TransMedics Group, Inc.

Previous wording

Prior to 2024, we had incurred significant annual operating losses since inception and we have only recently achieved profitability. Our ability to generate revenue sufficient to achieve sustained profitability will depend on the continued commercial sales of our products and services. We generated total revenue of $143.5 million and $96.9 million, and net income of $25.7 million and $12.2 million, for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, we had an accumulated deficit of $442.6 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 transplant logistics capabilities, including hiring training and retaining pilots to scale our aviation transportation operations, 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

Prior to 2024, we had incurred significant annual operating losses since inception and we have only recently achieved profitability. Our ability to generate revenue sufficient to achieve sustained profitability will depend on the continued commercial sales of our products and services. We generated total revenue of $157.4 million and $300.9 million, and net income of $34.9 million and $60.6 million, for the three and six months ended June 30, 2025, respectively. As of June 30, 2025, we had an accumulated deficit of $407.7 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 transplant logistics capabilities, including hiring training and retaining pilots to scale our aviation transportation operations, 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

Since our acquisition of Summit, we have continued to offer flight school training services, consistent with Summit's operations prior to the acquisition. During each of the three months ended March 31, 2025 and 2024, service revenue of $0.9 million was from Summit's legacy operations, unrelated to the NOP and organ transplant.

Current wording

Since our acquisition of Summit, we have continued to offer flight school training services, consistent with Summit's operations prior to the acquisition. During the three and six months ended June 30, 2025, service revenue of $1.0 million and $1.9 million, respectively, was from Summit's legacy operations, unrelated to the NOP and organ transplant. During the three and six months ended June 30, 2024, service revenue of $1.1 million and $2.0 million, respectively, was from Summit's legacy operations, 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 procurement and OCS perfusion 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 months ended March 31, 2025 and 2024 also includes $0.6 million and $0.8 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 procurement and OCS perfusion 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, 2025 also includes $0.7 million and $1.3 million, respectively, of costs from Summit's legacy operations unrelated to the NOP and organ transplant. 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.

Previous wording

Selling, general and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in our commercial team and personnel in executive, marketing, finance and administrative functions, and recruiting and temporary service fees for such personnel. Selling, general and administrative expenses also include direct and allocated facility-related costs, costs to support the NOP, promotional activities, marketing, conferences and trade show costs as well as professional fees for legal, patent, consulting, investor and public relations, accounting and audit services and amortization of sales and marketing-related intangible assets. We expect that our selling, general and administrative expenses will increase over the long term as we increase our headcount to support the expected continued sales growth of our OCS products and our NOP.

Current wording

Selling, general and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in our commercial team and personnel in executive, marketing, finance and administrative functions, and recruiting and temporary service fees for such personnel. Selling, general and administrative expenses also include direct and allocated facility-related costs, costs to support the NOP, promotional activities, marketing, conferences and trade show costs as well as professional fees for legal, patent, consulting, investor and public relations, accounting and audit services and amortization of sales and marketing-related intangible assets. We expect that our selling, general and administrative expenses will increase over the long term as we increase our headcount and infrastructure to support the expected continued sales growth of our OCS products and our NOP.

Previous wording

We also had service revenue unrelated to OCS transplant of $0.9 million for each of the three months ended March 31, 2025 and 2024.

Current wording

We also had service revenue unrelated to OCS transplant of $1.0 million and $1.1 million for the three months ended June 30, 2025 and 2024, respectively.

Previous wording

Revenue from customers in the United States related to OCS transplant was $138.6 million in the three months ended March 31, 2025 and increased by $46.8 million compared to the three months ended March 31, 2024, due to higher sales volumes of our OCS Liver and OCS Heart 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 procurement, OCS perfusion management and transplant logistics services under the NOP in the United States.

