TransMedics Group, Inc. (NASDAQ:TMDX) Q4 2025 Earnings Call Transcript

TransMedics Group, Inc. (NASDAQ:TMDX) Q4 2025 Earnings Call Transcript February 25, 2026

Operator: Good afternoon, and welcome to TransMedics Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Laine Morgan from the Gilmartin Group for a few introductory comments.

Dorothy Morgan: Thank you. Earlier today, TransMedics released financial results for the quarter and full year ended December 31, 2025. A copy of the press release is available on the company’s website. Before we begin, I would like to remind you that management will make statements during this call, including during the question-and-answer portion of the call, that include forward-looking statements within the meaning of federal securities laws. Any statements made during this call that relate to future events, results or performance, including expectations or predictions are forward-looking statements. All forward-looking statements, including, without limitation, are examination of operating trends, the potential commercial opportunity of our products and services, the potential timing, benefits or outcomes of new clinical programs and our future financial expectations, which include expectations for growth in our organization and guidance and/or expectations for revenue, gross margins and operating expenses in 2026 and beyond are based upon our current estimates and various assumptions.

These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. Additional information regarding these risks and uncertainties appears under the heading Risk Factors of our 10-K filed with the Securities and Exchange Commission on February 24, 2026, and our subsequent SEC filings and the forward-looking statements included in today’s earnings press release, which are available at www.sec.gov and our website at www.transmedics.com. TransMedics disclaims any intention or obligation, except as required by law, to update or revise any financial projections, expectations, predictions or forward-looking statements, whether because of new information, future events or developments or otherwise.

This conference call contains time-sensitive information and is accurate only as of the live broadcast today, February 24, 2026. And with that, I will now turn the call over to Waleed Hassanein, President and Chief Executive Officer.

Waleed Hassanein: Thank you so much, Laine. Good afternoon, everyone, and welcome to TransMedics’ Fourth Quarter and Full Year 2025 Earnings Call. Joining me today is Gerardo Hernandez, our Chief Financial Officer. I’m thrilled to be here tonight reporting our fourth quarter performance, capping off an outstanding year for TransMedics as we delivered our best operational performance to date. These results were achieved despite external challenges earlier in the year that were designed to distract and disrupt our sustained and transformational growth. I’m extremely proud of the resilience of our team and our business. In addition, I’m grateful to our global clinical users for their continued partnership with TransMedics and their trust in our OCS NOP program throughout the year.

Based on our performance in 2025 and our continued investment in expanding the caliber and the breadth of our team, I am growing exceedingly confident in TransMedics’ ability to overcome future challenges as we continue to innovate and disrupt antiquated and inefficient transplant processes in the U.S. and around the world. We are highly motivated and inspired by our mission to expand the utilization of available donor organs for transplantation while aiming to deliver the absolute best possible clinical outcomes for transplant patients worldwide. We strongly believe that TransMedics is just getting started, and we have our sights focused on new peaks, which we will share with you on today’s call. Now let me proceed with discussing our business performance.

On our last call, we stated our expectation that 3Q seasonality in U.S. transplant activities would be transient and that we should recover in 4Q. Today, we’re excited to report that 4Q results that validate our views. 4Q 2025 was a banner quarter for our business and allowed us to conclude 2025 on a very high note. Here are the key operational highlights for 4Q 2025. Total revenue for 4Q ’25 was $160.8 million, representing approximately 32% growth year-over-year and approximately 12% sequential growth from 3Q 2025. U.S. transplant revenue grew approximately 11% sequentially to $155 million, while OUS transplant revenue grew approximately 33% sequentially to $5 million. Finally, we delivered an operating profit of approximately $21.3 million in 4Q, representing approximately 13.2% of total revenue for fourth quarter while making substantial investments to fuel our growth.

Now let me provide the financial results for the full year 2025. Total revenue for the full year 2025 was $605.5 million, representing approximately 37% growth year-over-year. We delivered operating profit of approximately $108.6 million, representing approximately 18% of total revenue for the full year 2025. Importantly, we ended the year with approximately $488.4 million of cash and cash equivalents. Shifting now to TransMedics transplant logistics infrastructure and performance. TransMedics transplant logistics service revenue for 4Q was approximately $28.6 million, up from $21.7 million in 4Q 2024, representing approximately 32% year-over-year growth and up from $27.2 million in 3Q, representing approximately 5% sequential growth. Throughout 4Q, we owned and operated 22 aircraft.

