TransMedics (TMDX) - Deep Dive
Full Investment Thesis TransMedics. - The company that's changing the organ transplant sector.
Every Organ Wasted Is A Life Not Saved
TransMedics is one of the most interesting companies I’ve looked at in a long long time. Not just from a business perspective, but also from a humanitarian angle. While most companies’ primary focus is on making money, I’d argue TransMedics is also in the business of saving lives. The foundation of the company revolves around optimizing a small but very important part of the healthcare system, and it’s a part that saves lives.
Now, don’t be mistaken, they are also in the business of making money. Let’s be clear about that. Luckily, they are great at that too.
Luckily for us, the market does not always agree. The share price has fallen of a cliff this year and is now down 60% from it’s recent high.
This is a setup I like: a very interesting large moated company, down 60%.
Especially since TransMedics is still growing 20%+, they are still profitable and they are still the only company that can fly a living organ across the US and manage the whole process door to door.
And while the stock price may not reflect it, they have a lot of levers and options they can pull to speed up the growth trajectory even more.
The setup looks promising from here, so it was time to dig in deep. What led to the sell-off, and how can they can get back to where they were?
Introduction
TransMedics story starts in 1998. This is when a cardiac surgeon named Waleed Hassanein got fed up with seeing good organs go to waste.
He noticed that packing organs in ice for transport did not work as he believed it should. Ice slows organ degradation down, but it does not stop the organ from being damaged. Organs are incredibly fragile, and the usable window is very short.
He also noticed that surgeons have no way to check whether the organ is still any good until they've committed to the transplant. There a huge number of donated organs never got used. He saw an opportunity to change this, and he took it.
The thing he came up with: stop freezing the organs and keep them alive instead.
His goal was to keep the organs in near-living state, by perfusing them with warm oxygenated, nutrient-rich blood. This process was later named the Organ Care System (OCS). We will cover the specifics more in-depth later.
According to TransMedics, and many others, OCS is a revolutionary technology for preserving organs used in the treatment of end-stage heart, lung, and liver failure.
The goal is to optimize organ quality, validate organ viability and increase utilization of transplant organs.
TransMedics spent roughly two decades in R&D and clinical trials before OCS hit real commercial scale.
FDA approval came in only a few years ago.
OCS Lung was approved in 2018
OCS Heart and OCS Liver in 2021
Not too long after that, in 2022, they launched the NOP, which stands for the National OCS Program.
Instead of just selling hospitals a machine, they did something no one did before. They decided to take over the whole supply chain. They:
Retrieve the organ
Manage the perfusion with their own team
Handle all the logistics
Driving these organs around the US in a van does not work. That’s why in 2023 they bought Summit Aviation, and started building their own fleet of planes to fly the organs around the US (which is their main focus area as of today).
TransMedics IPO’d in 2019, at $16 a share, and they raised about $80M to fund the rollout.
As of today, the share trades around $70, down about 60% from it’s all time high in 2024.
Before we dive into what TransMedics does, and why I believe this is still a great long-term investment, we first have to find figure what happened to spark such a sell-off.
1. Why TransMedics crashed, twice
When we look at the TransMedics chart above, we see two declining periods. One at the end of 2024 and another one starting at the end of February of this year. Part of that is normal growth-stock volatility, but there are some key reasons for the drawdowns that are important to highlight.
I think this is important because it sets up the foundation of how TransMedics operates but also the hurdles it has to overcome. The beauty is, once they overcome it, it’s very hard to replicate for others.
The 2024 crash
First the 2024 event. This drawdown started as a rerating story. TransMedics was priced for perfection and with any growth stock drawdowns happen. It’s part of the deal. We had multiple contraction kicking in to start things off.
But after the Q3 report, the ‘‘this is a perfect growth story’’ for TransMedics really came under pressure.
Revenue fell sequentially, leaving everyone worried if the (hyper) growth story was still intact
Growth decelerated hard, although the numbers are still great: 118% in Q2 down to 64% in Q3. This marked the beginning of the end of the hyper growth story some thought TransMedics was.
