TransMedics Group, Inc.

Good afternoon and welcome to Transmedic's first quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. We will be facilitating a question and answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Lane Morgan from the Gilmartin Group for a few introductory comments. Please go ahead. Thanks, operator.

Earlier today, Transmedics released financial results for the quarter-ended March 31, 2025. 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 contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements. All forward-looking statements, including without limitation, future results and events, including financial guidance and projected estimates, our examination of operating trends, the potential commercial opportunity for our products and services, the potential timing, outcome, and value of new clinical programs, the potential impact of tariffs on our business, our expectations for growth and opportunities in our operations, and financial guidance and or expectations, including revenue, gross margins, and operating trends, operating expenses in 2025 and beyond are based upon our current estimates and various assumptions. These statements include 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 a form 10-K filed with the Securities and Exchange Commission on February 27, 2025. Our subsequent SEC filings and the forward-looking statements, including today's earnings press release, which are available at www.sec.gov and on our website at www.transmedics.com. Transmedics claims any intention or obligation except as required by law to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 8th, 2025. And with that, I will now turn the call over to Waleed Hassameen, President and Chief Executive Officer.

Thank you so much, Lane. Good afternoon, everyone, and welcome to Transmedic's first quarter 2025 earnings call. Joining me today is Gerardo Hernandez, our Chief Financial Officer. As we discussed previously, We viewed 2025 as an important year for Transmedics, mainly to transition and shift into our second year of growth for Transmedics OCS NOP platform. Despite external distractions in January, we remained laser-focused throughout Q1 on our business fundamentals, operational execution, and our unwavering support for our clinical transplant partners and users. In doing so, we continue to be successful in expanding the utilization of available donor organs for transplantation and increased OCS NLP adoption, all resulting in our core mission of delivering what we believe to be the best possible clinical outcomes and the most cost-efficient therapy for our transplant recipients. The results speak for themselves. Our 1Q performance demonstrates that the strength of our business fundamentals, the effectiveness of our strategy, and the unrivaled value of our business model. Importantly, our ability to execute at a very high level despite unexpected external pressures is a testament to the strong support of the transplant clinical community to Transmedic's mission and the resilience of our incredible team. Now let me proceed to discuss our business performance throughout the first quarter of the year, which was our strongest quarter to date in the history of Transmedics. Here are the key operational highlights for 1Q. Total revenue for 1Q 2025 was $143.5 million, representing approximately 48% growth year over year and approximately 18% sequential growth from 4Q 2024. Growth was driven primarily by higher overall utilization and center penetration of OCS and OP in the US for liver and heart transplants. And that happened across both DBD and DCD organs. This enabled us to achieve a new high watermark for overall case volume in 1Q 2025. Meanwhile, transmedics transplant services revenue for 1Q was approximately $55.3 million, up from $35.5 million in Q1-24 and up from $46.7 million in Q4-24, representing approximately 56% year-over-year and 18.5% sequential growth. Our overall gross margins for 1Q improved to 61.5%, up from 59% in 4Q-24. Finally, we delivered operating profit of $27.4 million in one queue, representing approximately 19% of total revenue and up from 8.6 million or 7% of total revenue in 4Q 2024. Shifting now to transmedics, transplant, logistics, infrastructure, and performance for the quarter. Transplant logistics services revenue for 1Q was 26.1 million, representing approximately 80% year-over-year and 20% sequential growth. Throughout 1Q, our daily average aircraft availability was approximately 15.4, up from 14 in 4Q24. Given that we reached a critical mass of owned aircraft capacity, we will retire the reporting of this metric going forward. Throughout the first quarter, we were able to cover 78% of our NOP missions requiring air transport compared to 75% in Q4 of 2024. As we've discussed previously, we are now focusing our effort in 2025 on efficiently operating our fleet by double shifting a portion of our planes to the extent possible before investing in additional aircraft to the fleet. We will be opportunistic, however, in adding one or more aircrafts in 2025 to reach our stated goal of 22 owned aircraft before year end. Overall, we are very pleased with our strong performance in 1Q. We are focused on maintaining this momentum throughout 2025. In addition, we are planning to launch two new heart and lung clinical programs later in the year to further catalyze our growth in 26 and beyond. Our 1Q performance underscores the unique attributes of Transmedics business. Transmedics is not only a top line grower, but also an increasingly profitable business capable of generating significant bottom line leverage. We remain confident that this is just the beginning and we believe we are well positioned to deliver sustainable long-term financial results as we gain more efficiency of scale and continue to drive leverage throughout the operation. Moving now to provide a quick status update on our next-gen OCS heart and OCS lung clinical programs. We filed both OCS lung and heart IDEs and are actively discussing the final details with FDA. Based on our interactions, we feel we are on track to initiate both programs in H2 2025 as we communicated earlier in the year. However, the precise launch time of the NextGen lung and heart clinical programs is still fluid and depends on the exact timing of the FDA approval, followed by the center's IRB processes. As we highlighted at our ISHLT symposium in April of this year and previously at our investor day in December of 24, we are planning to run a relatively large-sized trial aimed at building the next generation of level one clinical evidence that is unrivaled in our industry. As stated above, we see these new clinical programs as potential major growth catalysts for Transmedics 26 and beyond. and we are not counting on these two clinical programs to contribute materially to our financial results in 2025. Now, I'd like to address the potential impact of geopolitical, macroeconomic, and tariff policies on transmedics business in 2025. Let me start with the impact of tariffs that may have negatively impacted many device companies. I want to remind all of you that Transmedics is and will continue to be a proud US manufacturer of the OCS technology platform. Importantly, we also are focused on vertically integrating most of the critical technology blocks to minimize supply chain risks on our business. Based on what we know today, we believe that the currently proposed tariffs will have a minimal impact on our business. That said, This is a fluid environment and may change should policies change. Additionally, we are leaning forward and have announced publicly our strategic plan to open a disposable design center of excellence and a new manufacturing facility in the premier biomedical device district of Mirandola, Italy. This district is renowned for its deep expertise in polycarbonate injection molding and disposable perfusion technologies. We expect this plan to give Transmedic several key strategic advantages. First, it enables us to leverage their unique talent to rapidly integrate many of the key disposable critical components for OCS perfusion circuits. Second, provide an alternate disposable manufacturing source to ensure business continuity to our Andover facility. And finally, to provide us maximum flexibility in supplying OCS product OUS. while reducing the potential impact of tariffs on our international business. Now, let me share our perspective on the impact of potential economic downturn on organ transplantation in general and our business in specific. Our experience over the past two decades reinforces our belief that organ transplantation is a lifesaving procedure that is largely insulated from economic cycles. This is due to two important facts. One, the best clinical outcomes associated with the transplant procedure and the highly cost-effective and the highly cost effectiveness of the therapy for payers managing very expensive chronic disease conditions that lead to organ failure. Let me now conclude my remarks by discussing our expectation for the remainder of 2025. As seen in our 1Q results, we began the year with a very strong performance. We are confident that we can maintain this momentum for the overall 2025 annual performance. However, we may experience some level of variability or quarterly seasonality that could impact performance quarter to quarter as we've experienced last year. As a result of our strong 1Q performance and the full year considerations I just outlined, we are raising our full year 2025 revenue guidance to between 565 and 585 million, representing approximately 28 to 32% growth over full year 2024. With that, let me turn the call to Gerardo to cover the detailed financial results for the quarter. Gerardo?