Executive Summary

Q2 2024 revenue was $114.3M (+118% YoY, +18% QoQ); GAAP diluted EPS was $0.35 and net income was $12.2M; gross margin was 61% .
TransMedics raised FY2024 revenue guidance to $425–$445M (from $390–$400M in Q1 and $360–$370M initially), citing sustained OCS NOP momentum and logistics scaling; management flagged H2 aircraft maintenance downtime and OUS variability .
Logistics KPIs accelerated: daily active aircraft ~11, owned fleet 15 at Q2-end and 17 by early Q3; NOP missions covered by owned aircraft rose to ~~59% (Q2) from 49% (Q1); first positive free cash flow (~~$2M) achieved .
Organ revenue mix: U.S. transplant revenue $108.5M, with liver $77.0M, heart $27.2M, lung $4.3M; ex-U.S. revenue $4.7M (heart $4.3M, lung $0.4M) .
Wall Street consensus (S&P Global) estimates were unavailable at the time of this report due to API limits; therefore, beats/misses vs estimates are not assessed.*

What Went Well and What Went Wrong

What Went Well

“We set a new high-water mark for the business,” driven by product and service revenue growth from OCS NOP and the transplant logistics network; total revenue $114.3M, net income $12.2M, diluted EPS $0.35 .
Product margin improved to ~80% (from 77% in Q1), reflecting steady-state levels, and overall gross margin remained resilient at 61% amid higher service mix; management expects further margin improvement over the next 12–18 months as scale builds .
Logistics scaling delivered: daily active aircraft ~11 (vs. 9 in Q1), NOP mission coverage by owned planes ~59% (vs. 49% in Q1), ~~126 U.S. transplant programs used TransMedics logistics; achieved first positive free cash flow (~~$2M) despite aircraft purchases .

What Went Wrong

Gross margin declined YoY to 61% from 70% on higher service revenue mix, and service margin fell to ~28% QoQ due to accelerated pilot hiring/training and aviation maintenance investments to ramp operations .
Management cautioned H2 logistics growth cadence given scheduled aircraft maintenance and potential OUS revenue variability; guidance embeds conservative assumptions to avoid surprises .
Service mix rose to ~37.3% of total revenue, structurally diluting gross margin near term as the company builds out logistics infrastructure before efficiency gains normalize by early 2026 .

Financial Results

Metric	Q4 2023	Q1 2024	Q2 2024
Revenue ($USD Millions)	$81.174	$96.850	$114.305
Gross Margin (%)	59%	62%	61%
Net Product Revenue ($USD Millions)	$51.874	$61.325	$71.732
Service Revenue ($USD Millions)	$29.300	$35.525	$42.573
Net Income ($USD Millions)	$4.031	$12.197	$12.194
Diluted EPS ($USD)	$0.12	$0.35	$0.35

Segment and geography (U.S. vs ex-U.S.):

Metric	Q1 2024	Q2 2024
U.S. Transplant Revenue ($USD Millions)	$91.9	$108.5
U.S. Liver Revenue ($USD Millions)	$67.0	$77.0
U.S. Heart Revenue ($USD Millions)	$20.2	$27.2
U.S. Lung Revenue ($USD Millions)	$4.7	$4.3
ex-U.S. Total Revenue ($USD Millions)	$4.1	$4.7
ex-U.S. Heart Revenue ($USD Millions)	$3.1	$4.3
ex-U.S. Lung Revenue ($USD Millions)	$1.0	$0.4

KPIs:

KPI	Q4 2023	Q1 2024	Q2 2024
Logistics Revenue ($USD Millions)	$9.2	$14.5	$19.1
Daily Active Aircraft (approx.)	~7	9	~11
Owned Aircraft (period-end)	11	14	15 (17 in July)
NOP Missions Covered by Owned Aircraft (%)	35%	49%	59%
U.S. Programs Using Logistics (approx.)	~98	~105	~126
Product Margin (%)	73%	77%	80%
Service Margin (%)	35%	36%	28%
Gross Margin (%)	59%	62%	61%
Free Cash Flow ($USD Millions)	n/a	n/a	~2

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Millions)	FY 2024	$360–$370	$390–$400	Raised
Revenue ($USD Millions)	FY 2024	$390–$400	$425–$445	Raised
Gross Margin Exit (%)	FY 2024	63–64 (exit 2024)	“Improve over next several quarters” (no numeric update)	Maintained qualitative
Mix (Service % of Revenue)	FY 2024	~35% service (model view)	37–39% service expected	Raised qualitative

