STIFEL 2026 HEALTHCARE CONFERENCE - TRANSMEDICS GROUP INC

Financial Performance:

• Exited Q3 2026 with international revenue (excluding US domestic) approaching $7 million.
• PAD Charter revenue guidance for 2026 is approximately $14 million; expected to transition into organ transplant business with a potential slowdown in H1 2027.
• Q4 historically exhibits stronger performance for Transmedics compared to the first half due to annual transplant volume targets and the annual Transplant Leadership Forum in November.
• Service revenue growth is currently outpacing product revenue, driven by new donor/recipient coordination pilots and major logistics contracts at high-adoption centers.
• Profit margins in Q3 improved relative to the prior year due to increased operational efficiency in the services channel.

Guidance and Future Outlook:

• Management will provide formal 2027 revenue guidance at the next earnings call, excluding current trial-specific data to avoid mischaracterizing patient-centric progress.
• Long-term revenue growth is expected to remain in the 20-25% range, inclusive of incremental revenue from "Enhanced Part B" and "De Novo" studies.
• European expansion (NOP and Transplant Logistics) is projected to begin contributing meaningfully to revenue in H2 2027 and accelerate into 2028.
• The company aims to maintain 20-25% annual growth as trial cases transition to commercial scale, with the pace of "Enhanced Part B" and "De Novo" adoption dictating quarterly titration.
• Targeting a 25% increase in US organ transplant utilization over the last three years, with further growth expected via Kidney and cardiothoracic programs.

Business Segments and Product Lines:

• OCS 2.0 (Heart & Lung): Launched to address historical market barriers including organ edema, overnight storage capabilities, and function enhancement. Part A trial closed early with 175 patients enrolled in 7-8 months; Part B and De Novo trials target 5,000–5,500 new US cases annually (3,500 lungs, 2,200 hearts).
• Kidney: Identified as the largest global transplant market; OCS technology aims to eliminate prolonged ischemic time losses. Management asserts high confidence in success due to CMS incentives (National Kidney Initiative) and the ability to increase annual kidney transplants by 5,000–8,000.
• Logistics Services: In Europe, launching "Transplant Logistics" as a strategic entry point before NOP reimbursement is secured, leveraging existing high-budget logistics frameworks to drive future device adoption.
• Donor/Recipient Coordination: New pure clinical service launched as a pilot with a major Boston healthcare system, expected to expand in 2027.

Market and Competitive Landscape:

• US Market: Cardiothoracic surgeons prioritize different workflows compared to dedicated liver teams; OCS 2.0 aims to overcome these dynamics by improving outcomes rather than just "daytime" availability.
• Europe: A critical market representing 50% of global transplant volume; challenges include fragmented reimbursement systems (country/region-specific) but advantages include established logistics budgets.
• Competition: "Enhanced Part B" trial compares OCS directly against "CHOPS" (a cold storage device with advanced phase-changing materials), positioning OCS as superior even if cold storage is chosen.
• Kidney Market: Dominated by a single-payer system (CMS); potential to capture significant cost savings for CMS by reducing dialysis needs through increased transplant volume.

Risks and Challenges:

• Cardiothoracic Dynamics: Market acceptance hurdles due to surgeon priorities (combining valve/cancer surgery with transplants) and operating room constraints.
• European Reimbursement: Navigating complex, non-unified reimbursement landscapes across different European countries and regions (e.g., Italy's regional variances).
• Trial Execution: Reliance on clinical success in "Enhanced Part B" and "De Novo" trials to unlock the 5,000+ case annual addressable market; failure to demonstrate clinical superiority could limit adoption.
• Seasonality: Potential softness in October/November transplant volumes, though historically offset by strong Q4 performance.

Management Commentary and Tone:

• Tone is highly confident and focused on patient outcomes and organ utilization rates rather than immediate revenue splitting.
• Management explicitly rejected separating trial revenue from commercial revenue to prevent misinterpretation of their primary mission: increasing organ transplantation.
• Strong emphasis on the "high confidence" in the Kidney program, citing past execution success in Liver, Heart, and Lung as a predictor for renal success.
• Emphasized that "Enhanced Part B" and "De Novo" volumes are 100% incremental to current US capabilities, including cases currently underutilized.

Analyst Questions and Answers:

• Q: Challenges in Heart/Lung markets vs. Liver? A: Differences in surgeon workflows and crowded market dynamics; OCS 2.0 addresses edema and overnight storage to overcome these.
• Q: Will daytime transplants in Heart be a primary goal? A: No; the primary goal is better outcomes and higher utilization; daytime transplants are a secondary market adoption metric.
• Q: Clinical superiority bars for OCS 2.0 in sub-4-hour hearts? A: Primary endpoint combines severe PGD and survival; comparison is against CHOPS (advanced cold storage) to prove superiority or provide a superior cold storage alternative.
• Q: Is 100% of Enhanced B volume incremental? A: Yes, including OCS and CHOPS cases, as this represents a capability not currently available in the US.
• Q: When will Europe meaningfully contribute? A: Expected to ramp in H2 2027 and continue into 2028.
• Q: Why is Q4 stronger despite general market softness in Oct/Nov? A: Driven by the annual Transplant Leadership Forum (cross-pollination) and hospital incentives to meet annual transplant volume KPIs.
• Q: How should 2027 revenue be modeled regarding trial cases? A: 20-25% growth guidance includes all revenue streams; trial success will dictate the specific pace of growth throughout the year.

Other Key Points:

• The company views the Kidney market opportunity as a potential $250 billion cost reduction for CMS by 2040 if annual transplant volume increases by 2,000 kidneys.
• Management highlighted a track record of increasing organ transplantation by 25% in the US over the last three years.
• Transplant Logistics in Italy (Emilia-Romagna) won a specific tender, serving as a proof point for the European logistics strategy.
• The company will not provide granular revenue guidance per case or trial/non-trial splits until clinical programs mature.