TMDX - Earnings call transcript Q4 2024

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Operator

Good afternoon, and welcome to the TransMedics Fourth Quarter and Full Year 2024 Earnings Conference Call. [Operator Instructions].

As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Laine Morgan from the Gilmartin Group for a few introductory comments.

You may begin.

Dorothy Morgan

operator. Thanks, released XX, the XXXX. TransMedics year and results December ended financial today, quarter for full Earlier A available website. on of the copy the company's press release is

cause Before within the contained question-and-answer you of or the Any statements, which organization margins beyond to statements in predictions risks these results include assumptions. These expectations would forward-looking are statements new this without material of include of by events, this of estimates portion services we forward-looking to federal that place will call laws. statements programs in XXXX expenses during statements of you differ events performance forward-looking our during management that clinical for current and statements. implied revenue, various to gross and/or undue and actual results meaning and potential expectations, make for examination or our forward-looking expectations remind Accordingly, involve including these and our expectations for call, call begin, should operating based upon and those and I statements. All or in the the that and our statements. are on like materially commercial including, relate limitation, not that financial or from anticipated timing guidance reliance growth trends, our uncertainties could future future operating opportunity securities products,

available disclaims the at or whether and XX, Hassanein, today, Commission intention under October of forward-looking uncertainties and accurate www.sec.gov today's heading Officer. call conference with our that, and website otherwise. President information Factors except and forward-looking XXXX. And information subsequent by I appears to Securities XX-Q any of Executive the as our will projections www.transmedics.com. TransMedics live contains which information, to press the future release, in our included the SEC any or broadcast or XX, regarding now on risks February these call obligation, Chief the are is earnings Waleed only update or Exchange because Additional filed as This at events Form new turn statements, law, statements Risk time-sensitive XXXX, filings financial required and revise and with of over

Waleed Hassanein

Good welcome to TransMedics call. Thank everyone, year and afternoon, XXXX Laine. full you, quarter and fourth earnings

today me Financial Joining Gerardo Hernandez, is our Officer. Chief

make our reviewing remarks to about Before and unique would mission position. like a and our operational I first financial results, market our few

clinical played technology, do. has remains of professional, and Our organ NOP goals. few in thought integral has and for rapidly in ourselves infrastructure, to hold radically transplant an field transplantation, mission donor services field. highest patients. It thousands and are logistics we ethical We part in of growing OCS clinical standards outcomes disruptive indisputable possible already is for that globally organ comprehensive transplantation to our is TransMedics has possible transforming lives. Enabled in utilization the moral transplant things available by at saving the doing everything TransMedics always while our TransMedics we today that transplant organs of meeting been the our the Today, these best expand successful and delivering been

organ leadership. the investigation in that seriously are whom our & conduct in committed the world. Despite efforts, are of the Ellis extremely of and We our dedicated and very around this company raised and saving the took was highly lives of proud of team professionals, all to short report. and report at allegations need of diverse thorough an short TransMedics We U.S. recent serious of targeted in a LLP patients allegations retained Kirkland counsel outside matter the a the transplant to in about

find evidence of experienced did find again, fraud firm has Audit been any did any of which reported fraud to the evidence investigation support an engaged Board not of forensic other this to not Committee repeat misconduct. Kirkland Allow to of the me This work, other accounting addition, this or In outside their or investigation Directors. misconduct.

lives serve. We than and Unfortunately, our gains. the who the out a team. website campaign surgical and community the Burling Both published respond for were firmly ensuring to submitted of at which world-class are we response importantly, short Citizens seller evaluated the dedicated previously a the Petition, on smear warriors patients allegations our is Covington's Petition the week. To in In the of transplant summarize, addition, was strongly from leadership nothing to clinical baseless Senior and engaged NOP made short by save Regulatory and are this we purely night, most They potentially our is by Counsel stand this the was whom our life. FDA response the of TransMedics, report middle financial preserved donor clinical believe patient's racist the that the Citizen expense we of last Covington organ business to LLP FDA legal to & FDA. and that OCS there possible to every unsung and collection suitable more transplantation on for and and a

patients. working to OCS these quality manage Importantly, organs highest tirelessly the in clinical care outcomes on enables and that for are a they manner our

and to extremely impact of expanding and our transplant. extremely are lifesaving our committed proud the organ clinical of to need teams. humbled. technology of We remain NOP significant humbled mission for patients improving in access We're outcomes We OCS and by

report discussing thrilled impacted that call, with that proceed we transient. On for quarter we us to several a a 'XX why performance. business views. XQ high these validate discussed very business on XQ was me banner 'XX conclude we our headwinds our our results as results allowed last and and view note. generally our XQ are let to Now Today,

$XXX.X growth was million year-over-year Total 'XX. and 'XX, for operational sequential XX% million, $XX.X XQ sequential X% Here XX% up are from key revenue approximately $X to sequentially XQ approximately grew was transplant $XX.X up for revenue million. TransMedics from XQ, sequentially the XX% logistics XQ representing representing highlights million XX% for in $X.X service revenue million, $XXX growth. approximately to million, QX. in while growth grew XQ and from 'XX U.S. revenue OUS

Our overall to improved in from 'XX. XQ XX% margin XQ gross XX%, for up

Finally, delivered million million up XQ, or in of operating we revenue in of XQ of X.X% an approximately and X% revenue total from representing total $X.X $X.X profit 'XX.

