TransMedics Group Inc

Previous wording

From our inception through December 31, 2023, we incurred significant operating losses. Our ability to generate revenue sufficient to achieve sustained profitability will depend on the continued growth in customer utilization of our products and services. We generated total revenue of $114.3 million and $211.2 million, and net income of $12.2 million and $24.4 million, for the three and six months ended June 30, 2024, respectively. We generated total revenue of $241.6 million and incurred a net loss of $25.0 million for the year ended December 31, 2023. As of June 30, 2024, we had an accumulated deficit of $479.3 million. We expect our operating and capital expenditures will continue to increase as we focus on growing commercial sales of our products in both the United States and select non-U.S. markets, including growing our commercial team, which will pursue increasing commercial sales of our OCS products; growing our NOP, including by maintaining and growing our logistics capabilities, including hiring and training of pilots to scale our aviation transportation, to support our NOP and reduce dependence on third party transportation, including by means of the acquisition, maintenance or replacement of fixed-wing aircraft or other acquisitions, joint ventures or strategic investments; scaling our manufacturing and sterilization operations; developing the next generation OCS; continuing research, development and clinical trial efforts; seeking regulatory clearance for new products and product enhancements, including additional indications or other organs, in both the United States and select non-U.S. markets; and operating as a public company.

Current wording

From our inception through December 31, 2023, we incurred significant operating losses. Our ability to generate revenue sufficient to achieve sustained profitability will depend on the continued growth in customer utilization of our products and services. We generated total revenue of $108.8 million and $319.9 million, and net income of $4.2 million and $28.6 million, for the three and nine months ended September 30, 2024, respectively. We generated total revenue of $241.6 million and incurred a net loss of $25.0 million for the year ended December 31, 2023. As of September 30, 2024, we had an accumulated deficit of $475.1 million. We expect our operating and capital expenditures will continue to increase as we focus on growing commercial sales of our products in both the United States and select non-U.S. markets, including growing our commercial team, which will pursue increasing commercial sales of our OCS products; growing our NOP, including by maintaining and growing our logistics capabilities, including hiring training and retaining pilots to scale our aviation transportation, to support our NOP and reduce dependence on third party transportation, including by means of the acquisition, maintenance or replacement of fixed-wing aircraft or other acquisitions, joint ventures or strategic investments; scaling our manufacturing and sterilization operations; developing the next generation OCS; continuing research, development and clinical trial efforts; seeking regulatory clearance for new products and product enhancements, including additional indications or other organs, in both the United States and select non-U.S. markets; and operating as a public company.

Previous wording

In March 2023, the U.S. Department of Health and Human Services’ Health Resources and Services Administration, or HRSA, announced initiatives designed to improve the Organ Procurement and Transplantation network, or OPTN, including its intent to solicit contract proposals to manage the OPTN, which is currently operated by the United Network for Organ Sharing, or UNOS, under a contract that expired in March 2024. Additionally, in September 2023, the Securing the U.S. Organ Procurement and Transplantation Network Act was signed into law and expressly authorizes HRSA to award multiple grants, contracts or cooperative agreements to support the operation of the OPTN and specifies that the OPTN shall be operated through awards that are distinct from awards made to support the organization tasked with supporting the networks’ board of directors. The impact that the HRSA initiatives and the U.S. Organ Procurement and Transplantation Network Act may have on our business, including on our NOP, is uncertain at this time.

Current wording

In March 2023, the U.S. Department of Health and Human Services’ Health Resources and Services Administration, or HRSA, announced initiatives designed to improve the Organ Procurement and Transplantation network, or OPTN, including its intent to solicit contract proposals to manage the OPTN, which is currently operated by the United Network for Organ Sharing, or UNOS, under a contract that expired in March 2024. Additionally, in September 2023, the Securing the U.S. Organ Procurement and Transplantation Network Act was signed into law and expressly authorizes HRSA to award multiple grants, contracts or cooperative agreements to support the operation of the OPTN and specifies that the OPTN shall be operated through awards that are distinct from awards made to support the organization tasked with supporting the networks’ board of directors. In September 2024, HRSA began awarding contracts aimed at supporting these initiatives. The impact that the HRSA initiatives and the U.S. Organ Procurement and Transplantation Network Act may have on our business, including on our NOP, is uncertain at this time.