In Q4, we maintained coverage of approximately 80% of our NOP missions requiring air transport, compared to 75% in the same period in 2024. We are very pleased by our strong performance in 4Q and full year 2025. That was fueled by growing OCS case volume and increased clinical adoption. Importantly, as we predicted, our performance enabled growth in overall U.S. liver and heart transplant volumes for the third consecutive year, driven primarily by OCS NOP cases. This is really unprecedented and frankly, humbling. As we do every year, I would like to share full year OCS transplant volumes and overall U.S. transplants per order. Here are the key highlights. For the third consecutive year, we grew the total OCS transplant volume. As of February 2022 — 2026, our internal company data and UNOS database recorded records show that there were 5,139 total U.S. OCS transplants performed in the full year 2025.

Let me repeat this. As of February 22, 2026, our internal company and UNOS database records show that OCS was responsible for 5,139 transplants performed in the full year 2025, up from 3,735 U.S. OCS transplants in 2024. The overall transplants represented approximately 26% of the total 19,833 U.S. transplants for the year for heart, lung and liver in 2025 and up from 20% of the 2024 U.S. transplant volume for the same organs. Importantly, for the third consecutive year, we saw growth in overall U.S. liver and heart and lung transplant volumes. For the full year 2025, there were 19,833 liver, heart and lung transplants, up from 18,894 in 2024. We strongly believe that the OCS NOP once again played a key role in driving overall liver and heart market growth due to the increased use of DCD and DBD donors in the U.S. Since 2022, U.S. national transplant volumes for liver, heart and lung grew at a rate of 25%, including OCS NOP transplant volume.

Without OCS volume, national volumes for the same organs would have declined by approximately 1% over the same period. Please allow me to repeat this. U.S. transplant volumes for liver, heart and lung grew 25% with OCS NOP and would have declined by approximately 1% without OCS NOP case volume. Based on these facts, we believe that we are delivering on our vision of growing the overall U.S. market. Said differently, we are expanding the overall market, not just taking share. Now let me discuss our clinical adoption per organ. For liver, in 2025, OCS Liver transplant represented 4,197 transplants or 36% of the overall liver transplant volume in the United States. That is up from 26% in the same period in 2024. For heart, OCS transplant represented 854 cases or approximately 18% of the overall heart transplant volume, modestly up from the 17% seen in 2024.

For lung, the numbers are small. OCS Lung transplants represented only 88 cases or approximately 2%. These are very small numbers, and we will discuss below how we are planning to address this particular topic. These results underscore the significant remaining greenfield potential for OCS NOP cases across all 3 organs. Specifically, we are focused on the ENHANCE Heart program to drive increased use in heart transplantation across the donor types. Finally, our DENOVO Lung clinical program will focus on reinvigorating the OCS Lung market segment in the U.S. while driving much needed expansion of the utilization rates for donor lungs. Both programs have been cleared by FDA and are in various stages of trial activation and enrollment in the U.S. We’re looking forward to reporting the progress of these 2 crucial programs at the upcoming ISHLT in late April.

Now let me move on to discuss our 2026 plans and guidance. As we stated before, we’re excited for 2026 as we believe it will represent another critical and transformative year for TransMedics business given our focus on few, wide — few wide-ranging and far-reaching catalysts for near, mid- and long-term growth for our business. Let me share with you a summary overview of all the growth catalysts we are focused on in 2026. First, OCS ENHANCE Heart program. Simply stated, Part A of this program is designed to move cardiac transplantation beyond preservation and into functional enhancement of donor hearts. Importantly, it was designed to significantly expand the time and distance limitations currently imposed on the 4-hour DBD heart transplants preserved using cold static storage.

