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Get filing alertsTempus AI raises $460M in convertible notes, repays $308M credit facility in full
Filed May 13, 2026 · Period ending May 7, 2026 · ~1 min read
Key Changes
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high
Issued $460M of zero-coupon convertible senior notes due 2032, convertible at $69.26/share (40% premium to May 7 stock price). Notes are unsecured and convertible starting September 2026 under specific conditions.
Item 1.01 verify on EDGAR → -
high
Used $307.7M of proceeds to fully repay and terminate senior secured credit facility with Ares Capital, eliminating secured debt and reducing interest expense with 0% coupon notes.
Item 1.02 verify on EDGAR → -
medium
Purchased $31.2M in capped call hedges to reduce dilution from conversions, providing protection up to $98.94/share (100% premium). Maximum 9.3M shares could be issued upon conversion.
Item 1.01 verify on EDGAR → -
medium
Notes cannot be redeemed before May 2029, and only if stock trades above 130% of conversion price for 20 of 30 days thereafter, protecting noteholder upside participation.
Item 1.01 verify on EDGAR → -
low
Notes sold in private placement to qualified institutional buyers under Rule 144A exemption; conversion shares exempt under Section 3(a)(9) with no commissions paid.
Item 3.02 verify on EDGAR →
Summary
Tempus AI completed a significant capital structure optimization by issuing $460 million in convertible notes and using two-thirds of the proceeds to eliminate its secured credit facility entirely. The zero-coupon notes convert at a 40% premium to the current stock price, meaning shareholders face dilution only if the stock appreciates substantially.
The company spent $31 million on hedges to further limit that dilution up to a stock price near $99. For retail investors, this transaction trades secured bank debt for unsecured convertible debt with no cash interest, improving near-term cash flow and financial flexibility.
The 40% conversion premium and hedge structure suggest management expects meaningful stock appreciation but wants to protect existing shareholders from excessive dilution. The deal was upsized from $400M to $460M, indicating strong institutional demand. Watch whether Tempus deploys the remaining ~$150M in net proceeds for growth investments or acquisitions, and monitor the stock price relative to the $69.26 conversion threshold. If the stock approaches that level by late 2026, conversion activity could begin, potentially adding up to 9.3 million shares to the float over time.
Section-by-Section Diff
Event · Item 1.01 — Entry into a Material Definitive Agreement
Tempus AI issued $460M in convertible notes due 2032, used proceeds to repay $307.7M in credit facility debt and purchase capped call hedges.
Added in current filing · verify on EDGAR →
The conversion rate for the Notes will initially be 14.4388 shares of Common Stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $69.26 per share of Common Stock. The initial conversion price of the Notes represents a premium of approximately 40% to the last reported sale price of the Common Stock on The Nasdaq Global Select Market on May 7, 2026.
Noteholders can convert each $1,000 of principal into 14.4388 shares of common stock, equivalent to a $69.26 conversion price. This represents a 40% premium to the stock price on the pricing date. Conversion is subject to specific conditions including stock price thresholds (130% of conversion price for 20 of 30 trading days) until February 2032, after which conversion is unrestricted.
Added in current filing · verify on EDGAR →
The Company may not redeem the Notes prior to May 21, 2029. The Company may redeem for cash all or any portion of the Notes (subject to the partial redemption limitation set forth in the Indenture), at its option, on a redemption date on or after May 21, 2029, if the last reported sale price of the Common Stock has been at least 130% of the conversion price for the Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date.
The company cannot redeem the notes before May 21, 2029. After that date, redemption is permitted only if the stock price exceeds 130% of the conversion price for 20 of 30 trading days. This provision protects noteholders from early redemption unless the stock has appreciated significantly, ensuring they benefit from upside potential.
Event · Item 1.02 — Termination of a Material Definitive Agreement
Tempus AI repaid all debt under its credit facility and terminated the agreement using proceeds from an offering.
Added in current filing · verify on EDGAR →
On May 12, 2026, the Company used a portion of the net proceeds from the Offering to repay in full all obligations outstanding under that certain Credit Agreement, dated as of September 22, 2022, among the Company, Ares Capital Corporation, as administrative agent for the lenders, ACF Finco I LP, as revolving agent for the lenders and the lenders party thereto (as amended, the “Credit Agreement”). In connection with this repayment, the Credit Agreement, and all guarantee and security documents executed in connection therewith, were terminated.
The company voluntarily repaid all outstanding debt under its credit agreement with Ares Capital Corporation and other lenders using proceeds from a recent offering. This eliminated the debt facility entirely, terminating the credit agreement and all related security documents that had been in place since September 2022.
Event · Item 2.03 — Creation of a Direct Financial Obligation
Tempus AI disclosed creation of a direct financial obligation, with details incorporated by reference from Item 1.01.