Previous wording

Prior to the acquisition, Summit derived its revenue primarily from charter flight services. To a lesser extent, Summit also derived revenue from providing flight school training, managing aircraft and other related services. As part of the Summit integration, we have transitioned Summit's charter flight and aircraft management customers to third parties. We do not anticipate generating revenue from charter flights or aircraft management and related services. We are continuing to offer flight school training services. During the three and six months ended June 30, 2024, service revenue of $1.1 million and $2.0 million, respectively, of flight school training revenue is from Summit's legacy operations and is unrelated to the NOP and organ transplant.

Current wording

Prior to the acquisition, Summit derived its revenue primarily from charter flight services. To a lesser extent, Summit also derived revenue from providing flight school training, managing aircraft and other related services. As part of the Summit integration, we have transitioned Summit's charter flight and aircraft management customers to third parties. We do not anticipate generating revenue from charter flights or aircraft management and related services. We are continuing to offer flight school training services. During the three and nine months ended September 30, 2024, service revenue of $1.3 million and $3.3 million, respectively, consisting primarily of flight school training revenue is from Summit's legacy operations and is unrelated to the NOP and organ transplant. During the three and nine months ended September 30, 2023, service revenue of $2.4 million, including $1.6 million of charter flight and aircraft management services and $0.8 million of flight school training revenue is from Summit's legacy operations and is unrelated to the NOP and organ transplant.

Previous wording

Cost of net product revenue consists of costs of components of our OCS Consoles and disposable sets, costs of direct materials, labor and the manufacturing overhead that directly supports production and depreciation of OCS Consoles. Included in the cost of OCS disposable sets are the costs of our OCS Lung, OCS Heart and OCS Liver Solutions. Cost of service revenue primarily consists of labor and overhead that directly support organ retrieval and OCS organ management services and transportation and logistics costs, including labor costs for pilots, aircraft depreciation, aircraft costs, fuel, crew travel, maintenance and third-party flight costs and ground transportation that support organ delivery. Cost of service revenue for the three and six months ended June 30, 2024 also includes $0.9 million and $1.7 million, respectively, of costs from Summit's legacy operations unrelated to the NOP and organ transplant.

Current wording

Cost of net product revenue consists of costs of components of our OCS Consoles and disposable sets, costs of direct materials, labor and the manufacturing overhead that directly supports production and depreciation of OCS Consoles. Included in the cost of OCS disposable sets are the costs of our OCS Lung, OCS Heart and OCS Liver Solutions. Cost of service revenue primarily consists of labor and overhead that directly support organ retrieval and OCS organ management services and transportation and logistics costs, including labor costs for pilots, aircraft depreciation, aircraft costs, fuel, crew travel, maintenance and third-party flight costs and ground transportation that support organ delivery. Cost of service revenue for the three and nine months ended September 30, 2024 also includes $0.7 million and $2.4 million, respectively, of costs from Summit's legacy operations unrelated to the NOP and organ transplant. Cost of service revenue for the three and nine months ended September 30, 2023 also includes $2.3 million of costs from Summit's legacy operations unrelated to the NOP and organ transplant.

Previous wording

We also had service revenue unrelated to OCS transplant of $1.1 million for the three months ended June 30, 2024, which consisted of flight school training revenue from Summit's legacy operations.

Current wording

We also had service revenue unrelated to OCS transplant of $1.3 million for the three months ended September 30, 2024, which consisted primarily of flight school training revenue from Summit's legacy operations, and service revenue unrelated to OCS transplant of $2.4 million for the three months ended September 30, 2023, including $1.6 million of charter flight and aircraft management services and $0.8 million of flight school training revenue, from Summit's legacy operations.

