TMDX

TransMedics Group has given shareholders a wild ride over the past few years, and after a sharp pullback the live question is whether the current share price lines up with the earnings the business is generating. With the stock well off its highs, investors are increasingly asking if today's valuation fairly reflects what the company earns today rather than what it might earn someday. - Over the past 5 years the TransMedics Group share price has gained 157.9%, which puts real pressure on the numbers to show that earnings power has kept pace with the market's optimism. - The business model is capital intensive and depends on scaling its organ transport platform efficiently, which can have a direct impact on profitability, cash generation and how much of each revenue dollar ultimately supports the earnings line. - Your read on TransMedics Group is one view; the desks covering it have another. See what analysts think TransMedics Group's shares could be worth. The issue now is whether today's TransMedics Group share price is adequately supported by the earnings investors can reasonably expect the company to produce. If you want to stress test this same earnings lens beyond TransMedics Group, filter for other companies using the 33 high quality undervalued stocks. The P/E ratio suits TransMedics Group because earnings are now a central part of how investors frame the story. On this lens, the stock trades at about 16.2x earnings, which is well below the medical equipment industry average of roughly 25.3x and also trails the peer group at around 26.1x. That is a sizeable gap for a business building out a capital intensive organ transport platform where profitability and cash conversion are key concerns. The fair multiple model, which adjusts for TransMedics Group's sector, size and risk profile, indicates a higher P/E than where the shares change hands today. That places the current 16.2x reading on the undervalued side of that tailored range and indicates the market is putting a relatively low price on each dollar of earnings while it waits to see how efficiently the platform scales. Explore the numbers behind TransMedics Group's P/E valuation. Simply Wall St Narratives pick up where the P/E work on TransMedics Group leaves off. They translate that valuation gap into clear assumptions about future growth, profitability and earnings that would need to play out for the stock to trade meaningfully higher or lower than today. Rather than stopping at a single output from a ratio or model, they map out the underlying future those numbers rely on so you can track whether that story is actually unfolding on the Community page. Community views on TransMedics Group split between a service heavy growth story and concern that rising fixed costs and legal noise keep the stock rich. Bull case: 27% undervalued "Development of a recurring, service-driven model is advancing as service revenue reached about US$79 million in Q2 2026 and TransMedics Logistics contributed roughly US$41 million…" Discover why this Narrative puts TransMedics Group at 27% undervalued. Bear case: 9% overvalued "Bearish analysts expect TransMedics Group to pursue an aggressive spending path on OCS Kidney, next generation OCS platforms, international logistics build out, and new facilities, which keeps operating margins below what the current share price implies…" Explore why this Narrative puts TransMedics Group at 9% overvalued. There is one extra lens that can help you compare today's TransMedics Group valuation with where the business might be in a few years, and that is where professional analysts currently think the earnings story goes from here. Explore where analysts expect TransMedics Group to be in a few years. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include TMDX. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

TransMedics Group has seen its share price slide in recent months after a strong multi‑year run, which raises an obvious question for you as an investor. Is the current US$78.64 price still aligned with what the company is earning today, or has sentiment moved ahead of the underlying profit story? - Over the past 5 years the stock has gained about 157.4%, which puts real weight on whether the earnings profile can support where the valuation now sits. - The business relies on turning highly specialised transplant services into sustainable profit, so the pace at which margins and cash generation mature can affect how much you might be willing to pay for its earnings stream. - The analysts covering TransMedics Group have run their own numbers. See what analysts think TransMedics Group's shares could be worth. The issue now is whether TransMedics Group's recent earnings justify the price implied by that share performance. If you want to test the same earnings question you are asking of TransMedics Group across a wider watchlist, compare it with 28 high quality undervalued stocks. The P/E ratio suits TransMedics Group because earnings are a direct anchor for what you are paying at today's share price. On that measure, the stock trades on a P/E of about 18.0x, compared with roughly 24.5x for the wider Medical Equipment industry and around 24.6x across close peers. You are paying a lower price for each dollar of reported profit than the typical company in the same space. The fair multiple implied by TransMedics Group's own profile, including its sector, size and risk level, sits above where the current P/E lands. This points to the shares screening as undervalued on this earnings yardstick. That gap suggests the market is assigning a more cautious label to the current profit stream than the model does, so you need to judge whether that discount reflects genuine business risk or an opportunity that the crowd has not fully priced in. Explore the numbers behind TransMedics Group's P/E valuation. Simply Wall St Narratives pick up where the P/E puzzle for TransMedics Group leaves off by spelling out what kind of trajectory for growth, profitability and earnings would need to hold for the current share price to look materially higher or lower over time. Each narrative links its number to a clear stance on how TransMedics Group's revenue expansion, margin profile and business risks might evolve, giving you something concrete to revisit as fresh information comes through. Community views on TransMedics Group split between investors who see a transplant platform still underappreciated and others who think the valuation already bakes in a lot. Bull case: 19% undervalued "Expansion into new organ types (notably kidney) and next-generation product launches (Gen 3 OCS platforms for heart, lung, and liver) are expected to materially grow TransMedics' total addressable market…" Discover why this Narrative puts TransMedics Group at 19% undervalued. Bear case: 21% overvalued "Bearish analysts expect TransMedics Group to pursue an aggressive spending path on OCS Kidney, next generation OCS platforms, international logistics build out, and new facilities, which keeps operating margins below what the current share price implies…" Explore why this Narrative puts TransMedics Group at 21% overvalued. Price multiples and past returns only tell you what the market is willing to pay today. Professional estimates for where this business might be a few years from now give you a different reference point to compare against. Explore where analysts expect TransMedics Group to be in a few years. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include TMDX. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

A month has gone by since the last earnings report for TransMedics (TMDX). Shares have added about 10.2% in that time frame, outperforming the S&P 500. But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is TransMedics due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers. TransMedics delivered earnings per share of 44 cents in the second quarter of 2026, down 52.2% year over year. The figure missed the Zacks Consensus Estimate by 12%. Revenues rose 20.7% year over year to $189.9 million and surpassed the consensus estimate by 3.1%. Net product revenues totaled $111.2 million, up 15.7% from the prior-year quarter. The improvement was led by higher organ utilization and increased OCS adoption, particularly across the liver and heart businesses. Service revenues represented roughly 41% of total revenues and increased 28.6% to $78.8 million. Clinical service revenues rose 19.1% to around $36 million. The stronger service contribution reflected broader logistics adoption, pricing adjustments and higher aviation-fleet utilization. Transplant Logistics’ services revenues for second-quarter 2026 were approximately $41 million, up 39% year over year. TransMedics operated 22 owned aircraft during the quarter and covered 86% of National OCS Program missions requiring air transportation, compared with 82% coverage in the first quarter of 2026. This growth resulted from the broader adoption of TransMedics’ logistics services, increased aviation-fleet utilization and improved operating efficiency. In the quarter under review, TransMedics’ gross profit increased 17.2% year over year to $113.2 million. The gross margin contracted 100 basis points (bps) to 60%. Selling, general and administrative expenses rose 31.2% year over year to $57.8 million. Research, development and clinical trials expenses surged 98.5% year over year to $31.6 million. Total operating expenses of $89.5 million increased 49.1% year over year. Adjusted operating profit totaled $25.8 million, reflecting a decline of 29.5% from the prior-year quarter. The adjusted operating margin in the second quarter contracted 960 bps to 13.6%. TransMedics exited second-quarter 2026 with cash of $472.7 million compared with $461.7 million at the end of the first quarter. Total long-term debt at the end of second-quarter 2026 was $39.7 million compared with $44.5 million at the end of the first quarter. Cumulative net cash provided by operating activities at the end of second-quarter 2026 was $41.8 million compared with $88.8 million a year ago. TransMedics raised the lower end of its 2026 revenue guidance. Revenues are now expected to be between $737 million and $757 million, representing growth of approximately 22% to 25% from the 2025 level. The previous projection called for revenues of $727 million to $757 million. The outlook excludes contributions from PAD Aviation and assumes no incremental revenues from the ENHANCE Part B and DENOVO clinical programs. Adjusted operating margin, excluding PAD Aviation, is expected to be between 12.5% and 14%, below the company’s prior expectation of approximately 16% because of accelerated OCS Kidney investments. Since the earnings release, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -31.5% due to these changes. At this time, TransMedics has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy. Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise TransMedics has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months. TransMedics is part of the Zacks Medical - Instruments industry. Over the past month, IQVIA Holdings (IQV), a stock from the same industry, has gained 11.8%. The company reported its results for the quarter ended June 2026 more than a month ago. IQVIA reported revenues of $4.37 billion in the last reported quarter, representing a year-over-year change of +8.7%. EPS of $3.15 for the same period compares with $2.81 a year ago. IQVIA is expected to post earnings of $3.25 per share for the current quarter, representing a year-over-year change of +8.3%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged. IQVIA has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report TransMedics Group, Inc. (TMDX) : Free Stock Analysis Report IQVIA Holdings Inc. (IQV) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Tuesday, Aug. 4, 2026 at 4:30 p.m. ET President and Chief Executive Officer - Waleed Hassanein Chief Financial Officer - Gerardo Hernandez Operator: Good afternoon, and welcome to TransMedics Second Quarter 2026 Earnings Conference Call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Hannah Jeffrey from The Gilmartin Group for a few introductory comments. Hannah Jeffrey Thank you. Earlier today, TransMedics released financial results for the quarter ended June 30, 2026. A copy of the press release is available on the company's website. Before we begin, I would like to remind you that management will make statements during this call, including during the question-and-answer portion of the call, that include forward-looking statements within the meaning of federal securities laws. Any statements made during this call that can relate to future events, results or performance, including expectations or predictions, are forward-looking statements. All forward-looking statements, including, without limitation, our examination of operating trends, the potential commercial opportunity for our products and services, the potential timing, benefits or outcomes of new clinical programs and our future financial expectations, which include expectations for growth in our organization and guidance and/or expectations for revenue, gross margins and operating expenses in 2026 and beyond, are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. Additional information regarding these risks and uncertainties appears under the heading Risk Factors of our Form 10-K filed with the Securities and Exchange Commission on February 24, 2026, our subsequent SEC filings and the forward-looking statements included in today's earnings press release, which are available at www.sec.gov and our website at www.transmedics.com. TransMedics disclaims any intention or obligation, except as required by law, to update or revise any financial projections, expectations, predictions or forward-looking statements, whether because of new information, future events or developments or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, August 4, 2026. With that, I will now turn the call over to Waleed Hassanein, President and Chief Executive Officer. Waleed Hassanein: Thank you so much, Hannah. Good afternoon, everyone, and thank you for joining TransMedics Second Quarter 2026 Earnings Call. With me today is Gerardo Hernandez, our Chief Financial Officer. Before reviewing our second quarter performance and future catalysts, I want to take a moment to reflect on what we've built at TransMedics and the unparalleled value we are delivering every day for organ transplant patients globally. TransMedics operates a first-in-class vertically integrated organ transplant platform that rests on 4 distinct assets. These 4 assets required several years and substantial capital to create. First asset is the Organ Care System or OCS technology. To our knowledge, OCS is the only portable multi-organ normothermic perfusion platform commercially available today. Second is the National OCS Program, or NOP, a dedicated national infrastructure for organ procurement, surgical, and clinical services. Third is TransMedics Transplant Logistics Network, the first transplant dedicated air and ground logistics network in the United States. And fourth, NOP Connect, the first digital ecosystem that is purpose-built to run the end-to-end transplant workflow with full transparency for every stakeholder involved. Each asset is hard to replicate on its own. Together, they form a substantial moat, and we're not stopping here. We are determined to keep widening that moat. Effective July 1, 2026, we began offering a new service, which is donor and recipient clinical screening coordination services, allowing transplant programs for the first time to run more of their workflow efficiently on the TransMedics platform. We continue to believe that this TransMedics platform can support approximately 30,000 transplants by 2032, driving more than $2 billion in top line annual revenue with a healthy operating profile. Our capital allocation priority has always been and it is unchanged and deliberate. We are focused on durable top line growth ahead of near-term operating leverage. So alongside our second quarter results, I will spend a meaningful portion of today's call on exactly what we are funding over the next 18 to 24 months, the markets each investment unlocks and the milestone you should hold us accountable to. Turning to the quarter. Second quarter 2026 was the strongest in our history in both revenue and case volume. Here are the highlights. Total revenue of approximately $190 million, up approximately 21% year-over-year and approximately 9% sequentially. Transplant product revenue of $111 million, up approximately 16% year-over-year and approximately 3% sequentially. Service revenue of $79 million, up approximately 29% year-over-year and approximately 19% sequentially. Growth was led by liver, which was up approximately 28% year-over-year and approximately 7% sequentially. Heart also grew approximately 6% year-over-year and approximately 23% sequentially. And we expect heart to continue to accelerate in the fourth quarter and beyond as we unlock ENHANCE Part B. TransMedics Logistics delivered approximately $41 million, up approximately 39% year-over-year and approximately 30% sequentially. This growth is the clearest evidence yet that vertical integration of logistics is both a growth engine and a structural differentiator for TransMedics. It is precisely why we are replicating this network outside of the United States. On average, we covered approximately 86% of NOP mission requiring air transport in the quarter, up from 82% in the first quarter. This resulted in improved in operating efficiency. Taking share in this highly competitive transplant logistics market is [Technical Difficulty] real cost efficiency to transplant centers relative to the other transplant logistics providers in the States. Adjusted income from operations of approximately $25.8 million or approximately 14% of revenue delivered while continuing to fund our growth initiatives. We ended the quarter with approximately $473 million in cash and cash equivalents, giving us great confidence in our ability to self-fund our growth investment from the balance sheet and operations. And finally, on July 1, 2026, we closed our strategic investment in PAD Aviation in Germany, the first step towards establishing TransMedics Aviation Europe and building a pan-European transplant logistics network modeled on our U.S. network that we discussed in the quarter. We will discuss the implication of this growth investment later on this call. In short, second quarter strength was driven by strong growth across OCS case volume and clinical services, and it was achieved with minimal contribution from ENHANCE Part B or DENOVO, which we expect to begin to contribute meaningfully late in the fourth quarter and definitely into 2027. Now let me shift gears and address an important strategic topic. As we all know, our stock has been volatile since our last call as investors weigh our growth investment against near-term operating leverage. We take this matter very seriously, and I want to address it directly with data on both the size of the opportunities we're investing in and our track record of converting investment into significant results and significant shareholder value. As I mentioned earlier, our technology, service infrastructure, logistics network and digital platform well positions TransMedics to potentially surpass $2 billion in annual revenue, with a strong operating profile at scale. Four initiatives underpin that path. Each has a defined market, a defined investment window and a defined milestone. First, heart and lung growth, to try to replicate the liver trajectory. ENHANCE Part B targets a U.S. heart segment where we hold no clinical indications today. This segment represents approximately 2,200 DBD heart transplanted annually in the U.S., with roughly 4 hours of preservation time. We designed ENHANCE Part B to serve that segment in 2 distinct ways. The first is using the OCS for its improved preservation capabilities and enhanced function ex vivo. Second is using CHOPS, a lower-cost technology alternative for transplant programs who may be focusing on controlling cost. DENOVO is our focused effort to reestablish or frankly, resurrect the lung perfusion market in the U.S. and broaden OCS Lung adoption. Together, ENHANCE and DENOVO gives TransMedics access to a conservatively estimated 2,000 to 5,000 incremental U.S. heart and lung cases annually. This could materially expand our addressable U.S. opportunity from existing product line. As it relates to execution milestone, the IDE supplement incorporating CHOPS, which is the TransMedics controlled hypothermic organ preservation system into the ENHANCE trial, has been submitted and is currently under FDA review. We expect it to be approved by late Q3 or early fourth quarter, with the lung IDE to follow shortly thereafter. Second initiative is the kidney. This will enable us to access the largest transplant market segment in the U.S. and around the world. Let me give you the details. The U.S. performs more than 21,000 deceased kidney transplants annually. In 2024, approximately 9,200 additional deceased donor kidneys were recovered and never transplanted, largely because of limitations of cold storage preservation. At any given time, approximately 100,000 patients sit on the U.S. kidney waiting list. More than 131,000 new ESRD cases are diagnosed each year. The estimated CMS cost of the waiting list alone is approximately $10 billion annually in the U.S. Simply stated, the demand for better donor kidney utilization is enormous and is a matter of national interest for CMS and for end-stage renal failure patients. Now let's shift gears to post-transplant outcomes in kidney transplant. Post-transplant outcomes are further constrained by delayed graft function, which occurs in 26% to 50% of U.S. kidney recipients, requiring the patients to go back on dialysis at a significant cost and morbidity. Ischemia and reperfusion preservation injuries are the primary cause of DGF post-kidney transplant. The estimated incremental cost is approximately $25,000 to $45,000 per DGF case in the U.S. To summarize, the kidney opportunity is massive and the clinical need is real and its associated costs are significant. Now let me explain how OCS Kidney could address these issues comprehensively. OCS Kidney is being designed as the first portable normothermic oxygenated perfusion system for kidney transplant to significantly reduce ischemia and reperfusion injury on the donor kidney. In addition, OCS Kidney is designed to include online functional assessment capabilities. We believe that OCS Kidney has the potential to significantly increase donor kidney utilization and significantly reduce the incidence of DGF post-transplantation, which will drive significant cost efficiencies to CMS. We're building OCS Kidney system on our next-gen platform, which is Gen 3.0, which adds meaningful scale and operating leverage across the business. This is the single largest addressable segment available to us in organ transplantation in the U.S. and around the world. In terms of milestones, the development program is fully underway, and we have begun pre-IDE discussions with FDA to define the best path for the IDE to work on it collaboratively with the agency. In fact, we had our first pre-IDE meeting -- pre-sub meeting with the FDA this morning. We are targeting first clinical experience later in 2027, and the program is now entering engineering and manufacturing verification and validation to prepare for the first-in-human use. Global demand for OCS Kidney is significant, and we are evaluating potential options to capitalize on OUS demand in parallel to our U.S. IDE. The third initiative is international expansion to expand our total addressable market. As we've discussed, we are replicating the successful U.S. NOP and logistics model in Europe, starting with Italy, where we have secured national reimbursement for machine perfusion and services that should take effect later this year or early 2027. We're actively engaged in multiple regional transplant logistics tenders in Italy today, and the recent PAD Aviation investment was the enabling step that makes us eligible to compete for these transplant logistics tenders across Italy and across Europe. We are also in discussions with several additional European countries on NOP and logistics. The opportunity in Europe leverages capabilities we've already built, materially expanding our addressable market, extend our life-saving impact to European transplant patients, and we view it as a meaningful growth catalyst for 2027 and beyond. Finally, building the technology platform to scale globally and drive significant operating leverage. That is NextGen or OCS Gen 3.0. Gen 3.0 is a complete redesign of the OCS platform, engineered from the ground up to deliver significant operating leverage and supply chain independence. In addition, it is designed to be highly autonomous and with cloud-based remote monitoring and control capability to enable scaling of clinical usage and to support operating capacity of 30,000 transplants and beyond globally by 2032. Now let me conclude by a review of our execution track record. Over the last 4 years, TransMedics has consistently outperformed growth expectations, with the few exceptions largely driven by seasonal softness while at greater scale. We have also consistently delivered strong bottom