Now XXXX provide $XXX.X year revenue full XX% let me the growth XXXX for representing year over metrics year Total was XXXX. approximately the financial full full for revenue. million,

approximately U.S. to over representing XX% full the year $XXX revenue Our growth XXXX. grew million,

OUS relatively year-over-year. $XX Our was million, revenue flat

margin service XX.X% for the expectations. gross to in This with from is was down 'XX. XX.X%, our stated and overall in Our line the due year full contribution of revenue 'XX higher

in of and Importantly, of and profit market 'XX, full We're we an the approximately drive million, our fueled operating X.X% year by XXXX. delivered was which representing by year strong case penetration. for ability further performance $XX.X total pleased volume to our our full XQ very grow revenue

growth in U.S. performance heart transplant enabled primarily volumes consecutive our OCS second Importantly, NOP overall and cases. for the driven liver by year,

also ability growing share normal dynamics. quarterly to flows has cadence market despite and in our our performance the return market of to variability transplant Our demonstrated and of ebbs monthly

of volume per annual highlights key the case share are market and Here our organ.

OCS grew OCS cases X,XXX XXXX. X,XXX in transplant case the were third we volume. U.S. from consecutive For U.S. up year for cases 'XX, year, the full There

year U.S. XXXX. from market all overall 'XX, XX.X% up across was the X Our OCS full share in for organs XX.X%

row, liver, U.S. a and second volume. saw year overall lung heart we the in growth adult For in transplant

market driving For DCD heart X% and a growth while over reach 'XX by full use liver, XXXX, role utilizing there this the donors and up liver Since grew the U.S. of more key in again NOP driving from at X% Again, OCS 'XX and U.S. 'XX, in grew believe XX% the to grew we growth in X% DBD the transplant year heart transplants, XX,XXX to liver CAGR. X,XXX played an adult and heart adult DBD to grew liver a basis, in the at CAGR, XX,XXX. transplant XX,XXX were role that approximately volume U.S. On overall volume DCD organ-by-organ over by played U.S. lung increased heart strongly of believe transplants. an once XXXX. We key in OCS market due overall transplant market NOP the the donors transplant U.S.

discuss share our let annual market Now per organ. me

grew our meaningfully from liver market DCD in saw segments. This XX% XXXX. growth up DBD We of to XX% is market in we transplants. U.S. liver, For share and share overall of both

grew X% up in XXXX. we in for grew to from DBD, XX%, we DCD, from up And XXXX. For XX% XX%,

XX% For OCS. XXXX. in all all in XX% heart, our hearts in DCD XXXX from dominant maintained were DBD of X% to using hearts, transplants, we We XX% share market U.S., enabling grew our position done while DCD the up with heart of Heart of overall transplants

significant deeper will adult focus In see adoption DCD growth driving share continuing remaining market both share OCS Program we lung, segments adoption modest For for DBD X% primarily for metrics opportunity the across of lung particular, grow and Clinical U.S. transplants. These maintained liver. for underscore in on opportunity and NOP. to all deeper DBD Next-Gen adoption an DCD. drive to Heart we The a greenfield

Program market in our Clinical Lung on the Lung Finally, OCS reinvigorating Next-Gen will focus U.S. the

are both XXXX. discussed, targeted we've As to programs HX launch in

performance. TransMedics shift and reaching transplant me XX owned on fleet our XQ. update we XQ continue let gears by provide infrastructure Through Now of expand end an logistics to of our and aircraft, XQ,

we XX today, own aircrafts. of As

We 'XX. more planning to add are aircraft in

efficiency the of year the to leverage operating our model these assets. to with goal the optimize remainder utilization is Our for maximize XX existing and of aircrafts

portion our to We to double operation. fleet assess hire will the of pilots, the however, the impact we can shift of continue efficiency so a on

XQ, up in Overall, was XX% majority This daily missions XX% us owned to aircraft. in TransMedics' our Our availability XX, of in average flight XQ. XX.X on aircraft XQ NOP to using XQ aircraft 'XX. covered missions of aircraft NOP our from owned in service enabled our average compared the

design provide and our to Lung clinical programs. program, filed new at IDE results here will as clinical Conference Next-Gen within we clinical a and update April and formally expected ISHLT status our we well in OCS next OCS endpoints our to presented few OCS our proposed the program now IDE publicly for and quick be Last Scientific in Heart Heart upcoming Boston. on Lung program new file our week, weeks. Detailed the for as the Moving clinical preclinical

We will are transformative DCD into platform. of new clinical nationally, adoption programs These clinical of and these and and also while in heart be mid growth the lung pipeline further programs bullish near, OCS potentially product segments. expanding catalyze volumes our DBD enabling our nature market transplant critical about overall and long-term the deeper to and

