TransMedics Group, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of the Business and Basis of Presentation

TransMedics Group, Inc. (“TransMedics Group” and, together with its consolidated subsidiaries, the “Company”) was incorporated in the Commonwealth of Massachusetts in October 2018. TransMedics, Inc. (“TransMedics”), an operating company and wholly owned subsidiary of TransMedics Group, was incorporated in the State of Delaware in August 1998. The Company is a medical technology company transforming organ transplant therapy for end-stage organ failure patients across multiple disease states. The Company developed the Organ Care System (“OCS”) to replace a decades-old standard of care. The OCS represents a paradigm shift that transforms organ preservation for transplantation from a static state to a dynamic environment that enables new capabilities, including organ optimization and assessment. The Company’s OCS technology replicates many aspects of the organ’s natural living and functioning environment outside of the human body. The Company also developed its National OCS Program (“NOP”), an innovative turnkey solution to provide outsourced organ procurement, OCS perfusion management and transplant logistics services, to provide transplant programs in the United States with a more efficient process to procure donor organs with the OCS. The Company’s transplant logistics services include aviation transportation, ground transportation and other coordination activity.

The accompanying condensed consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. The Company believes that its existing cash of$493.0 million as of September 30, 2026 will be sufficient to fund its operations, capital expenditures, and debt service payments for at least the next 12 months following the filing of this Quarterly Report on Form 10-Q. If the Company needs to seek additional funding through equity financings, debt financings or strategic alliances, the Company may not be able to obtain financing on acceptable terms, or at all, and the terms of any financing may adversely affect the holdings or the rights of the Company’s shareholders. If the Company is unable to obtain funding when needed, the Company will be required to delay, reduce or eliminate some or all of its research and development programs, product expansion or commercialization efforts, or the Company may be unable to continue operations.

The Company is subject to risks and uncertainties common to companies in the medical device industry and of similar size, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, uncertainty of market acceptance of products, and the need to obtain additional financing to fund operations. Products currently under development will require additional research and development efforts, including additional clinical testing and regulatory approval, prior to commercialization. These efforts require additional capital, adequate personnel, infrastructure and extensive compliance-reporting capabilities. The Company’s research and development may not be successfully completed, adequate protection for the Company’s technology may not be obtained, the Company may not obtain necessary government regulatory approval on its expected timeline, or at all, and approved products may not prove commercially viable. The Company operates in an environment of rapid change in technology and competition. In addition, the Company is subject to risks and uncertainties related to its aviation transportation services, including, but not limited to, compliance with Federal Aviation Administration (“FAA”) regulations, pilot availability and operational disruptions.

The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

2. Summary of Significant Accounting Policies

Unaudited Interim Financial Information

The accompanying unaudited interim financial statements and related notes have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2025 included in the Company’s Annual Report on Form 10-K filed with the SEC. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of September 30, 2026 and results of operations for the three and nine months ended September 30, 2026 and 2025 and cash flows for the nine months ended September 30, 2026 and 2025 have been made. The Company’s results of operations for the three and nine months ended September 30, 2026 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2026 or any other period.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected in these unaudited condensed consolidated financial statements include, but are not limited to, revenue recognition, the valuation of inventory, the valuation of assets acquired and liabilities assumed in business combinations, including goodwill, the valuation of stock-based awards and income taxes. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. As of the date of issuance of these unaudited condensed consolidated financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update estimates, judgments or revise the carrying value of any assets or liabilities. Actual results may differ from those estimates or assumptions.

Risk of Concentrations of Credit, Significant Customers and Significant Suppliers

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and accounts receivable. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. As of September 30, 2026 and December 31, 2025, the Company’s allowance for credit losses wasnot material. Significant customers are those that accounted for 10% or more of the Company’s revenue or accounts receivable. For thethree and nine months ended September 30, 2026 and 2025, no customer accounted for more than 10% of revenue. As of September 30, 2026 and December 31, 2025, no customer accounted for more than 10% of accounts receivable.

Certain of the components and subassemblies included in the Company’s products are obtained from a sole source, a single source or a limited group of suppliers, as are sterilization services. Although the Company seeks to reduce dependence on those limited sources of suppliers, manufacturers and service providers, the partial or complete loss of certain of these sources could have a material adverse effect on the Company’s operating results, financial condition and cash flows and damage its customer relationships.

Fair Value Measurements

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

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Level 1—Quoted prices in active markets for identical assets or liabilities.

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Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

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Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The carrying values of the Company’s accounts receivable, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities. The carrying value of the Company’s long-term debt approximates its fair value (a Level 2 measurement) at each balance sheet date due to its variable interest rate, which approximates a market interest rate. The Company’s 1.50% convertible senior notes due 2028 (the “Notes”) are carried at the face value less unamortized debt discount and issuance costs on the accompanying condensed consolidated balance sheets, and the fair value of the Notes is presented at each reporting period for disclosure purposes only (see Note 8).