Previous wording

Revenue from customers in the United States related to OCS transplant was $108.5 million in the three months ended June 30, 2024 and increased by $59.5 million compared to the three months ended June 30, 2023, due to higher sales volumes of our OCS Liver, OCS Heart and OCS Lung disposable sets and increased usage of the NOP. Revenue for each organ in the table above includes net product revenue from sales of disposable sets as well as service revenue for organ retrieval, OCS organ management and logistics services under the NOP in the United States. Establishing the NOP, which launched in late 2021, has allowed us to broaden our customer base and increase utilization of the OCS in organ transplantation. Substantially all of our customers in the United States now participate in the NOP. By adding logistics to our NOP offering in late 2023, we have been able to further increase product and service revenue.

Current wording

Revenue from customers in the United States related to OCS transplant was $104.9 million in the three months ended September 30, 2024 and increased by $45.2 million compared to the three months ended September 30, 2023, due to higher sales volumes of our OCS Liver, OCS Heart and OCS Lung disposable sets and increased usage of the NOP. Revenue for each organ in the table above includes net product revenue from sales of disposable sets as well as service revenue for organ retrieval, OCS organ management and logistics services under the NOP in the United States. Establishing the NOP, which launched in late 2021, has allowed us to broaden our customer base and increase utilization of the OCS in organ transplantation. Substantially all of our customers in the United States now participate in the NOP. By adding logistics to our NOP offering in late 2023, we have been able to further increase product and service revenue.

Previous wording

Revenue from customers outside the United States was $4.7 million and $3.5 million for the three months ended June 30, 2024 and 2023, respectively.

Current wording

Revenue from customers outside the United States was $2.6 million and $4.3 million for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

Cost of net product revenue increased by $5.9 million in the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Cost of service revenue increased by $23.4 million in the three months ended June 30, 2024 compared to the three months ended June 30, 2023 as we increased utilization of the NOP. Gross profit increased by $32.5 million in the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Current wording

Cost of net product revenue increased by $2.2 million in the three months ended September 30, 2024 compared to the three months ended September 30, 2023. Cost of service revenue increased by $20.0 million in the three months ended September 30, 2024 compared to the three months ended September 30, 2023 as we increased utilization of the NOP. Gross profit increased by $20.2 million in the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Previous wording

Overall gross margin was 61% and 70% for the three months ended June 30, 2024 and 2023, respectively. The decrease in gross margin from 2023 to 2024 was driven primarily by an increase in service revenue, which has a lower gross margin than product revenue. Gross margin from net product revenue was 80% for each of the three months ended June 30, 2024 and 2023. Gross margin from service revenue was 28% for each of the three months ended June 30, 2024 and 2023, and consisted primarily of organ retrieval, OCS organ management and logistics services under our NOP.

Current wording

Overall gross margin was 56% and 61% for the three months ended September 30, 2024 and 2023, respectively. The decrease in gross margin from 2023 to 2024 was driven primarily by the relative increase in service revenue, which has a lower gross margin than product revenue. Gross margin from net product revenue was 80% and 77% for the three months ended September 30, 2024 and 2023, respectively. Gross margin from net product revenue increased from the three months ended September 30, 2023 to the three months ended September 30, 2024 primarily due to higher volume of product sales. Gross margin from service revenue was 19% and 21% for the three months ended September 30, 2024 and 2023, respectively, and consisted primarily of organ retrieval, OCS organ management and logistics services under our NOP. Gross margin from service revenue decreased during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 primarily due to investments in our NOP network, including aviation-related expenditures, to prepare for future growth.

Previous wording

Total research, development and clinical trials expenses increased by $5.6 million from $8.3 million in the three months ended June 30, 2023 to $13.9 million in the three months ended June 30, 2024. Personnel related costs increased by $1.6 million primarily due to increased headcount to support development efforts for our next generation OCS program and overall compensation increases. Personnel related costs included stock-based compensation expense of $1.1 million and $0.7 million for the three months ended June 30, 2024 and 2023, respectively. Laboratory supplies and research materials costs increased by $2.6 million from the three months ended June 30, 2023 to the three months ended June 30, 2024 primarily due to our increased need for supplies and materials used for development of our next generation OCS and other product development. Consulting and third-party services costs increased by $1.3 million due to development efforts by our external development consultants for our next generation OCS program, other product development and digital tools.

