TransMedics Group, Inc. Q3 FY2024 earnings call

• 2024 is a foundational year for TransMedics as it shifts into growth, focusing on building transplant logistics and aviation infrastructure, investing in NOP clinical/technology, and developing next-gen OCS Heart and Lung. • Q3 revenue growth driven by 76% y-o-y US sales but offset by OUS decline. • Expanded fleet to 18 planes, invested in Dallas maintenance hub. • US transplant volumes declined sequentially, but no impact on market share. • Gross margin decline due to investments in infrastructure. • Next-gen OCS programs aim to launch in 2025 for growth.

Total revenue for 3Q 2024 was $108.8 million, a 64% increase from 3Q 2023 but a 5% sequential decline from Q2. US transplant revenue was $104.9 million, up 76% y-o-y from 3Q 2023 but down 3% sequentially. Ex-US revenue was $2.6 million, a 40% decline y-o-y and 45% sequentially. Transplant logistics service revenue in Q3 was $20.1 million, up from $2.1 million in 3Q 2023 and up ~5% sequentially from Q2. Gross margins for 3Q were 56%, down from 61% in 2Q 2024. GAAP operating profit was $3.9 million, representing 4% of total revenue.

• Maintained full-year revenue guidance of $425 million to $445 million, representing 76% to 84% growth over full-year 2023 revenue. • Reiterated guidance as dynamics started normalizing in early October.

• Forward-looking statements involve material risks and uncertainties from new info, future events. • Risks outlined in Form 10-Q, including impact of aircraft maintenance variability and transplant volume fluctuations.

Q: Allen Gong asked about Q4 recovery and heart organ performance.

A: Waleed Hassanein said dynamics started normalizing in early October and reiterated guidance; no competitive impact on heart organ decline.

Q: Bill Plovanic asked about Q4 tracking and service margin.

A: Waleed said dynamics normalizing, Stephen Gordon said ~$2M nonrecurring expenses won't repeat, and margin will improve with more own plane usage.

Q: Josh Jennings asked about Q3 performance vs guidance.

A: Waleed said expected some headwinds, Q3 headwinds slightly higher than anticipated.

Q: Ryan Daniels asked about margins and 10,000 case goal.

A: Stephen Gordon said long-term mid-60s margin goal, Waleed said not mature yet to assume frequent volume impact.

Q: Matthew O'Brien asked about Q4 guidance and gross margin buckets.

A: Stephen Gordon said ~half of margin decline from added investment, half from using third-party logistics; no pricing impact.

Q: Suraj Kalia asked about share gains and OUS stocking orders.

A: Waleed said no shift in gears, Stephen said organ-specific revenue impacted by case volume and service component.

Q: David Rescott asked about Q4 share and planes maintenance.

A: Waleed said expecting share stabilization, Stephen said fleet planning for maintenance needs.

Q: Mike Matson asked about new OCS versions and plane fleet.

A: Waleed said details on next-gen OCS programs, Stephen said fleet size and operational plans.