Snapshot
TransMedics Group, Inc. reported $144M of revenue in Q3 2025, up 32.2% year over year, with diluted EPS of $0.66 and an operating margin of 16.2%.
- Revenue
- $144M
- YoY growth
- +32.2%
- Diluted EPS
- $0.66
- Operating margin
- 16.2%
What management said
- •Specifically, we're very encouraged by the year-over-year growth trend, which we strongly believe is a more relevant and meaningful performance metric, especially in a seasonal quarter like Q3.
- •Total revenue for Q3 2025 was approximately $144 million, or exactly $143.8 million, representing approximately 32.2% growth year-over-year.
- •We experienced year-over-year growth across all three organ segments, driven by higher overall utilization and center penetration of OCS NOP in the U.S.
- •Specifically, we saw year-over-year growth of nearly 41% in liver, approximately 14% in heart, and approximately 5% in lung revenues in Q3.
- •Our overall gross margin for Q3 was approximately 59%, representing 2.9% growth year-over-year.
- •We delivered operating profit of approximately $23.3 million in Q3, representing more than 16% of total revenue, up from $3.9 million or approximately 4% of total revenue in Q3 2024.
- •Transplant logistics service revenue for 3Q was $27.2 million, representing approximately 35% year-over-year growth.
- •Now, please allow me to discuss our effort to expand our TransMedics National OCS Program model outside of the U.S., which represents a key midterm growth driver for TransMedics.
- •This initiative will serve as an additional growth catalyst beginning as early as late 2026 and more meaningfully in 2027 and beyond.
- •We are expanding our OPO partnership to increase organ utilization for transplantation around the United States.
- •Continued benefits from our ongoing strategic investments drive solid performance across both product and service lines, along with continued margin expansion and improved profitability versus Q3 of 2024.
- •It's worth noting that in our earlier years, our rapid growth trajectory offset the natural seasonality in U.S.
What went well
- •Q3 2025 total revenue was approximately $143.8 million, representing approximately 32.2% growth year-over-year, achieved despite the anticipated transient seasonal slowdown in U.S. national transplant volumes.
- •The company experienced year-over-year growth across all three organ segments: nearly 41% in liver, approximately 14% in heart, and approximately 5% in lung revenues.
- •Operating profit was approximately $23.3 million, more than 16% of total revenue, up from $3.9 million (approximately 4%) in Q3 2024, with operating margin expanding to 16% from 4%.
- •Strong cash generation added approximately $65.6 million to the balance sheet, ending Q3 with over $466.2 million in cash, supported by improved billing processes and healthy AR collections.
- •Transplant logistics service revenue was $27.2 million, approximately 35% year-over-year growth, with NOP air-transport mission coverage at approximately 78% (up from approximately 61% in Q3 2024), and the company achieved its goal of 22 owned jets in October.
What went wrong
- •U.S. transplant revenue declined approximately 9% sequentially and OUS revenue declined approximately 13% sequentially, reflecting the typical seasonal moderation in third-quarter transplant activity.
- •Total gross margin of approximately 59% declined roughly 260 basis points sequentially, mainly reflecting lower activity levels and infrastructure investments to drive future efficiencies.
- •Operating income declined 36% sequentially and net income declined 30% sequentially due to seasonality and increased investment.