Current wording

Total research, development and clinical trials expenses increased by $3.1 million from $11.1 million in the three months ended September 30, 2023 to $14.3 million in the three months ended September 30, 2024. Personnel related costs increased by $0.9 million primarily due to increased headcount to support development efforts for our next generation OCS program and overall compensation increases. Personnel related costs included stock-based compensation expense of $1.1 million and $0.8 million for the three months ended September 30, 2024 and 2023, respectively. Consulting and third-party services costs increased by $2.1 million due to development efforts by our external development consultants for our next generation OCS program, other product development and digital tools.

Previous wording

Total selling, general and administrative expenses increased by $24.7 million from $54.3 million in the six months ended June 30, 2023 to $79.1 million in the six months ended June 30, 2024 due primarily to increases in personnel related costs and facility related and other costs. Personnel related costs increased by $19.3 million primarily due to the continued expansion of our team to support the growth in our business, as well as an increase in stock-based compensation expense of $4.3 million, due primarily to additional grants to new and existing employees. Professional and consultant fees increased by $1.3 million due primarily to information technology and other enterprise solutions costs to support the growth in our business, partially offset by a decrease in legal fees. NOP support costs decreased due to improved efficiency in our NOP service model as a result of the addition of our logistics offering and increased scale. Facility related and other costs increased by $5.0 million due primarily to increased costs associated with post-approval studies and information technology infrastructure costs, and depreciation and amortization expense due to the growth in our business.

Current wording

Total selling, general and administrative expenses increased by $12.0 million from $30.7 million in the three months ended September 30, 2023 to $42.7 million in the three months ended September 30, 2024 due primarily to increases in personnel related costs, facility related and other costs and NOP support costs. Personnel related costs increased by $9.1 million primarily due to the continued expansion of our team to support the growth in our business, as well as an increase in stock-based compensation expense of $2.2 million, due primarily to additional grants to new and existing employees. NOP support costs increased by $1.2 million due primarily to increased utilization of the NOP and our efforts to prepare for further growth. Facility related and other costs increased by $3.5 million due primarily to increased costs associated with post-approval studies as well as information technology infrastructure costs and depreciation and amortization expense due to the growth in our business. These increases were partially offset by decreases in professional and consultant fees and tradeshows and conferences expenses. Professional and consultant fees decreased by $1.5 million due primarily to transaction costs incurred in the three months ended September 30, 2023 of $2.0 million related to our Summit acquisition and decreased legal fees, partially offset by increased fees in the three months ended September 30, 2024 related to information technology and other enterprise solutions costs to support the growth in our business.

Previous wording

Interest expense was $3.6 million and $2.5 million for the three months ended June 30, 2024 and 2023, respectively. The increase was due primarily to interest expense on the $460.0 million principal amount of the Notes, which were issued in May 2023.

Current wording

Interest expense was $3.6 million for each of the three months ended September 30, 2024 and 2023 and consisted of interest expense on the $460.0 million principal amount of the Notes that carry a 1.5% interest rate and interest expense on the $60.0 million principal amount of the CIBC loan that carries a variable interest rate, which was 7.2% as of September 30, 2024.

Previous wording

Interest income and other income (expense) for the three months ended June 30, 2024 and 2023 included interest income of $3.4 million and $2.4 million, respectively, from interest earned on cash balances. Other income (expense) for the three months ended June 30, 2024 also included $0.2 million of realized and unrealized foreign currency transactions losses.

Current wording

Interest income and other income (expense) for the three months ended September 30, 2024 and 2023 included interest income of $3.3 million and $5.2 million, respectively, from interest earned on cash balances. Other income (expense) for the three months ended September 30, 2024 and 2023 also included $0.7 million of realized and unrealized foreign currency transactions gains and $0.2 million of realized and unrealized foreign currency transactions losses, respectively.

Previous wording

The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023:

Current wording

The following table summarizes our results of operations for the nine months ended September 30, 2024 and 2023:

Previous wording

Revenue from customers in the United States related to OCS transplant was $200.3 million in the six months ended June 30, 2024 and increased by $113.9 million compared to the six months ended June 30, 2023, due to higher sales volumes of our OCS Liver, OCS Heart and OCS Lung disposable sets and increased usage of the NOP. Revenue for each organ in the table above includes net product revenue from sales of disposable sets as well as service revenue for organ retrieval, OCS organ management and logistics services under the NOP in the United States. Establishing the NOP, which launched in late 2021, has allowed us to broaden our customer base and increase utilization of the OCS in organ transplantation. Substantially all of our customers in the United States now participate in the NOP. By adding logistics to our NOP offering in late 2023, we have been able to further increase product and service revenue.