XXXX our discuss and me let guidance. Now expectations

and programs and segments. market important As to particularly the at catalyze represent Heart Investor Next-Gen launch as 'XX, transformative December year we we our in will XXXX we these Lung another in stated believe that Analyst for growth Day TransMedics,

on based our to addition, expanding both clinical foundation, also build will our outcomes liver In DBD in excellent we adoption segments. strong our DCD and these continue on of liver

in transplants XX,XXX will We XXXX. platform Next-Gen also in technology beyond go investing U.S. are our future goal in heavily our NOP OCS years that of help stated us

strategically Finally, planning in progress we year. forward business these on to while ensure to to reducing We're are throughout and scalability, invest risks. infrastructure supply initiatives discussing chain continue quality maintaining looking our to the

As a year to operational we that plan the like also we're share and cognizant would few of ahead, we highlight. for challenges

infrastructure out as optimize logistics First, our stated, of building efficiency operation. we are still to

such, availability service variability may and our As aircraft unexpected maintenance margins. impact in create

that we ebbs we the transplantation impacted we organ may U.S. Second, the market as year, saw gain of as expect XXXX. in throughout continue normal flows by we should to the volume in share and XQ be

will Lung Next-Gen time depend the process, IDE launching and IRB Heart center of timing on approval initiation programs and several center FDA clinical approval variables, cetera. et precise line, the especially Finally,

call to to continue representing be between year over of will XX% setting $XXX report XXXX. With we year are above, guidance to the We as growth important XXXX XX% on Gerardo $XXX full turn million financial let materialize. Based cover detailed of the me and milestones quarter. they million, revenue the results on for to these that, the full the a to

Gerardo Hernandez

thank discuss Good joining full you, afternoon, TransMedics' and strong be I to today. and for fourth XXXX Thank quarter to results. us everyone, here Waleed. you year pleased am

disciplined demonstrating closed we continue momentum our revenue business, growth. As build to of we positive significant across strategic impact execution, investments and the year, our

fourth the adoption, OCS through reflects quarter progress overall our financial logistics infrastructure Our and the ongoing expansion increased an of improved performance.

flight QX $XX.X from sequential adoption and clinical to from of XX.X% down ability This a dynamic growth XX.X% includes increase our revenue our was a revenue sequentially. by positive execute operating modest environment. Breaking In revenues, to XX.X% our of was operations revenue while revenue impact to growth million, services, primarily which and for managing total $X.X our our split growth year-over-year at Growth million fleet XX% $X.X million, for increased liver. results. and Growth financial strategy, utilization. International and a quarter of representing driven a business and product primarily The mainly year-over-year $XX.X by liver heart. Service through delivered for fourth total $X.X revenue our expansion $XXX.X international and represents million, we driven of QX. performance million, procurement continued growing XX.X% increase. sequentially. remained reflecting XX.X% the school XX.X% XXXX, logistics our underscores the year-on-year X.X% by year-over-year in a which and revenue, revenue reached and million OCS organ Turning and heart, the in for sequential fleet $X.X million was organ lung portion

in year-end QX XXXX. million the our improvement charges approximately profit Our XXX the quarter fourth gross by points. procedures, basis gross fourth margin negatively margin inventory-related for a associated XX% approximately slight quarter's the included which over margin inventory XX.X%, the $X in of which gross with quarter gross reflects was impacted

inventory-related internal controls, basis in points, service margin forward. Sequentially, margin. margin we continue of impacts we primarily improved reflecting recovery to driven to the do gross XXX gross a QX, anticipate XXXX As impact product by Compared strengthening QX our inventory of XX.X% the declined similar QX, XX.X% not in in moving from charges.

that QX the on XX.X% XX.X% XX.X% variances. Service primarily XX.X% as were XXXX from in QX margin basis, QX factor. costs product to points non-recurring XXXX in XXX cost efficiencies to XXXX, driven and improved a of QX However, no expanded impacted longer scale of favorable a margin by QX year-over-year from in in basis of gross

for of XX.X% $XX.X to Additionally, sequentially, investment R&D contributed mix. Total to adoption technology. SG&A NOP were reduced XX% declined sequentially. recovery. On strengthening XX.X% QX OCS longer-term year-over-year of XXXX, margin a revenue to year-over-year margin up innovation grew sequentially, expenses XX.X% XX.X% reliance driven quarter and next year-over-year OCS overall in strategic from service gross basis points continued a third-party logistics and primarily increased year-over-year in XX.X% in expenses and development partners on to of million, and near-term in investment proportion capabilities. the basis, XX.X% by reflecting of XXX operating reflecting clinical continue both QX higher XX% our logistics support the XXXX and generation

and efficiencies We $X.X operating million aircrafts, profit is This operating the was are million profitability. Operating and $X.X year-over-year XXXX. profit investments In $XX.X activities logistics of significant quarter our X infrastructure long-term continue XXXX, This income a capabilities. XXXX XXXX, NOP compares logistics from scalability and end to revenue that our improvement to driven year strength. in commitment in drive cash in of our generated for leverage. Total million will compared towards invested from cash million, and a sustained million income quarter million, and the the $X the net financial $XX.X confident net we in of aviation $XX purchase million. enhance of the decrease was and to $X.X operational operating marked of the our growth as fourth positive strong reflecting continued outflow a $XXX by of XXXX. million first we a at quarter scaling December million in XXst, reinforcing approximately to our $XXX.X with step