Spare Parts Inventory

Spare parts are used in aviation operations and are generally not for sale. Spare parts inventory is comprised of repairable and expendable spare aircraft parts, which are valued at the lower of cost or net realizable value, using the specific identification method. Storage costs and miscellaneous materials and supplies costs related to inventory or to support flight equipment are expensed as incurred. As of September 30, 2026 and December 31, 2025, spare parts inventory of$4.3 million and$4.7 million, respectively, is included within prepaid expenses and other current assets on the accompanying condensed consolidated balance sheets. The Company determines, based on the evidence that exists, whether or not it is appropriate to maintain a reserve for excess and obsolete spare parts inventory. The reserve is based on historical experience related to the disposal of inventory due to damage, physical deterioration, obsolescence, or other causes. As of September 30, 2026 and December 31, 2025, the Company had no allowance for spare parts excess and obsolescence.

Foreign Currency Translation

The functional currency of each of the Company’s foreign subsidiaries is the currency of the local country. Assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars using the period-end exchange rates, and income and expense items are translated into U.S. dollars using average exchange rates in effect during each period. The effects of these foreign currency translation adjustments are included in accumulated other comprehensive income (loss), a separate component of stockholders’ equity.

The Company also incurs transaction gains and losses resulting from intercompany transactions as well as transactions with customers or vendors denominated in currencies other than the functional currency of the legal entity in which the transaction is recorded. Realized and unrealized foreign currency transaction gains (losses) are included in the condensed consolidated statements of operations as a component of other income (expense). Realized and unrealized losses totaled$0.2 million and$0.9 million for the three and nine months ended September 30, 2026, respectively, and realized and unrealized losses totaled$0.1 million for thethree months ended September 30, 2025 and realized and unrealized gains totaled$1.0 million for the nine months ended September 30, 2025.

Recently Adopted Accounting Pronouncements

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326) to introduce a practical expedient to calculating current expected credit loss by assuming that the current conditions as of the balance sheet date will not change for the remaining life of the asset. This expedient can only be applied to current accounts receivable and current contract assets. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025 and interim periods within those annual periods, and this update is applied prospectively. The Company adopted this standard effective January 1, 2026 and applied the practical expedient to assets within its scope. The adoption didnot have a material impact on the consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) to improve financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. ASU 2024-03 allows for adoption using either a prospective or retrospective method. The Company is currently assessing the impact of the adoption of this guidance on its consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which removes all references to software development project stages and requires entities to start capitalizing software costs when both of the following occur: (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. The amendments in ASU 2025-06 are effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted as of the beginning of a fiscal year. The amendments can be applied prospectively, retrospectively, or via a modified prospective transition method. The Company is currently assessing the impact of the adoption of this guidance on its consolidated financial statements.

In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. ASU 2025-10 establishes authoritative guidance for accounting for government grants received by business entities, and clarifies the appropriate accounting in an effort to reduce diversity in practice and increase consistency of application across business entities. ASU 2025-10 is effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. Adoption of this guidance can be appliedvia a modified prospective approach, a modified retrospective approach, or a retrospective approach. Early adoption is permitted. The Company is currently assessing the impact of the adoption of this guidance on its consolidated financial statements.

3. Strategic Investment in PAD Aviation service GmbH

On July 1, 2026, the Company, through its wholly owned subsidiary TransMedics GmbH, completed a strategic investment in PAD Aviation service GmbH (“PAD Aviation”), a Germany-based private aviation operator. The investment was made pursuant to a share purchase agreement under which TransMedics GmbH acquired a minority interest in PAD Aviation and all remaining interest was transferred by the sellers directly to a Netherlands Stichting (“PAD Aviation Partner”). The investment supports the Company’s ongoing efforts to build a dedicated organ transplantation air and ground logistics network in Europe.

The Company evaluated PAD Aviation under the variable interest entity (“VIE”) model and determined that PAD Aviation is a VIE. The investment in PAD Aviation has been made for it to provide aviation services principally on behalf of the Company, and the Company, through these arrangements with PAD Aviation, has the power to direct the activities that most significantly affect PAD Aviation’s economic performance. The Company also has the right to receive benefits and the obligation to absorb losses that could potentially be significant to PAD Aviation. Accordingly, the Company is the primary beneficiary of PAD Aviation and has included PAD Aviation in its condensed consolidated financial statements since the investment date. The consolidation of PAD Aviation for financial reporting purposes does not reflect legal ownership or control of PAD Aviation for purposes of applicable aviation regulations.

The investment in PAD Aviation was accounted for as a purchase of a business under ASC Topic 805, Business Combinations. The preliminary purchase consideration of $7.4 million, net of cash acquired, reflected an upfront cash payment, deferred consideration and working capital adjustments.

