TransMedics at Oppenheimer Conference: Strategic Growth Plans

TransMedics Group Inc (NASDAQ: TMDX) presented a forward-looking strategy at the Oppenheimer 35th Annual Health Care MedTech and Services Conference on Monday, 17 March 2025. The company addressed recent performance challenges and outlined ambitious growth plans, emphasizing innovations in transplant technology and market expansion. While acknowledging a recent performance dip, TransMedics remains optimistic about future prospects.

Key Takeaways

• TransMedics is focused on expanding transplant volumes and improving patient outcomes through its OCS and NOP technologies.
• The company plans to increase its aircraft fleet to 22 planes by the end of 2025 to enhance operational efficiency.
• Despite a Q3 2024 performance dip due to maintenance issues, the company bounced back in Q4 and maintains a positive outlook for 2025.
• TransMedics is exploring kidney transplants, potentially adding 25,000 procedures to its Total Addressable Market annually.
• The company is committed to demonstrating the superiority of its next-generation OCS technologies in upcoming clinical trials.

Financial Results

• Q3 2024 Performance: A downturn was attributed to aircraft maintenance and seasonality, described as a temporary setback.
• Q4 2024 Recovery: The company rebounded from Q3 challenges, indicating resilience and adaptability.
• Full-Year Guidance: TransMedics reaffirmed its commitment to meeting full-year financial targets.
• Aircraft Fleet Strategy: Plans to have 22 planes by the end of 2025, ensuring 18-20 operational planes monthly.
• Transaction Goals: Aiming for 10,000 transplants by 2028, excluding kidney transplants.

Operational Updates

• Fleet Expansion: Reached 21 planes in Q1 2025, with a target of 22 planes by year-end.
• Maintenance Management: Addressing both scheduled and unscheduled aircraft maintenance to minimize disruptions.
• NRP Utilization: The OCS is routinely used after abdominal NRP, which is seen as a surgical procedure rather than preservation technology.
• Weather Tracking: Enhanced weather tracking systems for aircraft operations to improve reliability.
• DCD Utilization: Approximately 66%-67% of DCD transplants in the US utilize TransMedics technology, with a 98% liver utilization rate from DCD donors.

Future Outlook

• Growth Strategy: Focus on organic growth in 2025, with new clinical programs for heart and lung as growth catalysts.
• Market Penetration: Targeting increased penetration in DBD and DCD markets for heart and liver transplants.
• Clinical Trials: Planning to reveal trial designs for next-gen OCS technologies at ISHLT, aiming to prove superior transplant outcomes.
• Kidney Transplants: Exploring potential expansion into kidney transplants, which could significantly increase the company’s market size.

Q&A Highlights

• Q3 Performance: Explained as a temporary issue due to aircraft maintenance and seasonality.
• Aircraft Redundancy: Building a fully operational fleet to ensure service reliability.
• Competition: Downplayed the impact of competitors, highlighting the unique capabilities of TransMedics’ technologies.
• Regulatory Engagement: Actively working with the FDA to navigate macro-level uncertainties affecting clinical trials and approvals.

In conclusion, TransMedics remains confident in its strategic direction, focusing on innovation and market leadership. For a deeper dive into the company’s plans and performance, refer to the full transcript below.

Full transcript - Oppenheimer 35th Annual Health Care MedTech and Services Conference:

Suraj, Senior Medical Device Analyst, Oppenheimer: Morning, everyone. Suraj, colleague, senior medical device analyst at Oppenheimer. Really pleased to have, Waleed Hassanen and Gerardo Hernandez from TransMedics. Gentlemen, I I I know the schedule is packed, and I know a lot of people on the call today want to ask a lot of questions. So, folks, for those of you on the call, let me just set set the stage.

You guys know the drill. Either put it in the chat box or you can email me or any of my juniors. Be more than happy to ask any questions as long as, it’s not related to the quarter. I really don’t want to go there. Okay?

So, Walid, good morning. Thank you for taking the time. And, let me start out. If give us a give us a high level snapshot, Volley, over the last three to four years. Right?

