TransMedics Group, Inc. Q1 FY2025 earnings call

• 1Q 2025 was the strongest quarter in TransMedics' history with total revenue up 48% YOY. - Growth driven by higher OCS NOP utilization and center penetration in US for liver and heart transplants. - Transplant services revenue up 56% YOY, transplant logistics services revenue up 80% YOY. - Overall gross margins improved to 61.5% in 1Q. - Planning to launch two new heart and lung clinical programs later in 2025. - Focus on vertically integrating critical technology blocks to minimize supply chain risks. - Organ transplantation is insulated from economic cycles due to best clinical outcomes and cost-effectiveness.

Total revenue for 1Q 2025 was $143.5 million, representing approximately 48% growth year-over-year. Transplant services revenue for 1Q was approximately $55.3 million, up from $35.5 million in Q1 2024. Transplant Logistics services revenue for 1Q was $26.1 million, representing approximately 80% year-over-year growth. Product revenue for the first quarter reached $88 million, up 44% year-over-year growth. Service revenue came in at $55 million, reflecting 56% year-over-year growth. US transplant revenue was $139 million, up 51% year-over-year and 19% sequentially. OUS revenue was $4 million, down 1% from Q1 of 2024 and up 4% sequentially.

• Raised full-year 2025 revenue guidance to $565 million to $585 million from prior range of $530 million to $552 million. - Expect operating margin improvement of at least 400 basis points in 2025 versus 2024. - Anticipate gross margin expansion across product and service but moderated by increasing service revenue proportion. - Balancing strategic growth with financial discipline in capital allocation.

• Potential impact of geopolitical, macroeconomic, and tariff policies on business. - Tariffs could impact, but TransMedics is a US manufacturer and focused on vertical integration. - Geopolitical and economic uncertainties could affect business operations.

Q: Congrats on strong quarter, break down drivers of liver growth?

A: Strong growth in liver across DBD, DCD, more utilization of disease donors, gaining share with best liver platform.

Q: What about April results and guidance?

A: April results confident in guidance range, momentum expected to continue with some seasonality.

Q: Talk on next-gen heart and lung products, service margins?

A: Confident in product revenue from trials, but silent on service revenue control arm.

Q: Competitors entering liver market, confidence?

A: Confident in liver platform as best, upcoming publications will prove value.

Q: Receivables increase, commentary?

A: Timing of billing, delayed in Q1, expecting recovery in Q2 with new digital ecosystem billing.

Q: Guidance and second quarter expectation?

A: Guidance reflects seasonality, expect modest improvement in Q2 with some variability.

Q: Margins, service gross margin gating item?

A: Utilization of assets, increasing aircraft utilization to expand margins.

Q: External distraction, impact on share?

A: No softness, clinical community voted with action, focus on serving users.

Q: Reimbursement help for transplant sites?

A: TransMedics has reimbursement experts, involved in working groups.

Q: Seasonality and Q2 expectation?

A: Expect some seasonality, could hit Q2 or Q3, guidance structured accordingly.

Q: Clinical trials, cannibalization?

A: Heart trial has new indication trial not currently served, not cannibalizing.

Q: Italy facility, reason?

A: Mirandola is hub for perfusion tech, talent for polycarbonate components.

Q: Transplant policy updates?

A: Not aware of imminent updates, actively engaged with policymakers.

Q: Lung trial enthusiasm, heart trial superiority?

A: Loud buzz in lung and heart trials, heart trial is Level 1 pivotal PMA trial to test against standard of care.