TransMedics Group, Inc. (NASDAQ:TMDX) Q1 2023 Earnings Call Transcript

Because I believe the last 3 years of — I mean, the 3 years with COVID, people just kind of lost focus on even understanding what the importance of machine perfusion for lung would be. So that’s another area. The third area is we’re — and this is the area that I’m going to be as vague as I can. And hopefully, as the year progresses, we will provide more granularity around it. We’re trying to find the right mix of a catalyst to kind of quickly galvanize a major clinical focus on machine perfusion for lung using our platform, our NOP. I’ll leave it at that, Allen, but I promise you that hopefully within the next quarter or 2, we will discuss in detail. Again, I am not concerned about the trend we saw in Q1. We’re watching what’s happening in Q2, and we feel that the early initiatives are starting to bear fruit.

But we’re not stopping here. We’re going to continue to push forward with all 3 prongs as we move forward. And we will explore other modalities as well. So this is an important market for us, and we’re not going to give it up that easy.

Allen Gong: And then another question with a bit of a more positive slant. When I look at your updated guidance, it looks like a really impressive be in raised quarter. But when I look at what you’ve kind of left for yourself, 2Q, 3Q, 4Q, you’re basically implying flat revenues, right? On a quarterly basis. Now I’m not saying the cadence will exactly be like that. But what’s really holding you back from meaningfully outperforming that once you have capacity up and running at the end of 2Q. Like why shouldn’t you be able to really outperform this bar you set for yourself?

Waleed Hassanein: Thank you, Allen. Excellent question. So Allen, we were trying in the script, we’re trying to identify a nuance that is taking place as we ramp up production capacity, which has been our achilles heel for the last 3 quarters. Now we’re straining our ability to secure raw material at the same pace or at the same volume as we historically have kept in inventory. So we have to be conservative and prudent to make sure that we allow Nick and the team to have enough buffer of raw material. They don’t know what’s coming around the corner. We are ramping up our purchasing of every raw material we use for the build of all of our product solutions. So we had to leave some room to allow for some surprises to take place.

And also, as you know, we are conservative by nature, and we like to be realistic. We know what the I think in med tech, having 70% to 80% growth is not an easy thing to do. And we think this is very realistic and we hope to do better. But right now, I cannot — we have to be prudent that the team is working very hard to make sure that we don’t run out of raw material. The other area, as I stated on the call, the other area is making sure that we’re ramping up our staffing and also ramping up our control of our logistical network, specifically aviation. If we get all these 3 done, Allen, this is really when I feel confident that going forward and our long-term growth trajectory. But this is a year that we’re still building. We’re still building our supply infrastructure, our NOP infrastructure, we’re upgrading and scaling our logistics.

We’re adding a whole new business units in TransMedics called TransMedics aviation. So we have to be prudent. We have to be realistic, and we feel pretty strongly and pretty excited about the opportunity here and the potential in front of us. And we feel that the guidance we outlined reflect reality from where we see it.

Operator: The next question is from Cecilia Furlong with Morgan Stanley.