Current wording

Revenue from customers in the United States related to OCS transplant was $305.2 million in the nine months ended September 30, 2024 and increased by $159.1 million compared to the nine months ended September 30, 2023, due to higher sales volumes of our OCS Liver, OCS Heart and OCS Lung disposable sets and increased usage of the NOP. Revenue for each organ in the table above includes net product revenue from sales of disposable sets as well as service revenue for organ retrieval, OCS organ management and logistics services under the NOP in the United States. Establishing the NOP, which launched in late 2021, has allowed us to broaden our customer base and increase utilization of the OCS in organ transplantation. Substantially all of our customers in the United States now participate in the NOP. By adding logistics to our NOP offering in late 2023, we have been able to further increase product and service revenue.

Previous wording

Revenue from customers outside the United States was $8.8 million and $7.6 million in in the six months ended June 30, 2024 and 2023, respectively.

Current wording

Revenue from customers outside the United States was $11.4 million and $11.9 million in the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Cost of net product revenue increased by $12.7 million in the six months ended June 30, 2024 compared to the six months ended June 30, 2023. Cost of service revenue increased by $40.7 million in the six months ended June 30, 2024 compared to the six months ended June 30, 2023 as we increased utilization of the NOP. Gross profit increased by $63.7 million in the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Current wording

Cost of net product revenue increased by $14.9 million in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. Cost of service revenue increased by $60.7 million in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 as we increased utilization of the NOP. Gross profit increased by $83.9 million in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Previous wording

Overall gross margin was 61% and 70% for the six months ended June 30, 2024 and 2023, respectively. The decrease in gross margin from 2023 to 2024 was driven primarily by an increase in service revenue, which has a lower gross margin than product revenue. Gross margin from net product revenue was 79% for each of the six months ended June 30, 2024 and 2023. Gross margin from service revenue was 32% and 28% for the six months ended June 30, 2024 and 2023, respectively, and consisted primarily of organ retrieval, OCS organ management and logistics services under our NOP. The increase in gross margin from services was due primarily to improved efficiency in our NOP service model as a result of the addition of our logistics offering and increased scale.

Current wording

Overall gross margin was 59% and 66% for the nine months ended September 30, 2024 and 2023, respectively. The decrease in gross margin from 2023 to 2024 was driven primarily by the relative increase in service revenue, which has a lower gross margin than product revenue. Gross margin from net product revenue was 79% and 78% for the nine months ended September 30, 2024 and 2023, respectively. Gross margin from service revenue was 27% and 25% for the nine months ended September 30, 2024 and 2023, respectively, and consisted primarily of organ retrieval, OCS organ management and logistics services under our NOP. The increase in gross margin from services was due primarily to improved efficiency in our NOP service model as a result of the addition of our logistics offering and increased scale.

Previous wording

Total research, development and clinical trials expenses increased by $11.1 million from $14.2 million in the six months ended June 30, 2023 to $25.2 million in the six months ended June 30, 2024. Personnel related costs increased by $4.2 million primarily due to increased headcount to support development efforts for our next generation OCS program and overall compensation increases. Personnel related costs included stock-based compensation expense of $2.0 million and $1.2 million for the six months ended June 30, 2024 and 2023, respectively. Laboratory supplies and research materials costs increased by $3.8 million from the six months ended June 30, 2023 to the six months ended June 30, 2024, primarily due to our increased need for supplies and materials used for development of our next generation OCS and other product development. Consulting and third-party services costs increased by $2.4 million due to development efforts by our external development consultants for our next generation OCS program, other product development and digital tools. Facility related and other costs increased by $0.9 million from the six months ended June 30, 2023 to the six months ended June 30, 2024 due primarily to the increased costs of supporting a larger group of research and development personnel and their development efforts.