Gross margins also fell down to 56%, because of lower-margin service revenue and aviation fleet maintenance costs. Decelerating revenue, accompanied with declining margins is not what people signed up for.
While management remained confident, as can be seen in the statement below, that is not how the market reacted. The stock crashed.
"We are proud of our performance year to date and look forward to ending 2024 on a strong note," said Waleed Hassanein, MD, President and Chief Executive Officer. "We continued to make meaningful progress across each of our growth initiatives through the third quarter and maintain our conviction in our growth runway for 2025 and beyond. Overall, we remain well on track to reach our stated target of achieving 10,000 OCS transplant cases per year in the U.S. by 2028."
On top of that, they dropped more bad news just after the Q3 report on December 2nd. They announced that the CFO, Stephen Gordon was stepping down. Management never gave a real reason, but framed it as ‘‘early retirement’’. It raised many questions among investors as they were concerned about, and wondering what the real reason was. This never came to light. In my opinion they should handle this different and provide more transparency.
At the same time they also slightly lowered their Q4 guidance by $5M. Usually such a small cut wouldn’t do too much harm, but the combination with the CFO stepping down hit like a truck. This double whammy led to the first hard sell-off.
The Scorpion short report; ‘‘Walk like an Egyptian’’
The nail in the coffin was the Scorpion short report in the beginning of January of 2025. They basically accused TransMedics of a ‘‘mafia-style’’ scheme, including:
Kickbacks to surgeons (giving cash, gifts or unearned consulting fees)
Billing fraud
Unreported device failures
Off-label use of the OCS
Steering damaged organs to certain transplant centers
They said it was the most extreme extreme healthcare fraud they'd seen.
Price target: $0.
It only took TransMedics 3 days to come with a rebuttal. They said the claims were meritless and said they were meant to "manipulate the market for financial gains."
Luckily, or unluckily, however you want to see it, the stock did not move much. Probably because it was down the gutter already.
None of the allegations ever got validated. No DOJ action. No FDA enforcement. Scorpion's FDA petition went nowhere public. During the FY2025 audit, PwC signed off on the numbers as accurate. Nothing has ever been proven.
A storm in a glass of water.
Unfortunately the report triggered securities class-action lawsuits, shareholders alleging the company misled them. That litigation is still live in 2026, and TransMedics is still carrying “legal matters” as a cost line.
After this whole ordeal, the stock recovered and reached a new all-time high, just to come crashing down again in 2026.
The 2026 crash
The first significant drop in 2026 came after the the Q4-25 earnings report. At first everything seemed good and everyone was happy, but the earnings were elevated because of one-off tax benefit. This was initially missed my almost everyone. Management actually had to release a press statement to clear that up. Guidance decelerated to ‘‘only’’ 20-25% growth and margins kept decelerating.
The second drawdown was during April/May, when there was overall market weakness and they had another disappointing earnings report. They reported EPS of just $0.30, completely missing the Wall Street estimate of $0.62 and not by a small margin.
Management blamed the squeeze on strategic investments and new facilities, and they warned that margins would stay pressured in the near term.
With all these misses and guidance cuts, it is important to look forward.
What are the expectations and plans to clear this ‘‘mess’’ up, or is it simply a strategy, where management is taking short-term pain for long-term gain.
This questions brings us to today. The stock is down about 60% from it’s highs on a streak of bad news.
So why do I still look into this company?
The thing is, there is still a lot to like. So let’s find out what TransMedics is all about and why this could actually still be a great investment from here.
2. The Management
First, let’s talk management. It is important to understand who is responsible for the overall strategy and everything that happened in the past 2 years.
2.1. Waleed Hassanein (CEO)
The big man first, Waleed Hassanein. He founded TransMedics in 1998 and has run it as President and CEO the whole way. He was trained as a surgeon, but never finished his residency. This is something critics always use to ‘debunk’’ his academic credibility.
