Summary of TransMedics Group FY Conference Call (December 02, 2025) Company Overview - **Company**: TransMedics Group (NasdaqGM:TMDX) - **Industry**: Medical Technology, specifically organ transplantation Key Points and Arguments Machine Perfusion Adoption - Current adoption of machine perfusion for liver transplants is approximately **40%** [14] - The company aims to increase this adoption to **80-90%** through aggressive efforts and data publication [14] - Significant survival differences and improvements in post-transplant complication rates are associated with the use of OCS machine perfusion [14] Data and Growth Potential - Major publications from liver registry data are expected in the **first half of 2026** [17] - DCD (Donation after Circulatory Death) liver adoption is around **60%**, while DBD (Donation after Brain Death) is only in the mid-20s, indicating room for growth [18] - Approximately **70%** of DCD livers are currently discarded, presenting a significant opportunity for market expansion [18] Transplant Goals - The company is confident in achieving a target of **10,000 transplants by 2028**, regardless of additional growth opportunities [23] - The growth strategy includes increasing utilization in existing centers and onboarding new centers [26] Competitive Landscape - The company welcomes competition, viewing it as a means to maintain market integrity [131] - TransMedics has a strong balance sheet with nearly **$500 million**, which will be invested back into the business [131] Clinical Trials and New Technologies - Enrollment for heart clinical trials has begun, with expectations for lung trials to start by early January [38] - The company is optimistic about replicating the success seen in liver transplants for heart and lung transplants [42] - A new **Gen3 OCS** system is in development, aimed at significantly improving efficiency and reliability for future transplant volumes [126] Kidney Transplant Market - The company plans to enter the kidney transplant market in **2027**, which has a potential volume of **23,000** transplants annually [100] - Current kidney utilization rates are low at **60-65%**, and complications post-transplant are high, indicating a need for improvement [105][106] Financial Outlook - The company aims to achieve an operating margin of **30% by 2028**, driven by growth, disciplined operating expenses, and margin protection [69][136] - There may be a slight impact on gross margins due to costs associated with clinical trials [66] Operational Efficiency - The company is working on increasing the efficiency of its transportation logistics, including double-shifting pilots to maximize jet utilization [73][80] - The goal is to run jets more efficiently, potentially reducing the need for additional aircraft purchases [78] Conclusion - TransMedics Group is positioned for significant growth in the organ transplant market, with a focus on increasing adoption of machine perfusion technology, expanding into new organ markets, and maintaining a strong financial outlook. The company is actively working on clinical trials and new technologies to enhance transplant outcomes and operational efficiency.

Group 1: MercadoLibre - MercadoLibre is the leading player in the Latin American e-commerce and fintech markets, with a compound annual growth rate exceeding 30% over the past five and ten years [2] - The stock has recently declined approximately 20% from its all-time high due to increased competition from Amazon in Latin America [3] - E-commerce penetration in Latin America is still in the mid-teens as a percentage of total retail sales, indicating significant growth potential [5] Group 2: TransMedics Group - TransMedics Group is innovating the organ transplantation market with its Organ Care System (OCS), which keeps donor organs alive during transport, addressing issues associated with traditional cold storage methods [6][7] - OCS technology allows for over 80% of donor hearts and lungs to be usable, significantly increasing transplant rates compared to cold storage [9] - The company is expanding into Italy in 2026 and developing a version of OCS for kidneys, which could transform the kidney transplant landscape [11] Group 3: Vertex Pharmaceuticals - Vertex Pharmaceuticals holds a dominant position in the cystic fibrosis market with the only approved therapies targeting the disease's underlying cause [12] - The company is also exploring opportunities in other therapeutic areas, including a non-opioid pain drug that is expected to be a blockbuster [13] - Vertex is advancing its pipeline with plans for regulatory submissions for treatments targeting IgA nephropathy and severe Type 1 diabetes, which could address significant patient populations [15][16]