The Company’s condensed consolidated financial statements reflect the preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on fair value as of the date of the investment. The Company’s estimate of preliminary purchase consideration is subject to change upon finalizing working capital adjustments. The following table summarizes the allocation of the preliminary purchase price (in thousands):

The identifiable intangible assets consist of customer relationships and a trade name and are being amortized to selling, general and administrative expenses over their estimated useful lives ofseven years. Goodwill was recognized for the excess purchase price over the fair value of the net assets acquired. Goodwill is primarily attributable to the assembled workforce of the acquired business (which is not eligible for separate recognition as an identifiable intangible asset) and anticipated synergies. Goodwill from the investment is included within the Company’sone reporting unit and in the Company’s enterprise-level annual review for impairment. Goodwill resulting from the investment is not deductible for tax purposes.

The Company incurred total transaction costs of$5.1 million for third-party professional services utilized for the investment, which are included within selling, general and administrative expenses in the condensed consolidated statements of operations. The operating results of PAD Aviation have been included in the Company’s condensed consolidated financial statements beginning on the investment date. Pro forma results of operations for the investment have not been presented as they are not material to the Company’s condensed consolidated results of operations.

PAD Aviation’s creditors do not have recourse to the general credit of the Company, and its assets are not available to satisfy obligations of the Company’s other subsidiaries. The Company hasno contractual obligation to provide financial support beyond amounts recognized in the condensed consolidated financial statements.

4. Inventory

Inventory consisted of the following (in thousands):

5. Property, Plant and Equipment, Net

Property, plant and equipment, net consisted of the following (in thousands):

During the three and nine months ended September 30, 2026, total depreciation and amortization expense, including finance lease amortization (see Note 11), was$10.7 million and$30.9 million, respectively. During the three and nine months ended September 30, 2025, total depreciation and amortization expense was$6.8 million and$19.6 million, respectively. Construction-in-progress as of September 30, 2026 primarily related to the design and construction of the Company’s new headquarters facility in Somerville, Massachusetts. Construction-in-progress as of December 31, 2025 primarily related to the in-process construction of manufacturing equipment.

The Company capitalized costs associated with the development of internal-use software of$2.3 million and$6.7 million during the three and nine months ended September 30, 2026, respectively, and$2.2 million and$6.2 million during the three and nine months ended September 30, 2025, respectively. The Company recorded amortization expense of$1.0 million and$2.5 million during the three and nine months ended September 30, 2026, respectively, and$0.4 million and$0.8 million during the three and nine months ended September 30, 2025, respectively. The net book value of internal-use software was$15.4 million and$11.2 million as of September 30, 2026 and December 31, 2025, respectively, of which$0.8 million and$0.1 million was included in construction-in-progress as of those respective dates.

Substantially all of the Company’s tangible property, plant and equipment are held in the United States.

6. Goodwill and Intangible Assets

Goodwill relates to the Company’s 2023 acquisition of Summit Aviation, Inc. and Northside Property Group, LLC (“Summit”) and the Company’s 2026 PAD Aviation investment. Goodwill is not amortized, but instead is reviewed for impairment at least annually or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired. To date, the Company has hadno impairments to goodwill.

The change in goodwill during thenine months ended September 30, 2026 was as follows (in thousands):

Acquired intangible assets as of September 30, 2026, which only related to the Company’s 2026 PAD Aviation investment, consisted of the following (in thousands):

Acquired intangible assets as of December 31, 2025, which only related to the Company’s 2023 Summit acquisition, consisted of the following (in thousands):

During the first quarter of 2026, the Company updated its estimate of the remaining useful life of acquired intangible assets from its acquisition of Summit based on its determination that the remaining economic benefit was substantially realized. This change in estimated useful life resulted in the recognition of $1.9 million of incremental amortization expense within selling, general and administrative expense during the first quarter of 2026.

The change in the Company’s acquired intangible assets during thenine months ended September 30, 2026 was as follows (in thousands):

Amortization expense is recorded within selling, general and administrative expense. Amortization expense was$0.2 million and$2.1 million, respectively, for the three and nine months ended September 30, 2026. Amortization expense was$0.1 million and$0.2 million, respectively, for the three and nine months ended September 30, 2025. Future amortization expense of the intangible assets as of September 30, 2026 is expected to be as follows (in thousands):

7. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

Certain prior year amounts have been reclassified to conform to the current-period presentation.

8. Long-Term Debt and Financing Arrangements

Convertible Senior Notes

The Notes consisted of the following (in thousands):

As of September 30, 2026, the estimated fair value of the Notes was$538.6 million. The fair value was determined based on the quoted price of the last trade of the Notes prior to the end of the reporting period in an inactive market, which is considered as Level 2 in the fair value hierarchy.

On May 11, 2023, the Company 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, pursuant to an indenture dated May 11, 2023, by and between the Company and U.S. Bank Trust Company, National Association (the “Indenture”).

