TransMedics Group Q3 Earnings Call Highlights

Key Points

• Record Q3 results prompted higher guidance: Revenue rose 41% year over year to $203 million, and TransMedics raised its 2026 revenue outlook to $764 million–$774 million, implying 26%–28% growth over 2025.
• Growth was led by services and core transplant markets: Service revenue increased 60% and product revenue rose 29%; liver and heart gains helped offset a 6% decline in U.S. deceased donor volume. Adjusted net income was $18.9 million.
• New programs are longer-term growth catalysts: Management expects the ENHANCE Heart Part B and DENOVO Lung programs to contribute meaningfully starting in 2027, with European launches and a first-in-human kidney experience also planned for that year.

TransMedics Group NASDAQ: TMDX raised its full-year revenue outlook after reporting record third-quarter revenue and transplant case volume, as gains in its liver and heart businesses helped offset a decline in U.S. deceased donor volume.

The organ transplant technology and services company reported third-quarter revenue of $203 million, up 41% from a year earlier. Organic revenue was $194 million, an increase of 35%. President and CEO Waleed Hassanein said the results came despite typical seasonal pressures and a 6% decline in overall U.S. deceased donor volume during the quarter.

TransMedics increased its 2026 revenue guidance to $764 million to $774 million, from $737 million to $757 million. The new range includes approximately $14 million from PAD Aviation and implies growth of 26% to 28% over 2025.

The forecast assumes no meaningful fourth-quarter revenue contribution from the company’s ENHANCE Heart Part B and DENOVO Lung programs, which management expects to become growth catalysts beginning in the first quarter of 2027.

Product and Service Growth

Third-quarter product revenue rose 29% year over year to $113 million, while total service revenue increased 60% to $90 million. Service revenue included $9.4 million from PAD Aviation charter services; excluding PAD, service revenue grew approximately 43%.

U.S. transplant revenue was approximately $186 million, up 34% from a year earlier. Liver contributed about $150 million, heart about $33 million and lung about $2 million. International revenue rose 82% to approximately $6.6 million.

Hassanein attributed the company’s ability to limit the impact of seasonality to adoption and market-share gains across liver and heart segments, along with work supporting organ procurement organizations, or OPOs. He said ENHANCE Heart Part A also helped drive adoption in the company’s existing indication, although he did not characterize the study cases themselves as incremental.

Overall gross margin was 58.5%, down about 40 basis points from a year earlier. CFO Fernando Araujo said the decline reflected a greater proportion of lower-margin service revenue and dilution from PAD Aviation. Excluding PAD, gross margin was 61.1%, up approximately 230 basis points.

Product gross margin rose to 79.2%, while service gross margin improved to 32.2%. Araujo said service margins would likely normalize somewhat in the fourth quarter but remain above historical levels. Adjusted net income was $18.9 million, or $0.51 per diluted share, and the company ended the quarter with $493 million in cash and cash equivalents.

Heart and Lung Programs Target 2027

TransMedics completed enrollment of 175 patients in ENHANCE Heart Part A in September. The Food and Drug Administration approved a continued-access protocol for another 90 patients, with enrollment expected to begin in late 2026 or early 2027.

Hassanein said the company plans to submit an application amendment for the enhanced heart system’s existing indication sometime in 2027. He cautioned that positive feedback from surgeons was anecdotal and that the trial’s follow-up period still needed to be completed.

ENHANCE Heart Part B targets a new indication involving donor hearts preserved within roughly four hours. DENOVO Lung aims to expand adoption in the U.S. lung transplant market. In late October, the FDA approved protocol amendments allowing TransMedics’ Controlled Hypothermic Organ Preservation System, or CHOPS, to serve as the control arm in both studies.

Part B is designed to enroll about 600 patients, while DENOVO is designed for approximately 450. Participating centers are completing internal review processes. Hassanein said it was premature to discuss CHOPS pricing and that the company was targeting a possible FDA 510(k) decision for the system in the second half of 2027.

Europe, Kidney Development and Guidance

TransMedics plans to launch its Organ Care System and National OCS Program services in Italy, the Netherlands and Belgium in the first half of 2027. Hassanein also said PAD Aviation won the company’s first European transplant logistics tender in Italy’s Emilia-Romagna region in October.

The tender is multiyear, Hassanein said, though he did not disclose its value. He added that the company sees established European logistics budgets as an entry point for its transplant services.

For its kidney platform, TransMedics remains on track for a first-in-human clinical experience in the second half of 2027. Hassanein said details of the kidney trial design would be shared in the first half of 2027.

Management also addressed softer flight trends in October. Hassanein acknowledged that flights were down but said flight data alone did not capture all transplant activity, including ground transportation. He described the updated guidance as conservative given potential holiday seasonality.

TransMedics maintained its full-year adjusted operating margin outlook of 12.5% to 14%. Araujo said research and development spending should remain fairly stable at current levels for the next few quarters, with more detail on 2027 plans expected alongside fourth-quarter results.

About TransMedics Group (NASDAQ:TMDX)

TransMedics Group, Inc is a medical technology company focused on improving organ transplantation through systems that preserve and assess donor organs outside the body. The company's primary platform is the Organ Care System (OCS), a portable, technology-enabled perfusion system designed to maintain organs in a functioning, near-physiologic state during transport and evaluation.

TransMedics offers OCS products for heart, lung and liver transplantation. Its systems are intended to support the use of organs that may not otherwise be suitable for conventional cold-storage methods, potentially expanding the donor pool and providing transplant teams with additional information when evaluating organs for transplantation.

Founded in 1998 and headquartered in Andover, Massachusetts, TransMedics serves transplant centers in the United States and select international markets.

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