Current wording

Revenue from customers in the United States related to OCS transplant was $152.2 million in the three months ended June 30, 2025 and increased by $43.7 million compared to the three months ended June 30, 2024, due to higher sales volumes of our OCS Liver and OCS Heart 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 procurement, OCS perfusion management and transplant logistics services under the NOP in the United States.

Previous wording

Revenue from customers outside the United States was $4.1 million for each of the three months ended March 31, 2025 and 2024.

Current wording

Revenue from customers outside the United States was $4.2 million and $4.7 million for the three months ended June 30, 2025 and 2024, respectively.

Previous wording

Cost of net product revenue increased by $2.2 million in the three months ended March 31, 2025 compared to the three months ended March 31, 2024. Cost of service revenue increased by $16.2 million in the three months ended March 31, 2025 compared to the three months ended March 31, 2024. Gross profit increased by $28.3 million in the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Current wording

Cost of net product revenue increased by $5.0 million in the three months ended June 30, 2025 compared to the three months ended June 30, 2024. Cost of service revenue increased by $10.8 million in the three months ended June 30, 2025 compared to the three months ended June 30, 2024. Gross profit increased by $27.3 million in the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Previous wording

Overall gross margin was 61% and 62% for the three months ended March 31, 2025 and 2024, respectively. The decrease in gross margin from 2024 to 2025 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 82% and 77% for the three months ended March 31, 2025 and 2024, respectively. Gross margin from net product revenue increased from the three months ended March 31, 2024 to the three months ended March 31, 2025 primarily due to higher volume of product sales. Gross margin from service revenue was 29% and 36% for the three months ended March 31, 2025 and 2024, respectively, and consisted primarily of organ procurement, OCS perfusion management and transplant logistics services under our NOP. Gross margin from service revenue decreased during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 primarily due to investments in our NOP network, including aviation-related expenditures, to prepare for future growth.

Current wording

Overall gross margin was 61% for each of the three months ended June 30, 2025 and 2024. Gross margin from net product revenue was 80% for each of the three months ended June 30, 2025 and 2024. Gross margin from service revenue was 32% and 28% for the three months ended June 30, 2025 and 2024, respectively, and consisted primarily of organ procurement, OCS perfusion management and transplant logistics services under our NOP. Gross margin from service revenue increased during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 primarily due to increased efficiencies in transplant logistics.

Previous wording

Total research, development and clinical trials expenses increased by $5.8 million from $11.4 million in the three months ended March 31, 2024 to $17.2 million in the three months ended March 31, 2025. Personnel related costs increased by $1.0 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 $1.3 million and $0.9 million for the three months ended March 31, 2025 and 2024, respectively. Laboratory supplies and research materials costs increased by $2.6 million from the three months ended March 31, 2024 to the three months ended March 31, 2025, primarily due to our increased need for supplies and materials used for development of our next generation OCS. Consulting and third-party services costs increased by $2.2 million due to development efforts by our external development consultants for our next generation OCS program and other product development.

Current wording

Total research, development and clinical trials expenses increased by $2.1 million from $13.9 million in the three months ended June 30, 2024 to $15.9 million in the three months ended June 30, 2025. Personnel related costs increased by $0.5 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 $1.2 million and $1.1 million for the three months ended June 30, 2025 and 2024, respectively. Laboratory supplies and research materials costs increased by $1.3 million from the three months ended June 30, 2024 to the three months ended June 30, 2025, primarily due to our increased need for supplies and materials used for development of our next generation OCS. Facility related and other costs increased by $0.6 million primarily due to the increased cost of supporting a larger group of research and development personnel.

Previous wording

Interest expense was $3.5 million and $3.6 million for the three months ended March 31, 2025 and 2024, respectively, 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 6.3% as of March 31, 2025.

Current wording

Interest expense was $3.5 million and $3.6 million for the three months ended June 30, 2025 and 2024, respectively, 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 6.3% in June 2025.