The overall transplant market, there is so much of chatter. Companies are getting acquired, you know, overall transplant volumes, and it’s pretty much coincided with you guys’ entry, you know, into the into the market. And I’d love for you to to set the stage for the audience in terms of, as you look back, what are the lessons learned? Right? What were the issues?

How are you all adopting as you all move along?

Waleed Hassanen, CEO, TransMedics: Good morning, Suraj. And, again, thank you for the opportunity to be with you here today. You’re absolutely right, Suraj. Since TransMedix was approved in late twenty twenty one, the transplant market in The U. S.

Has been living a period we call internally a period of renaissance. The main driver of that renaissance, we’re seeing national organ transplant volume grow double digits year over year. We’re seeing a significant uplift of DCD utilization across heart and liver. We’re seeing significant growth in DCD donors. In our humble view, all this renaissance is driven by one and one reason only that the OCS has been approved for broader utilization in The United States.

Because without the OCS, DCD was never a clinical reality in The United States, specifically for heart and for liver, and for the same extent for lungs. Then after that, the introduction of the NOP that we pioneered in early twenty twenty two. NOP is a very, very important factor driving the catalyst, especially towards growing the transplant national transplant volumes because if we had relied on the hospital infrastructure to be able to accommodate that growth and transplant procedure and manage the organs in OCS, I don’t think we would have achieved the same results. So yes, we are extremely, extremely proud and humbled by these dynamics that TransMedix and the OCS and NOP played a key role to actually achieve. However, we believe that we’re still in the early innings.

We believe there’s more catalyst in front of us. There’s more growth in front of us. We believe, as I stated in December at our Investor and Analyst Day, that we have a huge greenfield opportunity in front of us. I really cannot comment on what other dynamics and acquisitions and the like that is happening because it’s not our business. And frankly, we’re laser focused on our business.

We know who’s driving that growth and who’s driving that success, and we know who has been growing double and triple digits over the last three years. So that’s really our top priority at the moment. But we are extremely bullish about the future of organ transplant as long as we are continuing to do our job and focus on what’s the most important, which is patient outcome, growing transplant volume and improving patient outcomes. That’s that’s what’s going to carry organ transplantation into into the future.

Suraj, Senior Medical Device Analyst, Oppenheimer: So, Waleed, you mentioned, you’re laser focused. You know, obviously, q three was a surprise to everyone. And given your track record over three years and then q four, you guys bounced right back. Right? And our monthly tracker and I’m not asking you to comment on our monthly tracker so far as indicating, you know, trending towards a healthy q one.

But set the stage, you know, in terms of what was the key course correction that you all decided on after q three?

Waleed Hassanen, CEO, TransMedics: Suraj, that’s an excellent question. And, as I stated in the q three call, we, we highlighted, first of all, in the Q2 call, we said the second half of the year is going to be choppy. And we attributed that to two things. One, we knew that we have higher rate of scheduled maintenance for our aircraft in the second half of ’twenty four. Plus, we said there could be some impact of seasonality of summer vacations and Christmas holidays.

That’s exactly what happened to us in Q3. Unfortunately, we got hit by a double whammy. Not only our plane downtime was at all time high because not only we had scheduled maintenance, but also we had significant number of unscheduled maintenance needs related to weather pattern and the like and some unanticipated airplane on ground incidences. But also the seasonality of the summer vacation and impacted the overall national transplant volume was down, you know, 4% or 5% and we were down four percent to five percent. So for me, and on Q3 call, we said this is a bump in the road.

And this is this should not be, a call it should not cause any panic. People didn’t listen. And, unfortunately, or fortunately, our view is the same. It was a bump in the road, and we were able to overcome it in Q4. And, you know, we’re looking forward to a great year ahead of us.

So that’s really it. I wouldn’t call there was a course correction because course correction means that we were doing something wrong and we corrected it. That had nothing to do with us other than the plane. And the plane, we weren’t the ones getting the plane down. We just it was an unlucky situation coupled by the seasonality of the summer vacations.