While that may all be true, that does not make him a bad businessman. He singlehandedly led TransMedics to what it is today. He scaled the business, led the IPO, bought the aircrafts and turned the company profitable. All great achievements and nobody can take that away, no matter which way you look at it.
The Scorpion-short report framed him as short-tempered, dishonest, and alienating to the transplant community. This is hard to verify of course, but I think it’s important to take these signals into account when we hear them.
After listening to him in interviews and earnings call, he does sometimes divert to easily to ‘‘long-term growth story’’ when being confronted with bad things. I do however think it would be wise to have extra support when it comes to marketing and corporate/investor relations. He can be the visionary behind the scenes and have other people take care of the public facing endeavors.
The good thing is, no one is better aligned with the company than him. He bought $2M in stock in August 2025 and another $1M in November 2025. Although still being a net seller overall, buying in weakness does show confidence to me.
Then the rest of the directors at TransMedics.
James R. Tobin, he is a veteran medtech operator (ex-CEO of Boston Scientific and Biosite)
Edward M. Basile, very experienced with a regulatory/FDA background
Thomas J. Gunderson, a long-time medtech equity analyst
Edwin M. Kania, Jr. is one of the early venture backers
Stephanie Lovell, long experience in healthcare/insurance
Merilee Raines – ex-CFO of IDEXX Labs, likely audit chair
David Weill, M.D. – transplant pulmonologist, clinical voice
The most important thing that stands out is that there have been no new directors added in the past 3 years. Kind of unique if you see what the company went through.
2.2. Skin in the game
Insiders with skin in the game is what I look for. This aligns them properly with us as shareholders.
At Transmedics insiders own about 7% of the company. That means 2,388,992 shares across all 12 directors and executive officers. But don’t be mistaken, 7% is a considerable piece to hold for insiders.
For comparison, the two big institutions each own more than all insiders combined: FMR (Fidelity) at 14.6% and BlackRock at 14.3%.
CEO Waleed Hassanein holds by far the largest stake with 1,495,782 shares, a total of 4.3%.
Sidenote: 931,454 of those are unexercised options, and 564,328 are shares he actually holds outright. Still, half a million shares owned directly by a founder is meaningful skin in the game.
The independent directors are smaller holders but these are not trivial numbers for board members either:
Kania: 337,022
Tobin (chair): 231,209 (175,071 held via a trust)
Weill: 43,633
Raines: 40,879
Gunderson 69,348
Basile: 35,370
Lovell : 29,129
Most of these directors hold very few shares outright; the bulk is stock options. Basile, for example, holds just 732 actual shares; the rest is options and RSUs.
That’s not necessarily a bad thing, but options give the right to buy shares later at a fixed "strike" price. Stock goes up: buy cheap and profit. Stock goes down, option is worthless and they just don’t exercise their right to buy.
Important to note, TransMedics has stock ownership guidelines requiring each C-level executive to hold shares worth 2x base salary, and it says all C-level execs are on track to comply. There's an anti-hedging policy too.
Overall I believe this is a very capable and experienced management team, but maybe it would be refreshing to add some new faces and ideas to the board and directors. Someone from the outside with a fresh take on things could do wonders.
3. What does Transmedics do?
For this section we are gonna dive a bit deeper into what the Organ Care System is, and how TranMmedics actually makes money.
Earlier we concluded that TransMedics wants to fix the problems that arise when using cold storage. Just to refresh you memory, these are the three things that happen in cold storage that are not great:
Organ degradation
Doctors have no way to make it healthier before transplant
And they have no way to check if the organ is any good until it’s already inside the patient
3.1. Organ Care System (OCS)
To combat these problems in, TransMedics focused on doing the exact opposite. The OCS keeps the organs warm, alive and working.
It does this by pumping warm, oxygen-rich, nutrient-fed blood through the organ during transport. By doing so, the organ stays in almost the same state as if it was inside the donor’s body.