Core Insights - The article reflects on the importance of learning from past investment decisions, highlighting two stocks that have provided valuable lessons and solid returns [1][2] Group 1: Amazon Case Study - Amazon's Fire Phone was a significant misstep, leading to the decision to sell the stock despite its previous strong performance [3][4] - The stock, which had nearly tripled in value, ultimately became a 14-bagger, demonstrating the importance of long-term thinking and trust in management [4][6] - Key lessons learned include avoiding short-term thinking, trusting founder-led management, and not betting against innovation [6][7] Group 2: TransMedics Group Analysis - TransMedics Group, a provider of Organ Care Systems, was purchased at the beginning of 2023 and initially saw gains before a significant drop in share price following an acquisition announcement [9][10] - Despite initial concerns about the acquisition of Summit Aviation impacting margins, the company’s stock has since tripled from its lows, with sales more than doubling [12][14] - Recent financial performance includes a 32% increase in transplant revenue and a 35% rise in logistics revenue, with a net profit margin of 17% [16] - TransMedics aims to expand its transplant operations significantly and enter new markets, which could provide substantial growth opportunities [16][17]

Group 1 - TransMedics (TMDX) has reached a significant support level and shows potential as a good investment from a technical perspective, having recently broken through the 50-day moving average, indicating a short-term bullish trend [1] - Over the past four weeks, TMDX has gained 11.7%, and it is currently ranked a Zacks Rank 3 (Hold), suggesting the stock could continue to rise [2] - Positive earnings estimate revisions further strengthen the bullish case for TMDX, with no estimates decreasing in the past two months and six estimates increasing, alongside a rise in the consensus estimate [3]

Core Insights - U.S. stocks exhibited mixed performance, with the Nasdaq Composite increasing by over 100 points on Wednesday [1] - Dycom Industries, Inc. reported record third-quarter results, raised its outlook, and announced a significant acquisition [1] Company Performance - Dycom Industries' contract revenues rose by 14.1% year-over-year to $1.45 billion, surpassing analyst expectations of $1.41 billion [1] - The adjusted EPS for Dycom Industries was $3.63, exceeding analyst estimates of $3.20 [1] - Dycom Industries shares increased by 8.1% to $320.17 on Wednesday following the positive results [2] Other Notable Stock Movements - PACS Group, Inc. shares increased by 11.1% to $16.03 [4] - TransMedics Group, Inc. saw a rise of 10.4% to $129.27 [4] - MP Materials Corp. shares jumped by 9.3% to $63.95 after Goldman Sachs initiated coverage with a Buy rating and a $77 price target [4] - BellRing Brands, Inc. surged by 9.1% to $28.64 despite mixed fourth-quarter financial results and FY26 sales guidance below estimates [4] - Hinge Health, Inc. gained 8.2% to $43.93, announcing a $250 million share repurchase program [4] - Kyivstar Group Ltd. rose by 7.6% to $12.06 [4] - Lumentum Holdings Inc. increased by 7.2% to $265.33 after Mizuho Securities initiated coverage with an Outperform rating and a price target of $290 [4]

Core Insights - TransMedics Group, Inc. is a medical technology company focused on transforming organ transplant therapy for patients with end-stage lung, heart, and liver failure [1] Company Participation - The management team of TransMedics will participate in a fireside chat at the Piper Sandler 37th Annual Healthcare Conference [1]

Core Insights - Short interest data provides insights into investor sentiment and potential risks in the stock market, helping gauge market confidence in a company's future [1] - A stock is deemed heavily shorted when a significant percentage of its available shares are borrowed and sold by investors anticipating a price drop [2] - Short squeezes can occur when short-sellers rush to cover their positions, leading to rapid price increases, as seen in recent meme stock manias [3] Short Interest Overview - The most heavily shorted stocks as of November 13 include Lucid Group, Inc. (48.99%), Choice Hotels International, Inc. (46.71%), and Avis Budget Group, Inc. (46.13%) [5] - Stocks are ranked by short interest, which is the total number of shares sold short and not yet covered, expressed as a percentage of shares available for public trading [4] Market Dynamics - Highly shorted stocks represent a battleground where negative fundamentals meet speculative trading [7] - Monitoring short interest can help identify potential short squeeze candidates, although timing such trades is challenging due to high volatility [7]

