TransMedics Group, Inc. TMDX reported third-quarter 2024 earnings per share (EPS) of 12 cents, which missed the Zacks Consensus Estimate of 28 cents by 57.1%. The company recorded a loss per share of 78 cents in the year-ago period.
TransMedics registered revenues of $108.8 million, up 63.9% year over year. The figure, however, missed the Zacks Consensus Estimate by 4.8%. The year-over-year increase in sales was driven by the increase in utilization of the Organ Care System (OCS) across all three organs and additional revenues generated by TransMedics logistics services.
Shares of TMDX were down 27% during after-hours trading on Oct. 28, likely due to lower-than-expected top and bottom-line performances. The company’s shares have risen 60% so far this year compared with the industry’s growth of 5.2%. The S&P 500 Index was up 21.9% during the same timeframe.
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Q3 Highlights
TransMedics has three FDA-approved OCS products, each for heart, lung and liver transplantations. TMDX’s OCS products are the only FDA-approved portable, multi-organ, warm perfusion technology platform. The company’s OCS technology replicates many aspects of the organ’s natural living and functioning environment outside the human body.
TMDX also operates its National OCS Program, an innovative turnkey solution to provide outsourced organ retrieval, OCS organ management and logistics services, to support transplant programs in the United States with a more efficient process to procure donor organs with the OCS.
Revenues from sales to customers of OCS Perfusion Sets, OCS Solutions and OCS Consoles are classified as net product revenues. The company recorded product revenues of $65.9 million, up 38% year over year.
The company also generates revenues from logistics services to support transplant programs in the United States. These services include aviation transportation, ground transportation and other coordination activities. The company owned 18 total aircraft as of Sept. 30, 2024. It also generates revenues from organ retrieval and OCS organ management services.
These revenues are recorded as Service revenues, which improved 129.5% year over year to $42.9 million during the third quarter.
Margin Trend
In the quarter under review, TransMedics’ gross profit improved 49.6% to $60.8 million. The gross margin, however, contracted 500 basis points (bps) to 56%. The company’s products carry higher margins than its services. The contraction of gross margin was due to a higher proportion of service revenues in total sales.
Selling, general and administrative expenses rose 39.2% to $42.7 million. Research and development expenses increased 28.2% year over year to $14.3 million. The operating expenses of $56.9 million decreased 17.5% year over year. The company recorded a non-recurring expense of $27.2 million as Acquired in-process research and development expenses in the year-ago quarter. This was absent in the third quarter, which led to a decline in operating expenses.
The operating income totaled $3.9 million against an operating loss of $28.3 million in the year-ago period.
Financial Position
TransMedics exited third-quarter 2024 with cash of $330.1 million compared with $362.8 million at the end of the second quarter of 2024.
Cumulative net cash provided by operating activities at the end of third-quarter 2024 was $22.3 million against cumulative net cash used in operating activities of $14.5 million in the year-ago quarter.
Guidance
TransMedics maintained its sales outlook for 2024.
For 2024, the company expects revenues to be in the range of $425-$445 million, reflecting growth of 76-84% from the 2023 level. The Zacks Consensus Estimate is pegged at $443.6 million.
TransMedics Group, Inc. Price, Consensus and EPS Surprise
TransMedics Group, Inc. price-consensus-eps-surprise-chart | TransMedics Group, Inc. Quote
Zacks Rank and Stocks to Consider
Currently, TramsMedics carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the same medical industry are Globus Medical GMED, AngioDynamics ANGO and Avanos Medical AVNS, each carrying a Zacks Rank #2 (Buy) at present. You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Globus Medical has an estimated long-term growth rate of 12.7%. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.1%. Its shares have risen 38.7% year to date compared with the industry’s 6.1% growth.
AngioDynamics has an estimated growth rate of 38.2% for 2025. ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.
AngioDynamics’ shares have lost 19.2% year to date against the industry’s 6.1% growth.
Avanos has an estimated growth rate of 31.2% for 2025. AVNS’ earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 5.7%.
Avanos’ shares have risen 5.3% year to date compared with the industry’s 5.1% growth.
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