XXX.X%, let me full XXXX led by Now revenue, while respectively. U.S. XX.X% year-over-year XXXX. transplant an over at Full lung growth. reached also which million, XX.X% Growth grew growth our a XX.X%, and reached reflecting results. $XXX.X XX.X% liver summarize million, strong revenue year revenue growth delivered was $XXX.X representing financial and year heart

year XX.X% these $X.X variable. compared representing product revenue year revenue at Our contributed million, international and Breaking markets $XX.X X% from and reimbursement, it it Flight million, Heart year were limited revenue by XX.X%, decline a service school million full the $XXX.X was down driven to gross share primarily by to reached revenue by service the million. million. $XXX.X inherently $XXX.X of year-over-year, while in increasing revenue which revenue, margin. for down down carries category, million, primarily liver expenses XXXX, Total OCS with reached lung up revenue continued XX.X% due support was $XXX.X $XX.X organ, which million. Breaking expenses XXXX operating of in platform, the included related capabilities investment from Bridge ended reflecting to transplant the expansion note that NOP a to R&D scaling important growth. It's million expenses a margin makes infrastructure for business operating of million. Gross of Life to acquired revenue the and to acquisition. aviation in-process reached $XXX.X XXXX lower reached $XX.X

Excluding expenses This on compared profitability this first in million operating million, initiatives we time, for operating operational operating as year a to $XX.X to driving was profit, for $XX.X expanding million improvements to and growth diluted at outstanding profit share were XXXX. Earnings capacity. XXXX our in strategic basis, impact, common in a supporting performance and while growth $XX.X achieved million generating year loss full was share the XX.X%, was year $XX and Net was On one-time $X.XX. milestone per long-term XXXX. reflects positioning in loss compared per earnings the sustained reflecting focus XX,XXX,XXX was average and ability our $X.XX and basic the XX,XXX,XXX, XXXX. scale efficiently shares weighted us meaningful momentum respectively. for diluted financial

Now Growth increased on a to XX% revenue OCS guidance over by XX% total the service a driven We of full which our be year and revenue. revenue million adoption year continue to XXXX. turning for range $XXX to translates to revenue growth will of anticipate total million. XXXX, $XXX primarily

quarter-to-quarter we Waleed of variability, nature some transplantation. of organ expect mentioned, level dynamic As reflecting the

scale efficiencies normalize that, service, subsequent tend XXXX, gross and product across continued improvement operational anticipate to by variability that margin believe quarters. In we improvement. we However, driven in and both

the lower expansion. of However, operates which service at the overall margin margin proportion moderate a revenue, will increasing

in also we margin XXXX. Overall, the operating total gains XXXX expect full to of a leverage relatively year anticipate level. at such, As modest compared we modest operating expansion expense gross

balancing While and discipline in financial the remarks. to call we sustainable profitability. With we continue strategic targeted expansion investments drive innovation, over focused on Waleed closing with growth for making turn to remain I'll that,

Waleed Hassanein

impact of proud year-over-year our and We investing to on achieved operator of Thank forward to to committed lifesaving growth, 'XX technology continuing you, operating patients to need for positive several humbled are access we're strategic of continuing offering. outcomes dedicated differentiated throughout that, the OCS and and around and as capitalize XX% across proud results call the our to very now our highly will build to infrastructure we conclusion, and flow mission service our in and look Overall, while In the we delivered technology, service of pipeline in execute remain now improving team the initiatives significant XXXX. Gerardo. our cash transplants Operator? from to world. With NOP expanding of Q&A. our organ turn clinical I activities,

Operator

Instructions]. today's [Operator JPMorgan. Gong And comes from first question Allen with

K. Gong

of Just guess, I And But Gerardo, first of that. predict on quarter-to-quarter see about how quarter about close quarter kind congratulations year? thinking should the hard another guide? year. might be it you implied touched to thinking some of and seasonality Should of understand the being help solid for third my be be we upon given just I there. this some a how nature in kind question, we the market like to as kind you the to soft variability. your cadence quarter-to-quarter expect

Waleed Hassanein

It's the for question. Allen, you thank Waleed.

to pass it on color. start, and additional Gerardo I'll me for Let

transplant was given holidays variability that of know, be don't the holidays. the guidance we Generally we not specific generally market in we and but quarter. see QX remind and to it or highlighting and you We QX, guidance. experienced the XXXX, quarters some market, wanted summer usually what quarter. are issue identifying proactive volatility The saw Allen, of As quarterly in the Christmas or a any in the before, we the speaking, X speaking, we've quarter-to-quarter

on sometimes that variability quarters other I'll in However, we see pass it Gerardo. as well. to

Gerardo Hernandez

in that is, the just Allen, will absolutely that for normalize only bear you believe subsequent point in we The tend mind thank I that add to variability quarters. question.

just So go through when the we mind in keep that year.