The machine that does this comes in three parts:
The console: this is the portable box that houses and runs everything. It’s very expensive but durable and luckily also reusable. A hospital needs one per organ type.
The perfusion set: This is a sterile, single-use kit that holds the organ and circulates the blood. You can only use it once and after that it has to be thrown away and replaced for every single new transplant.
The solutions: These are the nutrient fluids that keep the organ fed. Also consumed each time.
Transmedics sells three versions of the OCS: Heart, Lung and Liver. Below you can see the explanation of the OCS Lung. A similar approach is used for the heart and liver.
All three have full FDA approval, for both brain-death and circulatory-death donors.
As of now it is the only FDA-approved portable, multi-organ, warm perfusion platform on the market.
3.2 How does TransMedics make money?
There are three main revenue streams for TransMedics.
3.2.1 The disposables
This is the bread and butter for Transmedics. We talked briefly about the console, which is a one time sale. But the disposables need to be rebought every time. Every transplant burns a fresh perfusion set and a fresh batch of solutions.
So you could say the console is the lock-in, after which they can collect years of cash from the high-margin consumable.
The disposables consist of the perfusion set, organ specific additives and accessory sets.
The beauty here: the revenue growth of TransMedics is directly tied to the growth of the transplant volume.
When the cases grow, so does the sale of disposables. They don’t have to resell or negotiate a new product. The installed based just keep growing and growing.
3.2.2. The consoles
Second are the consoles. As we said, this is a one-time sale. Not all hospitals buy them actually, some get them on loan or rental as they are very expensive.
This is not really where all the profit comes from. This is about getting in.
Every placed console, and it does not matter whether or loan or bought, is a future potential stream of sales.
3.2.3. The NOP (The National OCS Program)
The NOP is what brings all of it together, and what actually makes TransMedics unique.
The NOP solves a very time-consuming and hard to execute process, the transplant of the organ itself.
First you need a surgeon to get the transplans, a specialist on the machine and then you still have to manage the organ to be transferred across the country, usually within a very limited amount of time. This was incredibly difficult for hospitals to arrange by themselves and this led to a lot of organs going to waste.
TransMedics takes it all out of their hands. They have a team that retrieves the organs, their own specialist that does the perfusion and they have a whole (aviation) network to take care of the logistics.
Management has stated that most of their OCS usage now runs through this NOP.
Hospitals aren’t just buying the machine and leaving it at that. They now committing to the whole service and that’s exactly what TransMedics aims for.
That’s also where the stickiness of the TransMedics shows, once a hospital commits, they almost can’t go back. That would mean cutting the whole process and rebuilding this difficult and time-consuming endeavor from scratch.
It would be almost impossible for a hospital or a group of hospitals to build the transport network that TransMedics has. Let alone the whole aviation fleet.
When we get to the financials section we will look into how this translates to revenue and growth.
4. The sector
First, we are gonna look into the overall state of the sector, it’s competitors (yes they do have some) and their moat.
4.1. Ice is still a problem
We concluded earlier that cold storage is far from perfect, but it’s actually still the default for most transplants worldwide.
TransMedics, and some competitors (or allies, it’s however you want to frame this) are fighting to replace this method. The problem: the cold storage method is very very cheap. It’s far from perfect, but the cheapness and how easy it is to use makes up for a good part of that.
This is the opportunity, but also the difficulty. A large chunk of the growth of TransMedics is tied to how well they can capture the current cold storage market. If you believe in the warm perfusion angle, it’s just a matter of time. But it’s certainly not smooth sailing from here.
4.2 Competitors
One would think that what TransMedics does is very unique, and it is. But they have some noteworthy competitors.
The machine itself is not unique as there are several other companies in the warm perfusion market. TransMedics is the only one that does it across heart, lung, and liver in a single portable platform, but within each niche they have competitors. On top of the once I will mention here, there are also hospitals that still do the whole process themselves.
The two most noteworthy competitors are:
OrganOx, they make a normothermic liver machine that does essentially the same thing the OCS Liver does.
