TransMedics at Canaccord Genuity: Expanding Horizons in Organ Transplants

On Tuesday, 12 August 2025, TransMedics (NASDAQ:TMDX) presented at Canaccord Genuity’s 45th Annual Growth Conference, unveiling its strategic vision to revolutionize organ transplants. The company showcased impressive growth prospects, but also acknowledged operational challenges, particularly in logistics. TransMedics is poised to enhance its market presence and financial performance with a focus on expanding organ utilization and improving post-transplant outcomes.

Key Takeaways

• TransMedics aims to increase organ transplants and improve outcomes, with a 20% growth in heart, lung, and liver transplants from 2022 to 2024.
• The company projects revenue exceeding $1 billion and a 30% operating margin by 2028.
• Kidney transplant trials are expected to begin in late 2026 or early 2027.
• A vertically integrated logistics network, including 21 jets, is crucial to TransMedics’ operations.
• Guidance for 2025 includes 35% revenue growth and 650 basis points of operating margin expansion.

Financial Results

TransMedics reported a robust financial outlook, with expectations of reaching over $1 billion in revenue and achieving an operating margin close to 30% by 2028. The company anticipates a 35% revenue growth for the current year, with a focus on expanding its market share and improving organ utilization.

Operational Updates

The company highlighted its Organ Care System (OCS) technology and National OCS Program (NOP) as key drivers of growth. TransMedics’ logistics network, comprising 21 jets and a comprehensive ground transportation system, plays a vital role in its operations. While jet maintenance has posed challenges, the company expects improved scheduling to enhance efficiency.

Future Outlook

TransMedics is targeting significant growth in the U.S. market, with plans to expand into kidney transplants. The company is optimistic about increasing its transplant numbers beyond the initial target of 10,000, potentially reaching 20,000 to 30,000 by 2030. Clinical trials for heart and lung transplants are underway, aiming to broaden indications and address low penetration rates.

Q&A Highlights

During the conference call, CFO Gerardo Hernandez emphasized the company’s commitment to increasing transplant numbers and improving patient outcomes. Chief of Cardiothoracic Program Farhan Zapar highlighted the potential impact of reducing post-transplant dialysis needs in kidney transplants.

In conclusion, TransMedics is strategically positioned to expand its influence in the organ transplant market. For a detailed insight, readers are encouraged to refer to the full transcript below.

Full transcript - Canaccord Genuity’s 45th Annual Growth Conference:

Bill Plovanic, Senior Analyst, Canaccord: Alright. Good morning. My name is Bill Plovanic. I’m a senior analyst here with Canaccord. Welcome to the Canaccord Growth Conference.

I think they’re forty fifth annual. With with us up next, we have the CFO of TransMedics, Gerardo Hernandez, and the chief of cardiothoracic program, Farhan Zapar. With that, I’ll hand it over to Gerardo.

Gerardo Hernandez, CFO, TransMedics: Thank you. Thank you, Bill, and thank you everybody for being with us this this morning still. Before we start, this is the note regarding forward looking statement, and now we can move into our vision. I would like to start with that slide. Transmedic’s vision is to increase the number of organ transplants and improve the post transplant outcomes.

This is our guiding principle. This is what we keep in mind every day in every action or decision that we take. Now how is that vision translating into the everyday? If we take a look at The US national adult transplants for the combined number of heart, lung, and livers from twenty twenty two twenty twenty four, we can see that the total number of transplants grew by twenty percent. However, when we remove TransMedics from this equation, total number of transplants grew only two percent.

So really, I think that’s a clear testament, a clear evidence that TransMedics is positively impacting thousands of lives of patients every year and really increasing the number of transplants, not just gaining market share, but also increasing the number of transplants. Now, it’s not only about numbers, it’s also about outcomes. There are a number of papers out there where we have clinically proven that the OCS technology delivers outstanding outcomes. I’m not going to go through all of those, but I just want to call one of them. For instance, the ischemic biliary complications in the case of the liver.

For the OCS, the ischemic biliary complication that is a marker for morbidity, for complications post transplants and even death, has a two point one percent. Just last week at the WTC, one center actually shared the same number for the same KPI for one of our competitors, for their competitor. And that number was eleven percent. So that’s five times worse in terms of more frequent complications after the transplant. So that’s another evidence on how TransMedics is delivering on its mission and providing better outcomes.

How are we doing it? The key way of doing it is what we call the TransMedics Trident, and it’s composed of three different columns. The first one, and most important one, it’s our OCS multi organ platform, which allows to keep organs functioning outside of the human body. It also minimizes organ damage and increases utilization. That’s the first one.

