Reasons to Retain TransMedics Stock in Your Portfolio for Now

Core Viewpoint - TransMedics Group, Inc. (TMDX) is positioned for growth due to its OCS technology, despite facing gross margin pressure and U.S. transplant volume challenges [1][10][11] Company Overview - TransMedics has a market capitalization of $4.1 billion and an earnings yield of 1.6%, which is lower than the industry average of 2.8% [2] - The company has outperformed earnings estimates in three of the last four quarters, with an average surprise of 39.1% [2] Growth Drivers - The Organ Care System (OCS) technology enhances organ transplantation by providing a dynamic approach that improves organ viability, particularly for hearts and lungs [3][4] - As the only FDA-approved portable platform for warm perfusion in transplants, OCS sets a new standard in organ preservation and positions TransMedics as a leader in the transplant market [4] - The National OCS Program (NOP) supports OCS adoption by streamlining logistics and clinical execution, managing OCS perfusion, and operating a proprietary transportation network [5][7] - In 2023, OCS and NOP contributed to 12% of national heart and liver transplant growth, with 7,500 transplants performed in the U.S. [7] Financial Performance - TransMedics reported strong first-quarter 2025 results, with transplant logistics revenues of $26.1 million, reflecting an 80% year-over-year increase [8] - The company plans to open a new disposables manufacturing facility in Italy and launch two new clinical programs to drive future growth [9] Challenges - Gross margin pressure is evident, with a 45 basis point decline year-over-year and a significant drop in service gross margin by 632 basis points due to the growth of lower-margin service offerings [10] - U.S. transplant volume is affected by systemic inefficiencies and policy changes, which have increased transportation costs and limited demand for premium technologies [11][12]