K. Gong

close growth, the heart organ-specific to follow-up essentially then a kind through the think trajectories of This trial a of growth start Just of of and year we liver. And growth, it. driving to both the the the with the curious in revenues was of kind Got we similar kind look assume should you for liver getting growth mix still on at that half? When least majority clinical maybe about right? back year some really XXXX, until this the that. just about should strong heart

Waleed Hassanein

think both the second liver clinical lead for the you see from question, hit to heart I programs, half year. we until to growth lung safe the Yes, contribution our and Thank will that the assume of continue Allen. which will in it's

as So broadly I utilized stronger that we active the become see signs hope the U.S. more programs in and

reporting forward looking year-end early into on 'XX that to by I'm XXXX. -- by So and hopefully,

Operator

And our Jennings question with Josh Cowen. comes from TD next

Joshua Jennings

your confidence of Waleed, play just been that customers? Great concerns on some hoping quarter. you that to in that attrition I high-volume be change strong year. evolution base have see Clearly, finish Or of a just customers going are you was to any not XXXX? there in the seeing the in or customers. in high-volume outside customer your the are to potential new adding about comment could was level fourth

Waleed Hassanein

the question. for Thank you, Josh

concern that broad think a concern. is I not

-- saw the in concern from that think is I that came short the we confabulation report.

results that seen themselves. dynamic. not for The have We speak

users In The information. that. the will active active QX, at and fact, leave they're some and underscore in and in report or were go OCS X users in it the highlight of that cited centers are I out short QX, important QX, active in I'll users were

Joshua Jennings

risk competitive in that fourth far? seeing with math. any and the segments heart about quarter the But to whole just DCD the Again, you're I in they're liver the it. 'XX concern talk OCS, about trending And ask fourth just of bucket share our another quarter XQ on took offering from is how in by approach. just NRP Appreciate and can of share NRP over gains wanted the trends -- so you then

Waleed Hassanein

cases an of do but donor, a OCS. post-NRP. NRP again, not that. could mutually nothing only is actually simple growth it's donor from to us convert is We're NRP try think to taking a for the where liver to penetration imply share liver. DBD in is the in OCS. seeing NRP surgical market DCD I And NOP liver overall as as the a but DCD exclusive a procedure not We

still the need You to preserve liver.

still need liver. You to assess the

You protect the still need to liver.

as the threat I do franchise. see our before, again, data, liver year on a actually And seen So stated we the we've to based not as XX%. DCD NRP to market share increase in

Operator

And Canaccord. our next question comes from Bill Plovanic with

William Plovanic

exposure So on question today role, does first allocation is quick your the revenue? What's the thoughts investors the process? play is New if organ there's they asking Times get And if that this article TransMedics skipper and That's my on just first the something allocation or sites? in question. impact are line-jumping. then, an happens their something slapped hands your And to any, that York what to

Waleed Hassanein

challenges organ encouraged we're that more is public In more public about of aspect, now, awareness the and Bill. one transplant. there awareness you, Thank

some these and picture, of education. the full However, needs additional physicians are missing

or you As it, decline it, for everyday broader you centers allocation cases, unless happen it organ. allocation doesn't called calling -- what not the as line-jumping called in or national us

declining if organs fact, happen go we see want if this organ, utilization because historically, would overall wayside the these donor improvement organs utilize we and the by and in to them. So centers keep never growth, of in has to

active interest community to are New stated of And a just that going in the we're about of education. piece encouraged that role are today transplantation. continuing more out play there to in -- that the Times more we to publicly, element and information organ article a the missing it's and we public a educate more is transplant. public -- York challenges organ came And there as today we've So

William Plovanic

then And Okay. --

Waleed Hassanein

We highlight be do to that the our business article Bill, article not clear. meaningfully, impacting see or that that, issue

William Plovanic

then, both first weekly X-week Okay. through year-over-year quarter, UNOS quarter-over-quarter data. the is transplant the and And on the improving just -- month-to-date data

impact Just we're how that that does maybe any improvement? thoughts why seeing And you? on

Waleed Hassanein

X is report happens talking That's the again, transplants years across of our -- So got been quarter-to-quarter, we've month-over-month. variability in granularity X-plus since Bill, at variability volume year-end. There's year. for only FDA in organ This that overall we all this why that data every a approval level we about why penetration and organs.

it as settled. -- of when learned does second So that everything penetrate is up, we our are results well. impact from to many on is market the NOP year do business? also the we half up ability national the the numbers is But other continue of based on we course, the to our above. I should How Of last when be different of performance volume it one segments. relies plan to the our variables, And is in the volume, which and both think

down. kind hoping to as great a sign. transplant were that it's volume volumes see bit So a QX, flattish or We recovering. see was It's little to of important because, you know, the national overall

it sense. makes So

said, see X quarters flat down, X As always or when normalizes afterwards. it are we is our expectation Gerardo or

So is this a transition. welcomed

William Plovanic

heart you growth, then, how of there? the of you seasonal of half Yes. is XX% much lung just mean, up typical lung programs, QX? just mentioned any on guide, I commentary and that -- XX%, are the is with how having guide, on the a the then, just contributor much And benefit on the And back the heart expected. and

Waleed Hassanein

Thank you, you. Bill. Thank

clinical assumes variability as well guidance of the in trial. variability the quarter-to-quarter different the start as Our

far anticipating how X% clinical X% miniscule. between of I this to to in year, much the As as maximum. be would it estimate trial we're

the level variabilities, initiation these the contemplates time trial the point and of line. national both all at guide the or time So

William Plovanic

X% X% X% or growth to to of X% of total revenues?