And we bounced right back. And again, I’m looking forward to Q1 results and into this year.

Suraj, Senior Medical Device Analyst, Oppenheimer: So, Waleed, plane maintenance. Right? You you your comments are well taken, especially given what you had said on the on the q two call. One of the questions that keeps coming up, Waleed, in client conversations is like, hey. I get it, planes, there might be some downtime and all that, right?

But TransMedics has X planes and a Y go down for maintenance X minus Y should be able there should be redundancy in the system. What gives? Help us understand that.

Waleed Hassanen, CEO, TransMedics: Yeah. Yeah. That’s an excellent that’s an excellent question, Suraj. That is absolutely true. But that that is true when you have a fully fully operating fleet.

We were building a fleet in Q2 and Q3 and into Q4. We just reached 21 planes in Q1 of this year. And we still have one more to go. So, yes, this is one of the reasons why we are we want to stop at 22 is to give us a critical mass and then we can leverage the rest of the year using those 22 planes and see how much efficiency we can derive from those 22 planes that would guide our decision about how many aircrafts do we acquire going forward. Also, remember, in Q2 was the first time we have experience building our own service infrastructure, aircraft service infrastructure.

That’s something that we’re committed to going forward, and we’re going to expand that to minimize the impact of planes going down. But again, I want to caution the listeners that there’s two types of planes maintenance. There’s scheduled maintenance and that is the one that we’re in full control over and our team is world class team that can handle that as good as the best out there. The ones that we all are worried about are unplanned maintenance. Again, tornado hits Cleveland Airport with two airplanes waiting to, for this for missions, active missions, get hit with a tornado that knocked down the windshield of both aircraft, you know, a blow a blow a blown up tire bring in more aircraft to make sure that we have this critical mass of planes to help us kinda smoothen these, these unanticipated circumstances.

Suraj, Senior Medical Device Analyst, Oppenheimer: Moving forward, Waleed, is it fair to say that it should be the pie chart should be more scheduled maintenance? Or you would say it’s I

Waleed Hassanen, CEO, TransMedics: think there will be always some unscheduled maintenance, but we hope that that will be more controlled and the impact will not be as big as what we’ve experienced in Q3. We have upgraded some of our airplane operations to ensure that while we’re waiting, we shouldn’t wait on tarmac. For example, if we can get a hangar space, that’s where we put our plane to protect our plane from any weather, increment weather. We have now a much more active weather tracking system that we can bypass the planes around any active weather patterns in The United States, that will continue to improve. But you’re you’re right.

We the the the, the scheduled maintenance, we can control a lot a lot more than, unscheduled maintenance.

Suraj, Senior Medical Device Analyst, Oppenheimer: Wally, a question came in and it was similar to a question that I had on the docket was for NRP. Mhmm. It’s been the talk, you know, for all of last year as you you well know. Waleed, today as we stand, actually let me take a step back. Please correct me.

One of the things that we have picked up in the field is more and more NRP organs are being transported by OCS. Correct me, far field checks are wrong. And if I could push you on that, let’s say early twenty four, ’5 percent of organs were being transported after NRP were being transported on OCS, right? DCD. Exiting ’24, is it five plus delta x?

How should we think about, just qualify and quantify where NRP and OCS stack up?

Waleed Hassanen, CEO, TransMedics: Sure. I know this is an important topic and especially, you, Suraj, have taken a lot of effort to get to the bottom of this. From our perspective, as I’ve stated previously, NRP is not a preservation technology. NRP is nothing but a surgical procedure that has significant limitations. And it’s been implemented by the Oregon Procurement Organization.

Transplant programs, they never asked for NRP. It was a tool that OPOs started using in late twenty twenty three, early ’20 ’20 ’4 to try to maximize organ in their in their view, to maximize organ utilization from DCDs. I think the numb their number speaks for themselves. The results speaks for themselves. We don’t believe that that resulted in that significant number of increased utilization of DCDs.