The initial conversion price of the Notes is approximately $94.00 per share of common stock, which represents a premium of approximately 32.5% over the closing price of the Company’s common stock on May 8, 2023. The Notes will mature on June 1, 2028, unless earlier repurchased, redeemed or converted. The Company used $52.1 million of the proceeds from the sale of the Notes to fund the cost of entering into capped call transactions, described below. The proceeds from the issuance of the Notes were approximately $393.3 million, net of capped call transaction costs of $52.1 million and initial purchaser discounts and other debt issuance costs totaling $14.6 million.

The Notes bear interest at a rate of 1.50% per year and interest is payable semiannually in arrears on June 1 and December 1 of each year. The initial conversion rate is 10.6388 shares of common stock per $1,000 principal amount of the Notes, which represents an initial conversion price of approximately $94.00 per share of common stock. The conversion rate and conversion price are subject to customary adjustments upon the occurrence of certain events as described in the Indenture.

Before March 1, 2028, noteholders have the right to convert their Notes only upon the occurrence of certain events, including certain corporate events, and during thefive business days immediately after anyten consecutive trading days in which the trading price per $1,000 principal amount of Notes is less than ninety-eight percent (98%) of the as converted value. Additionally, noteholders can convert their Notes during any calendar quarter (and only during such calendar quarter), commencing after the calendar quarter ending on September 30, 2023 but before March 1, 2028, provided the last reported sale price of the common stock for at least 20 trading days is greater than or equal to 130% of the conversion price during the 30 consecutive trading days ending on the last trading day of a calendar quarter. From and after March 1, 2028, noteholders may convert their Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. The Company has the right to elect to settle conversions either in cash, shares or in a combination of cash and shares of its common stock.

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, if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price 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. In addition, calling any Note for redemption will constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted after it is called for redemption.

During the three and nine months ended September 30, 2026, the Company recognized$2.5 million and$7.4 million, respectively, in interest expense related to the 1.50% cash coupon of the Notes and amortization of debt issuance costs. During thethree and nine months ended September 30, 2025, the Company recognized$2.4 million and$7.3 million, respectively, in interest expense related to the 1.50% cash coupon of the Notes and amortization of debt issuance costs. During each of thethree and nine months ended September 30, 2026 and 2025, the effective interest rate on the outstanding Notes was approximately 2.1%.

Capped Call Transactions

In connection with the offering of the Notes, the Company entered into privately negotiated capped call transactions (the “Capped Calls”) with certain financial institution counterparties (the “Option Counterparties”). The Capped Calls are generally intended to reduce or offset the potential dilution to the common stock upon any conversion of the Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. For accounting purposes, the Capped Calls are separate transactions, and not part of the terms of the Notes. The Capped Calls are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of $52.1 million incurred to purchase the Capped Calls was recorded as a reduction to common stock on the accompanying condensed consolidated balance sheets.

Each of the Capped Calls has an initial strike price of approximately $94.00 per share, subject to certain adjustments, which corresponds to the initial conversion price of the Notes. The Capped Calls have an initial cap price of $141.88 per share, subject to certain adjustments. The Capped Calls cover, subject to anti-dilution adjustments, approximately 4,893,848 shares of the Company’s common stock, which is the same number of shares of the Company’s common stock initially underlying the Notes. The Capped Calls are subject to automatic exercise over a 40 trading day period commencing on April 3, 2028, subject to earlier termination under certain circumstances.

Long-term Debt

Long-term debt consisted of the following (in thousands):

In July 2022, the Company entered into a credit agreement with Canadian Imperial Bank of Commerce (“CIBC”), pursuant to which the Company has borrowed $60.0 million (as amended, the “CIBC Credit Agreement”).

Borrowings under the CIBC Credit Agreement bear interest at an annual rate equal to either, at the Company’s option, (i) the secured overnight financing rate for an interest period selected by the Company, 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%. Commencing in July 2026, the Company began repaying the outstanding borrowings in equal monthly installments with the remaining balance due on the maturity date in July 2027. At the Company’s option, the Company may prepay outstanding borrowings under the CIBC Credit Agreement, without a prepayment fee.