The second one is our NOP, our National OCS Program, where we have 17 hubs located across The US with procurement, a team of procurement, clinical specialists that are always ready to go the next mission. Importantly, we just launched our NOP Connect digital systems where now everyone involved in a specific transplant, in a specific mission can see real time where the organ is and what is the status of the organ from donor to recipient, as well as all of the administrative documents that need to be there, like the approved quotes or the invoice, etcetera. We have all of that evidence located in one single place at the power of one finger as you use your mobile, if you use your mobile. We also have our vertically integrated logistics network. We’re coordinated from our command center in Andover, Massachusetts.

It works 20 fourseven, three sixty five. And from there, we coordinate our aviation fleet, 21 jets so far. We have more than 100 pilots or maintenance hub and a network of ground transportation that allows to transport the organs in a safely, fast, and efficient way. And I want to highlight efficient way because that network effect is what allows us to actually pass those efficiencies back to the transplant centers that partner with us, right? More specifically, when we have dry runs.

When you have the dry runs, we are able to pass on to the centers 50% of discount on transportation cost, which no other company can do that, and we are able to do that just because we are integrated. All of that, we’re really making the impossible possible. And sorry, these are maybe some sensitive videos for some, but I believe it’s important to show how our devices, our OCS technology, is actually keeping organs alive. You can see the lungs breathing, the heart beating, the liver producing bile, and the kidney producing urine. That’s the difference that we’re making.

And that’s how we are able to increase the number of transplants and have better outcomes because this is the closest to physiology that you can get today. I hope you enjoy these videos. I love these videos. It’s really Yes. All right.

I often get the question about how much can we grow. And to me, this slide really help us to visualize how much transmedic can grow. And by the way, this is just US, all right? And this is just US and the organs where we currently participate. Last year, according to the OPTN data, in The US we had approximately 17,000 donors.

That means that we have 70,000 lungs, 70,000 hearts, and 70,000 livers potentially available for transplantation. In the case of lungs, only twenty percent of those 17,000 lungs were actually transplanted. Eighty percent were wasted. In the case of heart, seventy five percent was wasted. In the case of liver, 40% was wasted.

So when we look into how much can we grow, can we continue to grow, just by increasing organ utilization, It provides a huge runway to continue to expand our business. Now, certainly, utilization is key. I don’t know why the presentation is moving. The presentation the utilization is key. However, we also have or we also can win on the OCS adoption or market share, where in lung, we have 4% in heart, 19% and in liver, 27% at the 2024.

Those are numbers that we shared in our Q4 earnings release. So the wrong way to continue to grow in The U. S. In our current market, it’s in our current organs is huge. By the way, The clinical programs that we are about to start are exactly tackling the kind of heart, in the case of heart, this DVD section that we currently don’t have an indication for.

So that’s going to be a huge lever to accelerate growth, as well as in the case of lung. Now, and next comes kidney. Kidney, according to OPTN data, in 2024, we have more than twenty thousand transplants. And that represents approximately sixty percent organ utilization. So a lot of organs, lot of kidneys are being wasted.

And based on our preclinical data, we are extremely excited with the outcomes that we are seeing. I believe that the model, the proposal, the proposition that we’re going to have in the kidney model is going to be extremely compelling for many players in the field. So that’s a huge opportunity that is coming. We expect to start the trial late twenty twenty six or early twenty twenty seven. Now we are transforming.

All that growth is coming, but the best of that as a CFO, is that we’re actually able to convert all that growth into a P and L that increasingly gets stronger as we grow. So as you could see in our last two quarters of results, our model, our operating model has proven to scale efficiently while expanding our margins. And that’s something that is incredible for our business model. We can continue to expand margins as we bring growth to the business and generate significant cash flow. We are expecting that by 2028, we should be once we get to the 10,000 transplants, we should be north of the $1,000,000,000 in revenue and we should be at or approaching 30% of operating margin.

That’s our current view. So TransMedics is really uniquely positioned to continue to drive sustainable profitable growth, and I would like to call out just two elements sorry, four elements. The first one is our TransMedics Tribe, which I already covered, or OCS, or national OCS program, and our vertically integrated logistics. We have significant growth potential, not only on the organs that we currently participate, but also in US kidney and international. International market also represents a very important growth opportunity that we are really looking forward to unlock in the short term.