line performance despite our hyper focus on top line growth and deliberate deployment of capital to build our unparalleled platform. With that as a background, please let me state plainly for the record, TransMedics is and remains a growth-oriented business. Please allow me to repeat it again. TransMedics is and remains a growth-oriented business. We are funding these 4 growth initiatives over the next 18 to 24 months precisely because they are what carries us to approximately 30,000-plus transplants by 2032 and more than $2 billion in top line revenue. Turning to guidance. Recognizing that we are early in Q3, which is a traditionally seasonally soft quarter for transplant procedure volume, and early in the integration path for PAD Aviation into our European operation, we are raising the low end of our full year 2026 revenue guidance to a range of $737 million to $757 million, representing 22% to 25% growth over 2025. Importantly, this guidance assumes no revenue contribution from PAD Aviation investment and no meaningful incremental revenue from ENHANCE Part B or DENOVO clinical programs. With that, let me turn the call over to Gerardo to review our second quarter financial results in detail. Gerardo Hernandez: Thank you, Waleed. Good afternoon, everybody. I am pleased to share TransMedics second quarter 2026 results. A supplemental slide presentation with additional detail is available in the Investors section of our website. The second quarter delivered strong revenue growth, sequential gross margin improvement and an adjusted operating margin of 13.6%. Our results reflect continued strength in the business together with increased investment in R&D and the infrastructure required to support future growth. Today, I will review our second quarter financial performance, the key drivers of operating expenses and our updated full-year outlook. As introduced last quarter, we report several non-GAAP measures, including adjusted R&D, SG&A, operating expenses, income from operations, operating margin, net income and diluted earnings per share. We believe these measures provide both management and investors with greater visibility into the underlying performance of the business, particularly as we incur certain discrete expenses that may affect comparability between periods. Full reconciliations are included in the supplemental materials. Now turning to our second quarter financial performance. Total revenue was approximately $190 million, up 21% year-over-year and 9% sequentially, marking the highest quarterly revenue in our history. U.S. transplant revenue was approximately $184 million, up 21% year-over-year and 10% sequentially. By organ, liver contributed with approximately $148 million, heart approximately $33 million and lung approximately $2 million. International revenue was approximately $5 million, up 26% year-over-year, reflecting continued progress as we expand our presence in Europe. We remain in the early innings of our European growth story. And as we continue to build scale, we expect some quarterly variability. Product revenue was approximately $111 million, up 16% year-over-year and 3% sequentially, led by liver. Service revenue was approximately $79 million, up 29% year-over-year and 19% sequentially. Service revenue represented 41% of total revenue. The increase was primarily driven by broader adoption of TransMedics Logistics and pricing adjustments to offset higher fuel costs. Total gross margin was 59.6%, up approximately 140 basis points sequentially and down approximately 180 basis points year-over-year. The sequential improvement was driven primarily by service margin, which increased from approximately 27% in the first quarter of 2026 to 35% in the second quarter, reflecting higher fleet utilization, improved operating efficiency and continued optimization of our service offerings. Product gross margin was 77%, broadly stable sequentially. The year-over-year decline primarily reflects the higher mix of service revenue and certain temporary product cost pressures, including inventory provisioning and trial-related solution costs. These factors were partially offset by improved performance in TransMedics Logistics and continued operating efficiencies. We expect some normalization in service margin during the second half while remaining above historical levels. Adjusted operating expenses were $87 million, up approximately 46% year-over-year and approximately 5% sequentially. OCS Kidney, next-generation OCS and our ENHANCE and DENOVO clinical programs accounted for approximately half of the year-over-year increase or about $14 million. Investments in our new headquarters and our new disposable manufacturing facility in Mirandola, Italy represented another approximately 20% of the incremental investment for about $5 million. The Mirandola investment is an important step in strengthening our supply chain through greater vertical integration. The sequential increase was concentrated in these strategic growth programs. Excluding these investments, operating expenses declined sequentially, demonstrating continued discipline across the broader cost base. Adjusted R&D was approximately $32 million, up approximately 99% year-over-year, primarily driven by investment in the strategic growth programs. Adjusted SG&A was approximately $55.8 million, up approximately 27% year-over-year and down approximately 4% sequentially. The year-over-year increase primarily reflects our Somerville headquarters and investment in NOP network, IT infrastructure and international expansion. Sequentially, SG&A declined as nonrecurring payroll-related costs recorded in the first quarter did not repeat and consulting spending decreased following the completion of several projects. For the second half, we expect adjusted operating expenses for the existing TransMedics business to be broadly in line with the first half, with R&D remaining elevated and SG&A tightly managed. Adjusted income from operations was $25.8 million, representing an adjusted operating margin of 13.6%. Most of the year-over-year decline reflects the planned increase in strategic investment with the balance attributable to the gross margin factors discussed earlier. Adjusted net income was $16.2 million and adjusted diluted earnings per share was $0.44. Diluted weighted average number of shares were approximately 40.7 million. For modeling purposes, interest expense was $7.2 million in the quarter, including approximately $3.8 million related to the finance lease for our new Somerville headquarters. We expect headquarter-related interest expense of approximately $15.3 million for the full year and total interest expense approximately $29 million, partially offset by approximately $12 million of interest income. Our effective tax rate was 24.3% in the quarter, and we expect approximately 26% for the full year. We ended the quarter with $473 million in cash and cash equivalents and approximately $18 million in restricted cash, primarily related to headquarters' lease, which is reported separately. Now let me turn to PAD Aviation. The transaction closed in July 1, 2026, and PAD will be consolidated in our financial statements beginning in the third quarter. PAD's existing third-party charter business will be reported within non-OCS revenue. Future transplant logistics revenue generated by PAD in support of our European platform will be reported within service revenue, consistent with our U.S. transplant logistics business. While we understand PAD's historical performance and its charter business, we have not yet established an operating track record under TransMedics to provide a stand-alone estimate with the level of confidence and precision we expect from our guidance. PAD is an important strategic investment that provides the aviation infrastructure required to support our European transplant logistics platform. As we integrate the business and increase the utilization of transplant missions over time, we expect its financial profile to improve. In the near-term, however, its initial consolidation will be dilutive to both gross margin and operating margin beginning in the third quarter. Now turning to our 2026 outlook. As Waleed noted, excluding the impact of PAD Aviation, we are raising the lower end of our full year 2026 revenue guidance to a range of $737 million to $757 million, representing growth of approximately 22% to 25% compared to 2025. This guidance assumes no incremental revenue from ENHANCE Part B and DENOVO. We are confident in our updated guidance because at the midpoint, it reflects a second half sequential growth pattern broadly consistent with the average observed over the past 2 years. For the second half of 2026, we expect gross margin, excluding the impact of PAD Aviation of approximately 59%. Looking beyond 2026 and excluding PAD Aviation, we expect gross margin to remain broadly around current levels over the next 2 to 3 years as we continue to invest in international expansion. Over time, greater scale and utilization across our international platform, together with efficiencies designed into OCS Kidney and next-generation OCS should support a sustainable gross margin profile of approximately 60%, with potential for further improvement. In terms of operating margin, our prior expectation was for a full year adjusted operating margin of approximately 16% or about 250 basis points below our 2025 level of 18.5%. We now expect full-year adjusted operating margin, excluding the impact of PAD Aviation of approximately 12.5% to 14%. The range primarily reflects potential variability in revenue performance, while the reduction from our prior expectation primarily reflects the higher planned investment in OCS Kidney. This represents a deliberate acceleration of key strategic growth programs rather than a broad-based expansion of our overhead structure. Our capital allocation priorities remain focused on long-term value creation, supporting innovation across our technology and clinical pipeline, strengthening our NOP and international platform and build the systems and infrastructure required to support scale. We also continue to evaluate selective strategic opportunities that can further strengthen and expand our platform, subject to disciplined strategic and financial criteria. To summarize, the second quarter delivered record revenue, sequential gross margin improvement and materially higher service profitability. We raised the lower end of our full year revenue guidance, excluding PAD Aviation, to $737 million to $757 million, and we expect full year adjusted operating margin, excluding PAD Aviation of approximately 12.5% to 14%, while maintaining a strong liquidity position. With that, I'll turn the call over to Waleed, for closing remarks. Waleed Hassanein: Thank you so much, Gerardo. Overall, we're pleased with our second quarter performance and more importantly, confident in what lies ahead as we execute against the growth initiatives we outlined today. Please allow me to be direct about how we see our business and how to model TransMedics. We are building TransMedics to be a growth business in the near-, mid- and long-term. Operating margin will vary quarter-to-quarter with the pace of the investment required to fuel that growth. We are equally committed to delivering a strong operating profile at scale, and we will report progress against these initiatives every quarter. On execution, our track record speaks for itself. A few years ago, our plan to vertically integrate logistics was widely questioned. Today, TransMedics transplant logistics is a significant growth driver and operational differentiator for our business. Importantly, TransMedics is approaching approximately $800 million annualized revenue run rate, yet with substantial growth initiatives still in front of us and ahead of us. Finally, we remain grounded and humbled in the life-saving impact of the OCS technology, our NOP services, our world-class team, and committed to our mission of expanding access and improving clinical outcomes for patients in need of organ transplantation worldwide. With that, I will turn the call over to the operator for questions. Operator? Operator: Your first question comes from Allen Gong with JPMorgan. K. Gong: I just wanted to start off with your service performance in the quarter, definitely, I think, stronger than we had been expecting. And the growth outpaced your disposables business even ahead of this new initiative that you're launching on the service side. So I know, like, I think you had talked to some increase in dry runs in the quarter. But how should we think about the drivers of that increase? And what are you seeing so far in the third quarter when it comes to that dry run dynamic or any