All obligations under the CIBC Credit Agreement are guaranteed by the Company and each of its material subsidiaries. All obligations of the Company and each guarantor are secured by substantially all of the Company’s and each guarantor’s assets, including their intellectual property, subject to certain exceptions. Under the CIBC Credit Agreement, the Company has agreed to customary representations and warranties, events of default and certain affirmative and negative covenants to which it will remain subject until maturity. The financial covenants include, among other covenants, (x) a requirement to maintain a minimum liquidity amount of the greater of either (i) the consolidated adjusted EBITDA loss (or gain), as defined, for the trailing four month period (only if EBITDA is negative) and (ii) $10.0 million, and (y) a requirement to maintain total net revenue of at least 75% of the level set forth in the total revenue plan presented to CIBC. The obligations under the CIBC Credit Agreement are subject to acceleration upon the occurrence of specified events of default, including payment default, change in control, bankruptcy, insolvency, certain defaults under other material debt, certain events with respect to governmental approvals (if such events could cause a material adverse change in the Company’s business), failure to comply with certain covenants and a material adverse change in the Company’s business, operations or financial condition. As of September 30, 2026, the Company was in compliance with all financial covenants of the CIBC Credit Agreement. During the continuance of an event of default, the interest rate per annum will be equal to the rate that would have otherwise been applicable at the time of the event of default plus 2.0%. If an event of default (other than certain events of bankruptcy or insolvency) occurs and is continuing, CIBC may declare all or any portion of the outstanding principal amount of the borrowings plus accrued and unpaid interest to be due and payable. Upon the occurrence of certain events of bankruptcy or insolvency, all of the outstanding principal amount of the borrowings plus accrued and unpaid interest will automatically become due and payable. In addition, the Company may be required to prepay outstanding borrowings, subject to certain exceptions, with portions of net cash proceeds of certain asset sales and certain casualty and condemnation events.

During the three and nine months ended September 30, 2026, the Company recognized$0.9 million and$2.8 million, respectively, in interest expense related to the CIBC borrowings. During the three and nine months ended September 30, 2025, the Company recognized$1.0 million and$3.1 million, respectively, in interest expense related to the CIBC borrowings. During the three and nine months ended September 30, 2026, the weighted average effective interest rate on outstanding borrowings under the CIBC Credit Agreement was approximately 6.3% and 6.2%, respectively. During each of the three and nine months ended September 30, 2025, the weighted average effective interest rate on outstanding borrowings under the CIBC Credit Agreement was approximately 6.8%. As of September 30, 2026, the stated interest rate applicable to borrowings under the CIBC Credit Agreement was 5.3%.

9. Stock-Based Compensation

2019 Stock Incentive Plan

The 2019 Stock Incentive Plan (the “2019 Plan”) provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), unrestricted stock, unrestricted stock units, and other stock-based awards to employees, directors, and consultants of the Company and its subsidiaries. The number of shares of common stock of TransMedics Group initially available for issuance under the 2019 Plan was 3,428,571 shares, which was increased by 1,000,000 shares in 2023, plus the number of shares underlying awards under the previously outstanding 2014 Stock Incentive Plan (the “2014 Plan”), not to exceed 1,595,189 shares, that expire or are terminated, surrendered, or cancelled without the delivery of shares, are forfeited to or repurchased by TransMedics Group or otherwise become available again for grant. Since the effectiveness of the Company’s 2019 Plan in April 2019, no awards have been made or will be made under the 2014 Plan.

Shares withheld in payment of the exercise or purchase price of an award or in satisfaction of tax withholding requirements, and the shares covered by a stock appreciation right for which any portion is settled in stock, will reduce the number of shares available for issuance under the 2019 Plan. In addition, the number of shares available for issuance under the 2019 Plan (i) will not be increased by any shares delivered under the 2019 Plan that are subsequently repurchased using proceeds directly attributable to stock option exercises and (ii) will not be reduced by any awards that are settled in cash or that expire, become unexercisable, terminate or are forfeited to or repurchased by TransMedics Group without the issuance of stock under the 2019 Plan. On May 20, 2026, the shareholders of the Company approved an amendment to the Amended and Restated 2019 Stock Incentive Plan (the “Amended 2019 Plan”) to among other things, (i) increase the number of shares of the Company’s common stock available for issuance thereunder by 2,750,000 shares,(ii) extend the term of the Amended 2019 Plan until June 1, 2036, (iii) provide that, for awards granted on or after January 1, 2027, no portion of an award may be scheduled to vest prior to the date that is one year following the date the award is granted, except for awards that result in the issuanceof an aggregate of up to five percent of the shares authorized under the Amended 2019 Plan and (iv) provide for “double-trigger” vesting of awards following a change in control. As of September 30, 2026,2,631,199 shares of common stock were available for issuance under the Amended 2019 Plan.

2021 Inducement Plan

In August 2021, the Company’s board of directors approved the TransMedics Group, Inc. Inducement Plan (the “Inducement Plan”). Pursuant to the terms of the Inducement Plan, the Company may grant nonqualified stock options, stock appreciation rights, restricted stock, unrestricted stock, RSUs and performance awards to individuals who were not previously employees or directors of the Company or individuals returning to employment after a bona fide period of non-employment with the Company. A total of 1,000,000 shares of the Company’s common stock were initially available for issuance under the Inducement Plan, which was increased by 500,000 shares in 2023. As of September 30, 2026,338,507 shares of common stock remained available for issuance under the Inducement Plan.