Initial feedback is promising, but we are still early in the process. Now let’s talk about Part B. Part B of this program is designed to allow OCS to gain a potential new clinical indication in DBD Heart Transplant segment that are sub 4 hours preservation by demonstrating superiority of outcomes in a head-to-head comparison to current cold static storage modalities. Progress in Part B has been slightly impacted by our competitive dynamic as it relates to a cold storage arm of the trial. Specifically, there is a hesitation amongst competition to a head-to-head comparison between OCS and their static cold storage modality. We are confident in our ability to overcome this competitive dynamic that we somewhat expected. Importantly, we are committed to conducting this important part of our heart program with the highest level clinical evidence and robust protocol and randomization scheme.

If successful, one or both parts combined, could dramatically increase the use of OCS Heart in the U.S. and should have a huge impact on our transplant volume and top line revenue growth. Next is OCS DENOVO Lung program. As I’ve stated before, in our humble view, this is the last real chance for lung transplant community to experience the benefits of machine perfusion and integrated NOP services in lung transplantation in the U.S. If successful, this program would resurrect a sleeping giant of lung transplant market and would add significant lung clinical adoption and top line revenue growth for TransMedics. Next is bringing the NOP model to Europe and rest of the world. This program is actively launching in Italy and few other European countries have expressed strong interest in exploring the NOP model in their local geography.

This program has the potential to significantly grow our OCS market adoption in Europe. Expanding our commercial activities in Europe has the potential to nearly double our transplant total addressable market for TransMedics. We are actively engaged in building our European NOP transplant air and ground logistics network while also expanding our European clinical support infrastructure. Next is the OCS Kidney program. This represents our next frontier and will be the first organ to launch on our OCS Gen 3.0 technology platform. OCS Gen 3.0 will have a completely redesigned technology and perfusion systems that is smaller, lighter and with a much lower part count. Importantly, it’s designed for automated assembly and was designed to operate with a high degree of reliability.

There are currently more than 20,000 deceased kidney transplants in the U.S. annually and an additional 8,000 to 9,000 kidneys that are discarded annually in the U.S. for only prolonged ischemic times. To our knowledge, the OCS Kidney system will be the first and only warm perfusion oxygenated kidney platform for kidney transplantation, used from the donor to the recipient. Currently, the development program is running in full gear throughout 2026 to get the platform ready for FDA trial by early 2027. Next is OCS Gen 3.0 for liver, heart and lung systems. This program is running in parallel to the kidney program to upgrade our current liver, heart and lung system and help grow our clinical adoption rates and scale our operations. Finally, we are exploring the potential to capitalize on the U.S. transplant modernization initiatives, driven by HRSA, CMS and U.S. Congress.

Specifically, we are exploring if TransMedics can be a more integrated contributor to the national transplant ecosystem in the U.S. The goal is to maximize donor organ utilization for transplantation and continue to save more American lives and save significant health care dollars. As you can see, these are significant potential short, mid- and long-term catalysts for our business, and we are laser-focused on ensuring successful execution of these initiatives throughout 2026. That being said, we’re also cognizant of a few operational challenges that could influence the pace and timing of these initiatives. First, as stated, we are still building out our logistics infrastructure in Europe, which could moderate the initial pace of our EU NOP launch as we ensure we have the right foundation in place.

Second, timing of the full DENOVO trial accrual will depend on how long and how the lung transplant market adopts machine perfusion and NOP, which remains to be proven. Third, timing of ENHANCE Part B completion will be influenced by some of the inertia created by competitive dynamics for the cold storage arm in the marketplace. Fourth, the — very common and now, I hope, well understood annual phenomena of potential Q3 seasonality in U.S. transplant market that temporarily slows down transplant activities. And finally, ramping our infrastructure and clinical staffing to meet the growing demand for OCS NOP will be critical to achieve our full growth potential in 2026. With all this in mind, we are setting our revenue guidance for full year 2026 between $727 million and $757 million, representing approximately 20% to 25% growth over full year 2025.

With that, let me turn the call to Gerardo to cover the detailed financial results for the quarter.