That number that’s number one. Number two, even when the NRP is successful, you need to preserve that liver, especially if it’s transported across country. So you you’re doing an NRP case that is very, very complicated. The utilization rate of that complicated case is much lower than the OCS. If you take a liver directly from a DCD donor and put an OCS, we have a utilization rate of nearly ninety eight percent.

With with these with the NRP, it’s much lower. It’s between 5060%. So why why waste these precious organs? What rationale do you have to justify that? And and again, this is not my view.

The data is clear on the OPTN Explorer, on their OPTN webpage. The average number of donors procured from a DCD is actually below what we procure from a DVD organ. So that’s number three. Number four, we use OCS after abdominal NRP quite frequently and quite routinely. And that number has been pretty much steady throughout 2024.

So as I stated earlier, NRP is not a preservation technology that we are concerned about or that is eating in our market share. It isn’t. It’s a surgical procedure and organs will be transplanted nationally. These livers needs to be preserved. NRP for cardiothoracic organ is a completely different story.

We’re the lion’s share of DCD in The United States at close to seventy percent last year. Then that’s the number, with sixty seven percent to be exact, sixty six percent to sixty seven percent to be exact. And that will continue to grow because we see some significant limitations to, thoracic NRP. There is ethical limitations. There is legal limitations.

And we do not take organs after thoracic NRP because the outcomes are different. So that’s our view on NRP. And again, NRP works only when the organ is around the corner, you know, very short distance transport. Again, it’s national organ allocation scheme that we’re running in The United States. So, we don’t see that as a big issue for us.

We coexist with NRP for livers. We do liver NRP over time on OCS because we are the ones that are maintaining that liver overnight. NRP can maintain levers overnight to an ice.

Suraj, Senior Medical Device Analyst, Oppenheimer: Walid, reading a question verbatim from a client. Can you ask about what drives continued share gains growth in 2025 given that they are already in most of the major accounts? There’s gotta be same store growths. Right?

Waleed Hassanen, CEO, TransMedics: That’s an excellent question. There’s absolutely nothing wrong with the same store growth in transplant, and that’s not % accurate across all three organs. For example, lung, we only have four or five stores out of 40. So we have huge room to grow new stores in lung. But in heart and liver, yes, we’re in 75 stores each.

But in liver, we still have 15 to 20 new stores to penetrate. But data side, let me tell you where the huge growth opportunities in front of TransMedix is. It’s not about opening up new accounts. It’s about we are at 17% or 18% DBD penetration in liver. We need to grow that.

We’re at 53% DCD penetration in liver. We need to grow that. We are only at 8% in DBD penetration in heart. We need to grow that because people need to remember, seventy percent of unutilized donor hearts are DBD donors. So we still have huge room for improvement, not just to penetrate the DBD market, but to grow the overall heart market.

And we’re at 66% or 67% of the DCD in The United States exiting last year. We still have room to grow and DCD donation is growing. Lung is a dormant market. So mark DPD and DCD is a huge opportunity for us. So we look at the new clinical programs for heart and lung as a significant catalyst for growth, not just for ’25.

In fact, ’25 is all organic growth. It’s really ’26 and beyond. So for us, we still have long room to go to grow the business. And we haven’t even talked about kidney yet. And our number of 10,000 transplants by ’28 does not include kidneys.

Kidney alone would add 25,000 procedure to our TAM in The United States annually. So there’s a lot, a long, way to go on our growth opportunity. Very few very few technologies out there can state that, because it’s just they they can’t address the limitations that we can overcome with the OCS and NOP.

Suraj, Senior Medical Device Analyst, Oppenheimer: It’s interesting, Waleed. The Xvivo also confirmed the same numbers that you guys have been talking about for overall. Waleed, reading another client question verbatim, assumption for twenty to twenty five calendar twenty five growth increase OCS adoption and service revenue, expect some level of quarter to quarter variability, but tends to normalize in following quarters. The expectation is when one or two quarters are flatter down than normal. Do you think the Street has gotten the message on this?

What do you think normalization means?