Group 1: Company Overview - TransMedics Group, Inc. (TMDX) reported strong year-over-year growth in the third quarter, which is typically a seasonally weak period [1] - Despite the strong growth, dollar terms showed soft year-over-year growth, indicating a maturing liver transplant market in the United States [1] Group 2: Investment Strategy - Narweena, an asset manager led by Richard Durant, focuses on identifying market dislocations due to poor understanding of long-term business prospects [1] - The firm aims for excess risk-adjusted returns by targeting businesses with secular growth opportunities in markets with barriers to entry [1] - Narweena's research emphasizes company and industry fundamentals to uncover unique insights, with a high risk appetite and long-term investment horizon [1] Group 3: Market Dynamics - An aging population with low growth and stagnating productivity is expected to create new investment opportunities, differing from past trends [1] - Many industries may face stagnation or secular decline, which could paradoxically enhance business performance as competition diminishes [1] - The economy is increasingly influenced by asset-light businesses, leading to a declining need for infrastructure investments over time [1] - A large pool of capital is pursuing a limited set of investment opportunities, resulting in rising asset prices and compressed risk premia [1]

Company Performance - TransMedics Group, Inc. (TMDX) reported strong year-over-year (YoY) growth in the seasonally weak third quarter, indicating resilience in its operations [1] - Despite the strong growth, dollar terms showed soft YoY growth, suggesting that the liver transplant market in the United States is maturing [1] Investment Strategy - Narweena, an asset manager led by Richard Durant, focuses on identifying market dislocations due to poor understanding of long-term business prospects, aiming for excess risk-adjusted returns [1] - The investment strategy emphasizes uncovering secular growth opportunities in markets with barriers to entry, with a high risk appetite and long-term horizon [1] - Narweena's research process is centered on company and industry fundamentals to reveal unique insights, particularly favoring smaller cap stocks and markets with less obvious competitive advantages [1] Market Trends - An aging population with low population growth and stagnating productivity growth is expected to create a different set of investment opportunities compared to historical trends [1] - Many industries may face stagnation or secular decline, which could paradoxically enhance business performance as competition diminishes [1] - Conversely, some businesses may encounter rising costs and diseconomies of scale, while asset-light businesses are increasingly dominating economies, leading to a declining need for infrastructure investments [1] - A large pool of capital is pursuing a limited set of investment opportunities, resulting in rising asset prices and compressed risk premia over time [1]

Core Insights - TransMedics Group, Inc. (TMDX) reported earnings per share (EPS) of 66 cents for Q3 2025, representing a 450% increase year over year and exceeding the Zacks Consensus Estimate by 78.4% [1][6] - The company's revenues reached $143.8 million in Q3 2025, a 32.2% year-over-year increase, although it fell short of the Zacks Consensus Estimate by 0.8% [2][6] Revenue Breakdown - TMDX's net product revenues amounted to $87.7 million, up 33.1% year over year, driven by increased organ utilization in liver and heart transplants [4] - Service revenues totaled $56.1 million, reflecting a 30.9% year-over-year growth, primarily due to logistics services [4][7] Operational Performance - The company covered 78% of its National OCS Program (NOP) missions requiring air transport, an increase from approximately 61% in Q3 2024 [3] - Operating profit reached $23.3 million, marking a 493.9% increase from the prior year, with an operating margin expansion of 1260 basis points to 16.2% [9] Financial Position - At the end of Q3 2025, TMDX had cash reserves of $466.2 million, up from $400.6 million at the end of Q2 2025, while long-term debt decreased to $54.6 million from $59.5 million [10] - Cumulative net cash provided by operations was $158.3 million, significantly higher than $29.1 million at the end of Q3 2024 [10] Guidance and Future Outlook - TMDX has raised its full-year 2025 revenue guidance to a range of $595 million to $605 million, indicating a growth of 36% at the midpoint compared to 2024 [11] - The company is advancing multiple product programs, including next-gen trials for heart and lung OCS, with expectations for significant revenue generation starting in 2026 [13] Expansion Plans - TMDX plans to launch its inaugural international NOP program in Italy in the first half of 2026 and aims to build a European logistics network similar to its U.S. model [14] - The company is increasing its aviation capacity to 22 aircraft and is finalizing a new global headquarters and manufacturing campus to support future growth [14]