Current wording

Total research, development and clinical trials expenses increased by $14.2 million from $25.3 million in the nine months ended September 30, 2023 to $39.5 million in the nine months ended September 30, 2024. Personnel related costs increased by $5.1 million primarily due to increased headcount to support development efforts for our next generation OCS program and overall compensation increases. Personnel related costs included stock-based compensation expense of $3.1 million and $2.0 million for the nine months ended September 30, 2024 and 2023, respectively. Laboratory supplies and research materials costs increased by $4.1 million from the nine months ended September 30, 2023 to the nine months ended September 30, 2024, primarily due to our increased need for supplies and materials used for development of our next generation OCS and other product development. Consulting and third-party services costs increased by $4.5 million due to development efforts by our external development consultants for our next generation OCS program, other product development and digital tools. Facility related and other costs increased by $1.0 million from the nine months ended September 30, 2023 to the nine months ended September 30, 2024 due primarily to the increased costs of supporting a larger group of research and development personnel and their development efforts.

Previous wording

Total selling, general and administrative expenses increased by $13.5 million from $29.4 million in the three months ended June 30, 2023 to $42.9 million in the three months ended June 30, 2024 due primarily to increases in personnel related costs and facility related and other costs. Personnel related costs increased by $9.7 million primarily due to the continued expansion of our team to support the growth in our business, as well as an increase in stock-based compensation expense of $2.0 million, due primarily to additional grants to new and existing employees. Professional and consultant fees increased by $0.7 million due primarily to information technology and other enterprise solutions costs to support the growth in our business, partially offset by a decrease in legal fees. NOP support costs increased due primarily to increased utilization of the NOP and our efforts to prepare for further growth. Facility related and other costs increased by $2.5 million due primarily to increased costs associated with post-approval studies as well as information technology infrastructure costs and depreciation and amortization expense due to the growth in our business.

Current wording

Total selling, general and administrative expenses increased by $36.7 million from $85.0 million in the nine months ended September 30, 2023 to $121.7 million in the nine months ended September 30, 2024 due primarily to increases in personnel related costs and facility related and other costs. Personnel related costs increased by $28.4 million primarily due to the continued expansion of our team to support the growth in our business, as well as an increase in stock-based compensation expense of $6.4 million, due primarily to additional grants to new and existing employees. Facility related and other costs increased by $8.4 million due primarily to increased costs associated with post-approval studies and information technology infrastructure costs, and depreciation and amortization expense due to the growth in our business. Professional and consultant fees decreased due primarily to transaction costs incurred in the nine months ended September 30, 2023 of $2.0 million related to our Summit acquisition and decreased legal fees, partially offset by increased fees in the nine months ended September 30, 2024 related to information technology and other enterprise solutions costs to support the growth in our business.

Previous wording

Interest expense was $7.2 million and $3.6 million for the six months ended June 30, 2024 and 2023, respectively. The increase was due primarily to interest expense on the $460.0 million principal amount of the Notes, which were issued in May 2023.

Current wording

Interest expense was $10.8 million and $7.2 million for the nine months ended September 30, 2024 and 2023, respectively. The increase was due primarily to interest expense on the $460.0 million principal amount of the Notes, which were issued in May 2023.

Previous wording

Interest income and other income (expense) for the six months ended June 30, 2024 and 2023 included interest income of $7.2 million and $2.9 million, respectively, from interest earned on our cash balances. Other income (expense) included $0.4 million of realized and unrealized foreign currency transactions losses and $0.1 million of realized and unrealized foreign currency transactions gains during the six months ended June 30, 2024 and 2023, respectively.

Current wording

Interest income and other income (expense) for the nine months ended September 30, 2024 and 2023 included interest income of $10.5 million and $8.1 million, respectively, from interest earned on our cash balances. Other income (expense) included $0.3 million of realized and unrealized foreign currency transactions gains and $0.2 million of realized and unrealized foreign currency transactions losses during the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

From our inception through December 31, 2023, we have incurred significant operating losses. To date, we have funded our operations primarily with proceeds from borrowings under loan agreements, proceeds from the issuance of our Notes, proceeds from the sale of common stock in our public offerings and revenue from commercial sales of our OCS products and NOP services and clinical trials. On May 11, 2023, we issued $460.0 million aggregate principal amount of the Notes in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The total net proceeds from the sale of the Notes, after deducting debt issuance costs of $14.6 million, and purchases of Capped Calls of $52.1 million, were $393.3 million. At June 30, 2024, our principal source of liquidity was cash of $362.8 million.