Gerardo Hernandez: Thank you, Waleed. Good afternoon, everybody. I am pleased to share TransMedics Fourth Quarter 2025 Results. Please note that a supplemental slide presentation with additional details is available on the Investors section of our website. As Waleed highlighted, we sustained strong momentum through the fourth quarter, closing the year with solid performance following an expected seasonally softer third quarter in U.S. transplant activities. As discussed in our Q3 call, our rapid growth in prior years often marked the natural seasonality in the U.S. transplant activity. At our current scale, those dynamics are more visible. However, as we have seen, these fluctuations tend to normalize over the full year. Total revenue for the quarter was approximately $161 million.

U.S. transplant revenue was approximately $155 million, up 33% year-over-year and 11% sequentially. By organ, liver contributed with $127 million, heart [ $26 million ] and lung $2 million. International revenue was $4.8 million, up 24% year-over-year and 33% sequentially. Revenue by organ was $3.9 million in [ heart ], $0.2 million in lung and $0.7 million in [ liver ]. Growth was primarily driven by liver and heart. While we continue to make progress in our international expansion plans, the business remains at an early stage and quarterly variability is expected due to reimbursement and market dynamics. Product revenue for the fourth quarter was $100 million, up 34% year-over-year and 15% sequentially, reflecting continued momentum across both liver and heart programs.

Service revenue for the fourth quarter was $60 million, up 29% year-over-year and 8% sequentially. The primary driver of growth was logistics revenue, which increased 32% year-over-year and 5% sequentially, reflecting continued expansion and strong utilization of our aviation fleet compared to 2024. Together, these results reflect strong order utilization, continued OCS adoption and increasing leverage of our integrated logistics platform. Total gross margin for the quarter was approximately 58%, down 110 basis points year-over-year and 70 basis points sequentially. The year-over-year decline primarily reflects higher clinical service costs associated with the expansion of our NOP program, increased logistic discounts and higher freight expenses.

The sequential decrease was mainly, driven by inventory-related charges, associated with our year-end inventory procedures and higher freight costs from expediting shipments to replenish our costs. Total operating expenses for the fourth quarter of 2025 were $72 million, up 14% year-over-year and 18% sequentially. The year-over-year growth was mainly driven by increased R&D investment to advance our innovation pipeline and expand product development capabilities, including targeted additions to our technical and development teams. SG&A growth reflected continued IT infrastructure expansion, strategic growth initiatives and selected headcount investments to support scale. Sequentially, the increase was largely driven by higher R&D investments related to development and testing activities as well as incremental SG&A investments supporting growth and expansion initiatives.

Operating income for the quarter was $21 million, 146% year-over-year and down 9% sequentially. The sequential decrease was primarily driven by higher operating expenses associated with increased investments during the quarter. Operating margin expanded to 13%, compared to 7% in the fourth quarter of 2024. Net income for the fourth quarter was $105 million, a significant increase both year-over-year and sequentially. Net profit included an income tax benefit of $83.8 million, compared to an income tax provision of $0.1 million in 2024, mainly related to the release of the valuation allowance. The release of the valuation allowance on our deferred tax assets is not merely an accounting adjustment, but a strong indication of our confidence in the sustainability of our long-term profitability grounded in continued growth and scalability.

This decision follows a thorough and rigorous evaluation under applicable accounting and tax standards. Earnings per share were $3.08 and diluted earnings per share were $2.62 for the fourth quarter of 2025. We ended the year with $488 million in cash, up $22 million from September 30, 2025, driven by strong operating cash generation and continued disciplined working capital management. Overall, our fourth quarter performance reflects another quarter of strong execution, operational efficiency and continued advancement across our clinical programs. As we operate at a greater scale, the TransMedics team continues to demonstrate focus and discipline, investing in growth while maintaining strong financial and operational performance. Now let me summarize our full year 2025 results.

Full year revenue reached approximately $605 million, representing 37% growth over 2024. Growth was led by liver, which grew almost 49% and continued strength in heart at almost 15%. Lung revenue was lower compared to 2024. U.S. transplant revenue reached approximately $585 million, reflecting a 38.6% growth year-over-year. Our international transplant revenue ended the year at $16.7 million, representing a 9.3% year-over-year growth, primarily driven by liver and heart. Breaking it down by categories, product revenue totaled $372 million, while service revenue contributes with $233 million. Breaking it down by organ, liver revenue reached $461 million, heart revenue reached $126 million and lung reached approximately $15 million. Flight School revenue for the year was $4 million.