XVIVO has an EVLP (ex vivo lung perfusion) that keeps the lung at body temperature and breathing. For liver they use HOPE, which is a hypothermic (cold) oxygenated perfusion. For heart and kidney they also lean on hypothermic/HOPE
The thing is, both XVIVO and OrganOX do a small part of what TransMedics does. But TransMedic’s moat goes behind just the machine.
4.3 The Moat
That’s because the scope of what TransMedics offers is not easy to replicate.
Nobody offers the complete NOP-package we talked about before. And competing in that field is gonna be very costly and time-consuming. But when you boil it all down, there’s nothing holding a different company back from doing what Transmedics does, besides money and time.
The competitor that is the biggest threat right now is OrganOx. Even more so as they in 2025 they were acquired by Terumo, which is a Japanese Medical-device giant, with very deep pockets.
OrganOx as a standalone couldn't have built a national logistics network to rival the NOP. OrganOx with Terumo's money behind it could, if it chose to.
Whether Terumo actually builds logistics or stays a device-and-disposables player is the single most important and unanswered question, especially when it comes to the Liver section of TransMedic’s revenue side.
For now, TransMedics remains in the lead, and that’s because of the full-service they provide. If OrganOx decides to move into their terriotory, they still have a first-mover advantage which is bigger than it seems.
The second part of the moat are the FDA approval’s, relationships and expertise that TransMedics has built over the last decades. FDA trials take a long time, cost a fortune and are not something that any company go shoot for. B
4.4. NRP (Normothermic regional perfusion)
To get a full picture of the sector, we also have to understand NRP. This required a bit more researched as it’s quite technical, but very important to understand if you want to invest in TransMedics.
Here is what NRP means:
Normothermic regional perfusion (NRP) is an organ preservation technique used in donation after circulatory death (DCD) transplants.
By pumping warm, oxygen-rich blood into a donor's specific organs after their heart stops, NRP revives tissues, repairs ischemic damage, and allows doctors to assess organ function before removal
NRP is a direct competitor to the perfusion method TransMedics uses.
The difference: with NRP, instead of removing an organ after circulatory death and reviving it on a machine, surgeons restart circulation inside the donor's body using a cheap ECMO pump, assess the organs in place and then recover them.
It's been the growing standard for DCD recovery in parts of Europe over the last decade or so. This method is also a lot cheaper than the OCS + NOP procurement fee.
There is however one big caveat. NRP only works for donation after circulatory death (DCD). You can't restart circulation in a brain-dead donor, because their heart is still beating and their circulation was never stopped. So a large share of transplants fall outside the NRP use case entirely.
NRP adoption in the US has been very slow, mostly because of ethical and legal friction. The main point of critism is what happens after death is declared.
NRP restarts blood flow in donors who were just pronounced dead by "permanent" loss of circulation. In the version used to recover hearts, surgeons then clamp the arteries feeding the brain so it can't reperfuse. Critics argue that clamp is what actually causes brain death, which would make it a violation of the dead donor rule: the principle that recovering organs can't be the thing that kills the donor.
Not everyone agrees. Some say the donor is already dead by circulatory criteria, and the clamp just prevents a resuscitation nobody intends and that would never be attempted anyway. That debate is still unsettled, and no US authority has ruled either way
Legal grey areas are exactly the thing hospitals want to avoid. Therefore US hospitals remain cautious for now and that’s really slowing NRP’s spread in the US.
And not only that, NRP requires a specialized on-site team and coordination that many centers don't have.
Funny enough, that is the exact gap the NOP was trying to fill.
For small and mid-sized programs without the staff to run NRP or fly its own organs, the TransMedics NOP-service is probably still the best way to go.
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4.5 Pricing
Unfortunately, we have no clear direct and exact insight into the pricing of the OCS products and NOP, TransMedics simply does not publish these numbers. But publicly available information (analysts targets and first hand remarks from surgeons) show that:
The OCS disposable set costs a hospital somewhere between $70,000 and $90,000 per case. That’s just for the kit.