2019 Employee Stock Purchase Plan

Pursuant to the Company’s 2019 Employee Stock Purchase Plan (the “2019 ESPP”), certain employees of the Company are eligible to purchase common stock of the Company at a reduced price during offering periods. The 2019 ESPP permits participants to purchase common stock using funds contributed through payroll deductions, subject to the limitations set forth in the Internal Revenue Code, at a purchase price of 85% of the lower of the closing price of the Company’s common stock on the first trading day of the offering period or the closing price on the applicable purchase date, which is the final trading day of the applicable offering period. A total of 371,142 shares of TransMedics Group common stock were initially reserved for issuance under the 2019 ESPP. During thenine months ended September 30, 2026,56,115 shares of common stock were issued under the 2019 ESPP and as of September 30, 2026,118,145 shares of common stock remained available for issuance under the 2019 ESPP.

Stock Option Activity

During the nine months ended September 30, 2026, the Company granted options with service-based vesting for the purchase of an aggregate of 380,796 shares of common stock with a weighted average grant-date fair value of$51.53 per share.

Restricted Stock Unit Activity

During the nine months ended September 30, 2026, the Company granted 381,633 RSUs with service-based vesting conditions and a weighted average grant-date fair value of$75.64 per share.

Stock-Based Compensation

The Company recorded stock-based compensation expense in the following expense categories of its condensed consolidated statements of operations (in thousands):

As of September 30, 2026, total unrecognized compensation cost related to unvested share-based awards was$71.7 million, which is expected to be recognized over a weighted average period of 2.6 years.

The Company recognized income tax benefits related to stock-based compensation expense of$0.5 million and$4.7 million as a component in calculating its income taxes during thethree and nine months ended September 30, 2026, respectively. Income tax benefits related to stock-based compensation expense for the three and nine months ended September 30, 2025 were fully offset by the valuation allowance against deferred tax assets.

10. Net Income per Share

Basic net income per common share is computed by dividing the net income by the weighted average number of shares of common stock outstanding for the period. Diluted net income per common share is computed by dividing net income by the weighted average number of shares of common stock outstanding for the period, including potential dilutive common shares assuming the dilutive effect of outstanding stock awards, using the treasury stock method, and outstanding convertible notes, using the if-converted method.

A reconciliation of the numerators and the denominators of the basic and diluted net income per common share computations is as follows (in thousands, except share and per share amounts):

The Company excluded the following potential common shares, presented based on weighted average shares outstanding, from the computation of diluted net income per share because including them would have had an anti-dilutive effect:

11. Commitments and Contingencies

Finance Lease

Agreements

On January 8, 2026, the Company entered into a lease agreement (the “Lease”) with BioMed Realty (the “Landlord”) for the lease of a building with approximately 498,286 square feet of space in Somerville, Massachusetts for the Company’s principal executive offices and for research and development, laboratory, manufacturing and assembly, vivarium, office and related uses (the “Premises”) to ultimately replace its existing headquarters in Andover, Massachusetts. The Lease expires in January 2044, unless earlier terminated (the “Initial Term”). Base rent begins to accrue in January 2028 at an annual rate of $23.9 million, and will increase by 2% annually during the first three years of the Initial Term and by 3% annually for each year thereafter. The Company will also be obligated to pay annual operating and tax expenses for the Premises. The Company holdstwo consecutive options to extend the term for additional periods often years each as well as an option to extend the term for a period ofsix months.

The Lease includes a one-time purchase option for the Company to buy the Premises and associated parking spaces, exercisable by the Company at any time prior to November 2028. The purchase price is $374.6 million if the option is exercised on or before December 31, 2027; if exercised thereafter, the purchase price is based on a formula tied to future lease payments. The Lease also provides for a tenant improvement allowance of $0.4 million.

The Company has delivered a security deposit to the Landlord in the form of a letter of credit for$17.9 million, which is classified as restricted cash (non-current) on the condensed consolidated balance sheets.

Additionally, on January 8, 2026, the Company acquiredtwo parcels adjacent to the Premises in Somerville, Massachusetts from the Landlord and an entity affiliated with the Landlord for $15.0 million each.

Accounting

The Company accounted for the Lease and property purchases as one combined contract under ASC 842, Leases (Topic 842). Because the Lease grants the Company an option to purchase the underlying assets that the Company is reasonably certain to exercise, the Company classified the Lease as a finance lease. Accordingly, total consideration for the combined contract of $404.3 million, including the estimated payment to purchase the property under lease less the tenant improvement allowance and the payments to purchase thetwo properties, was allocated to the Lease and property purchases based on relative standalone selling prices. The property purchases are included in land and building within property, plant and equipment on the condensed consolidated balance sheets (see Note 5).

The Company recorded a finance lease right-of-use asset of $336.6 million as of the lease commencement date of January 8, 2026, representing the present value of the lease payments less the tenant improvement allowance and a tenant rebate of $3.7 million, allocated to the contract components.