others? Waleed Hassanein: Thank you, Allen. We have never discussed increase in dry run pace. We don't see an increase in dry run rate. We didn't see it in Q2. We didn't see it in Q3. And I'll leave it at that. K. Gong: I guess then, like, what drove that increase in service revenues, right? Because I think like maybe naively that disposables and service should go -- grow pretty hand-in-hand given -- especially on the aviation side, you service an increased percentage of your flights using NOP. So that would increase it a bit, but I think the growth disparity is a little bit stark there. So what drove that increase in service revenues kind of above product revenues? Waleed Hassanein: Gaining market share in logistics, gaining a lot of efficiency in our logistics, improving our margins, pricing adjustment to buffer against the increase in costs, new centers. So that's -- these all combined lead to that picture. Operator: Your next question comes from Josh Jennings with TD Cowen. Joshua Jennings: Congratulations on a strong quarter. It seems that the third quarter is starting off strong, too, looking at some of the transplant -- post transplant volume data. But maybe -- and that's a continuation in the back half of 2Q. Maybe help us think about the market growth dynamics that you're seeing in U.S. heart, lung, and liver transplant volumes and what's driving the acceleration if that is, in fact, occurring? Waleed Hassanein: Thank you, Josh. We agree we started Q3 very, very strong. In fact, I mean, it's not a secret. It's published on Twitter every day. July was the highest aviation month for the business. But July is not Q3. And we are entering into August, and we all know what happens in August. So we're encouraged. As I said, there are new centers coming on board. There are new initiatives that are driving growth, plus we're gaining market share in our logistics and clinical services. So we are cautiously optimistic about Q3. We need to see how the rest of the quarter unfolds before we formulate an opinion. We're focusing on our part of the equation, Josh. We're driving more utilization, more cases, more services. What happened on the national level, again, we keep track of it, but our primary focus is growing our own adoption and our own portion of the market, so. And we feel we're -- the team is doing a great job at that. But it's early in Q3, Josh, I don't want anybody on the call to think that Q3 this year is going to be significantly different until we see it significantly different. So far, we had a great July. But again, we still have 2 more months to go. And August, we're starting to see some kind of -- we know what happened in August. People take vacations and centers go hunker down. So we have to wait and see. Joshua Jennings: Understood. That makes sense. Maybe just one follow-up just on the controlled hypothermic organ preservation system or CHOPS and I'm not sure if you -- if I missed this, but any update just on the 510(k) pathway? And maybe help us think about when you could have clearance in hand and just the commercial opportunity outside of the benefit you received from CHOPS being included in ENHANCE Part B and DENOVO, but just the overall commercial opportunity, help frame that up for us. Waleed Hassanein: Thank you, Josh. Josh, as you know, we like to walk before we run, before we sprint. So right now, the focus is getting the IDE approval to get -- to unlock the trial. The next frontier for us will be the 510(k). I think realistically speaking, this is H1 2027 horizon for us. As far as the opportunities that it unlocks, as I stated earlier, at least, at least 2,200 annual cases in the U.S. DBD hearts that are done with approximately 4 hours of preservation. So that's why we framed it as such in the prepared remarks. Joshua Jennings: And can it be used in other indications? Or are you focusing on heart first, Waleed? Sorry for the... Waleed Hassanein: Again, we don't talk about our active discussions with FDA, and we're actively discussing all this with FDA. But when you look at what CHOPS does, there's no reason why we shouldn't have indications beyond heart. But I'll leave it at that. Operator: Your next question comes from Bill Plovanic with Canaccord. William Plovanic: Waleed, first question is, I was wondering if you could unpack the statement that you're adding donor and recipient screening services starting July 1. I'm trying to understand the potential impact from that from a volume standpoint, from a revenue standpoint, providing that service, what does that do for the customers? And how does that impact TransMedics? Waleed Hassanein: Thank you, Bill. We've been talking about this for a long time. It's a natural kind of progression to what we do. I'll focus on why we're doing it rather than what the centers could do because that's what I can control. We're doing it because we've always stated that the transplant market or the transplant workflow is highly complex and highly unorganized. There's many cooks in the kitchen. And we always believed that harmonizing that workflow into one streamline of services, technology, transparency, accessibility could be a catalyst for what TransMedics is doing. So we launched that service. We signed up a major health care system in Boston. We are going to experiment with that, pilot that over the next few quarters. And the hope is, one, the center would see the value, and we would see the potential impact. It's early, but we're excited about this initiative. It gives us visibility to the national donor pool that's coming for allocation. It allows us to support these centers and give them access to our platforms, whether digital platforms, OCS platforms, logistics services and it streamlined the process for them to drive more efficiency and more transplants. William Plovanic: And then just following up on the earlier question regarding -- I'm sorry. I lost my train of thought there. The ENHANCE heart trial and the DENOVO lung trials, these have been delayed and they kind of continue to get delayed. I don't know if you could characterize the conversations with the FDA? Or what gives you confidence that we'll be able to at least start the DENOVO lung before year-end and get into the ENHANCE Part B early next year, if I'm accurately hearing you? What gives you confidence that we're actually more towards the end of the goal line with those IDEs rather than kind of stuck in the neutral here? Waleed Hassanein: Thank you, Bill. Listen, again, there's a reason why we don't comment on our discussions with FDA. FDA owns the time line. We are working collaboratively with them. We believe we have done everything that we've been asked to do. I'll leave it at that. The heart is ahead of the lung right now, and it has been to-date. So that's why we are predicting that once we gain visibility on the IDE for heart, we will use that as a stepping stone to get lung IDE amendment approved. We have to remind the audience that what I'm talking about is not the IDE approval per se. I mean, everybody knows that IDE amendment is anywhere between 30 and 60 days. The problem is after that, we need to go back to the centers, notified IRBs and I'm focusing on getting actual cases done with that approval. So I'm not necessarily focusing on FDA approval per se. I'm focusing on the tangible outcome, the impact on our quarterly print, which is doing cases with that IDE. Operator: Your next question comes from Ryan Daniels with William Blair. Matthew Mardula: This is Matthew Mardula on for Ryan. And I kind of want to follow-up on the previous question but ask it in a different way. Can you give us an update on the percentage or amount of the DENOVO, ENHANCE clinical trials that have been completed so far? I know in your prepared remarks, you discussed a minimal contribution from ENHANCE Part B and DENOVO in Q2. But any update on that contribution and then just overall completion of the clinical trials so far? Waleed Hassanein: Sure. Matt, thank you for the question. I would -- as I stated several times, I believe, over the last few months, ENHANCE Part B will be completed before year-end. There's no question in our mind. But ENHANCE Part A -- I'm sorry, Part A, I apologize if I stated these. ENHANCE Part A is going to be completed before year-end this year. There's no doubt about it. The slow to kick into full gear is Part B for the heart and DENOVO. We've done a handful of cases in each, nothing really to hang our hat on. So that's why I said there was no meaningful contribution in Q2 from these two. The only way we can really put that to test is by getting that IDE approval -- IDE supplement approved and giving the center the freedom to use a control arm that is not hampered by competitive dynamics. So we expect that once it happens, we expect, we hope for rapid adoption and rapid enrollment. And again, we're keeping our focus around 12 to 18 months from initiation of the enrollment of the study. So we're still within the bounds of 2027, but we need to start seeing uptake, and we need to get that IDE approved in the time lines we outlined. Matthew Mardula: Perfect. And one very quick follow-up. Regarding the international growth, you talked about securing reimbursement for both machine perfusion and services internationally that should take effect later this year or early 2027. It sounds like initial conversations internationally are going better than expectations. Can you give us some insights into that growth internationally? I know it's still early, but any big picture ideas as well as with the kind of tenders and contracts in Italy as well as expanding outside of Italy? Waleed Hassanein: Matt, that's an important question, but I want to kindly correct the question. I did not say that we secured reimbursement for the product and service across Europe. I said we secured a budget in Italy, only in Italy. The budget that I'm referring to is in Italy. And that's where we -- the regional budgets have been ratified in Q2, and we expect going through the bureaucratic steps to get that budget disbursed is underway in Italy, and we hope to get through that bureaucratic process by end of this year, beginning of next. I'm referring specifically on Italy. All the other dynamics across Europe are targeting or prioritizing countries that already have budgets for reimbursement. For example, Netherlands, France, the U.K., those have budgets already approved. What we're doing, however, is we're expanding our outreach to compete not just for the technology and the transplant, but also for logistics, which their budgets are large, already approved and already at the national tender level. That's what we are competing for. And that's where we see a near-term potential growth opportunity as a first step towards broader OCS NOP growth across Europe. Operator: Your next question comes from Matt O'Brien with Piper Sandler. Samantha Munoz: This is Sam on for Matt. I guess we -- still waiting on the CMS final rule regarding OPO recertification. How are you planning for the potential opportunity here? And what do you think TransMedics' role would look like and the benefit to TransMedics if it could become an OPO? Waleed Hassanein: Thank you, Sam. We are waiting exactly like everybody else. So we hope that decision will be made sometime in the second half of this year. We are waiting ready and able if we're fortunate to be given the opportunity to compete for as many DSAs as CMS would allow us to participate at. But until that happens, we have to continue to do what we're doing. We see 2 significant benefits. The first is our ability to leverage technology, clinical leadership and clinical expertise to expand the donor pool and to increase the utilization of the existing donor pool using OCS technology, reduce the overall cost by eliminating, frankly, costly and unnecessary excessive procedures that really hasn't demonstrated its ability to increase organ supply like NRP. But again, if that doesn't happen, we will continue to operate in the same mode that we're operating in. And all of -- everything we discussed today from a growth opportunities, you notice does not include us becoming an OPO. So because this is a binary decision. It's either going to happen or it's not going to happen. So that's why we can't count on it until it happens. Samantha Munoz: Okay. Great. And then also, I want to continue the conversation on the really strong flight performance that's happened in the past few months. I know you mentioned market share gains. Could you talk a little bit about how double shifting the aircraft is going? And how durable do you think this momentum is in the flight performance? Waleed Hassanein: Thank you, Sam. I think the growth is primarily market share gain. The