TransMedics (TMDX) Q2 Revenue Jumps 38%

Key Points

• TransMedics Group (NASDAQ:TMDX) beat GAAP revenue and earnings estimates for the second quarter of 2025, with GAAP revenue up 38% year over year.

• GAAP EPS more than doubled versus analyst forecasts, reaching $0.92 compared to the expected $0.45.

• Full-year 2025 revenue guidance was raised for the second time this year, now projecting up to $605 million in GAAP revenue.

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TransMedics Group (NASDAQ:TMDX), a leader in organ transplant technology, released its second quarter 2025 earnings on July 30, 2025. The company topped Wall Street expectations, posting GAAP revenue of $157.4 million, ahead of the $147.7 million analyst estimate, and delivering GAAP earnings per share (EPS) of $0.92—more than doubling consensus forecasts. GAAP revenue jumped 38.0% from the prior year, and management raised its full-year outlook, citing continued strong momentum in both its core Organ Care System adoption and National OCS Program logistics business. The quarter showed expanding profits, and ongoing investment in logistics and clinical programs.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

About TransMedics Group and Its Recent Strategic Focus

TransMedics Group provides medical devices and logistical services that help preserve donor organs for transplantation. The company’s key product is the Organ Care System (OCS), a portable perfusion platform used to keep heart, lung, and liver organs functioning outside the body. This warm perfusion technology allows for more precise preservation and assessment compared to traditional cold storage methods, enabling more successful transplants.

Its business increasingly centers on two main areas: expanding adoption of its FDA-approved OCS across U.S. transplant centers, and scaling the National OCS Program (NOP), which includes comprehensive procurement, logistics, and aviation services for organ transport. Success for the company hinges on deepening clinical evidence, strong reimbursement strategies, and logistical efficiency as it supports transplant growth, particularly in the U.S. With continued investment in R&D, logistics, and digital platforms, the company aims to make its OCS the new standard for transplantation around the world.

Quarterly Performance: Revenue Surges; Margins and Investments

Second quarter revenue (GAAP) grew 38%, reaching $157.4 million, with product revenue (GAAP) rising 34.0% compared to the prior year and service revenue jumping 44% compared to the prior year. Expanded OCS utilization—especially in liver and heart transplants—fueled these gains, as did the scaling of the NOP’s aviation-supported services. Service revenue (GAAP) accounted for $61.3 million, reflecting the growing central role of logistics and transportation in the company’s offerings. Service growth outpaced product growth.

Gross margin stayed level at 61%, despite a larger share of lower-margin service revenue. Operating expenses grew 5.6% compared to the prior year, reaching $60.0 million. Net income (GAAP) soared to $34.9 million, up over 186% compared to the prior year, and accounted for 22% of revenue.

The company’s balance sheet also strengthened, with cash reserves at $400.6 million at quarter end. Spending on R&D rose, and stock-based compensation increased from $7.3 million to $9.0 million year over year. Investments in fleet expansion continued, putting the company on track for 22 owned aircraft by year-end. These investments in logistics infrastructure are integral to supporting rapid organ delivery and enabling centralized NOP operations for transplant centers nationwide.

Operationally, the launch of the NOP ACCESS digital platform introduced new automation for billing. The company also secured conditional Investigational Device Exemption (IDE) clearance from the U.S. Food and Drug Administration (FDA) for upcoming next-generation OCS Lung trials, a step toward broadening its technology to future clinical applications. Management reiterated its focus on cost discipline with at least 400 basis points of operating margin improvement expected in 2025 versus 2024, largely on the back of efficiency gains and scaling effects.

Product Families and Recent Developments

The core of the company’s offering is the Organ Care System—a portable perfusion device that allows donor hearts, lungs, and livers to be maintained under near-natural conditions during transport. This OCS platform stands out for being the only FDA-approved multi-organ warm perfusion system in the U.S. Adoption remains strongest in the U.S, particularly in liver and heart transplants, where market share continues to climb.

During the quarter, the company expanded the digital infrastructure supporting its National OCS Program, rolling out NOP ACCESS to transplant centers to streamline operations and automate billing.

Beyond logistics, regulatory progress continued: conditional IDE approval opened the door to start U.S. clinical trials for the next-generation OCS Lung device in the second half of 2025. These studies will deliver new clinical evidence, with management stating that any revenue boost from these trials would be modest in 2025 (estimated at between 2% and 5% of revenue), but potentially significant for long-term growth and competitive insulation. Post-market studies and clinical registries also continued, providing ongoing real-world data support for the technology’s efficacy and safety.

The company expanded its aircraft fleet for NOP logistics and began investing in manufacturing infrastructure in Italy to support international expansion and ensure global supply continuity. Despite most revenue coming from the U.S, management described this manufacturing investment as providing business continuity and maximum flexibility for supplying OCS products outside the U.S.

Reimbursement remains a priority: both the hardware (OCS device) and NOP logistics services are reimbursed by the U.S. Medicare program and commercial insurers. The company says it is assisting transplant centers with billing and reimbursement through a dedicated team of full-time internal and external reimbursement experts, and continues to pursue access to reimbursement and supply chain logistics in international markets.

Looking Forward: Guidance and Key Points for Investors

Management raised its full-year fiscal 2025 revenue guidance to a range of $585 million to $605 million. This new midpoint reflects about 35% growth over the previous year. No updated guidance was given on margins, but the company reiterated its target of at least 400 basis points of operating margin improvement in 2025 versus 2024, credited largely to scaling operations and better expense leverage.

The next quarters will see increased investment in R&D and the start of large-scale U.S. clinical trials for next-generation OCS devices. Management highlighted seasonal and demand variability, with Q2 usually stronger and Q3 historically weaker due to vacation season, and noted the possibility of quarterly revenue swings. Investors can watch for signs of continued service margin improvement as fleet utilization grows, and competitive trends, particularly as new market entrants seek to challenge OCS technology in the liver transplant segment. TMDX does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has positions in and recommends TransMedics Group. The Motley Fool has a disclosure policy.