Tempus AI, Inc. 8-K

What Happened

• Tempus AI, Inc. announced on May 12, 2026 that it completed a private offering of $460.0 million aggregate principal amount of 0.00% Convertible Senior Notes due 2032 (the “Notes”), including full exercise of the initial purchasers’ option. The Notes were issued under an indenture with U.S. Bank Trust Company, N.A. as trustee. The company used part of the offering proceeds the same day to repay in full outstanding obligations under its September 22, 2022 Credit Agreement and terminated that credit facility and related security documents.

Key Details

• Offering size and proceeds: $460.0M principal; net proceeds ≈ $441.9M after fees and expenses.
• Use of proceeds: repaid $307.7M of outstanding loans under the prior senior secured credit facilities (plus accrued interest/fees) and paid ≈ $31.2M for capped call transactions; remaining proceeds for general corporate purposes.
• Note terms: 0.00% coupon, mature May 15, 2032, no regular interest; initial conversion rate 14.4388 shares per $1,000 principal (≈ $69.26 per share conversion price, ~40% premium to May 7, 2026 last sale).
• Dilution mitigation: capped call transactions were entered to reduce potential dilution and/or offset certain cash conversion amounts; initial cap price $98.94/share (≈100% premium to May 7, 2026 price).
• Conversion/redemption mechanics: holders may convert subject to specified stock-price and other conditions before Feb 15, 2032; unrestricted conversions allowed on/after Feb 15, 2032 (until two trading days before maturity). Company cannot redeem before May 21, 2029 and may redeem after that date only if stock price tests are met. Notes are general unsecured obligations.

Why It Matters

• Capital structure and interest expense: issuing zero-coupon convertible notes and repaying the secured credit facility materially changes Tempus AI’s capital structure—reducing near-term interest cash outflows by retiring a secured loan but creating potential future dilution if notes convert.
• Dilution vs. flexibility tradeoff: the capped calls limit dilution up to a cap price, but conversion rights (and possible share issuance) could dilute shareholders if stock rises above the conversion thresholds. Investors should watch conversion price ($69.26) and capped call cap ($98.94), as well as future redemption or conversion activity.
• Credit and default profile: the Notes are unsecured and include usual events of default and repurchase rights on certain fundamental changes; termination of the prior secured credit agreement removes liened debt from the balance sheet.