Current wording

From our inception through December 31, 2023, we incurred significant operating losses. To date, we have funded our operations primarily with proceeds from borrowings under loan agreements, proceeds from the issuance of our Notes, proceeds from the sale of common stock in our public offerings and revenue from commercial sales of our OCS products and NOP services and clinical trials. On May 11, 2023, we issued $460.0 million aggregate principal amount of the Notes in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The total net proceeds from the sale of the Notes, after deducting debt issuance costs of $14.6 million, and purchases of Capped Calls of $52.1 million, were $393.3 million. At September 30, 2024, our principal source of liquidity was cash of $330.1 million.

Previous wording

During the six months ended June 30, 2024, operating activities provided $22.3 million of cash, primarily resulting from net income of $24.4 and net non-cash charges of $25.8 million, partially offset by net cash used by changes in our operating assets and liabilities of $27.9 million. Net cash used by changes in our operating assets and liabilities for the six months ended June 30, 2024 consisted primarily of an increase in accounts receivable of $17.7 million, an increase in inventory of $7.9 million and an increase in prepaid expenses and other current assets of $3.2 million, partially offset by an increase in accounts payable and accrued expenses and other current liabilities of $2.4 million .

Current wording

During the nine months ended September 30, 2024, operating activities provided $29.1 million of cash, primarily resulting from net income of $28.6 and net non-cash charges of $39.7 million, partially offset by net cash used by changes in our operating assets and liabilities of $39.2 million. Net cash used by changes in our operating assets and liabilities for the nine months ended September 30, 2024 consisted primarily of an increase in accounts receivable of $26.5 million, an increase in inventory of $12.5 million and an increase in prepaid expenses and other current assets of $6.1 million, partially offset by an increase in accounts payable and accrued expenses and other current liabilities of $7.4 million.

Previous wording

During the six months ended June 30, 2023, operating activities used $14.5 million of cash, primarily resulting from our net loss of $3.6 million and net cash used by changes in our operating assets and liabilities of $23.3 million, partially offset by net non-cash charges of $12.4 million. Net cash used by changes in our operating assets and liabilities for the six months ended June 30, 2023 consisted primarily of an increase in accounts receivable of $19.9 million and an increase in inventory of $11.0 million, partially offset by an increase in accounts payable and accrued expenses and other current liabilities of $7.9 million.

Current wording

During the nine months ended September 30, 2023, operating activities used $21.3 million of cash, primarily resulting from our net loss of $29.1 million and net cash used by changes in our operating assets and liabilities of $38.8 million, partially offset by net non-cash charges of $46.5 million, which included an IPR&D charge of $27.2 million. Net cash used by changes in our operating assets and liabilities for the nine months ended September 30, 2023 consisted primarily of an increase in accounts receivable of $31.0 million, an increase in inventory of $21.0 million and an increase in prepaid expenses and other current assets of $2.2 million, partially offset by an increase in accounts payable and accrued expenses and other current liabilities of $15.8 million.

Previous wording

During the six months ended June 30, 2024, net cash used in investing activities of $67.9 million consisted of purchases of property, plant and equipment, including an increase of $53.6 million in transplant aircraft.

Current wording

During the nine months ended September 30, 2024, net cash used in investing activities of $115.7 million consisted primarily of purchases of property, plant and equipment, including an increase of $96.2 million in transplant aircraft. We also received $0.4 million for the final settlement of the Summit purchase price working capital adjustments.

Previous wording

During the six months ended June 30, 2024, net cash provided by financing activities of $13.8 million consisted of proceeds from the issuance of common stock upon exercise of stock options of $13.2 million and proceeds from the issuance of common stock in connection with the 2019 Employee Stock Purchase Plan of $0.6 million.

