TransMedics(TMDX) - 2025 Q2 - Quarterly Report

PART I Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Q2 2025, showing significant revenue and net income growth, alongside balance sheet expansion Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $890.5 million, driven by cash and property, while stockholders' equity grew significantly to $318.1 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $558,129 | $497,216 | | Total Assets | $890,522 | $804,076 | | Total Current Liabilities | $56,620 | $59,913 | | Total Liabilities | $572,421 | $575,473 | | Total Stockholders' Equity | $318,101 | $228,603 | Condensed Consolidated Statements of Operations The company achieved strong Q2 2025 performance with total revenue growing 37.7% year-over-year to $157.4 million, resulting in net income of $34.9 million Q2 and H1 2025 vs 2024 Performance (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $157,370 | $114,305 | $300,907 | $211,155 | | Gross Profit | $96,589 | $69,261 | $184,817 | $129,223 | | Income from Operations | $36,567 | $12,508 | $64,010 | $24,929 | | Net Income | $34,907 | $12,194 | $60,589 | $24,391 | | Diluted EPS | $0.92 | $0.35 | $1.62 | $0.70 | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities significantly improved to $88.8 million in H1 2025, while investing activities used $36.1 million, primarily for capital expenditures Six Months Ended June 30 Cash Flow Summary (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $88,754 | $22,283 | | Net cash used in investing activities | ($36,113) | ($67,935) | | Net cash provided by financing activities | $10,117 | $13,826 | | Net increase (decrease) in cash | $63,925 | ($32,061) | Notes to Unaudited Condensed Consolidated Financial Statements These notes detail accounting policies, revenue disaggregation, debt, legal contingencies, and subsequent events, including land purchase for a new facility - The company is a medical technology firm focused on transforming organ transplants with its Organ Care System (OCS) and National OCS Program (NOP)[26] U.S. OCS Transplant Revenue by Organ (in thousands) | Organ | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Lung | $4,154 | $4,243 | | Heart | $32,171 | $27,173 | | Liver | $115,862 | $77,039 | - A class action lawsuit was filed in February 2025 against the company, alleging misstatements related to business practices, with the outcome and potential losses currently unpredictable[79] - In July 2025, the company purchased land in Mirandola, Italy, for $2.6 million to build a new manufacturing and R&D facility[91][100] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses strong financial performance driven by OCS platform adoption, particularly in U.S. liver and heart transplants, and outlines strategic initiatives including a new Italian facility - The company's growth is driven by its OCS platform, which includes FDA-approved products for heart, lung, and liver transplants, and its National OCS Program (NOP), providing a turnkey organ procurement and logistics solution[94][95] - A strategic plan was announced to build a design and manufacturing facility in Mirandola, Italy, to support the development of the next-generation OCS platform and expand international supply capabilities[100] Results of Operations In Q2 2025, total revenue grew 37.7% year-over-year to $157.4 million, leading to a surge in operating income to $36.6 million as revenue growth outpaced expense increases Q2 2025 vs Q2 2024 Results of Operations (in thousands) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $157,370 | $114,305 | $43,065 | | Gross Profit | $96,589 | $69,261 | $27,328 | | Income from Operations | $36,567 | $12,508 | $24,059 | | Net Income | $34,907 | $12,194 | $22,713 | - U.S. OCS transplant revenue increased by $43.7 million in Q2 2025 compared to Q2 2024, driven by higher sales volumes of OCS Liver and OCS Heart disposable sets and increased NOP usage[119] - R&D expenses increased by $2.1 million in Q2 2025, primarily due to higher headcount and material costs for the next-generation OCS program[123] - SG&A expenses increased by $1.2 million in Q2 2025, driven by higher stock-based compensation and professional fees, partially offset by lower NOP support and tradeshow costs[124] Liquidity and Capital Resources As of June 30, 2025, the company held $400.6 million in cash, with operations generating $88.8 million in cash for the first half of the year, sufficient to fund future needs - The company's principal source of liquidity was cash of $400.6 million at June 30, 2025[139] Cash Flow Summary - Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $88,754 | $22,283 | | Net cash used in investing activities | ($36,113) | ($67,935) | | Net cash provided by financing activities | $10,117 | $13,826 | - A conditional conversion feature of the Convertible Senior Notes was triggered on June 30, 2025, making the notes convertible at the holders' option during Q3 2025 as the stock price exceeded 130% of the conversion price[150] Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from interest rate changes on variable-rate debt and foreign currency fluctuations, with no material changes since the 2024 Form 10-K - The company's primary market risks are related to interest rate changes on its variable rate debt and foreign currency exchange rate fluctuations[162] Controls and Procedures Management concluded that disclosure controls were ineffective as of June 30, 2025, due to a material weakness in internal control over financial reporting related to inventory movement - A material weakness was identified in internal control over financial reporting because the company has not designed and maintained effective controls over inventory movement within its manufacturing network[165] - Despite the material weakness, management concluded that the condensed consolidated financial statements included in the report are fairly presented in all material respects[165] - Management is in the process of finalizing a remediation plan to address the material weakness, which will involve designing and implementing new controls for inventory movement[166] PART II—OTHER INFORMATION Legal Proceedings The company is defending against a consolidated class action lawsuit filed in early 2025, alleging misstatements regarding business practices and billing activities - A class action lawsuit (Jewik v. TransMedics Group, Inc., et al.) was filed on February 14, 2025, and later consolidated with a similar suit[170] - The complaint alleges violations of the Securities Exchange Act based on purported misstatements and omissions regarding coercive business tactics, anticompetitive conduct, and fraudulent billing[170] Risk Factors This section refers investors to the company's 2024 Form 10-K for a comprehensive discussion of risks and uncertainties affecting the business - For a detailed discussion of risk factors, the report refers to "Item 1A. Risk Factors" in the company's 2024 Form 10-K[173] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of its equity securities during the reporting period - None[174] Other Information During the fiscal quarter ended June 30, 2025, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the quarter[175] Exhibits This section lists the exhibits filed with the 10-Q report, including CEO and CFO certifications and Inline XBRL financial data files - The exhibits filed with this report include CEO and CFO certifications pursuant to Sarbanes-Oxley Act rules and XBRL data files[176]