- •Heart market volumes showed some softness, with the second straight year of third-quarter market slowdown and accompanying OCS deceleration noted by analysts.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Full-year revenue | FY2025 | — | narrowed to $595M-$605M, approximately 36% growth over 2024 at the midpoint | |
| Operating margin expansion vs prior year | FY2025 | — | at least 750 basis points of operating margin expansion for full-year 2025 vs 2024, with possible additional upside | |
| Gross margin | Coming years | around 60% | around 60%, with potential near-term pressure from international expansion that is expected to normalize | |
| Clinical trial revenue contribution | Q4 2025 | — | minimal/minuscule; first handful of patients to enroll in heart and lung in Q4 with near-zero revenue contribution |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Total revenue | approximately +32.2% | Higher overall utilization and center penetration of OCS NOP in the U.S. across all three organ segments. |
| U.S. transplant revenue | +32% | Continued momentum across liver ($108M) and heart ($27M) programs, partially offset by typical Q3 seasonal moderation that drove a 9% sequential decline. |
| Logistics revenue | +35% | Continued expansion and strong utilization of the aviation fleet versus 2024, though down 9% sequentially with the seasonal volume slowdown. |
| Gross margin | up nearly 290 bps to ~59% | Higher fleet utilization, cost efficiencies in logistics, limited unplanned aircraft downtime, and more evenly spread scheduled maintenance. |
| Operating income | +494% | Strong top-line growth with operating leverage; operating expenses up only 8% year-over-year against revenue up approximately 32%. |
| Net income | +477% | Strong operating performance and efficiency gains; EPS of $0.71 and diluted EPS of $0.66. |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Seasonality in U.S. transplant activity | Rapid growth previously masked natural seasonality | At greater scale, results follow underlying market seasonality more closely; Q3 softness viewed as transient with volume rebounding in September and early Q4. | |
| ENHANCE Heart and DENOVO Lung clinical programs | — | Several U.S. centers approaching enrollment; first patients and first revenue expected in Q4 2025 under conditional approval (heart Part A and Part B sizable; lung more limited), with all IDE conditions expected satisfied by early 2026. | |
| International / NOP Europe expansion | — | First ex-U.S. NOP program announced in Italy with up to four hubs covering northern and southern Italy, planning an EU air and ground logistics network, launch expected first half of 2026 as a catalyst in late 2026 and more meaningfully in 2027+. | |
| Double-shifting fleet pilot | — | Pilot underway to maximize existing fleet efficiency by flying more missions per plane; pilot hiring and training advancing, with early results expected in first half of 2026. | |
| U.S. transplant modernization and OPO decertification | — | No disruption seen from HHS actions; management views modernization initiatives as a potential tailwind and opportunity rather than a risk, and is confident operating in current or future models. |
Q&A summary
Allen Gong (JPMorgan) asked about the Q4 trajectory and 2026 run rate, and whether 2025 is an appropriate year for seasonality.
Waleed Hassanein said seasonality should be anticipated year after year as TransMedics becomes a dominant player; 2026 guidance will be issued at the next earnings call, with the current focus on ending 2025 strong, and 2026 fully expected to be a growth year.
Bill Plovanic (Canaccord) asked for clarity on whether enroll means treating first patients or booking first revenue in first half of 2026, and on operating margin/Europe CapEx.
Waleed Hassanein said TransMedics will enroll first patients and book first revenue in Q4 2025 under conditional approval, with caps/conditions removed in Q1 2026. Gerardo Hernandez said European NOP CapEx color will come next year and that the 2025 operating margin forecast assumes landing at the low end of guidance and delivering on Q4 U.S. investments, with room for upside.
Chris Pasquale (Nephron Research) asked where logistics penetration goes over time given it has been in the high 70% range, and about NOP Connect impact on cash conversion and adoption.
Waleed Hassanein said the high-70s reflects only missions requiring air transport and expects it to rise to the low-to-mid 80s, capped near-term by existing third-party contracts and long-distance/Hawaii missions needing larger jets. On NOP Connect, he said a 2.0 version rolls out in Q4 with good early efficiency feedback, but full impact is expected throughout 2026.
Joshua Jennings (TD Cowen) asked what is driving the $5 million midpoint guidance increase and about any impact from the New York Times DCD donor expose on donor registrations and wait lists.
Waleed Hassanein said TransMedics is confident in the Q3 results and trends into early Q4 but is being prudent. He said wait lists are dynamic, with centers wiping and rebuilding them; the focus is opening up suitable organ supply. He pushed back on the expose, noting bad acts are very limited and the U.S. transplant system remains among the best.
Daniel Markovic (Evercore/Evoco) asked whether the new guide assumes any Q4 contribution from next-gen heart and lung trials, and for a reaction to the Organox takeout announcement.
Waleed Hassanein said the answer is essentially no meaningful contribution given trials may start enrolling in November. On Organox, he congratulated them, said it validates that TransMedics created a multi-billion-dollar industry, shows how undervalued TransMedics stock is, and confirms the market is an exciting medtech opportunity.
Mike Matson (Needham) asked whether the heart trial's 30-day patient/graft survival endpoint is powered to show superiority given high baseline survival rates.
Waleed Hassanein clarified the primary effectiveness endpoint is patient and graft survival at 30 days combined with freedom from primary graft dysfunction within 72 hours, which brings the combined rate to the low-to-mid 80s, providing a wider signal to power the study for superiority; lung uses the same design.