(Bloomberg) -- Tempus AI Inc., a technology platform company using artificial intelligence to process medical data, jumped as much as 19% in its trading debut before falling closer the price in its $410.7 million initial public offering.

The company’s shares, which opened trading Friday at $40, were up 8.8% to close at $40.25, giving Tempus AI a market value of about $6.6 billion. The company sold 11.1 million shares Thursday at the top of the $35 to $37 marketed range.

Tempus AI’s public debut capped off a relatively slow week in the US IPO market, where only four companies raised a total of $853 million, with Tempus AI contributing nearly half of it. Telix Pharmaceutical Ltd., which is already listed in Australia and slated to have a US listing Friday, announced Thursday its decision not to move forward with its American depositary receipts listing “under current market conditions.”

Chicago-based Tempus AI, founded in 2015, describes its business as creating “intelligent diagnostics” for precision medicine, and focuses on oncology, neuropsychiatry, cardiology and radiology.

Eric Lefkofsky, the company’s founder and chief executive officer, didn’t disclose the orders the IPO received but said that investors’ warm reception of the stock “is a function of people realizing, for the first time ever, there are all these incredible background technologies, including generative AI and large language models that make it so that we can finally bring technology to health care.”

‘Kind of Sad’

“It’s kind of sad that health care hasn’t adopted technologies as fast as other industries, especially when so many patients are suffering on the other end,” Lefkofsky said in a phone interview.

He said that the company focuses on treatment modalities, like those for anxiety and depression for example, in which there is a huge, heterogeneous population of patients treated with a variety of drugs, often given based on trial and error.

“It can take two or three years for the patient to be on the right dose and the right drug and they’re just suffering for that entire period,” said Lefkofsky. “Over time we’ll be able to use technology to help physicians choose the right antidepressant to get that patient up front, to avoid all that trial and error and all that suffering.”

The company, which changed its name from Tempus Labs Inc. in December, connects laboratory results to a patient’s own clinical data, and has been used by more than 7,000 physicians across hundreds of provider networks, according to its filings. It has about 2,300 employees.

Tempus AI had a net loss of $214 million on revenue of $532 million in 2023, compared with a net loss of $290 million on revenue of $321 million a year earlier, according to the filings.

Value Creation

In a research note Friday, Bloomberg Intelligence analyst Jonathan Palmer said that Tempus AI’s valuation is “a solid degree of value creation for a company less than a decade old.” Still, it’s lower than the $8.1 billion valuation it got when it raised $200 million in 2020.

He said Tempus AI’s model of licensing molecular data derived from its diagnostics tests in combination with linked clinical and imaging records differentiates it from traditional diagnostics companies, and create a stable revenue stream. 

The company’s largest investors include Lefkosky as well as a firm controlled by Kimberly Keywell and entities affiliated with Baillie Gifford & Co. The company has a dual-class share structure that gives Lefkofsky 65% of the shareholder voting power after the IPO, according to the filings.

The offering was led by Morgan Stanley, JPMorgan Chase & Co. and Allen & Co. The company’s shares are trading on the Nasdaq Global Select Market under the symbol TEM.

(Updates figures in second paragraph.)

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