Gerardo Hernandez

growth. The

Waleed Hassanein

The growth.

William Plovanic

Okay.

clear just the and programs I be XX%. are without taking saying it's XX% want -- that Is contribution to -- you're up So it that XX%, what it on is. that, would to to be

Waleed Hassanein

I Bill, a range and we X% would X%. a and say said guidance, speaking, of not it's to roughly

So --

William Plovanic

Okay.

Operator

Suraj Kalia Oppenheimer. comes question with from Our next

Suraj Kalia

the Gerardo, Waleed, strong congrats year. finish a to on

your weeks. was review be Waleed, in & Kirkland the of this the concluded it understand And X made what will So the done was because Ellis, this independent of by public? review scope Help independence us review?

Waleed Hassanein

comment a was not dynamic. I reported any at Committee, And a do that. or and independent to of We pretty Audit you, on Thank our review. review. is Suraj. the Board-initiated full it It it It leave would exhaustive was internal

Suraj Kalia

just around noise Got guys is enthusiasm want The that FY is implying to is piggyback concern on dampen I it new Josh's it. would Obviously, right? of 'XX right now, share Waleed, X,XXX sites, Part the gains. Waleed, the earlier but guide you strong, question. your telegraphing are at roughly organs. math

ahead Waleed in share okay, gains in have think you in especially noise, or guys put us everyone. Help giving I given prepared confidence has guide and you understand so -- to terms gains? the your Kudos confidence you mentioned comments, the the out. obviously, rearview But gains share to help something continued seeing great. the the that for all to mirror, us this -- what -- gone your thereof. Help of understand, QX is share gives be in you us confidence

Waleed Hassanein

Suraj, of drive in greenfield want big and segments in opportunity 'XX, us. full thank Suraj, for to not our we drive be thoughtful significant period, I question. Noise much gain planning, you business, reported clear. so not the single-digit not heart. does reported TransMedics, our stop. Two, crystal drive growth share we does yet for us. penetration 'XX a over a ahead XX% penetration We There's of liver. DBD lot for DCD ahead liver reported in does There's

are users, even again, any this. And seeing losing though not, about are allege market major losing claim bullish or that we share not have we XXXX. or We we're of the noise

out Our the operation, that guidance our we we're in out. plans And business, feel with everything in the interactions front we highly our seeing in users, set guidance set confident the the in from in in of our street. we logistics, contemplate the

Operator

with And comes Research. Pasquale Nephron from question Chris next the

Christopher Pasquale

logistics utilization in to has been ramp the see. Waleed, nice

You giving plan maintenance, to to and don't those it coverage. do case really plane, sounds then about if some more balancing the fleet for XX, that desire you you about does assets while. you you adding yourselves gets How like one think go for lose versus So one capacity talked cushion? you gives pause a that, to and work the down

Waleed Hassanein

optimize we make our we rapidly, now we and stop -- to we that build variability going demand or our maintenance we wanted the rate Chris, But we're operation to growing reach that That is primary unexpected the on great high question. operation. the of in semi the event, we in efficiency see Listen, to to focus is right remarks, can state our that primary the if want steady really is highlight see goal. not operation. if sure

I think that we still clear mode. very Gerardo in is are growing

pass are We way extremely it we of but and long here, go his opportunity. add profitability, additional and perspective. on are greenfield a that runway from to deliver to to and going growth Gerardo still comments a XX% to We stop business. have I'll any to I'll stop long not fortunate

Gerardo Hernandez

you Chris, Yes. thank for the question.

we I have think what in is what since think been we conference. the JPMorgan can saying summary

to want make test double to efficiency the shifting, that's and the at us this aircrafts. XX what capacity. around XX average in we of at top year plan improve pause sweat theory, And to give can add we XX operational should aircrafts to certainly That increases every expect our pilot and sure month. We the assets margins. operational we having that significantly on it around capacity of That's the of and our when that, least

So to tell we That's still before a we you. go continue airplanes. have would I to more long what way acquire

Christopher Pasquale

for then Gerardo. And That's one maybe helpful. you,

of Just doubled. over as the R&D more at we spending it's years, last look couple than

of clinical in trials And with those about should trials on You R&D and clinical in projects the R&D growth step and does versus up spending come need how your for to half? into as list get 'XX year started we terms lot this a back think to-do SG&A?