Waleed Hassanen, CEO, TransMedics: I think what Gerardo meant to say is that after Q3, we have Q4. Specifically, on the results of Q3 where everybody panicked and we said there’s no need to panic and people panicked and we normalized in Q4. That’s exactly what he was talking about. He never mentioned we expect two quarters of variability. He never mentioned which quarter, and he’s here.

He can address it himself.

Gerardo Hernandez, TransMedics: No, absolutely. I think in the past, the variability is it’s been there always to us. But with the extreme growth, I would say that the company have delivered in the past years, the company was able to go through those viabilities. Now we are at scale. Now it’s harder to go or or to just go through that variability.

And that’s exactly the message that we want to pass on. Just don’t panic. If there is variability in one quarter, either up or down, it will tend to normalize. It will tend to normalize. That’s our expectation.

The key number is our full year guidance.

Waleed Hassanen, CEO, TransMedics: I think, yes, I want to underscore what Gerardo ended We stand by our full year guidance. We never issued that quarter to quarter guidance or anything like that. That’s the most important message.

Suraj, Senior Medical Device Analyst, Oppenheimer: Waleed, one of your competitors, Organox, has come up regularly in client discussions and surely you all have seen the capital raise recently. And there are both sides of the coin, right, in terms of how the metro device in liver for normothermic and whatnot. Help us understand how you’ll see it, how TransMedics sees competition, you know, in the in the current state of affairs, the portability or lack thereof, you know, clinical trials. Help us understand, especially as it relates to Organox because that seems to dominate client conversations recently.

Waleed Hassanen, CEO, TransMedics: Sure. Again, guys, I’m the CEO of TransMedix. I can only talk about TransMedix. You guys spend a lot of time asking me questions about competition. My job is to focus on growing TransMedics business.

We are very we’re thrilled that Organox were finally able to raise some capital. We know that half of their raise was a secondary offering. So we wish them all the best. It’s important to have competitors in the marketplace because that validates the market, number one. Number two, it keeps us honest.

And number three, it gives different options to the transplant community. We believe that the OCS have unique capabilities that positions us far above any other player in the field. And NOP, on top of that, even distance us even further from just being another preservation technology. Then integrating the network effect of logistics, that gives us an an another layer of, of opportunities to distance ourselves from from, anybody else in the field. But, obviously, this is this is a very important area in medicine, transplantation, and we we we we love to have other, participants and players in the field.

We our results and our data and our presence and our penetration rates and market share speaks for itself. And I’ll leave it at that. Again, Organox was in in The US when we were were doing our clinical trial. Organox was in The U. S.

When we were approved. Organox was in The U. S. When we launched NOP. And Organox, God willing, will continue to exist.

But you know, we we are in a completely different league, so we wish them all the best.

Suraj, Senior Medical Device Analyst, Oppenheimer: Waleed, switching gears, clinical trials and the next generation products and indications is something that also dominates client conversations. First, I know in your past commentary, you’ve said you would unveil the trial design at ISHLT.

Waleed Hassanen, CEO, TransMedics: That’s correct.

Suraj, Senior Medical Device Analyst, Oppenheimer: Question number one, is that still on track? And question number two is, well, it’s superiority for a trial design. You and I know it it it it is it is not easy to show superiority. Right?

Waleed Hassanen, CEO, TransMedics: Absolutely. That’s why we did it.

Suraj, Senior Medical Device Analyst, Oppenheimer: So people put in composite endpoints and this and that. Can you shed some color? What gives you the confidence? You’re smiling. What gives you the confidence for superiority?

Because it’s an it’s an important thing. Right?

Waleed Hassanen, CEO, TransMedics: Suraj, again, I very much enjoy our conversation because you asked some very, very intelligent questions. So, Suraj, we stand by our commitment to do two things. One, we would reveal that the detailed preclinical results at the ISH-twenty at our Monday, lunch and symposium at the ISHRT here in Boston. Also, we will end that lunch and symposium with me given a detailed overview of the actual trial design. Hopefully, by that time, one or maybe both trials will be approved by FDA so we can speak about it, freely.