Because the interest rate implicit in the Lease was not readily determinable, the Company’s incremental borrowing rate of 4.4% was used to calculate the present value of the payments under the Lease. In determining its incremental borrowing rate, the Company considered its credit quality and assessed interest rates available in the market for similar borrowings for a similar term, adjusted for the impact of collateral.

The components of the Company’s finance lease cost under ASC 842 are as follows (in thousands):

Because the Lease contains a purchase option which the Company is reasonably certain to exercise, the building is being amortized on a straight-line basis over its estimated useful life of 40 years.

Future payments under the Lease, inclusive of the Company’s assumed exercise of the purchase option, as of September 30, 2026 were as follows (in thousands):

Operating Leases

There have been no material changes to the Company’s operating leases during the nine months ended September 30, 2026. For additional information, please read Note 11 Leases, to the consolidated financial statements in the Company’s Form 10-K for the year ended December 31, 2025.

401(k) Savings Plan

The Company has a defined-contribution savings plan under Section 401(k) of the Internal Revenue Code. This plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their compensation on a pre-tax basis. Company contributions to the plan may be made at the discretion of the board of directors. Effective January 1, 2023, the Company instituted an employer matching program for the plan pursuant to which the Company will match 100% of the first 3% of each participating employee’s eligible compensation contributed to the plan and 50% of up to an additional 2% of each participating employee’s eligible compensation contributed to the plan. For thethree and nine months ended September 30, 2026, the Company recorded expense of$1.1 million and$3.7 million, respectively, related to these matching contributions. For the three and nine months ended September 30, 2025, the Company recorded expense of$1.0 million and$3.0 million, respectively, related to these matching contributions.

Indemnification Agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to customers, vendors, lessors, business partners, and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements, negligence or willful misconduct, or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors and executive officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or services as directors or officers.

The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company is not currently aware of any material indemnification claims and has not accrued any liabilities related to such obligations in its condensed consolidated financial statements as of September 30, 2026 and December 31, 2025.

Unconditional Purchase Commitment

In January 2021, the Company entered into an unconditional $9.5 million purchase commitment, in the ordinary course of business, for goods with specified annual minimum quantities to be purchased through December 2029. The contract is not cancellable without penalty. The remaining purchase commitment as of September 30, 2026 was$4.0 million.

Legal Proceedings

On February 14, 2025, a class action captioned Jewik v. TransMedics Group, Inc., et al., Case No. 1:25-cv-10385, was filed against the Company and certain of its current and former officers in the U.S. District Court for the District of Massachusetts. The complaint purported to assert claims pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, and SEC Rule 10b-5 promulgated thereunder, seeking unspecified damages on behalf of a putative class of investors who purchased or otherwise acquired the Company’s shares between February 28, 2023 and January 10, 2025 (the “Class Period”). On April 2, 2025, another purported stockholder filed a putative class action lawsuit against the Company and certain of its current and former officers, also in the U.S. District Court for the District of Massachusetts (Collins v. TransMedics Group, Inc., et al., Case No. 1:25-cv-10778). The Collins complaint alleged claims substantially similar to those alleged in the Jewik action and also sought unspecified damages. On May 22, 2025, the court consolidated the Jewik and Collins actions and appointed the Peace Officers’ Annuity and Benefit Fund of Georgia and Oguzhan Altun as lead plaintiffs (the “Lead Plaintiffs”).

On August 8, 2025, Lead Plaintiffs filed a consolidated amended complaint. Like the earlier-filed complaints, the consolidated amended complaint purports to assert claims pursuant to Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5, on behalf of a putative class of investors who purchased or otherwise acquired the Company’s shares during the Class Period. Lead Plaintiffs seek unspecified damages allegedly caused by purported misstatements and omissions contained in the Company’s 2022 Annual Report, certain earnings calls, and other public statements. The consolidated amended complaint claims these alleged statements and omissions operated to artificially inflate the price paid for the Company’s common stock during the Class Period. On October 7, 2025, defendants filed a motion to dismiss the consolidated amended complaint for failure to state a claim. Lead Plaintiffs filed their response to the motion on November 21, 2025, and defendants filed a reply in further support of their motion on December 22, 2025. The court heard oral argument on defendants’ motion on July 9, 2026, and on July 21, 2026 the court granted in part and denied in part the motion to dismiss. The defendants filed their answer to the consolidated amended complaint on August 18, 2026, and the case is now in discovery.

At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. At this time, the Company is unable to predict the outcome of the class action litigation or reasonably estimate a range of possible losses. The Company expenses as incurred the costs related to such legal proceedings.

12. Revenue and Segment Information

Disaggregated Revenue

The Company disaggregates revenue from contracts with customers related to transplant procedures by organ type and geographical area as it believes this presentation best depicts how the nature, amount, timing and uncertainty of the Company’s revenue and cash flows are affected by economic factors, as shown below (in thousands):

(1)

Revenue by country is categorized based on the location of the end customer. Total transplant revenue includes product and service revenue.