Previous wording

Interest income and other income (expense), net for the three months ended March 31, 2025 and 2024 included interest income of $2.3 million and $3.8 million, respectively, from interest earned on cash balances. The decrease in interest income was primarily due to lower yields and lower cash balances. Interest income and other income (expense), net for the three months ended March 31, 2025 and 2024 also included $0.5 million of realized and unrealized foreign currency transactions gains and $0.2 million of realized and unrealized foreign currency transactions losses, respectively.

Current wording

Interest income and other income (expense), net for the three months ended June 30, 2025 and 2024 included interest income of $2.5 million and $3.4 million, respectively, from interest earned on cash balances. The decrease in interest income was primarily due to lower yields on our cash balances. Interest income and other income (expense), net for the three months ended June 30, 2025 and 2024 also included $0.6 million of realized and unrealized foreign currency transactions gains and $0.2 million of realized and unrealized foreign currency transactions losses, respectively.

Previous wording

Total selling, general and administrative expenses increased by $7.5 million from $36.2 million in the three months ended March 31, 2024 to $43.6 million in the three months ended March 31, 2025 due primarily to increases in personnel related costs and professional and consultant fees. Personnel related costs increased by $3.3 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 $1.7 million and overall compensation increases. Personnel related costs included stock-based compensation expense of $7.3 million and $5.6 million for the three months ended March 31, 2025 and 2024, respectively. Professional and consultant fees increased by $3.8 million due primarily to increased professional and legal fees related to an independent review of business practices following allegations raised in a short seller report released in January 2025.

Current wording

Total selling, general and administrative expenses increased by $8.7 million from $79.1 million in the six months ended June 30, 2024 to $87.7 million in the six months ended June 30, 2025. Personnel related costs increased by $3.6 million primarily due to an increase in stock-based compensation expense of $3.4 million. Personnel related costs included stock-based compensation expense of $15.2 million and $11.8 million for the six months ended June 30, 2025 and 2024, respectively. Professional and consultant fees increased by $4.7 million due primarily to increased professional and legal fees related to an independent review of business practices following allegations raised in a short seller report released in January 2025 and, to a lesser extent, higher consulting services related to corporate communications and public affairs. Facility related and other costs increased by $2.4 million due primarily to increased depreciation and amortization and information technology infrastructure costs, as well as an increase in costs related to post-approval studies. These increases were partially offset by a decrease in NOP support costs of $1.2 million due to less activity supporting selling, general and administrative functions and a decrease in tradeshows and conferences costs of $0.9 million due primarily to lower costs related to tradeshows.

Previous wording

Prior to 2024, we had incurred significant annual operating losses since inception and we may continue to incur losses in the future. 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 from sales of our OCS products for use in clinical trials. At March 31, 2025, our principal source of liquidity was cash of $310.1 million.

Current wording

Prior to 2024, we had incurred significant annual operating losses since inception and we may continue to incur losses in the future. 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 from sales of our OCS products for use in clinical trials. At June 30, 2025, our principal source of liquidity was cash of $400.6 million.

Previous wording

During the three months ended March 31, 2025, operating activities used $2.9 million of cash, primarily resulting from net cash used by changes in our operating assets and liabilities of $44.4 million, partially offset by net income of $25.7 million and net non-cash charges of $15.9 million. Net cash used by changes in our operating assets and liabilities for the three months ended March 31, 2025 consisted primarily of an increase in accounts receivable of $44.1 million and a decrease in accounts payable and accrued expenses and other current liabilities of $3.9 million, partially offset by decreases in inventory of $2.0 million and prepaid expenses and other current assets of $1.9 million.

Current wording

During the six months ended June 30, 2025, operating activities provided $88.8 million of cash, primarily resulting from net income of $60.6 million and net non-cash charges of $32.4 million, partially offset by net cash used by changes in our operating assets and liabilities of $4.2 million. Net cash used by changes in our operating assets and liabilities for the six months ended June 30, 2025 consisted primarily of an increase in accounts receivable of $6.6 million, a decrease in accounts payable and accrued expenses and other current liabilities of $2.8 million, and a decrease in operating lease liabilities of $1.4 million, partially offset by a decrease in inventory of $5.7 million and a decrease in prepaid expenses and other current assets of $1.1 million.