And then we have also expanding margins as we grow. This is a that equation of growing and then expand margins as you grow is a very powerful equation and we are confident that we can continue to do so, as we have proven already in results. Last but not least, we have a wealth of knowledge, a group of leadership, in general, team transmedics that is committed to integrity, transparency, quality, and increase the number of transplants as well as the outcomes post transplant. With that, I promise that I was gonna finish soon.

Bill Plovanic, Senior Analyst, Canaccord: Alright. Ten minutes.

Gerardo Hernandez, CFO, TransMedics: Alright. You see?

Bill Plovanic, Senior Analyst, Canaccord: We got about twelve minutes left. Great. So, we’ll move on to the fireside chat portion of that. You want me to take that? Thanks, Gerardo and doctor Zafar.

Let’s I’ll start out with, you know, we’ll start out with numbers first. We got a packed room here. Know, you gave guidance to 35% of revenue at the midpoint. We got six fifty bps of operating margin expansion. What are you assuming in terms of second half growth given that you expect seasonality in Q3?

And I think we just put out a note late last night about looking at the UNOS database and tail number tracking number. And it looks like, you know, we saw a modest high single digit decline in July versus June. Just how should we think about that and especially as it relates to kind of guidance and expectations?

Gerardo Hernandez, CFO, TransMedics: Yeah. We we we feel very confident with our guidance. We know that q three has seasonality. By the way, looking into the last three years, in 2022, 2023, 2024, all of the years, you can actually see the the decline in q three. But at the same time, you can see that q two is a strong quarter in all of those years.

So we have a strong quarter in q two followed by lighter quarters in q four sorry, q three, and then a recovery in q four. We are extremely confident with our with our guidance bill. We believe that, we should at least do the same as we did in the first half. That’s how we get to the our approximately 600,000,000, but we know that there is plenty of opportunity to grow. So that’s why we decided to take a prudent approach in the guidance, however, leaving space for upside.

And then as we

Bill Plovanic, Senior Analyst, Canaccord: think about the heart and lung trials that you’re getting ready to kick off, you’re working through the FDA with final IDE, because my understanding was conditional IDE. When do you expect enrollment? What type of contribution will that make? Just to set the level playing field here, just people understand, like, in those trials, do you book revenue? What do you book?

How does that all work?

Gerardo Hernandez, CFO, TransMedics: Right. So for 2025, we we didn’t assume any impact at all, any incremental impact from the from the trial. So the numbers that we’re going to deliver this year is excluding the trials. If we start booking incremental revenue, that’s going to be upside. The way this is going to work is that the OCS part of the of both trials for heart and lung will be invoiced as usual.

So we’ll have revenue from the technology, we have revenue from the service, and we’ll have revenue from the logistics from the logistics part. In the case of the control arm, we’re gonna have revenue for the logistics. We will waive the cost of our, service, and we don’t charge for the for the, technology because it’s not our technology.

Farhan Zapar, Chief of Cardiothoracic Program, TransMedics: And then to answer, I think we’re very confident and expect to enroll first patient before the end of this year.

Bill Plovanic, Senior Analyst, Canaccord: In both both trials?

Farhan Zapar, Chief of Cardiothoracic Program, TransMedics: In both trials.

Bill Plovanic, Senior Analyst, Canaccord: Great. And then, you know, I think one of the surprises, we look at the service margin. I I get a lot of questions on that. Just how should we think about that? I think longer term, you said maybe 30%, but what are the puts and takes as we you scale up that business?

Gerardo Hernandez, CFO, TransMedics: Yeah. There are multiple puts and takes in in service margin and in product margin build. So to simplify the view of of our business, my my guidance is to look at TransMedics as a as a 60% overall gross margin business. So in some cases, we’ll be ups or be down or be down, but the long term is around the 60%. Okay.

Bill Plovanic, Senior Analyst, Canaccord: We’ll look at q two. Heart had a great q two. It was a really nice step up. We saw that same kind of, seasonality in the 2024, and then we saw it kinda went up a lot and then it came back down. Is there something different about the step up this year than last year or something going on in the marketplace?

How should we think about and I’m kind of getting at what’s the sustainability? It’s like you had a nice step up in market share in q two. We saw it again last year, then it came down. So what anything going different this year versus last?

Gerardo Hernandez, CFO, TransMedics: I think we’re seeing a very similar profile to what we saw last year. Nothing nothing really new. Our OCF or Trident, the TransMedics Trident continue to drive OCS adoption. And that’s I mean, we’re very pleased with those results. I mean, you see in Q1, Q2, seeing that increase in share.