(2)

Service revenue unrelated to transplant procedures was$10.5 million and$12.8 million, respectively, for the three and nine months ended September 30, 2026 and includes$9.4 million of revenue from PAD Aviation charter services provided outside of the United States. Service revenue unrelated to transplant procedures was$1.2 million and$3.1 million for the three and nine months ended September 30, 2025, respectively.

Payments to Customers

In connection with its clinical trials, the Company makes payments to customers to reimburse the cost of clinical trial materials and other costs incurred by customers in executing specified clinical trial protocols related to the Company’s OCS products. The Company evaluates the appropriate accounting treatment for these payments based on their nature, including whether the payments are in exchange for distinct goods or services.

Payments that do not represent consideration for a distinct good or service received from the customer at fair value are recorded as a reduction of revenue. The Company recognizes such reductions of revenue and the related accrual in the same period in which the associated revenue is recognized. The Company updates its estimates of these accruals as additional information becomes available, with a corresponding adjustment to revenue. For each of the three and nine months ended September 30, 2026 and 2025, the impact of adjustments to revenue related to these payments was not material.

Payments that represent consideration for distinct goods or services received from the customer, and for which the consideration reflects the fair value of those goods or services, are recorded as operating expenses. For the three and nine months ended September 30, 2026, the Company recorded$2.8 million and$7.4 million, respectively, as operating expenses related to these payments. For the three and nine months ended September 30, 2025, the Company recorded$1.3 million and$4.3 million, respectively, as operating expenses related to these payments.

Segment Information

The Company manages its operations as asingle segment for the purposes of assessing performance and making operating decisions. Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the Company’s chief operating decision maker, or decision-making group (the “CODM”), in deciding how to allocate resources and assess performance. The CODM of the Company is the Chief Executive Officer. The CODM assesses performance and allocates resources based on the Company’s consolidated statements of operations and the Company’s operations are managed on a consolidated basis to decide where to allocate and invest additional resources within the business to continue growth. The CODM also utilizes the consolidated balance sheet for resource allocation and segment asset information is not provided to the CODM to allocate resources.

As asingle reportable segment entity, the Company’s segment performance measure is net income (loss). Significant segment expenses, as provided to the CODM, are presented below (in thousands):

(1)

Other segment items include interest income, interest expense, foreign currency exchange gains and losses and income taxes. See the condensed consolidated financial statements for other financial information regarding the Company’s operating segment.

Substantially all of the Company’s tangible long-lived assets are located in the United States.

13. Related Party Transactions

Employment of Dr. Amira Hassanein

Dr. Amira Hassanein, who serves as Product Director for the Company’s OCS Lung program, is the sister of Dr. Waleed Hassanein, the Company’s President and Chief Executive Officer and a member of the Company’s board of directors. The Company paid Dr. Amira Hassanein$0.2 million and$0.8 million in total compensation for thethree and nine months ended September 30, 2026, respectively, for her services as an employee. The Company paid Dr. Amira Hassanein$0.2 million and$0.7 million in total compensation for the three and nine months ended September 30, 2025, respectively, for her services as an employee.

14. Income Taxes

For the three and nine months ended September 30, 2026, the Company recorded income tax expense of$7.0 million and$12.9 million, respectively, by applying a forecasted annual effective tax rate to year-to-date pretax income, and adjusting for discrete items occurring in the periods. The Company’s forecasted annual effective tax rate may vary from period to period based on many factors including changes in management’s forecast, changes to federal, state or foreign tax laws, and deductibility of certain expenses. During the first quarter of 2026, the Company recorded an out-of-period adjustment to reduce deferred tax assets and increase income tax expense by $2.5 million. This adjustment was not material for the year ended December 31, 2025.

The Company’s effective tax rate of 29.2% for the three months ended September 30, 2026 differed from the statutory federal corporate tax rate of 21% primarily due to state income taxes and a discrete tax item resulting from transaction-related costs, which increased the effective tax rate. The Company’s effective tax rate of 24.9% for the nine months ended September 30, 2026 differed from the statutory federal corporate tax rate of 21% primarily due to state income taxes, which increased the effective tax rate.

The Company hasnot recorded any amounts for unrecognized tax benefits as of September 30, 2026 or December 31, 2025. As of September 30, 2026 and December 31, 2025, the Company hadno accrued interest or tax penalties recorded.

For the three months ended September 30, 2025, the Company recorded an income tax benefit of$1.3 million resulting from a reduction in state income taxes due to the passage of the One Big Beautiful Bill Act, specifically changes related to domestic research expensing and bonus depreciation. For the nine months ended September 30, 2025, the Company recorded income tax expense of$1.0 million, consisting primarily of state income taxes. Until the fourth quarter of 2025, the Company maintained a valuation allowance on its overall net deferred tax assets.