double-shifting is what improved the margin. So there are 2 different things. The growth in revenue is primarily market share gain. And other vendors reported earlier today that they lost a major account. Where do you think that major account went to? It came to us. The double-shifting gave us significant operating leverage, so. How durable it is? We think it's durable. And again, we will let the print speak for itself. Operator: Your next question comes from Patrick Wood with UBS. Patrick Wood Given the time, I'll just keep it to one. Curious about Germany and what it was that drove you, I guess, as the next steps to be looking at that market. I think they're kind of unique in that DCD isn't really on the table at the moment. What was it about Germany, just size and scale of patients? Why was that the right next move after Italy? Waleed Hassanein: Patrick, first, congratulations on the new role, and thank you for the question. I want to clarify one point. We are not in Germany today. We made a major strategic investment in PAD Aviation in Paderborn, Germany because of its central location in Europe, we can access any potential European country or donor site within 2 hours of flight from Paderborn. That's what we make the investment in, but we are not active in Germany because of lack of reimbursement. We're still negotiating with the German reimbursement authority. And also, as you know, there's no DCD donation in Germany. So it's a complex market, and we are actively engaged there, but we don't see them as a near-term growth catalyst for us. Operator: Your next question comes from Daniel Markowitz with Evercore ISI. Daniel Markowitz: I was curious on the consulting fees in the first half and some of the findings of that work. So sort of asking a different way with what some of the folks before me have asked. If I recall correctly, it was focused on OUS market development. I guess I'm curious what was the focus of the diligence? And what did you find that gave you the confidence to accelerate investments here? I think some investors want to better understand and get more confidence that some of these cost-conscious markets seem right for OCS and logistics adoption. Waleed Hassanein: Daniel, thank you for the question. I'll start, and I'll let Gerardo comment if he has anything to add. I think we learned a ton, specifically about the existence of these significant budgets for organ transplant logistics, significant budgets for increasing the utilization of donor pools, which we believe could be a first step towards expanding the overall clinical adoption in Europe. And they gave us a road map to all the tenders upcoming over the next several quarters across Europe, which is guiding us of who, where and how we can compete. Gerardo, would you like to add anything? Gerardo Hernandez: No, nothing. You covered it. Daniel Markowitz: Very helpful. And then just a follow-up on PAD Aviation. All the guidance metrics were kind of ex PAD, but can we get a sense for what the level of investment will look like and how that might impact the P&L, both near-term and maybe, call it, through the rest of this year and into next year? Gerardo Hernandez: Not yet. I think, as we mentioned, we are not prepared just yet to provide any number or any metric. However, I think by Q3, we should be able to align -- internally, we should be able to provide some guidance for the remaining of the year. Waleed Hassanein: The only thing I would add to that, Daniel, is I want to caution the audience and the listeners that PAD Aviation investment is not Summit Aviation investment. Summit Aviation, we had a huge pent-up demand in the United States. PAD is just the beginning. It's the first step towards establishing that. So we are not going to be as bullish in capital deployment until we see the demand justifies that. So it's going to be slightly different to the Summit Aviation investment. But we will provide more color and more detail in Q3. Operator: Your next question comes from Young Li with Jefferies. Young Li: I'll just keep it to one. Maybe just a follow-up on the prior OPO question and lines of conversation. Just kind of curious about, I guess, maybe if you can update us on the next milestones with the Modernization Act. Any changes in time lines and expectations there? As well as you talked about OPO pressures in 1Q this year. How has that dynamic evolved? How much have you seen in 2Q and expectations for second half impact? Waleed Hassanein: Thank you for the question. Young, I really would love to address this in a direct way. There are no updates. We are waiting for CMS. CMS may delay the decision point. CMS may decide that they're not going to allow outside entities to participate. TransMedics is going to continue to grow and expand regardless of that initiative. The dynamic around the OPO, we printed Q2, everybody is looking at the OPTN data like we all do. I think we are -- I don't see that dynamic impacting the overall numbers. And as I said, I am and the team are laser-focused on our own adoption, our own expansion, our own growth. I worry about providing commentary that is really not directly related to TransMedics that could be misperceived. That's why I'm addressing it in that fashion. At the end of the day, CMS has the ball. CMS has us on the clock. Everybody and their mothers are waiting for CMS to make a decision. Until they make a decision, we have no update, unfortunately, or no updates. So I'll leave it at that. Operator: Your next question comes from Suraj Kalia with Oppenheimer & Company. Suraj Kalia: Gentlemen, congrats on a nice quarter. So Waleed, a couple from my side, and I'll pose them upfront. You mentioned about the centers that you all have signed for additional service platforms and the value that TransMedics provides. Maybe if you could shed it for us what -- how do you define value in this specific context? That is question #1. And Waleed, question #2 would be the 10,000 organs by 2028, look, kidneys seems highly unlikely to contribute by that time and ENHANCE Part B -- or sorry, if ENHANCE Part A is completed, right, the DBD standard criteria label expansion will also come presumably late '27. So help us tie the different pieces together on the 10,000 units outlook by 2028. Waleed Hassanein: Thank you, Suraj. Let me start by addressing the second piece first. The 10,000 transplants by 2028 was established at the JPMorgan conference, I believe, in January of 2023. So we never factored CHOPS. We never factored kidney. The 10,000 transplants is on the current platform, heart, lung, liver, at the current pace, at the current, how do you call it, adoption proportion. And kidney is what gets us from 10 to 20, and that's by 2030. And 2032, that includes international numbers. So I don't want anybody to be confused that 2028 or the 10,000 transplant has any of ENHANCE Part B or CHOPS. No, this is all -- those all came after that goal was set. So our expectation is to meet that goal with or without CHOPS, with or without ENHANCE Part B. So that's #2. #1, it's simply stated, Suraj, TransMedics has built an infrastructure that is delivering significant value across the entire transplant ecosystem. We know that transplant ecosystem is very choppy. It's very segmented and there's significant inefficiencies both from workflow, organ utilization and expense. By efficientizing that entire workflow, by providing additional technologies like our digital ecosystem, by having the command center run the entire process for the transplant program, we become a trusted partner to transplant programs. We hope that partnership translates over time to broader adoption and deeper utilization. Simply stated, that's the approach. Operator: Your next question comes from Mike Matson with Needham. Michael Matson: I'll just limit to one, but just on this PAD deal. So I guess I'm a little confused what you're getting with the deal. Does this company -- I assume they own some planes and then the charter business that they have, the nonmedical charter business, it sounds like that's going to continue, but I assume that will kind of wind down over time as you ramp up the OCS part of their business. Is that all fair statements? Waleed Hassanein: Mike, thank you for the question. What we're getting with the PAD Aviation is the license to operate in Europe. This is not a small undertaking. What we expect to happen, again, similar to Summit, but will take a slightly longer pathway because of the demand is we will transition out of the charter business into 100% transplant operations or transplant missions over time as the demand ramps up. The company has a large number of pilots, a fairly sizable fleet that they operate, doesn't necessarily mean they own. And we're leveraging all of that to minimize our capital expenditures early on until the demand is there to justify us buying our own planes. But to get access to the aviation license to operate in Europe and internationally and get access to having 40-plus pilots under our command and an efficient fleet that is available and the ability to participate in all these transplant logistics centers across Europe as the first step towards expanding our medical device adoption is critical in Europe. So that's why we -- yes, go ahead. Michael Matson: That answers my question. Operator: Your next question comes from David Rescott with Baird. David Rescott: I guess I'll also limit it to one, and congrats on the results here. I appreciate the comments on this delta between the service and product revenue that you saw from a growth perspective in the quarter. But curious if you could provide any more color as to whether or not that was seen more either on the heart or liver side or DCD versus DBD? Just curious to hear why exactly or where exactly you've seen that bigger step up? And then I guess, is it fair to assume that the remainder -- for the remainder of 2026, that this higher effectively service revenue dollar per transplant should remain into the back half of the year? Waleed Hassanein: David, I'm sorry, can you please repeat the first part of the question about DBD and DCD? I missed that. I apologize. David Rescott: Yes. Can you hear me still? Waleed Hassanein: Yes, I can hear you now. David Rescott: Yes. Just curious if this higher service revenue dollar was seen more or more specifically coming from either liver or heart or DCD liver, DBD liver. Just curious if any of those specific organs were seeing a higher service utilization. Waleed Hassanein: Yes. Thank you, David, for the question. Service is associated with OCS use and they go hand in hand. So when we have higher service dollars, it's associated with OCS use for the most part. And the delta is potentially dry runs because our team gets deployed and we charge for the service. So that could be the delta. But we see it across the board. We see it in liver. We see it in heart. We see it in lung when lung is used. Nobody can operate the OCS without service. Gerardo Hernandez: And David, if I can add something there. We're expecting that in the second half, the gross margin of service will normalize a little bit. We will remain above historical levels, but will certainly not be comparable to the one in Q2. Service margin is closely linked to volume. So as we have more volume, we should be able to achieve those new levels of gross margin. But for instance, in Q3, when volume goes down, there is no way we can achieve those levels. I hope that answers your question. Operator: Your next question comes from Tom Stephan with Stifel. Thomas Stephan: I'll only get to one. But I wanted to ask about 2027 sort of in the context of Street at, I think, roughly $3 of earnings next year. Maybe, Gerardo, for you. Just curious if you can help us think about '27 OpEx or maybe '27 operating margin. This year, I think you said the midpoint of the new guide around 13%. Last year was, I think, 18% to 19%. So do we think about 2027 Op margin somewhere in between, maybe closer to either of those ends being 13% or 19%? Just any directional commentary would be helpful as we try to reset our models a bit down to the bottom line. Maybe to ask it more bluntly, for '27 earnings, should we be above or below $2? Gerardo Hernandez: Thank you for the question. Operating margin is a clear -- is clearly linked in the case of TransMedics to basically 3 elements. One, it's our scale, so the volume that we have. Two, it's the usual gross margin. But three, and probably more importantly, it's capturing the benefits that we have designed within OCS 3.0 and Kidney to improve our gross margin. Those 3 elements will drive a long-term operating margin that will be sustainable to the level that I have mentioned before. Right now, for 2027, it's early to say which is the right forecast. The reason for that is because we need to see how the second half of this year evolves in terms of the different projects that we currently have to make sure that we have clarity on a reasonable 2027 view. Let me put you one example. For instance, the clinical programs, we had significant investment in 2026. But now that we have delayed -- that those programs are delayed, that investment is going to next year. We need to see how the rest of the programs evolve, as I said, to have better -- clearer visibility, and then we will be able to provide a better view. So with that, I don't want to go into more details, but certainly, in Q4, we will have a better view and provide guidance on 2027. Operator: This concludes the question-and-answer session. I'll turn the call to Waleed, for closing remarks. Waleed Hassanein: Thank you, operator. Thank you all very much for taking the time to be in this call and looking forward to our next call. Thank you. Have a great evening. Operator: This concludes today's conference call. Thank you for joining. You may now disconnect. Before you buy stock in TransMedics Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and TransMedics Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends TransMedics Group. The Motley Fool has a disclosure policy. TransMedics (TMDX) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