Previous wording

During the three months ended March 31, 2024, operating activities used $3.4 million of cash, primarily resulting from net cash used by changes in our operating assets and liabilities of $28.1 million, partially offset by our net income of $12.2 million and net non-cash charges of $12.5 million. Net cash used by changes in our operating assets and liabilities for the three months ended March 31, 2024 consisted primarily of an increase in accounts receivable of $18.4 million, an increase in inventory of $5.6 million, a decrease in accounts payable and accrued expenses and other current liabilities of $2.1 million and an increase in prepaid expenses and other current assets of $1.6 million.

Current 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.

Previous wording

During the three months ended March 31, 2025, net cash used in investing activities of $27.0 million consisted of purchases of property, plant and equipment, primarily related to the purchase of transplant aircraft.

Current wording

During the six months ended June 30, 2025, net cash used in investing activities of $36.1 million consisted of purchases of property, plant and equipment, primarily related to the purchase of transplant aircraft.

Previous wording

During the three months ended March 31, 2024, net cash used in investing activities of $44.2 million consisted of purchases of property, plant and equipment, primarily related to the purchase of transplant aircraft.

Current 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, primarily related to the purchase of transplant aircraft.

Previous wording

During the three months ended March 31, 2025, net cash provided by financing activities of $3.0 million consisted of proceeds from the issuance of common stock upon exercise of stock options of $1.7 million and proceeds from the issuance of common stock in connection with the 2019 Employee Stock Purchase Plan of $1.3 million.

Current wording

During the six months ended June 30, 2025, net cash provided by financing activities of $10.1 million consisted of proceeds from the issuance of common stock upon exercise of stock options of $8.8 million and proceeds from the issuance of common stock in connection with the 2019 Employee Stock Purchase Plan of $1.3 million.

Previous wording

During the three months ended March 31, 2024, net cash provided by financing activities of $3.2 million consisted of proceeds from the issuance of common stock upon exercise of stock options of $2.5 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 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.

Previous wording

Borrowings under the CIBC Credit Agreement bear interest at an annual rate equal to either, at our option, (i) the secured overnight financing rate for an interest period selected by us, subject to a minimum of 1.50%, plus 2.0% or (ii) 1.0% plus the higher of a) the prime rate, subject to a minimum of 4.0% or b) the Federal Funds Effective Rate, plus 0.5%. At our option, we may prepay borrowings outstanding under the CIBC Credit Agreement, without a prepayment fee. All obligations under the CIBC Credit Agreement are guaranteed by us and each of our material subsidiaries.

Current wording

Borrowings under the CIBC Credit Agreement bear interest at an annual rate equal to either, at our option, (i) the secured overnight financing rate for an interest period selected by us, subject to a minimum of 1.50%, plus 2.0% or (ii) 1.0% plus the higher of a) the prime rate, subject to a minimum of 4.0% or b) the Federal Funds Effective Rate, plus 0.5%. We are obligated to repay the outstanding borrowings in equal monthly installments commencing in July 2026 until the maturity date in July 2027. At our option, we may prepay outstanding borrowings under the CIBC Credit Agreement, without a prepayment fee. All obligations under the CIBC Credit Agreement are guaranteed by us and each of our material subsidiaries.

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. 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, including expanding our research and development and manufacturing capabilities to Italy, 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

There have been no material changes to our cash requirements from those disclosed in our 2024 Form 10-K.

Current wording

There have been no material changes to our cash requirements from those disclosed in our 2024 Form 10-K. In July 2025, we purchased two parcels of land in Mirandola, Italy. We plan to construct research and development and manufacturing facilities but have not yet entered into constructions contracts.