
|
|
|
4,571 |
|
Capitalized software |
|
|
6,216 |
|
|
|
165 |
|
|
|
6,051 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Developed technology - biotech |
|
|
114,000 |
|
|
|
20,900 |
|
|
|
93,100 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Developed technology - software |
|
|
18,000 |
|
|
|
5,500 |
|
|
|
12,500 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
$ |
462,386 |
|
|
$ |
107,133 |
|
|
$ |
355,253 |
|
|
$ |
48,579 |
|
|
$ |
36,863 |
|
|
$ |
11,716 |
|
Amortization of intangible assets is recognized using the straight-line method over their estimated useful lives, which range from to seven years. Amortization expense was $70.3 million, $10.9 million and $11.9 million for the years ended December 31, 2025, 2024 and 2023, respectively, and is recorded in cost of revenues, research and development, or selling, general and administrative expense, depending on use of the asset. The weighted average life of the Company’s intangibles is approximately six years.
As of December 31, 2025, the estimated future amortization expense related to intangible assets is as follows (in thousands):
2026 |
|
75,126 |
|
2027 |
|
70,460 |
|
2028 |
|
64,117 |
|
2029 |
|
62,475 |
|
2030 |
|
41,306 |
|
Thereafter |
|
41,750 |
|
Total |
$ |
355,234 |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 24, 2025 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.