TransMedics Group TMDX delivered earnings per share (EPS) of 44 cents in the second quarter of 2026, down 52.2% year over year. The figure missed the Zacks Consensus Estimate by 12%. Revenues rose 20.7% year over year to $189.9 million and surpassed the consensus estimate by 3.1%. Net product revenues totaled $111.2 million, up 15.7% from the prior-year quarter. The improvement was led by higher organ utilization and increased OCS adoption, particularly across the liver and heart businesses. Service revenues represented roughly 41% of total revenues and increased 28.6% to $78.8 million. Clinical service revenues rose 19.1% to around $36 million. The stronger service contribution reflected broader logistics adoption, pricing adjustments and higher aviation-fleet utilization. Transplant Logistics’ services revenues for second-quarter 2026 were approximately $41 million, up 39% year over year. TransMedics operated 22 owned aircraft during the quarter and covered 86% of National OCS Program missions requiring air transportation, compared with 82% coverage in the first quarter of 2026. This growth resulted from the broader adoption of TransMedics’ logistics services, increased aviation-fleet utilization and improved operating efficiency. However, shares of TransMedics lost 7.8% in yesterday’s after-market trading. The company’s shares have plunged 33.6% in the year-to-date period compared with the industry’s decrease of 10.6%. However, the broader S&P 500 Index has increased 13.3% in the same time frame. Image Source: Zacks Investment Research In the quarter under review, TransMedics’ gross profit increased 17.2% year over year to $113.2 million. The gross margin contracted 100 basis points (bps) to 60%. Selling, general and administrative expenses rose 31.2% year over year to $57.8 million. Research, development and clinical trials expenses surged 98.5% year over year to $31.6 million. Total operating expenses of $89.5 million increased 49.1% year over year. Adjusted operating profit totaled $25.8 million, reflecting a decline of 29.5% from the prior-year quarter. The adjusted operating margin in the second quarter contracted 960 bps to 13.6%. TransMedics exited second-quarter 2026 with cash of $472.7 million compared with $461.7 million at the end of the first quarter. Total long-term debt at the end of second-quarter 2026 was $39.7 million compared with $44.5 million at the end of the first quarter. Cumulative net cash provided by operating activities at the end of second-quarter 2026 was $41.8 million compared with $88.8 million a year ago. TransMedics raised the lower end of its 2026 revenue guidance. Revenues are now expected to be between $737 million and $757 million, representing growth of approximately 22% to 25% from the 2025 level. The previous projection called for revenues of $727 million to $757 million. The outlook excludes contributions from PAD Aviation and assumes no incremental revenues from the ENHANCE Part B and DENOVO clinical programs. Adjusted operating margin, excluding PAD Aviation, is expected to be between 12.5% and 14%, below the company’s prior expectation of approximately 16% because of accelerated OCS Kidney investments. TransMedics Group, Inc. price-consensus-eps-surprise-chart | TransMedics Group, Inc. Quote TransMedics delivered mixed second-quarter 2026 results, with revenues surpassing expectations but earnings falling short. Record revenues reflected higher OCS utilization, strong liver and heart volumes and accelerating logistics services. However, adjusted earnings declined sharply year over year as the company increased spending on clinical programs, product development and growth infrastructure. In the reported quarter, positives included balanced growth across product and service revenues, improved sequential gross margin and stronger logistics profitability. TransMedics covered 86% of NOP missions requiring air transport with its owned fleet, up from 82% in the first quarter, supporting better operating efficiency. The company is investing in four major initiatives: expanding heart and lung adoption, developing OCS Kidney, building an international transplant platform and launching the Gen 3.0 OCS system. Management expects ENHANCE Part B and DENOVO to begin contributing meaningfully in late 2026 and into 2027, while the first clinical experience with OCS Kidney is targeted for late 2027. Gen 3.0 is designed to improve scalability, supply-chain independence and remote monitoring capabilities. On the other hand, challenges included substantial year-over-year margin contraction and a sharp increase in operating expenses. Research and development costs nearly doubled as TransMedics accelerated investments in OCS Kidney, Gen 3.0 and the ENHANCE and DENOVO programs. Moreover, the initial consolidation of PAD Aviation is expected to dilute gross and operating margins beginning in the third quarter. These investments may support long-term market expansion, but they are likely to keep near-term profitability under pressure. TransMedics currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the broader medical space are McKesson MCK, Phibro Animal Health PAHC and Cardinal Health CAH. McKesson carries a Zacks Rank #2 (Buy) at present and has an estimated long-term growth rate of 13.7%. MCK’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.09%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. McKesson shares have gained 8.8% against the industry’s 12.7% decline in the year-to-date period. Phibro Animal Health, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 21.5%. PAHC’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 16.25%. Phibro Animal Health stock has climbed 44.2% against the industry’s 17.1% decline in the year-to-date period. Cardinal Health, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 17%. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 10.27%. Cardinal Health’s shares have lost 2.6% compared with the industry’s 3.1% decline in the year-to-date period. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report TransMedics Group, Inc. (TMDX) : Free Stock Analysis Report Cardinal Health, Inc. (CAH) : Free Stock Analysis Report McKesson Corporation (MCK) : Free Stock Analysis Report Phibro Animal Health Corporation (PAHC) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in TransMedics Group, Inc.? Here are five stocks we like better. Record Q2 performance: Revenue rose 21% year over year to approximately $190 million, driven by 28% liver growth and a 39% increase in logistics revenue. Service revenue reached 41% of total sales, while adjusted earnings were $0.44 per diluted share. Growth investments are weighing on margins: TransMedics is prioritizing heart and lung adoption, OCS Kidney, European logistics and its next-generation platform. The increased spending lowered the full-year adjusted operating-margin outlook to approximately 12.5%–14%, despite a higher revenue forecast. 2026 outlook raised: The company now expects full-year revenue, excluding PAD Aviation, of $737 million to $757 million, representing 22%–25% growth. PAD Aviation will be consolidated in the third quarter and is initially expected to dilute margins as TransMedics builds its European logistics network. Mid-Cap Marvels: 3 Stocks That Crushed Sales Estimates in May TransMedics Group (NASDAQ:TMDX) reported record second-quarter revenue as growth in liver procedures, clinical services and transplant logistics offset increased spending on product development, international expansion and infrastructure. Total revenue for the quarter ended June 30 rose 21% year over year and 9% sequentially to approximately $190 million. Transplant product revenue increased 16% to $111 million, while service revenue climbed 29% to $79 million. Service revenue accounted for 41% of total revenue during the quarter. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control 3 Medical Technology Stocks Outperforming in 2025 President and Chief Executive Officer Waleed Hassanein said the quarter was the company’s strongest to date in both revenue and case volume. Liver revenue growth led the performance, increasing approximately 28% from a year earlier and 7% sequentially. Heart revenue rose approximately 6% year over year and 23% from the first quarter. TransMedics’ logistics business generated approximately $41 million in revenue, up 39% from the prior-year quarter and 30% sequentially. The company said its TransMedics Logistics network covered about 86% of National OCS Program missions requiring air transport, compared with 82% in the first quarter. → Why Rare Earth Processing Could Be the Real 2027 Opportunity 3 High-Growth Stocks Traders Love and Investors Should Watch Hassanein attributed the service-revenue performance to logistics market-share gains, operational efficiencies, pricing adjustments intended to offset higher costs and new transplant-center customers. He said the company did not see an increase in dry-run rates during either the second or third quarter. Chief Financial Officer Gerardo Hernandez said total gross margin was 59.6%, improving about 140 basis points sequentially but declining roughly 180 basis points year over year. Service margin rose to 35% from approximately 27% in the first quarter, supported by higher fleet utilization and operating efficiencies. Product gross margin was 77%, broadly stable sequentially. → TSMC Insiders Are Buying the Pullback—But Is the Signal as Bullish as It Looks? The year-over-year gross-margin decline reflected a greater mix of service revenue as well as temporary product cost pressures, including inventory provisioning and trial-related solution costs, according to Hernandez. The company expects service margin to normalize somewhat in the second half while remaining above historical levels. Management emphasized that TransMedics is prioritizing long-term revenue growth over near-term operating leverage. The company is funding four principal initiatives over the next 18 to 24 months: expanding heart and lung adoption, developing its OCS Kidney platform, building a European logistics network and advancing its next-generation OCS Gen 3.0 platform. Hassanein said the company expects its platform could support approximately 30,000 transplants globally by 2032 and generate more than $2 billion in annual revenue. The target includes current heart, lung and liver operations, new clinical programs, kidney development and international expansion. For heart and lung, TransMedics is pursuing ENHANCE Heart Part B and the DENOVO Lung program. The company said the programs could provide access to an estimated 2,000 to 5,000 incremental U.S. heart and lung cases annually. The FDA is reviewing an investigational device exemption supplement incorporating the company’s Controlled Hypothermic Organ Preservation System, or CHOPS, into the ENHANCE trial. Management expects approval by late in the third quarter or early in the fourth quarter, followed by a lung IDE submission. Hassanein said ENHANCE Heart Part A is expected to be completed before year-end. Part B and DENOVO Lung have each completed only a handful of cases so far, he said, and did not make a meaningful contribution to second-quarter results. Management expects the clinical programs to be completed within 12 to 18 months after enrollment accelerates. The company also said it has started pre-IDE