TransMedics Group, Inc.

Good afternoon and welcome to Transmedic's fourth quarter 2025 earnings conference call. 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 Laney Morgan from the Gilmartin Group for a few introductory comments.

Thank you. Earlier today, Transmedics released financial results for the quarter and full year ended December 31st, 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 made during this call that relate to future events, results, or performance, including expectations or predictions, are forward-looking statements. All forward-looking statements, including without limitation, our examination of operating trends, the potential commercial opportunity of our products and services, the potential timing, benefits, or outcomes of new clinical programs, and our future financial expectations, which include expectations for growth in our organization and guidance, and or expectations for revenue, gross margins, and operating expenses in 2026 and beyond, are based upon our current estimates and various assumptions. These statements involve 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 our 10-K Filed with Securities and Exchange Commission on February 24, 2026, and our subsequent SEC filings, and the forward-looking statements included in today's earnings press release, which are available at www.suc.gov, and our website at www.transmedics.com. Transmedics claims any intention or obligation except as required by law to update or revise any financial projections, expectations, predictions, or forward-looking statements, whether because of new information, future events or developments, or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, February 24, 2026. And with that, I will now turn the call over to Waleed Hassaneen, President and Chief Executive Officer.

Thank you so much, Lane. Good afternoon, everyone, and welcome to Transmedic's fourth quarter and full year 2025 earnings call. Joining me today is Gerardo Hernandez, our Chief Financial Officer. I am thrilled to be here tonight reporting our fourth quarter performance, capping off an outstanding year for Transmedics as we delivered our best operational performance to date. These results were achieved despite external challenges earlier in the year that were designed to distract and disrupt our sustained and transformational growth. I'm extremely proud of the resilience of our team and our business. In addition, I'm grateful to our global clinical users for their continued partnership with Transmedics and their trust in our OCS NOP program throughout the year. Based on our performance in 2025 and our continued investment in expanding the caliber and the breadth of our team, I am growing exceedingly confident in Transmedic's ability to overcome future challenges as we continue to innovate and disrupt antiquated and inefficient transplant processes in the U.S. and around the world. We are highly motivated and inspired by our mission to expand the utilization of available donor organs for transplantation while aiming to deliver the absolute best possible clinical outcomes for transplant patients worldwide. We strongly believe that Transmedics is just getting started, and we have our sights focused on new peaks, which we will share with you on today's call. Now let me proceed with discussing our business performance. On our last call, we stated our expectation that 3Q seasonality in US transplant activities would be transient and that we should recover in 4Q. Today, we're excited to report that 4Q results that validate our views. 4Q 2025 was a banner quarter for our business and allowed us to conclude 2025 on a very high note. Here are the key operational highlights for 4Q 2025. Total revenue for 4Q25 was $160.8 million, representing approximately 32% growth year-over-year and approximately 12% sequential growth from 3Q2025. U.S. transplant revenue grew approximately 11% sequentially to $155 million, while OUS transplant revenue grew approximately 33% sequentially to $5 million. Finally, we delivered an operating profit of approximately $21.3 million in 4Q, representing approximately 13.2% of total revenue for fourth quarter, while making substantial investments to fuel our growth. Now let me provide the financial results for the full year 2025. Total revenue for the full year 2025 was $605.5 million, representing approximately 37% growth year over year. We delivered operating profit of approximately $108.6 million, representing approximately 18% of total revenue for the full year 2025. Importantly, we ended the year with approximately $488.4 million of cash and cash equivalents. Shifting now to transmedics, transplant, logistics, infrastructure, and performance. Transmedics transplant logistics service revenue for 4Q was approximately $28.6 million, up from $21.7 million in 4Q 2024, representing approximately 32% year-over-year growth, and up from $27.2 million in 3Q, representing approximately 5% sequential growth. Throughout 4Q, we owned and operated 22 aircraft. In Q4, we maintained coverage of approximately 80% of our NOP missions requiring air transport, compared to 75% in the same period in 2024. We are very pleased by our strong performance in 4Q and full-year 2025 that was fueled by growing OCS case volume and increased clinical adoption. Importantly, as we predicted, our performance enabled growth in overall U.S. liver and heart transplant volumes for the third consecutive year, driven primarily by OCS NOP cases. This is really unprecedented and, frankly, humbling. As we do every year, I would like to share full-year OCS transplant volumes and overall U.S. transplants per organ. Here are the key highlights. For the third consecutive year, we grew the total OCS transplant volume. As of February 2022, 2026, our internal company data and UNOS database recorded records show that there were 5,139 total U.S. OCS transplant performed in the full year 2025. Let me repeat this. As of February 22nd, Our internal company and UNOS database records show that OCS was responsible for 5,139 transplants performed in the full year 2025, up from 3,735 U.S. OCS transplants in 2024. The overall transplants represented approximately 26% of the total 19,833 U.S. transplants for the year for heart, lung, and liver in 2025, and up from 20% of the 2024 U.S. transplant volume for the same organs. Importantly, for the third consecutive year, we saw growth in overall U.S. liver and heart and lung transplant volumes, For the full year 2025, there were 19,833 liver, heart, and lung transplants, up from 18,894 in 2024. We strongly believe that the OCS NOP once again played a key role in driving overall liver and heart market growth due to the increased use of DCD and DBD donors in the U.S., Since 2022, U.S. national transplant volumes for liver, heart, and lung grew at a rate of 25%, including OCS and OP transplant volume. Without OCS volume, national volumes for the same organs would have declined by approximately 1% over the same period. Please allow me to repeat this. U.S. transplant volumes for liver, heart, and lung grew up 25% with OCS and OP, and would have declined by approximately 1% without OCS NOP case volume. Based on these facts, we believe that we are delivering on our vision of growing the overall U.S. market. Said differently, we are expanding the overall market, not just taking share. Now, let me discuss our clinical adoption per organ. In 2025, OCS liver transplant represented 4,197 transplants, or 36% of the overall liver transplant volume in the United States. That is up from 26% in the same period in 2024. For heart, OCS transplant represented 854 cases or approximately 18% of the overall heart transplant volume and modestly up from the 17% seen in 2024. For lung, the numbers are small. OCS lung transplants represented only 88 cases or approximately 2%. These are very small numbers and we will discuss below how we are planning to address this particular topic. These results underscore the significant remaining greenfield potential for OCS NLP cases across all three organs. Specifically, we are focused on the enhanced heart program to drive increased use in heart transplantation across donor types. Finally, our de novo lung clinical program will focus on reinvigorating the OCS lung market segment in the U.S. while driving much-needed expansion of of the utilization rates for donor lungs. Both programs have been cleared by FDA and are in various stages of trial activation and enrollment in the US. We're looking forward to reporting the progress of these two crucial programs at the upcoming ISHLT in late April. Now let me move on to discuss our 2026 plans and guidance. As we stated before, we're excited for 2026 as we believe it will represent another critical and transformative year for Transmedic's business, given our focus on few wide-ranging and far-reaching catalysts for near, mid, and long-term growth for our business. Let me share with you a summary overview of all the growth catalysts we are focused on in 2026. First, OCS Enhanced Heart Program. Simply stated, Part A of this program is designed to move cardiac transplantation beyond preservation and into functional enhancement of donor hearts. Importantly, it was designed to significantly expand the time and distance limitations currently imposed on the four-hour DBD heart transplants preserved using cold static storage.