So it’s positive. We’re really positive. Now, obviously, in q two, you always have a ISHLT. You we announced more on the the the programs, and that generated some excitement. So I’m sure some some of that is is generating, energy around the heart type.

Bill Plovanic, Senior Analyst, Canaccord: Okay. Moving on to market share. So, you know, you you have, I think, by our numbers, you’re right around 35%, in the liver in the second quarter, you know, mid to high twenties, 26% in the heart, and about 4% along. You know, you talked about 10,000 organs, right, by I think it was 2028. What’s more important to getting there?

Is it gaining market share? Is it growing the market? And what do you what are what’s the biggest driver there?

Gerardo Hernandez, CFO, TransMedics: Well, Billy, internally, are no longer focusing on 10,000. We’re we’re focusing on 10,000 and beyond. We believe that we can achieve twenty to thirty thousand transplants in the following, you know, by 2030, and that’s when we add kidney. So our view, it’s it’s already above and beyond the ten thousand. And to do that, we will need to do both.

We need to gain share. But more importantly, as you saw, we need to have less organs wasted. So improve the organ utilization as well.

Bill Plovanic, Senior Analyst, Canaccord: And and how important are the heart and lung trials to getting there? Because I think the way we think about it is, you know, liver has been fantastic. Heart’s been solid. Obviously, lung, small penetration even though it was first product to market. But as you think about I wanna stick on the 10,000.

I think we’re more near term focused. Like, important are heart and liver or heart and lung in getting to that 10,000?

Farhan Zapar, Chief of Cardiothoracic Program, TransMedics: Oh, absolutely key because for heart, we are getting to a market segment that we don’t have indication in currently. So, DBD hearts that are sub four hours or standard hearts, our program is designed to go beyond preservation to enhance function of the organ on OCS, and that’s where I think there’s a lot of upside for us to gain that that and have the similar impact as we have on on the liver side. So, definitely, that’s that’s gonna be a very short term, impact we will see.

Bill Plovanic, Senior Analyst, Canaccord: And has it been a label issue where liver is a DVD label, if I understand correctly, where heart’s only extended DVD and DCD? Is that for the and then how do you for the physician, your right liver is, what, 80% case stacking? Like, how much is heart today, and how do you, like, get that perception to get the physician the heart physicians to really adopt that?

Farhan Zapar, Chief of Cardiothoracic Program, TransMedics: I think that that’s the point of our clinical program. What we have seen is that, for even for standard hearts, we have been encouraged by our clinical data that we’re able to see improved function in hearts that are even standard hearts preserved for sub four hour, and if we are able to demonstrate that in the clinical trial setting, we believe there would be a change in their practice, a fundamental change in their practice. And then, not only that, we’re able to demonstrate preserving these hearts for up to twenty four hours. Again, that has not been done before. So that would allow what you’re saying that now they can have the flexibility to stack these cases and and have the same level of experience or or or benefit that the liver community is facing today.

Bill Plovanic, Senior Analyst, Canaccord: And is there something different about the heart surgeons versus the liver surgeons or why the adoption has been what it has in each one of those markets?

Farhan Zapar, Chief of Cardiothoracic Program, TransMedics: Now being a heart surgeon, I would definitely think there is a difference, but let’s put that aside. I I think I think fundamentals are the same. It’s to have a better better outcome from the graft, long term survival, decreased morbidity, and we believe and we have demonstrated that in our use to date, and we’re continuing to improve that, and I think that would spread across heart and lung as much as it has in liver.

Bill Plovanic, Senior Analyst, Canaccord: K. To move on, just go back to logistics. You know, I think one of the things you talked about on the earnings call was just jet maintenance. Right? So you’ve got this huge fleet of jets, and, you know, we looked at the utilization tail number data, which I know I I think you’re you’re shifting a little more to the ground.

But how do we think about that maintenance? Because you bought newer planes, so they are going to need maintenance and kind of in and out of service. And how confident are you that you can predict what that schedule will look like and and kinda continue to support your operations?

Gerardo Hernandez, CFO, TransMedics: Oh, we’re we’re extremely confident on that, Bill. Our logistics team are doing an amazing job of that. Like, hard maintenance, the soft heavy maintenance to the planes is, let me put it illustrate this differently, is like a car. Every certain miles, you need to do some sort of maintenance. Jets are exactly the same, but in terms of miles, it’s ours.