On top of that you have the service with the clinical team, organ retrieval and transport costs. When you combine those costs the total cost of easily reach around $120k. Again this is an estimate.
To get a feel of this is correct we can backtest this to 2023, which was before NOP scaling happened.
TransMedics did $241.6M in revenue across 2,347 OCS cases, which equates to roughly $103,000 per case on average.
Management has said that the price per organ has remained stable in these past few years, so that confirms our earlier assumptions.
4.6 Aviation fleet + flight numbers
The current total fleet sits at 22 owned aircrafts and they are currently not adding more aircrafts. This is a deliberate choice as management wants to improve utilization rates of the current fleet before expanding more.
And it’s working, we can see that in the coverage numbers which climbed even as the fleet stayed flat:
Q3 2025: 78% of NOP flight missions on owned aircraft (21 planes)
Q4 2025: 79% (22 planes)
Q1 2026: 82% (22 planes)
The thing to keep in mind here is that maintenance costs are very high. Fuel and pilots are expensive too. So while this makes TransMedics unique and gives them a moat, it’s also a drag on free cash flow that other parties do have currently.
A great X account to follow that keeps track of flight data is Jonah Lupton. He mentioned that the average amount of flights is increasing. In July it was 8% MoM and 67% YoY.
Another great place to track the flights is Singularity Research’s flight tracker. Link here: TMDX Flight tracker.
Recent numbers show an upwards in the past Qs, and Q3 is starting of strong as well.
This is exactly what you want to see. In general we can make the claim that the more flights TransMedics does, the more growth they see. The only thing to take into account are the so-called dry-runs.
A dry-run is when the NOP team get’s activated, but the organ doesn’t get delivered. Usually it gets declined at recovery, the donor doesn’t proceed or can’t proceed or the patient becomes unsuitable.
The problem here: the costs have been made. But there’s no revenue to show for. Management is aware and has addressed this problem, and they are now working to reduce these dry runs through better case screening.
5. The Risks
We already briefly flagged some of the risks earlier in this deep dive, but there are a couple other ones that are important to cover as well. I’m gonna try to keep it short, but some require a bit more explanation as this is not easy material to understand.
5.1 Medicare changes
I really had to do some digging again here as I’m European and not overly familiar with the Medicare system. But this is probably one of the most important ones to understand. Big changes in Medicare could be very harmful for TransMedics.
When a hospital does a transplant, Medicare pays them a fixed lump sum for the whole procedure. The actual costs are irrelevant, higher, lower, it doesn’t matter. The payment is the same, whatever they do. So if a hospital uses something expensive during that procedure and they have more costs that the payment by Medicare, it comes out of their own pocket.
The second payment is separate. The cost of acquiring the organ, preservation, transport, procurement, gets reimbursed on top of the lump sum, on a "reasonable cost" basis. It's billed on its own worksheet.
This is VERY important to TransMedics. Because the whole service gets billed as part of “getting the organ,” the hospital gets paid back for it separately, instead of having it eat into their flat payment. So the hospital can use TransMedics’s service (which is not cheap) and not lose money on it.
But imagine Medicare changes the rule and says: “Nope, the cost of getting the organ is now part of the flat lump sum too”. That would mean this expensive service now comes out of their own pocket.
Suddenly every dollar a hospital spends on TransMedics comes straight out of their own pocket and margin. The service that was once “free” to them (because they got reimbursed) is now a cost they just have to swallow.
And you can be damn sure that they will be a lot more critical as to if this is really the service they want to have and maybe even look for cheaper alternatives or try to do it themselves.
5.2 Terumo/OrganOx + XVIVO
We’ve already talked about the competitors before, but I want to shed a bit more light on the particular risks that comes with them.
As of now, liver is by far the biggest revenue stream (80% in Q1-26) and therefore of high importance to TransMedics. The biggest competitor in this space, OrganOX, just found a new daddy with a big bag of money. With the backing of Terumo they can expand and maybe eat into TransMedics market share for liver.
