TransMedics Group, Inc. Q4 FY2024 earnings call

• Mission: TransMedics' mission is to expand organ utilization for transplantation and improve clinical outcomes. - Response to short report: Conducted an independent investigation by Kirkland & Ellis LLP which found no evidence of fraud or misconduct. Engaged counsel to respond to a citizen petition. - 4Q and full-year results: 4Q '24 was a banner quarter with $121.6M revenue, 50% YOY growth. Full year 2024 had $441.5M revenue, 83% YOY growth. - Case volumes: 3,715 U.S. OCS cases in 2024, up from 2,347 in 2023. U.S. market share for OCS across organs was 20.9% in 2024. - Logistics infrastructure: Owned 21 aircraft by end of 2024, planning to add one more in 2025. Owned aircraft covered 75% of NOP flight missions in 4Q '24. - Clinical programs: Filed OCS Lung IDE, expected to file OCS Heart IDE soon. Upcoming ISHLT Scientific Conference to present preclinical results.

For the fourth quarter ended December 31, 2024, total revenue was $121.6 million, representing approximately 50% growth year-over-year and 12% sequential growth from 3Q '24. Product revenue increased to $74.9 million, reflecting a 44.5% year-over-year growth and 13.8% sequentially. Service revenue, which includes revenue from clinical and organ procurement services, logistics operations and flight school reached $46.7 million, growing 59.3% year-over-year and 8.8% sequentially. For the full year 2024, total revenue was $441.5 million, representing approximately 83% growth over full year 2023 revenue. Product revenue reached $273.9 million, while service revenue contributed with $167.7 million. Liver revenue was $309.6 million, heart revenue $109.9 million, and lung revenue $17.7 million.

• 2025 revenue guidance: Between $530 million and $552 million, representing a 20% to 25% growth over full year 2024. - Plans: Launch next-gen heart and lung clinical programs, continue building on liver foundation, invest in next-gen OCS technology, and strategically invest in business infrastructure.

• Unexpected aircraft maintenance may impact availability and service margins. - Market volume variability in organ transplantation could impact results. - Precise timing of launching next-gen lung and heart clinical programs is uncertain, depending on FDA IDE approval, center IRB approval, etc.

Q: Allen Gong asked about quarter-to-quarter variability and organ-specific growth.

A: Waleed and Gerardo responded that they don't issue quarterly guidance, variability tends to normalize, and liver will continue to lead growth until heart and lung clinical programs contribute in the second half.

Q: Joshua Jennings asked about high-volume customers and competitive risk.

A: Waleed stated no broad concern about high-volume customers leaving, and NRP is not a threat to OCS liver DCD franchise with market share increase in DCD liver.

Q: Bill Plovanic asked about New York Times article on organ allocation and TransMedics' role.

A: Waleed said the article doesn't meaningfully impact the business and TransMedics doesn't see it affecting revenue.

Q: Suraj Kalia asked about the scope of the independent review.

A: Waleed said it was a full independent review reported to the audit committee but didn't provide further details.

Q: Chris Pasquale asked about logistics fleet and R&D spending.

A: Gerardo explained they plan to pause at around 22 aircraft and will continue strong R&D investment for innovation and clinical programs.

Q: Matthew O'Brien asked about bridging to 10,000 U.S. NOP transplants by 2028 and margin improvement.

A: Waleed and Gerardo responded that new clinical programs should contribute and 2025 will see modest margin improvements with further gains in later years.

Q: David Rescott asked about service gross margins and plane service planning.

A: Gerardo and Waleed discussed that service margins will improve modestly in 2025 with considerations for aircraft maintenance variability. Waleed explained plane service scheduling and pilot staffing.

Q: Mike Matson asked about pricing perception and plane service visibility.

A: Waleed stated TransMedics delivers value, pricing is standardized, and they are working on marketing messaging. He also discussed unexpected aircraft maintenance (AOG) and how they manage it.