As we fly more often, then the timing in which we need to run those heavy maintenance shifts. Last year, we had a lot of planes queue maintenance commute falling in the second half in q three particularly. Now that they’re flying more, actually, that maintenance is starting to be spread a little bit more throughout the year. I believe that as of next year, the maintenance issue the the the scheduled maintenance issue will be not an issue anymore. We wouldn’t be calling it, get ready because we’re gonna have heavier maintenance.

Not anymore. We’ll be much more spread. We’re using more of the jets, so then, the maintenance is happening whenever it needs to happen throughout the year.

Farhan Zapar, Chief of Cardiothoracic Program, TransMedics: Okay.

Bill Plovanic, Senior Analyst, Canaccord: In last time logistics, I think you’re 78, 79% penetrated today.

Farhan Zapar, Chief of Cardiothoracic Program, TransMedics: And I

Bill Plovanic, Senior Analyst, Canaccord: think in the past, you said 80. Is there any reason it can’t go above 80? Or is that you know, is there some limitation?

Gerardo Hernandez, CFO, TransMedics: No. No. We we’re aiming our internal goal is to be somewhere between 8085%. Can it go up? Yes.

But there is always, maybe there is a flight that is too long that our planes can’t do. So those type of things that are above and beyond our control, we wouldn’t be able to do so with our fleet. However, we believe that the 80%, 85% is is achievable range. Now bear in mind that as we continue to grow, that 25% is is not the same, is not a static number. It actually increases year over year as as our transplant volume grows.

Bill Plovanic, Senior Analyst, Canaccord: And as we look at all your organs in transplant, what’s the mix between aviation and ground?

Gerardo Hernandez, CFO, TransMedics: We have approximately 30 to 40%, of the total mix. It’s ground. 30 to 30 to 40% ground, and the rest is aviation.

Bill Plovanic, Senior Analyst, Canaccord: And with the look looking at the standard DVD organs, do you expect that the ground will go up if you’re doing more short haul?

Farhan Zapar, Chief of Cardiothoracic Program, TransMedics: No. Actually actually, if anything, we see those organs on OCS surgeons making decision to stay longer have the organs longer so they can plan their ORs. So we really feel that even the standard hearts would go beyond longer go on longer preservation. So I I don’t anticipate that to change the the ratio of ground versus aviation as much.

Bill Plovanic, Senior Analyst, Canaccord: Alright. I’m gonna switch to the clinical trials. And, you know, we talked a little about the current label on heart and lung and that you’re looking to expand those. You announced the ENHANCE for heart on August 4, the conditional approval. You asked de novo for the lung on the second do you expect final you know, you mentioned first enrollment, but what are you working through with the FDA to get the final sign off to actually get the trials kicked off?

Because once you do that, then it’s contracting Mhmm. And kinda patient enrollment and what have

Farhan Zapar, Chief of Cardiothoracic Program, TransMedics: Yeah. So, we have some questions on the animal studies we did. So, we’re in active conversation with FDA to resolve those. The condition approver does not limit us to start the trial now. So, we’re we’re actually interacting with centers at the same time in parallel.

We hope to resolve everything that FDA has questions about within, I would say, six to eight weeks, and then we are in parallel continuing to in interact with centers and get the IRB and and contract process going as well.

Bill Plovanic, Senior Analyst, Canaccord: Last question. We’re out of time, but I’ll ask one more because I have the podium. You talked about the kidney opportunity. And what’s that market like today competitively? Because my understanding, it’s super competitive.

It’s a lower price. Like, when you came into heart, lung, and liver, those were much different market dynamics. Why do you think you’re pretty confident about making an impact in kidney? What are you going to do differently than everybody else?

Farhan Zapar, Chief of Cardiothoracic Program, TransMedics: So, kidney is very connected to heart, I’ll take this one. What excites us the most is the biggest impact on outcomes. So today, as Gerardo showed, over twenty thousand deceased donor organs are transplanted. Even in those twenty one thousand or above twenty thousand kidney transplants, thirty to thirty five percent of these transplant patients require dialysis post transplant. That’s a huge impact.

So, that’s number one on our list is to improve outcome, preserve these kidneys better, and really, today, most of these kidneys, majority of these kidneys are either ice or cold perfusion or a mix of those. So so we we do see a potential impact that we, with our physiologically maintained, kidney perfusion, can deliver to the community.

Bill Plovanic, Senior Analyst, Canaccord: Great. Thank you for your time today.

Gerardo Hernandez, CFO, TransMedics: Thank you, babe.

Bill Plovanic, Senior Analyst, Canaccord: Thanks.

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