discussions with the FDA for OCS Kidney, including its first pre-submission meeting. TransMedics is targeting first clinical experience for the kidney program later in 2027. “This is the single largest addressable segment available to us in organ transplantation in the U.S. and around the world,” Hassanein said, citing more than 21,000 deceased-donor kidney transplants performed annually in the U.S. On July 1, TransMedics closed its strategic investment in PAD Aviation, a Germany-based aviation operator. The company said PAD provides aviation licensing, pilots and fleet access needed to establish TransMedics Aviation Europe and compete for transplant-logistics tenders across the region. Hassanein clarified that the investment does not mean TransMedics has begun commercial operations in Germany. Instead, he said PAD’s location in Paderborn provides access to potential European donor sites within roughly two hours of flight time. Germany is not viewed as a near-term growth catalyst because of reimbursement limitations and the absence of donation after circulatory death procedures, he added. TransMedics said it has secured a machine-perfusion and services budget in Italy that is expected to take effect later this year or in early 2027 following administrative steps. The company is also pursuing regional transplant-logistics tenders in Italy and is evaluating opportunities in other European countries with existing reimbursement budgets. PAD will be consolidated beginning in the third quarter. Hernandez said the business will initially dilute gross margin and operating margin, and the company is not yet providing standalone financial guidance for PAD. Management expects to provide additional detail after further integration work in the third quarter. TransMedics raised the low end of its full-year 2026 revenue outlook, excluding PAD Aviation, to a range of $737 million to $757 million. The guidance represents growth of approximately 22% to 25% over 2025 and assumes no revenue contribution from PAD and no meaningful incremental revenue from ENHANCE Part B or DENOVO. The company expects second-half gross margin, excluding PAD, of approximately 59%. It now forecasts a full-year adjusted operating margin of approximately 12.5% to 14%, excluding PAD, below its earlier expectation of about 16%. Hernandez said the reduced margin outlook primarily reflects accelerated investment in OCS Kidney rather than a broad expansion of overhead. Adjusted operating expenses were $87 million in the quarter, up 46% year over year. About $14 million of that increase was tied to OCS Kidney, next-generation OCS, and the ENHANCE and DENOVO programs, while approximately $5 million was related to the company’s new headquarters and disposable manufacturing facility in Mirandola, Italy. Adjusted income from operations was $25.8 million, representing a 13.6% operating margin. Adjusted net income was $16.2 million, or $0.44 per diluted share. TransMedics ended the quarter with approximately $473 million in cash and cash equivalents. Management said it remains cautious on the seasonally softer third quarter despite a strong July, which Hassanein described as the company’s highest aviation month. The company said it will provide a fuller outlook for 2027 when it reports fourth-quarter results. TransMedics Group, Inc is a medical device company headquartered in Andover, Massachusetts, that specializes in advanced organ preservation and transport systems for transplantation. The company's flagship technology, the Organ Care System (OCS), maintains donor organs in a near-physiologic, warm, beating state during transportation, with the aim of extending preservation times and improving post‐transplant outcomes. TransMedics' solutions address a critical need in transplantation by reducing ischemic injury and expanding the donor organ pool. TransMedics currently markets two commercially available OCS platforms. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "TransMedics Group Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

This article first appeared on GuruFocus. Release Date: August 04, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Record Q2 2026 revenue of ~$190 million, up 21% year-over-year and 9% sequentially, with strong growth across all organ segments. Service revenue surged 29% year-over-year and 19% sequentially, driven by logistics market share gains and improved service margins (35% in Q2 vs. 27% in Q1). TransMedics Logistics delivered ~$41 million in revenue, up 39% year-over-year, with 86% of NOP air missions covered internally, enhancing operational efficiency. Raised the low end of full-year 2026 revenue guidance to $737-$757 million (22%-25% growth), excluding PAD Aviation contribution, reflecting confidence in continued momentum. Strong cash position of ~$473 million, enabling self-funding of strategic growth initiatives, including OCS Kidney, NextGen platform, and European expansion. Strategic investment in PAD Aviation (Germany) establishes a European logistics hub, enabling participation in regional transplant tenders and expanding international TAM. OCS Kidney program progressing with pre-IDE discussions with FDA, targeting first clinical experience in 2027, addressing a massive US kidney transplant market (21,000+ annual transplants). Enhanced Part B and De Novo clinical programs advancing, with IDE supplement for CHOPS submitted and expected approval by late Q3/early Q4, unlocking incremental heart and lung cases. New donor and recipient screening coordination service launched July 1, 2026, with a major Boston healthcare system, expanding platform value and workflow integration. Management reiterated long-term growth target of ~30,000 transplants and >$2 billion annual revenue by 2032, with a clear roadmap of four key initiatives. Adjusted operating margin declined to 13.6% in Q2 2026, down from 18.5% in 2025, due to increased strategic investments, and full-year 2026 margin guidance was lowered to 12.5%-14%. Adjusted operating expenses rose 46% year-over-year, driven by heavy R&D spending (up 99%) on OCS Kidney, NextGen, and clinical programs, with no near-term operating leverage. Gross margin declined 180 basis points year-over-year to 59.6%, impacted by higher service mix and temporary product cost pressures, with service margins expected to normalize in H2. PAD Aviation acquisition will be dilutive to gross and operating margins in the near term, with no revenue contribution assumed in 2026 guidance and limited financial visibility. Enhanced Part B and De Novo clinical programs have been delayed, with minimal contribution in Q2 and no meaningful revenue expected until late Q4 2026 or 2027, creating uncertainty. Q3 2026 is expected to be seasonally soft, with management cautioning that July's strong performance may not sustain through August and September. International expansion remains early-stage, with only ~$5 million in Q2 international revenue (up 26% year-over-year), and European reimbursement and logistics tenders are still in progress. The OCS Kidney program is in early development, with first clinical experience not expected until 2027, and regulatory approval and commercialization are years away. The company's growth strategy relies heavily on regulatory approvals (e.g., FDA IDE for CHOPS, CMS OPO decision), which are subject to delays and external factors beyond management's control. Management declined to provide 2027 operating margin or earnings guidance, citing uncertainty in clinical program timelines and investment pace, leaving investors without clear near-term profitability expectations. Warning! GuruFocus has detected 9 Warning Signs with TMDX. Is TMDX fairly valued? Test your thesis with our free DCF calculator. Q: Can you unpack the statement that you're adding donor and recipient screening services starting July 1st? What is the potential impact from a volume and revenue standpoint, and what does it do for customers and TransMedics?A: Waleed Hassanin (President and CEO) explained that this is a natural progression of their workflow harmonization strategy. The service aims to streamline the complex and unorganized transplant workflow into a single, transparent platform. They have already signed up a major healthcare system in Boston to pilot the service over the next few quarters. The goal is to provide centers with visibility into the national donor pool and access to TransMedics' digital, OCS, and logistics platforms, ultimately driving more efficiency and transplants. Q: The enhanced heart trial and de novo lung trials have been delayed. What gives you confidence that you can start de novo lung before year-end and get into enhanced Part B early next year?A: Waleed Hassanin (President and CEO) stated that the FDA owns the timeline, but the company believes it has done everything asked of it. He clarified that the heart program is ahead of the lung program. The focus is not just on FDA approval (which takes 30-60 days for an IDE amendment) but on the tangible outcome of doing cases. He expects Enhanced Part A to be completed before year-end, while Part B and de novo have only seen a handful of cases so far. The company expects rapid enrollment once the IDE supplement is approved, with a 12-18 month timeline for study completion. Q: Can you provide an update on the percentage or amount of the de novo and enhanced clinical trials that have been completed so far?A: Waleed Hassanin (President and CEO) reiterated that Enhanced Part A will be completed before year-end without a doubt. However, Enhanced Part B (heart) and de novo (lung) have only completed a "handful of cases" each, which is why there was no meaningful contribution in Q2. The key to accelerating enrollment is getting the IDE supplement approved to allow centers to use a control arm not hampered by competitive dynamics. The company remains focused on completing the studies within 12-18 months from initiation, keeping them within the bounds of 2027. Q: What drove the increase in service revenues, which grew faster than product revenues? Was it due to an increase in dry runs?A: Waleed Hassanin (President and CEO) firmly denied any increase in dry run rates. He attributed the service revenue growth to gaining market share in logistics, improving logistics efficiency and margins, implementing pricing adjustments to offset higher fuel costs, and onboarding new centers. He noted that service is associated with OCS use, and the delta could be from dry runs where the team is deployed and charged for the service, but the primary drivers were market share gains and efficiency. Q: How should we think about the market growth dynamics in U.S. heart, lung, and liver transplant volumes, and is Q3 starting off strong?A: Waleed Hassanin (President and CEO) confirmed that July was the highest aviation month for the business, indicating a strong start to Q3. However, he cautioned that July is not Q3 and August is typically a seasonally soft month due to vacations. The company is "cautiously optimistic" about Q3, driven by new centers, new initiatives, and market share gains in logistics and clinical services. He emphasized that the company's primary focus is on growing its own adoption and market share rather than national transplant volume trends. Q: Regarding the PAD Aviation investment in Germany, what was the strategic rationale, and why was Germany the right next move after Italy?A: Waleed Hassanin (President and CEO) clarified that the investment in PAD Aviation is not about entering the German market immediately. The strategic value lies in Paderborn's central location in Europe, allowing access to any potential European country or donor site within two hours of flight. The investment provides the license to operate in Europe, access to 40+ pilots, and an efficient fleet, making TransMedics eligible to compete for transplant logistics tenders across Europe. Germany itself is not a near-term growth catalyst due to lack of reimbursement and no DCD donation, but the aviation infrastructure is critical for the broader European expansion. Q: Can you provide more color on the strong flight performance and market share gains? How durable is this momentum?A: Waleed Hassanin (President and CEO) stated that the growth in flight revenue is primarily due to market share gains, noting that a competitor lost a major account which came to TransMedics. The "double shifting" of aircraft improved margins and provided significant operating leverage. He believes the momentum is durable and stated, "we will let the print speak for itself." The company covered approximately 86% of NOP missions requiring air transport in Q2, up from 82% in Q1. Q: What is the status of the CMS final rule regarding OPO recertification, and what