Gerardo Hernandez

Right.

in you some gains expect leverage. we operating Let modest have me tell that to

So at the a revenue. are lower expenses will operating that pace grow overall our than that expecting said,

invest in Now R&D. strongly to continue will R&D, we

OCS We have innovation.

to will OCS. continue want want next-generation We advance to our program. have kidney development capabilities. to we or strengthen our strengthen We We product

So to we be strengthening will continue our to we're that, invest long-term command in going center. NOP our growth. and strongly After

see adoption continue modest some But to our a expecting grow gain to operating in our operating well. expand we lastly, functions will We as -- overall, and And modest leverage. will gains team. in in way we're a clinic G&A

Operator

with Piper Matthew And Sandler. is from next our question O'Brien

Matthew O'Brien

It's Maybe, just by add I'm of 'XX, the organs X, still nice just under progress. when XXXX. at X,XXX. I by 'XX, 'XX it starters, multiply in look Waleed, to I just you many did you X,XXX that versus in to organs If getting like a for it's really how amount organs did more

to how to XXX that it more to a you little get is with And bit Is wondering get XX,XXX? extra to just lung we the loaded the I'm so, competition that XX,XXX? side, to you and heart on bridge And do get the more liver there? organs -- studies are back-end clinical enough

Waleed Hassanein

for I at we're that and heart in heart, even question. liver or from digit. in in we not Excellent DBD, Matt. Lung heart today, and the And driving as Thank you, penetration driving growth a growth single-digit much us single have liver all. the really is order. reported, Matt,

contribute contribute new are should for transplants. growth significantly, absolutely lung to increase the market to clinical to programs program penetration the to DBD resurrecting lung one, or our heart and We in that the us confident our

in of We do than these to alone from pipeline. we are just X lung not might be organs, how liver XXXX coming the that we those additional that we and more going are on and fill gap counting the heart, into programs not XXX XX,XXX bullish only organs and additional or any transplants XXX in think

correct. So we're your about that, math Matt. And confident highly is

I dead Matt, -- that these programs. And the assume or X operating but if have, should lung lung XXXX, slow additional currently be don't programs for have but us clinical we're back-end thing. have why as X we you interrupted last It's years by in we investments concluded that's leverage 'XX, are to the And front. still with If we of expectation. especially and loaded very one market for that you. catalysts very, that's is that these I'm slow -- highlight years, we our on X the been or sorry full gives just prioritizing not

Matthew O'Brien

No, Gerardo, saw step specific, 'XX. perfect. in in then, but function want margins to get And you improvement too that's a operating don't I

the invest of in means program we clinical function then couple until But that. things? that here think investments don't a I step for You're on know continuing if to we wait do Or get given in the do need know of side improvement just I the about don't to 'XX saying business. improvement in 'XX as 'XX? you're how modest hundred that, basis we should another XXX, points,

Gerardo Hernandez

terms or want capture improvement level. share can you there. margin not planning. tell I view But us of That operating is to operating I those and rather for as any should what in at margin, yet expecting am we Yes. still -- still just I leverage longer-term XXXX, operating -- long-term do getting into in modest gross would it that some improvement and margin I in expenses give we're familiar modest modest leave

Operator

David Rescott is from Baird. question next with the And

David Rescott

strong margins the to comments 'XX. Maybe those finish a here. on year Gerardo, follow-up, the just just Congrats in on around the

the on in for year the QX XXs ended service high with You number margins. a line service gross

be single, Or variability this on the margins kind seem for that end service You're XX% But margins. Does could stepping the at low that? the mid of about You're guess, to of before. gross moderation think to you lower kind good be point off you number more margin at that operating I should year, that the mid-XXs bar? gross still when in next there were high of through XXs that high like year? a service kind below of

Gerardo Hernandez

for Thanks question, Yes. David. the

I business. still XX% long-term clarify to and that's or we're really tell my into is have see What me I service in views going that in am margin, sustainable of what's both product you expectation. that in that review said some today going target not going the let the improvements. XXXX, First, to can our I we're of

the However, how see of in service of the XXXX. increase portion That's that's moderate how will I can improvement. see margin I mix the -- overall

Waleed Hassanein

to And just David, I would said. like to add Gerardo what

the service. specific Your about question was

service we margin. think I all the expect improvement in

we rate 'XX, that in the to third-party variability had more on because maintenance modest expect our we as and outlined. QX hit might impact as of logistics on only by if basis, caution an unexpected the rely we that will get of aircraft. heavily negatively that However, we operated Gerardo want own could high on year partner the not present overall we But That's margin itself. improvement,

David Rescott

kind clinical -- pilots, but bringing for have maybe surgeons, plane you associated should When planes, on know surgeons, can the a helpful. scale, you some if the you kind think X as of you on we about meaning -- term? it new wouldn't you clinical on support Okay. every plane, you planes, those got, dollar dedicated those? Or plane, new being kind when of some amount of clinical my I across specialists X support bring to each think That's incremental specialists in support plane, you've don't of a of guess new don't on, with that for same it'd the OpEx X I is know, pilots, spread staff a amount about bring about fixed of step-up of you each for longer expect be that plane that kind of think of bringing that each of you new

