TransMedics Group, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue reached $203.0 million for the quarter ended September 30, 2026, a 41% year-over-year increase from $143.8 million in Q3 2025.
• Product revenue was $113.4 million (up 29% YoY), while service revenue was $89.6 million (up 60% YoY).
• Organic revenue growth was 35%, and organic service revenue growth was 43%.
• Net income was $17.1 million ($0.46 per diluted share), compared to $24.3 million ($0.66 per diluted share) in Q3 2025.
• Adjusted net income was $18.9 million ($0.51 per diluted share), compared to $24.5 million ($0.67 per diluted share) in Q3 2025.
• Gross margin was 58.5% in Q3 2026, down from 58.8% in the prior-year period.
• Operating expenses increased to $90.5 million in Q3 2026 from $61.3 million in Q3 2025, driven by clinical program investments and headcount growth.
• Cash balance was $493.0 million as of September 30, 2026.
• Accounts receivable increased to $114.9 million from $84.3 million at year-end 2025.
• Deferred revenue decreased to $1.5 million from $2.9 million at year-end 2025.
• Current portion of long-term debt increased to $54.8 million from $10.0 million at year-end 2025.
• Convertible senior notes, net, stood at $455.0 million as of September 30, 2026.

Guidance and Future Outlook:

• Full-year 2026 revenue guidance was raised to $764-$774 million, inclusive of approximately $14 million from PAD Aviation.
• Revenue guidance excluding PAD Aviation was raised to $750-$760 million, implying 24%-26% annual growth compared to FY 2025.
• Guidance including PAD Aviation implies 26%-28% annual growth compared to FY 2025.
• OCS Kidney is on track for first-in-human clinical experience in the second half of 2027.
• OCS NOP is planned for launch in Italy, the Netherlands, and Belgium.
• ENHANCE Heart Part B and DENOVO Lung trials target large, untapped heart and lung segments.

Business Segments and Product Lines:

• Completed enrollment in Part A of the Next-Generation Organ Care System (OCS) ENHANCE Heart trial in September.
• Received FDA approval for a continued access protocol in October to enroll an additional 90 patients in the ENHANCE Heart trial.
• Received Investigational Device Exemption (IDE) approvals in October for ENHANCE Heart Part B and DENOVO Lung trials.
• The ENHANCE Heart and DENOVO Lung trials will utilize TransMedics Controlled Hypothermic Organ Preservation System (CHOPS) as a control arm.
• Awarded the first European transplant logistics tender in Italy in October, commencing European operations via PAD Aviation.
• Strategic investment in PAD Aviation was completed on July 1, 2026.
• Fernando Araujo was appointed Chief Financial Officer in September.

Market and Competitive Landscape:

• The company is expanding operations in the European Union, supported by a dedicated organ transplantation air logistics network.
• Revenue growth was primarily driven by increasing Liver and Heart volume through the National OCS Program (NOP) and additional logistics services.
• The company aims to transform organ transplantation by increasing the utilization of donor organs for end-stage heart, lung, and liver failure.

Risks and Challenges:

• The press release notes a material weakness in internal control over financial reporting and the potential for additional material weaknesses.
• Risks include dependence on the success of the OCS platform, ability to sustain profitability, and need for additional funding.
• Potential risks involve regulatory approvals, clinical trial outcomes, and the ability to scale manufacturing and sterilization capabilities.
• The company faces risks related to third-party suppliers, IT infrastructure attacks, and international expansion costs.
• Risks include the performance of third-party suppliers, price increases for aircraft components, and the ability to service 1.50% convertible senior notes due 2028.
• The company must maintain Federal Aviation Administration licenses and comply with healthcare policy changes, including CMS-3409-F.

Management Commentary and Tone:

• CEO Waleed Hassanein, MD, described Q3 2026 as the strongest in the company's history, citing record revenue and case volume.
• Management noted results were achieved despite typical third-quarter seasonality and prior to contributions from ENHANCE Part B or DENOVO.
• Management expressed strong conviction, stating, "Our strategy is clear. Our execution is proven. Our conviction has never been stronger."
• The company believes its best years are still ahead as it builds a global platform to transform organ transplantation.

Other Key Points:

• The company reported $12.1 million in stock compensation expense for Q3 2026, up from $8.7 million in Q3 2025.
• Operating margin decreased to 13.9% in Q3 2026 from 16.2% in Q3 2025.
• Adjusted operating margin was 14.2% in Q3 2026, down from 16.4% in Q3 2025.
• The company hosts a conference call on November 5, 2026, at 4:30 p.m. ET.
• The press release includes reconciliations for non-GAAP financial measures such as organic revenue, adjusted income from operations, and adjusted net income.