TransMedics(TMDX) - 2024 Q2 - Quarterly Report

Financial Performance - Total revenue for the three and six months ended June 30, 2024, was $114.3 million and $211.2 million, respectively, with net income of $12.2 million and $24.4 million for the same periods[56] - The company generated total revenue of $241.6 million and incurred a net loss of $25.0 million for the year ended December 31, 2023[56] - As of June 30, 2024, the company had an accumulated deficit of $479.3 million[56] - Total revenue increased by $61.8 million to $114.3 million in Q2 2024 compared to $52.5 million in Q2 2023, driven by higher net product and service revenue[67] - Net product revenue grew by $29.3 million to $71.7 million in Q2 2024, while service revenue surged by $32.6 million to $42.6 million[67] - Gross profit increased by $32.5 million to $69.3 million in Q2 2024, with overall gross margin at 61%, down from 70% in Q2 2023 due to higher service revenue mix[69] - Net income improved significantly to $12.2 million in Q2 2024 from a net loss of $1.0 million in Q2 2023[67] - Total revenue for the first six months of 2024 reached $211.2 million, a $117.1 million increase compared to the same period in 2023[74] - Gross profit for the first six months of 2024 was $129.2 million, up $63.7 million from the same period in 2023[74] - Net income for the first six months of 2024 was $24.4 million, a $28.0 million improvement from a net loss of $3.6 million in the same period of 2023[74] - Gross profit increased by $63.7 million in the six months ended June 30, 2024, compared to the same period in 2023, with overall gross margin at 61% in 2024, down from 70% in 2023 due to increased service revenue[77] Revenue Growth and Expectations - The company expects revenue growth from the expansion of the NOP in the United States and anticipated growth in non-U.S. sales if healthcare systems reimburse for OCS usage[60] - Gross margin is expected to decrease in 2024 as service revenue increases as a proportion of overall revenue, but long-term gross margin is expected to improve due to economies of scale and manufacturing efficiency[61] - The company anticipates increased service revenue from logistics services following the acquisition of Summit and the addition of a logistics team[59] - OCS transplant revenue in the US grew by $59.5 million to $108.5 million in Q2 2024, driven by higher sales of OCS Liver, Heart, and Lung disposable sets and increased NOP utilization[68] - OCS transplant-related revenue in the United States reached $200.3 million for the six months ended June 30, 2024, a $113.9 million increase compared to the same period in 2023, driven by higher sales volumes of OCS Liver, Heart, and Lung disposable sets and increased usage of the NOP[76] - Total OCS transplant revenue for all other countries was $8.8 million for the six months ended June 30, 2024, compared to $7.6 million in the same period in 2023[76] Research and Development - Research, development, and clinical trials expenses are expected to increase over the long term due to ongoing product development and regulatory approval efforts[63] - Research and development expenses increased by $5.6 million to $13.9 million in Q2 2024, primarily due to next-generation OCS program development[70] - Research, development, and clinical trials expenses increased by $11.1 million to $25.2 million in the six months ended June 30, 2024, driven by personnel-related costs and laboratory supplies for next-generation OCS development[80] Operating Expenses - Selling, general, and administrative expenses rose by $13.5 million to $42.9 million in Q2 2024, mainly due to personnel and facility-related costs[71] - Selling, general, and administrative expenses increased by $24.7 million to $79.1 million in the six months ended June 30, 2024, primarily due to personnel-related costs and facility-related expenses[81] Financing and Debt - The company issued $460.0 million in aggregate principal amount of 1.50% convertible senior notes due 2028 in May 2023[65] - Interest expense increased to $7.2 million in the six months ended June 30, 2024, compared to $3.6 million in the same period in 2023, due to interest on the $460.0 million Notes issued in May 2023[82] - The company issued $460.0 million in Convertible Senior Notes with an initial conversion price of $94.00 per share, representing a 32.5% premium over the May 8, 2023 closing price[89] - Net proceeds from the Notes issuance were approximately $393.3 million after deducting capped call transaction costs of $52.1 million and other issuance costs of $14.6 million[89] - The Notes bear interest at 1.50% per year and have an initial conversion rate of 10.6388 shares per $1,000 principal amount[89] - The company borrowed $60.0 million under the CIBC Credit Agreement, with interest rates tied to SOFR or prime rate plus a margin[90] - The company must maintain a minimum liquidity amount of the greater of consolidated adjusted EBITDA loss or $10.0 million under the CIBC Credit Agreement[91] Cash Flow and Liquidity - Cash and cash equivalents stood at $362.8 million as of June 30, 2024, with net cash provided by operating activities of $22.3 million for the six months ended June 30, 2024[84][85] - Net cash used in investing activities was $67.9 million for the six months ended June 30, 2024, primarily due to $53.6 million spent on transplant aircraft[87] - Net cash provided by financing activities was $13.8 million for the six months ended June 30, 2024, mainly from the issuance of common stock upon exercise of stock options[88] - The company believes its existing cash will fund operations, capital expenditures, and debt service for at least 12 months[93] - The company may need to raise additional funding, which might not be available on favorable terms[94] - There have been no material changes to the company's cash requirements or critical accounting policies[95][96] Regulatory and Market Expansion - The company received CE Mark recertification for OCS Heart, OCS Lung, and OCS Liver systems in 2022 and 2023, enabling sales in the EU[59] Operational Investments - The company acquired two fixed-wing aircraft for a total purchase price of approximately $28.0 million in July 2024, to be utilized for aviation transportation services as part of the NOP[55] - The company expects increased costs and expenses as it expands commercial sales, manufacturing, and R&D efforts for its OCS products[92] Risk Factors - The company is exposed to interest rate and foreign currency exchange risks but has not experienced material changes in these risks[98]