Tempus AI Inc. (NASDAQ: TEM) announced the pricing of $400 million in convertible senior notes due 2032 in a private placement to qualified institutional buyers. The offering was increased from the previously announced $350 million.

The notes carry a 0% interest rate and will mature on May 15, 2032. Initial purchasers received an option to buy an additional $60 million in notes within 13 days of issuance. The sale is expected to close on May 12, 2026, subject to customary conditions.

Tempus estimates net proceeds of approximately $384.1 million, or $441.9 million if the purchaser option is exercised in full, after deducting discounts and expenses. The company plans to use proceeds to repay $307.7 million in outstanding credit facility loans plus interest and fees, pay approximately $27.2 million for capped call transactions, and fund general corporate purposes including potential acquisitions.

The notes are convertible at an initial rate of 14.4388 shares per $1,000 principal amount, equivalent to a conversion price of approximately $69.26 per share. This represents a 40% premium to the Class A common stock's last reported sale price on the Nasdaq Global Select Market on May 7, 2026.

Conversion is permitted under specific conditions before February 15, 2032, and without conditions thereafter until maturity. Tempus may redeem the notes after May 21, 2029, if the stock price reaches at least 130% of the conversion price for 20 trading days within any 30-day period.

The company entered into capped call transactions with financial institutions to reduce potential dilution from conversions. The cap price was set at $98.94, representing a 100% premium over the May 7, 2026 stock price.