It’s still totally unclear if they will actually venture into the logistics part or force quick expansion in an other way, but this is a high potential risk. Liver is the bread and butter for TransMedics, and no other revenue stream could fill the gap if the revenue falls in that section.
XVIVO is also a name that deserves to be on this risk list. They are currently the default in Europe for liver. Their Liver Assist is the most-used liver perfusion device globally, and their XPS lung platform holds a US PMA (pre-market approval).
They now have their eyes set on the US. The DeLIVER trial will run their liver platform through a US PMA pathway. If XVIVO can pull their DeLIVER timeline forward, or if cold perfusion outcomes come in close enough to warm that hospitals start optimizing on cost. the impact on TransMedics could be quite big.
5.3 Margin Pressure
As of now, TransMedics is spending heavily. They have multiple angles they are currently exploring, but the R&D and expansion costs are high. These are the most noteworthy things TransMedics is pursuing that cost them a lot of money:
ENHANCE Heart: A trial to get more hearts used, even from harder to use donors
DENOVO Lung: A trial aimed at proving the lung machine works in the same way as it does for liver and heart
OCS Kidney development: a new kidney machine
European build-out
This eats into their margin. This is a deliberate choice by management. They are still focused on expanding and cementing their position rather than focusing on near-term profitability. But in the near-term this could really pressure margins and in turn profitability.
5.4 Aviation fleet eating capex
We concluded in the last chapter that the aviation fleet is not cheap, far from it. The majority of property and equipment costs is related to the aircrafts. It adds a lot of fixed costs (fuel, pilots and maintenance) plus you have the depreciation of the aircrafts itself.
They’ve stopped expansion in the US, so the rising costs should somewhat decelerate. But if they continue to expand in the EU, that will open up a whole new CAPEX runway. It will take many years and heavy investments before we can see it translate to meaningful revenue, let alone profit.
5.5 Financial reporting
Early in 2025 TransMedics reported ‘‘a material weakness in its internal controls over financial reporting’’. The system meant to catch accounting errors were not up to par according to their own editors. Just to be clear, this does not mean the numbers were wrong, it simply means they had a higher risk of being wrong.
Timing on this was rough, as it coincided with the short report.
The important thing, PwC still signed off on the financials. But it's an overhang. Until the controls are fixed and the litigation clears, it's a lingering question mark on an otherwise clean operating record
5.6 Regulatory and clinical risk
We have to talk about the FDA of course. Since TransMedics sells medical devices, the FDA can do a lot of harm (or good) to them. Getting FDA approval for new product or avenues takes a long time. As they are still expanding, any delay or FDA disproval can really hurt long-term growth potential.
And then there is public perception. For lung especially, some surgeons argue the machine doesn't beat cheap cold storage on patient outcomes. If that view spreads to liver or heart, adoption could stall. The DENOVO Lung trial is basically TransMedics trying to prove its case with data.
6. Opportunity
Before we go into the financials I want to highlight why I believe TransMedics is still a very interesting opportunity from here. Yes there are risks and headwinds, but that does not mean it can’t be an interesting opportunity. It’s all about the balance between growth potential and the factors that could limit it.
Besides that, there is a lot to like as well.
6.1. First-mover advantage and MOAT
This is the most obvious one, but I want to hit this point home hard. TransMedics is the first. And that’s easy to say, because they invented this category. the NOP is truly a one-of-a-kind and very hard to replicate. No competitor comes close to the total service-package they offer.
When you also take the high-switching costs into account, this truly gives them a very hard to penetrate position and moat.
6.2. Large market to attack
When we get to the financial section we will see that growth is impressive, but honestly they still have a very large runway.
In 2025 they did 5,139 U.S. OCS cases. Its three approved organs, liver, heart, and lung accounted for roughly 20,000 U.S. transplants that year. So as of now they have only captured a fourth of the overall market.