would be TransMedics' role and benefit if it could become an OPO?A: Waleed Hassanin (President and CEO) said the company is waiting for CMS like everyone else, with a decision expected in the second half of this year. If given the opportunity, TransMedics would compete for as many DSAs as allowed. The benefits would include leveraging technology and clinical expertise to expand the donor pool and increase utilization using OCS technology, while reducing costs by eliminating unnecessary procedures like NRP. However, he emphasized that none of the company's current growth opportunities depend on becoming an OPO, as it is a binary decision that cannot be counted on until it happens. Q: Can you help us think about 2027 operating margin? Should we expect it to be between the 13% expected for 2026 and the 18.5% seen in 2025?A: Gerardo Hernandez (CFO) explained that operating margin is linked to scale, gross margin, and the benefits designed into OCS 3.0 and kidney to improve gross margins. He stated it is too early to provide a specific 2027 forecast, as the company needs to see how the second half of 2026 evolves, particularly regarding the delayed clinical programs and their investment impact. He indicated that the company will provide better visibility and guidance on 2027 during the Q4 earnings call. Q: Regarding the PAD Aviation deal, what are you getting, and will the non-medical charter business wind down over time?For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Never miss an important update on your stock portfolio and cut through the noise. Over 7 million investors trust Simply Wall St to stay informed where it matters for FREE. TransMedics Group stock has delivered a 170.9% gain over the past five years, yet the broader valuation checks currently lean toward the shares being undervalued rather than fully priced in. With recent returns mixed over shorter periods, the market seems less certain than the long term chart suggests about what the current price of US$80.75 really reflects. The 170.9% return over five years signals that long term holders in TransMedics Group have already seen substantial value creation, which raises the bar for any new upside case. Expectations around the company’s ability to translate its organ transplant technology into durable revenue growth can support the current valuation. However, any setback in execution or profitability may quickly pressure the share price. On Simply Wall St’s checks, TransMedics Group screens as undervalued in 5 of 6 valuation tests. This means the broader set of metrics leans cheap rather than expensive for the current share price 5/6. The issue now is whether TransMedics Group’s current valuation still leaves enough upside potential to compensate investors for the risks in the story. Find out why TransMedics Group's -32.0% return over the last year is lagging behind its peers. The P/E ratio is a useful starting point for TransMedics Group because earnings give you a clear anchor for what the market is currently paying for the business. Right now the stock trades on about 16.2x earnings. That sits well below the Medical Equipment industry average P/E of roughly 31.9x and also below the peer group average of about 68.4x. A more tailored lens is the fair P/E ratio estimate of about 24.9x, which reflects what investors might typically pay for a company with TransMedics Group’s profile within its sector. The current 16.2x level is noticeably under that fair ratio. That gap suggests the market is applying a discount to the stock relative to what those fundamentals might usually command. On the P/E multiple alone, TransMedics Group stock currently appears undervalued compared with both its industry and its own modelled fair ratio. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for TransMedics Group pick up where the valuation puzzle leaves off by spelling out what assumptions about future growth, margins and earnings would need to be true for the stock to be worth materially more or less than today’s price. Each narrative links TransMedics Group's potential catalysts and risks to a specific implied fair value, so you can later compare which storyline is actually unfolding. Community views on TransMedics Group sit far apart, with one camp leaning into the long runway for transplant adoption and another fixated on structural and competitive risks. Bull case: 28% undervalued Read the full Bull Case to see why TransMedics Group could be undervalued Bear case: roughly fairly valued Read the full Bear Case to see why TransMedics Group could be overvalued Do you think there's more to the story for TransMedics Group? Head over to our Community to see what others are saying! TransMedics Group screens as undervalued on market multiples, with the current P/E sitting well below both sector peers and its own tailored fair ratio. That points to a discount that only closes if the company can deliver on the earnings power implied by its organ transplant platform. For you as an investor, the key question is whether TransMedics Group can turn its technology into consistent, profitable growth that justifies a higher multiple, or whether the current discount is the market correctly pricing execution and reimbursement risks. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include TMDX. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Track your investments for FREE with Simply Wall St, the portfolio command center trusted by over 7 million individual investors worldwide. TransMedics Group (TMDX) heads into a busy early August, with Q2 2026 results and an earnings call scheduled for August 4 after the market close, drawing fresh attention to the stock. See our latest analysis for TransMedics Group. Recent trading in TransMedics Group reflects this renewed attention, with a 1 day share price return of 6.6% and a 30 day share price return of 18.4%, even as the year to date share price return is down 33.5% and the 1 year total shareholder return is down 35.1%. The 5 year total shareholder return of 171.8% points to a much stronger long term picture. If this kind of momentum in healthcare technology interests you, it could be a good moment to see what else is moving through 41 healthcare AI stocks After this sharp rebound and with TransMedics Group trading below some fair value estimates yet above at least one recent target, the question is where a reasonable valuation range actually sits now as earnings approach. Against the last close of $81.55, the most followed TransMedics Group narrative points to fair value closer to analyst consensus assumptions, which frame a higher long term earnings and transplant volume profile than the market price currently reflects. Read the complete narrative. Want to understand why this fair value sits so far above today’s share price? The narrative focuses on stepped up revenue growth, shifting margins and a richer future earnings multiple, and examines which transplant volume assumptions and profitability levels would need to hold for that story to make sense. Result: Fair Value of $112.89 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, there are still clear pressure points for the TransMedics Group story, particularly around rising competition in organ preservation and the potential impact of tighter regulatory scrutiny. Find out about the key risks to this TransMedics Group narrative. Given the mixed signals around TransMedics Group, it helps to look past headlines and review the numbers yourself while this story is moving. To see what the market currently flags as the upside case, review the 4 key rewards While TransMedics Group stays in focus, do not limit yourself to a single story. Broaden your watchlist now so you are not late to the next opportunity. Target potential mispricings by scanning for quality stocks that the market may overlook through the 53 high quality undervalued stocks Strengthen your downside protection by focusing on companies that pass strict balance sheet and fundamentals checks using the solid balance sheet and fundamentals stocks screener (46 results) Hunt for future standouts that are still under the radar by working through a screener containing 18 high quality undiscovered gems This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include TMDX. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

TransMedics (TMDX) came out with quarterly earnings of $0.44 per share, missing the Zacks Consensus Estimate of $0.5 per share. This compares to earnings of $0.92 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -12.00%. A quarter ago, it was expected that this medical technology company would post earnings of $0.62 per share when it actually produced earnings of $0.3, delivering a surprise of -51.61%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. TransMedics, which belongs to the Zacks Medical - Instruments industry, posted revenues of $189.95 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 3.14%. This compares to year-ago revenues of $157.37 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. TransMedics shares have lost about 33% since the beginning of the year versus the S&P 500's gain of 11%. While TransMedics has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for TransMedics was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #5 (Strong Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.46 on $178.08 million in revenues for the coming quarter and $1.82 on $733.24 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Medical - Instruments is currently in the bottom 37% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Teleflex (TFX), is yet to report results for the quarter ended June 2026. The results are expected to be released on August 6. This medical equipment maker is expected to post quarterly earnings of $1.28 per share in its upcoming report, which represents a year-over-year change of -65.7%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Teleflex's revenues are expected to be $559.76 million, down 28.3% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report TransMedics Group, Inc. (TMDX) : Free Stock Analysis Report Teleflex Incorporated (TFX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

For the quarter ended June 2026, TransMedics (TMDX) reported revenue of $189.95 million, up 20.7% over the same period last year. EPS came in at $0.44, compared to $0.92 in the year-ago quarter. The reported revenue compares to the Zacks Consensus Estimate of $184.17 million, representing a surprise of +3.14%. The company delivered an EPS surprise of -12%, with the consensus EPS estimate being $0.50. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance. As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately. Here is how TransMedics performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: OCS transplant revenue- United States- Total: $183.62 million versus $177.1 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a +20.7% change. OCS transplant revenue- United States- Lung total revenue: $2.25 million versus the three-analyst average estimate of $2.83 million. OCS transplant revenue- United States- Heart total revenue: $33.38 million compared to the $30.21 million average estimate based on three analysts. OCS transplant revenue- United States- Liver total revenue: $147.99 million versus the three-analyst average estimate of $144.05 million. OCS transplant revenue- All other countries- Total: $5.24 million compared to the $5.15 million average estimate based on three analysts. The reported number represents a change of +26% year over year. OCS transplant revenue- All other countries- Lung total revenue: $0.41 million compared to the $0.48 million average estimate based on three analysts. OCS transplant revenue- All other countries- Heart total revenue: $4.59 million compared to the $4.5 million average estimate based on three analysts. OCS transplant revenue- All other countries- Liver total revenue: $0.25 million compared to the $0.26 million average estimate based on two analysts. Revenue- Service: $78.79 million versus the two-analyst average estimate of $69.04 million. The reported number represents a year-over-year change of +28.6%. Revenue- Net Product: $111.16 million versus the two-analyst average estimate of $113.35 million. The reported number represents a year-over-year change of +15.7%. View all Key Company Metrics for TransMedics here>>> Shares of TransMedics have returned +14.5% over the past month versus the Zacks S&P 500 composite's +1.7% change. The stock currently has a Zacks Rank #5 (Strong Sell), indicating that it could underperform the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report TransMedics Group, Inc. (TMDX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research