Added in current filing · verify on EDGAR →
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
The company disclosed the creation of a direct financial obligation under Item 2.03. The specific details of this obligation are referenced in Item 1.01 of the same 8-K filing, which is not included in the provided text. Without access to Item 1.01, the nature, amount, and terms of the financial obligation cannot be determined.
Event · Item 3.02 — Unregistered Sales of Equity Securities
Item 3.02 — Unregistered Sales of Equity Securities filed; see Key Changes for terms.
Added in current filing · verify on EDGAR →
The Company offered and sold the Notes to the initial purchasers in reliance on the exemption from registration provided by Section 4(a) (2) of the Securities Act of 1933, as amended (the “Securities Act”), and for resale by the initial purchasers to persons reasonably believed to be qualified institutional buyers pursuant to the exemption from registration provided by Section 4(a) (2) and Rule 144A under the Securities Act.
Tempus AI sold convertible notes in a private placement to institutional buyers without registering the securities with the SEC. The notes were sold under exemptions that allow sales to sophisticated investors without public registration. The initial purchasers can resell the notes only to qualified institutional buyers under Rule 144A.
Added in current filing · verify on EDGAR →
Initially, a maximum of 9,298,532 shares of Common Stock may be issued upon conversion of the Notes based on the initial maximum conversion rate of 20.2142 shares of Common Stock per $1,000 principal amount of Notes, which is subject to customary anti-dilution adjustment provisions.
The notes can convert into up to 9.3 million shares of common stock at a rate of about 20.21 shares per $1,000 of note principal. This represents potential dilution to existing shareholders if noteholders convert. The conversion rate can adjust under standard anti-dilution provisions, meaning the actual number of shares issued could change based on future corporate actions.
Added in current filing · verify on EDGAR →
To the extent that any shares of Common Stock are issued upon conversion of the Notes, they will be issued in transactions anticipated to be exempt from registration under the Securities Act by virtue of Section 3(a) (9) thereof because no commission or other remuneration is expected to be paid in connection with conversion of the Notes and any resulting issuance of shares of Common Stock.
When noteholders convert their notes into common stock, those share issuances will also be exempt from SEC registration under Section 3(a)(9) because no fees or commissions will be paid for the conversion. This is a standard structure for convertible note offerings that allows the company to issue shares upon conversion without additional registration requirements.
Event · Item 8.01 — Other Events
Tempus AI announced a convertible notes offering, with pricing disclosed on May 8, 2026.
Added in current filing · verify on EDGAR →
On May 7, 2026, the Company issued a press release announcing the proposed Offering.
Tempus AI announced a proposed offering of convertible notes on May 7, 2026. The 8-K references press releases attached as exhibits but does not disclose the offering size, terms, or use of proceeds in the body text itself.
Added in current filing · verify on EDGAR →
On May 8, 2026, the Company issued a press release announcing the pricing of the Notes.
The company announced pricing of the convertible notes on May 8, 2026, one day after the initial offering announcement. Specific pricing terms are referenced in an attached press release exhibit but not disclosed in the 8-K body.
Event · Item 9.01 — Financial Statements and Exhibits
Tempus AI issued $400M of 0% convertible senior notes due 2032 to optimize capital structure and reduce interest expense.
Added in current filing · verify on EDGAR →
Indenture, dated as of May 12, 2026, by and between Tempus AI, Inc. and U.S. Bank Trust Company, National Association, as Trustee
Tempus AI entered into an indenture on May 12, 2026 with U.S. Bank Trust Company as trustee to govern the issuance of convertible senior notes. This establishes the legal framework for the debt offering.
Added in current filing · verify on EDGAR →
Form of Global Note, representing Tempus AI, Inc.’s 0.00% Convertible Senior Notes due 2032
The notes carry a 0% coupon rate and mature in 2032. Zero-coupon convertible notes mean no cash interest payments, reducing near-term cash outflows while giving investors conversion rights to equity.
Added in current filing · verify on EDGAR →
Form of Confirmation for Capped Call Transactions
Tempus entered into capped call transactions, which are derivative instruments typically used to reduce potential dilution from convertible note conversions by effectively raising the conversion price ceiling. This protects existing shareholders from excessive dilution.
Added in current filing · verify on EDGAR →
Press release entitled “Tempus Announces Pricing of Upsized Offering of $400.0 Million of Convertible Senior Notes,” dated May 8, 2026
The offering was upsized to $400 million, indicating strong investor demand. The stated purpose is to optimize capital structure and reduce interest expense, suggesting refinancing of higher-cost existing debt.
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Figures/quotes linked to EDGAR · Narrative written by AI · May 25, 2026 · How we verify