Management noted H2 cadence constraints: routine aircraft maintenance and OUS variability may temper logistics growth pace embedded in guidance .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2023 & Q1 2024)	Current Period (Q2 2024)	Trend
Aviation/logistics scaling	Built 11 owned jets; daily active ~7; logistics revenue $9.2M; plan 15–20 operational aircraft by YE 2024	Daily active ~11; owned 15 (17 in July); logistics revenue $19.1M; target ~20 operational aircraft by YE	Accelerating
NOP mission coverage	Owned aircraft covered 35% of NOP flights (Q4); target 80% over time	Coverage rose to 59% (Q2); continued improvement expected	Improving
Gross/service margins trajectory	Overall GM improved to 62% in Q1; service margin 36%; exit 2024 GM 63–64% expected	Overall GM 61%; product margin 80%; service margin 28% due to pilot hiring/maintenance; margins expected to improve with scale	Near-term pressure; medium-term improving
Heart franchise durability	Q1: outcomes driving adoption; competitor cold perfusion study discouraging results reported at ISHLT	Management reiterated confidence; heart growth durable; OCS remains only FDA-approved perfusion tech; plans warm and cold heart programs in 2025	Strengthening
Lung reinvigoration & 24h perfusion	Q1: plan new lung program with 12–24h perfusion, randomized vs cold storage	Preclinical results show >24h perfusion with lower edema; lung program on track to initiate in 2025; negative pressure not in first iteration	Advancing
International expansion	Q1: hire leadership; focus on reimbursement; potential NOP replication; contribution likely by end-2025/2026	Expect early fruit by end-2025; main focus Europe; ongoing dialogues; prioritize reimbursement	Building
Quality of life / morning surgeries	Q1: morning surgeries in liver via NOP; aim to extend to heart/lung	Continued emphasis on morning surgeries; 63% of liver transplants done in day hours at NOP programs	Expanding narrative
Pricing strategy	Q4/Q1: pricing model works; not leveraging transplant for pricing power	Maintain trusted partner stance; no near-term pricing changes; focus on volume growth	Stable

Management Commentary

Strategic focus on three initiatives: (1) complete aviation fleet and logistics build-out to meet OCS NOP demand; (2) drive national transplant volume growth and share expansion; (3) prepare to launch three new cardiothoracic clinical programs in 2025 .
“We remain extremely confident that we will be able to improve gross margins over the next 12 to 18 months as we benefit from further scale in both product and service operations over time” .
Preclinical updates: successful maintenance of donor lungs and hearts on OCS perfusion for >24 hours with significantly lower edema and reduced ischemia-reperfusion injury markers; lung and heart programs to initiate in 2025 .
Logistics narrative: daily active aircraft ~11; plan ~20 by YE; owned aircraft covered ~59% of NOP missions; ~126 U.S. programs using logistics .

Q&A Highlights

Heart franchise sustainability: Management rebutted concerns; highlighted competitor cold perfusion trial failure in Europe; expects continued durable growth and further acceleration post heart program launches .
Guidance cadence: Conservatism reflects dynamic logistics ramp, pilot training, aircraft onboarding time; H2 pace “flattish to a little bit up” with potential delays considered .
Capacity and pilots: Pilot headcount nearly doubled vs Q1 to support double-shifting and future growth; aim for eventual 24/7 aircraft operations; no near-term manufacturing capacity constraints but planning additional capacity over 12–18 months .
International: Expect more meaningful OUS contributions by late-2025/2026; prioritizing reimbursement; exploring NOP clinical support replication (no logistics/procurement OUS initially) .
Pricing: Company emphasized partnership and volume growth over pricing leverage; current pricing model “works,” no near-term changes .

Estimates Context

S&P Global (Capital IQ) consensus estimates for EPS, revenue, and EBITDA could not be retrieved at the time of preparation due to API request limits. As a result, we have not assessed beats/misses versus Wall Street consensus for Q2 2024.*
Implication: The raised FY2024 revenue guidance ($425–$445M) serves as the principal near-term narrative driver in lieu of quantitative beat/miss analysis .

Key Takeaways for Investors

Raised FY2024 guidance to $425–$445M underscores sustained momentum in OCS NOP and logistics scaling; near-term catalysts center on execution and H2 cadence against maintenance/OUS variability .
Logistics KPIs are inflecting: daily active aircraft, program adoption, and owned-plane coverage; these should drive both service revenue and product pull-through as operational efficiency improves .
Margins: Product margin reached ~80% while service margin dipped to ~28% on ramp investments; management expects overall margin improvement with scale over 12–18 months—watch for service margin stabilization as aircraft hours increase .
Heart narrative strengthening: Management sees durable growth and competitive differentiation vs cold perfusion approaches; 2025 warm/cold heart programs are medium-term accelerants .
Lung reinvigoration is a 2025 theme: >24h perfusion preclinical data positions TransMedics to extend “morning surgery” efficiency from liver to cardiothoracic, supporting longer-term adoption .
Cash generation turning: first positive free cash flow achieved despite fleet expansion; expect variability near term, but scaling should improve cash conversion .
International optionality is building (Europe first), though reimbursement timelines suggest contributions mainly from late-2025/2026 onward .

* Estimates unavailable: S&P Global consensus could not be retrieved due to daily request limits at time of report.

TransMedics Group, Inc. (TMDX)·Q2 2024 Earnings Summary