Management is quite aggressive here, they are guiding to 10,000 U.S. NOP transplants by 2028, and they talk openly about 20,000+ over time. That would mean volume can still increase by 3x or 4x based on execution.
This is just the US. Europe is a different cookie.
6.3. The Kidney Angle
As of now TransMedics does, Liver, Heart and Lung. But the Kidney transplant section is actually the largest. The U.S. did 27,573 kidney transplants in 2025 which is more than the other three combined.
TransMedics has an OCS Kidney program in the works, with a clinical trial targeted for 2027 and FDA approval aimed at 2028.
Basic math: if they can start capturing this market, their TAM doubles. It could simply double the use cases TransMedics can address and capture.
This is still a long-shot though, but a big one. The trial is yet to commence and approval is still a long way out. The positive thing here is that the market is not yet pricing this in.
6.4. OCS 2.0 and OCS 3.0
TransMedics is also doing other trials.
OCS 2.0 is in trials right now, with ENHANCE for heart, DENOVO for lung. FDA approval is targeted around 2028.
Then we have OCS 3.0, which is the platform kidney is expected to launcs on. Management describes it as smaller, fully automated and remotely monitored, with integrated biosensors and continuous data capture.
Just to be clear, the OCE 2.0 and 3.0 terms are what the public gave the Next-gen OCS and Gen-3 trials.
6.5. Expansion into Europe
International revenue (outside of the US) is still small (3% of total revenue), but it is a very promising angle TransMedics is directly pursuing right now.
The plan is simple, copy what worked in the US and bring it to Europe. They are already operating in Italy including a ground-transport tie-up with Mercedes-Benz.
The OCS device is CE-marked across the EU for all three organs already: heart, lung, and liver. That approval was given many years ago. So unlike a U.S. organ launch, TransMedics doesn't need to run fresh trials or wait on a regulator.
What is still missing the NOP part. The logistics and service section, and that’s what they are building out now. Italy is the foundation. TransMedics already runs R&D in Mirandola, and it's told investors it plans to add R&D and manufacturing there.
International growth is strong as we can see in the Financials section, but the base is still very small.
But to me, this angle is big. It’s the difference between just a US focused-company and a global one.
The thing it will all come down to is reimbursement. As soon as European health care systems start paying for the transplants, growth will pick up.
6.6. CHOPS & TROPS
We are going to get a bit technical here, but I think it is important to mention CHOPS here. CHOPS stands for Controlled Hypothermic Organ Preservation System.
This is basically TransMedics answer to the fact that not all transplants need warm perfusion. For same of the more simpler and non-time constraint transplants ice is still the best way to go. CHOPS is a controlled hypothermic preservation system, cold, but not a cooler full of ice.
As of now, TransMedics simply loses that case, as there is not need for their services.
The strategic logic is simple, TransMedics already has the relationships, contracts and agreements. Everything is in place. Adding a second, cheaper product doesn't require building any of that again. It just gives the sales team something to sell on the cases where OCS was never going to win.
It’s also a defensive angle. XVIVO and Paragonix compete in cold and hypothermic preservation. Right now, every short-ischemia case is a case TransMedics can't contest. CHOPS lets them directly compete.
Just keep in mind that this is just an extra. This will be a lower revenue, lower margin profile, until proven otherwise. Management is targeting an early Q3 2026 launch, which means we get our first real data in the back half of the year.
6.7. The Price
Not unimportant, I believe with the current drawdown TransMedics the risk/reward profile from here looks very appealing. It’s now just above $70, but it peaked at $170 in 2024.
Meanwhile the business is still guiding to 20–25% revenue growth for 2026, and it turned profitable and free-cash-flow positive along the way.
This is not some cash-burning microcap still having to proof itself. This is a profitable company with a few very promising avenues to capture.
More on valuation later.
This is the end of the free part of the Deep Dive. The next part is for paid subscribers only. In the last part I will cover
The financials
My valuation models, base, bear and bull case
What I am doing. Am I buying and if so, how will I approach building a position?