Current wording

During the nine months ended September 30, 2024, net cash provided by financing activities of $21.7 million consisted of proceeds from the issuance of common stock upon exercise of stock options of $19.6 million and proceeds from the issuance of common stock in connection with the 2019 Employee Stock Purchase Plan of $2.1 million.

Previous wording

During the six months ended June 30, 2023, net cash provided by financing activities of $398.0 million consisted of net proceeds from the issuance of our Notes of $445.4 million, partially offset by payments of $52.1 million for associated capped calls, proceeds from the issuance of common stock upon exercise of stock options of $4.3 million and proceeds from the issuance of common stock in connection with the 2019 Employee Stock Purchase Plan of $0.4 million.

Current wording

During the nine months ended September 30, 2023, net cash provided by financing activities of $399.5 million consisted of net proceeds from the issuance of our Notes of $445.4 million, partially offset by payments of $52.1 million for associated capped calls, proceeds from the issuance of common stock upon exercise of stock options of $5.2 million and proceeds from the issuance of common stock in connection with the 2019 Employee Stock Purchase Plan of $1.0 million.

Previous wording

A conditional conversion feature of the Notes was triggered on June 30, 2024, as the last reported sale price of our common stock was greater than or equal to 130% of the conversion price of the Notes for at least 20 trading days during the period of 30 consecutive trading days ending on and including the last trading day of the quarter ended June 30, 2024, and the Notes therefore became convertible at the noteholders’ election in the calendar quarter ended September 30, 2024 (and only during this calendar quarter). If this condition or another conversion condition is met in the future, the Notes may again become convertible, otherwise the Notes will be convertible at the noteholders’ election from March 1, 2028 through the close of business on the second scheduled trading day immediately before the maturity date.

Current wording

A conditional conversion feature of the Notes was triggered on June 30, 2024, as the last reported sale price of our common stock was greater than or equal to 130% of the conversion price of the Notes for at least 20 trading days during the period of 30 consecutive trading days ending on and including the last trading day of the quarter ended June 30, 2024, and the Notes therefore became convertible at the noteholders’ election in the calendar quarter ended September 30, 2024. This conditional conversion feature was triggered again on September 30, 2024, and the Notes therefore are convertible at the noteholders’ election in the calendar quarter ending December 31, 2024. If this condition or another conversion condition is met in the future, the Notes may again become convertible, otherwise the Notes will be convertible at the noteholders’ election from March 1, 2028 through the close of business on the second scheduled trading day immediately before the maturity date.

Previous wording

As we continue to pursue and increase commercial sales of our OCS products, we expect our costs and expenses to increase in the future, particularly as we expand our commercial team, grow our NOP, scale our manufacturing and sterilization operations, continue research, development and clinical trial efforts, seek regulatory approval for new products and product enhancements, including new indications, both in the United States and in select non-U.S. markets, and seek greater control of air and ground transport for our NOP. For example, if the demand for our products exceeds our existing manufacturing and sterilization capacity, our ability to fulfill orders would be limited until we have sufficiently expanded such operations. In addition, following the closing of our IPO, we have incurred and expect to continue to incur additional costs associated with operating as a public company. The timing and amount of our operating and capital expenditures will depend on many factors, including:

Current wording

As we continue to pursue and increase commercial sales of our OCS products, we expect our costs and expenses to increase in the future, particularly as we expand our commercial team, grow our NOP, scale our manufacturing and sterilization operations, continue research, development and clinical trial efforts, seek regulatory approval for new products and product enhancements, including new indications, both in the United States and in select non-U.S. markets, and seek greater control of air and ground transport for our NOP. For example, if the demand for our products exceeds our existing manufacturing and sterilization capacity, our ability to fulfill orders would be limited until we have sufficiently expanded such operations. The timing and amount of our operating and capital expenditures will depend on many factors, including:

Previous wording

the costs associated with maintaining and growing our logistics capabilities, including by means of the acquisition, maintenance, or replacement of fixed-wing aircraft for our aviation transportation services or other acquisitions, joint ventures or strategic investments;

Current wording

the costs associated with maintaining and growing our logistics capabilities, including by means of attracting, training and retaining pilots, and the acquisition, maintenance, or replacement of fixed-wing aircraft for our aviation transportation services or other acquisitions, joint ventures or strategic investments;