So that’s number one. That that’s not gonna change. That’s our commitment, to the community. On the on the other aspect of the question, again, I reiterate TransMedics’ commitment to leading with evidence. We believe wholeheartedly that the next gen OCS technologies that we are launching into the second half of this year, we give TransMedix further leverage to be able to demonstrate superiority of transplant outcomes in both heart and lungs.

And that’s why we’re leading with that evidence. Yes. It’s not gonna be a small trial. We know that. But we are the company that sponsored the largest number and the largest size clinical trials in the history of organ transplant.

And we we stand by that commitment. So why we did it? We did it because this addresses all the noise about how about this technology, how about this approach, how about this or that. Demonstrating superiority is a class by itself, and we think that OCS next gen capabilities will enable us to achieve that. Again, we our confidence is coming from the results we’ve seen in the preclinical phase, which always in our history, in our track record, we’ve done seven pivotal trials with The US and two European, always tracked well.

So we’re very, very encouraged and bullish about getting these clinical programs started so we can actually validate that excitement.

Suraj, Senior Medical Device Analyst, Oppenheimer: Waleed, a question has come in and it is a slight twist on my question. What I was going to ask is, there’s a lot of drama in Washington, D. C. Nowadays, right? Rightly or wrongly.

I guess where I was going is, how do you all see any macro level dislocations? How are you all buffering for that? And the question that has come in is, would that could that impact any of the clinical trials, you know, timing, any other regulatory approval, so on and so forth?

Waleed Hassanen, CEO, TransMedics: That’s an excellent question. Of course, it could. Of course, it could. As we sit here, we’re not aware of it. But we all know that tomorrow could bring in a different reality.

But we have been keeping an open line of communications with FDA. Our review team are still employed, but we could find out tomorrow that they’re not or something else is happening. And that’s why, again, we’ve been very cautious about what we discuss until we actually get these trials approved. So, yes, we, you know, the environment is rapidly moving. But also another thing we’re doing is we are trying to engage, not just be an innocent bystander, but to engage to try to at least be closer, to be able to provide some perspective and try to influence the decision not to derail the progress.

Suraj, Senior Medical Device Analyst, Oppenheimer: Got it. Gentlemen, we are up on time. Let me see any more questions. One more, but it’s about xenografts and I’m gonna skip that for now, Walid. Gerardo, one for you.

Is 25 to 30 planes exiting calendar 25 still the right number to think about it? Or has your thought process changed on what is the optimal number?

Gerardo Hernandez, TransMedics: Right now, we are planning to close the year with 22. So that’s 22 planes that we expect that will give us somewhere between 18 to 20 operational planes in average every month. That’s almost 70% more than the average that we have in 2024. So that should give us significant operational leverage and efficiencies throughout the year. This is a key year in which we would really want to see the impact of that asset utilization on our margins.

And from there, we have a better visibility on how many more if we need additional more.

Suraj, Senior Medical Device Analyst, Oppenheimer: So basically, you’ll have looked at scheduled, unscheduled maintenance, and then kind of reverse engineered the ’22 is the right number to it for exiting 2025 and that’s the way to think about it?

Gerardo Hernandez, TransMedics: At this point in time, it’s ’22. That’s the number that we discussed. I think to get to the 10,000 transactions, we will need to get more planes. Suraj, the question is how many and when? And really the results of this year will help us to have better visibility on those answers.

Suraj, Senior Medical Device Analyst, Oppenheimer: Correct. Gentlemen, folks, we are up on time. Walid, Gerardo, thank you so much for taking the time this morning answering our questions and client questions. I know you guys have a full day. Congrats on all the progress, and hopefully, we get through the storm once again.

Do appreciate your help.

Waleed Hassanen, CEO, TransMedics: Thank you.

Gerardo Hernandez, TransMedics: Thank you so much. Have a nice day.

Suraj, Senior Medical Device Analyst, Oppenheimer: Take care.

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