Waleed Hassanein

Very you. important clinical heads at incremental an model thank have addition. you plane should No, each question. all David, not that

our to tie plane need license. a weeks' -- we clinical staffing X to thing for link needs added that not our we pilot specialists. do the -- is need to plane. be and broad the only is The waiting ground to is to network Our a network plane X and staffing surgeons clinical clinical crew plane, We broad to things. One, on from crew to to and that be the XXX important the our time Part X

operational. we this So buy minute be can not the plane, a plane

of As fleet. concerned, because double we to continuing we targeting are somewhere stated, critical we as between our pilots. far we have those and as add, but pilots are mass is shift a operate planes, XX% We of XX% can to

the year. the we'll titrating those to continue sure growth, running that demand we're that So will without throughout make be will hot. that goal we and be monitoring And meeting additions

Operator

Needham from is & with Company. question next Matson Mike our And

Michael Matson

kind you're know and or one But high talked So guys of on transplant something prices your it's thing. is that third-party handwringing, -- people that I that I when of that start I've pricing a want improve and from continuing see guess, to cited just the some that argument world, same that? that research I too I But to like strong there to just concern, perception you lot pricing. with whatnot. understand people can the I've wondering, I'm proposition there there the value is the to compelling do customers marketing seen in the is is anything to of of about you standpoint kind your a growth. charging. try pushback are

Waleed Hassanein

Thank themselves. The value the you the one. OCS. The for is low we overall we're transplantation designed because designed We market. they value speaks would the the delivering charging. believe for to itself. again, question, competition market number in The growth States delivering the value penetration have far value, otherwise pricing the way for United the adopted it's in price speaks that Mike. That's exceeds growth rates see wholeheartedly significant competitive The that But actually we're the not the are the and really, rates technology brings. of

doing. lower we decided change than to are to not if low value So a competitor level our their going what pricing because technology at TransMedics a price is

cost full that transplant program. NOP can operating two, cost that give us competitor and one. Number some of efficiency transplant program. back None one number leverage network of the to our the the effect manage pass to you that's example. I'll gives and deliver process of So efficiency NOP the entire to efficiently significant

they to become get For on competitor capable is logistics, to close a come offering. including our to that our None even DCD that NOP doesn't using our spectrum progress centers the XX% donor a donor. are of that offering, the of full even service making discount

but So procedure on And overall is do TransMedics. or yes, the not cost again, we comment $XX,XXX usually pricing. $XX,XXX, the that, technology might be higher our the probably than of

speak pricing results our knows is, across administrator what And center Our Every United is. is. themselves. user our what standardized our transplant Every pricing the again, pricing knows States. knows every for is what pricing the

Michael Matson

pitch way to I I people trying a convincing -- I your or say to maybe wasn't a Okay. in I mean, it but find guess, to understand needed way price, maybe something, lower to you more just that

Waleed Hassanein

I completely that team his highlight to key ago. summarized the to points the perspective, that, and that. doing from refine a understand. doing minutes improve and I it Tamer and And messaging right marketing are of we're continuing you highlight couple a

Michael Matson

you like when did is or in fall way last maybe particular with Is the of plan something? of high schedule to it unpredictable? of it Okay. say then, visibility want and quarter. year. out it I all into it, spread is great there it level in quarter some to like quarter, regard I'm it's just have required. the plane into Understand. wondering, sort but you And third really X all don't ahead a service almost fall But to just a service, to kind abnormally don't doesn't a it it had there that sounds way just Or so

Waleed Hassanein

an that's question. Mike, excellent

what unexpected So we of is properly. parcel and and for visibility across the not is any a part the we The it that, manage is have it schedule don't full and year, part called it and visibility Ground. and And happen situations scheduled in happen even in it have service, plane some unanticipated, a we airworthy. to its on to, we fleet any AOG, spread and could day, that it could have are flexibility of the where middle These the mission. operating industry, in Airplane

missions. That's unexpectedly on things QX. But that. it in events a in lot jet navigating creep we our can a So team nearby fleet navigating -- to a are rely to we building But between We and TransMedics spot. things to to having a to. visibility every job great the you, managed it and And the deal by internal own the we is We hub by it maintenance extremely in manage that from not of The third-party. managing from have again, nearby that with do is don't -- do jet our we well and scramble We you these a on it? expect part continue down have robust doing a XXX% experienced these third-party on case AOG we and can plane supplement that network how manage in team a -- QX. on a is quarter. ourselves sometimes up with that

Operator

in queue, for like now back At the our remarks. further this time, questioners would the conclude to I Waleed turn does are any this question-and-answer closing Hassanein to session. conference there over no and

Waleed Hassanein

Thank you to forward all you, we're Chris. looking Have wonderful Thank Bye-bye. your next evening, and a call. for very much our time.

Operator

you has now attending disconnect. concluded. presentation, you now and conference The may for Thank today's

TransMedics (TMDX) 27 Feb 252024 Q4 Earnings call transcript