Gross margin for the full year was 59.9%, up from 59.4% in 2024, reflecting logistics efficiencies and scale benefits. A portion of these gains was strategically share with customers through logistic discounts enabled by our integrated network. Margins also reflects incremental costs related to our double shifting programs and higher expedited hub replenishment expenses. Total operating expenses were $254 million, up 13% year-over-year. The increase was primarily driven by a 23% increase in R&D investments, reflecting continued investment in our innovation pipeline and product enhancements. SG&A grew almost 10% year-over-year, reflecting ongoing expansion of our IT infrastructure and investment in strategic growth initiatives. Operating margin expanded from 8.5% in 2024 to 18% in 2025.

A significant achievement in a year where gross margin improved only modestly. This performance demonstrate that the primary driver of margin expansion in our model is operating leverage as revenue scale, supported by a strong discipline to cost management. Net profit for the year was $190 million, compared to approximately $36 million in 2024. Results benefit from strong operating performance as well as the previously mentioned onetime income tax benefits recognized during the fourth quarter related to the deferred tax assets. This performance positions us well as we enter 2026 with continued growth momentum and a strong financial foundation. Earnings per share was $5.60 and diluted earnings per share was $4.87. Now turning to our total revenue guidance for 2026.

We anticipate revenue growth of 20% to 25% over the full year of 2025, which translates to a full year revenue range of approximately $727 million to $757 million. Growth is expected to be driven primarily by the increased order utilization, continued OCS adoption and expansion of our service revenue. In 2026, we expect similar seasonal dynamics in the U.S. transplant activities consistent with prior years. In terms of gross margin, we expect overall margins to remain around 60% over the long term. This outlook reflects factors influencing both product and service margins beyond mix alone. As we expand internationally and continue investing ahead of growth, we may experience some near-term pressure. However, we expect this impact to normalize as volumes scale across markets.

In terms of capital allocation, our focus remains on driving long-term value. We are concentrating our investments in 3 key areas: first, fueling growth through continued R&D investments, strengthening our NOP network and targeting expansion into selected international markets. Second, building a stronger foundation by implementing systems to simplify and optimize processes across the business, improving efficiency as we grow. And third, enhancing our infrastructure and strategic optionality, including our planned move to a new global headquarters to accommodate growth, ongoing upgrades to expand our manufacturing and project development capabilities and our continued evaluation of strategic opportunities that could further strengthen our platform for the future.

Collectively, these initiatives are preparing TransMedics for its next stage of expansion as we move beyond the 10,000 transplant milestone. We continue to make progress on our double shifting pilot program to improve fleet utilization and expect to see early results in the first half of 2026. These insights will help us determine the rightly sized and utilization model to maximize capital efficiency. We achieved our goal of owning 22 jets by the end of 2025. While there are no current plans to increase the fleet in 2026, we remain open to acquiring additional aircraft when the right conditions are in place, whether to enhance U.S. capacity or to support international expansion. In 2026, we plan to meaningfully increase investment and with particular focus on advancing our clinical programs, completing the final development phase of our OCS Kidney program and continued development of our next-generation OCS platform.

It is important to note that approximately half of the incremental investment is transitory in nature and as these initiatives are completed, expense levels should normalize, allowing us to capture additional operating levels over time. Based on the current revenue guidance for 2026, we expect operating margins to be up to approximately 250 basis points below 2025 full year levels, primarily reflecting the timing and scale of these investments. As investment levels normalize and the business continues to scale, we would expect operating margins to resume expansion. We continue to expect operating margins to approach 30% by 2028. As shared in previous quarters, we may see some fluctuations as we expand international and invest ahead of growth.

However, we remain confident in the long-term direction and scalability of our model. As we look ahead, we see meaningful growth opportunities from multiple sources beyond continued organ utilization and OCS adoption including the expected impact of our clinical programs, advancement OCS kidney program and ongoing international expansion efforts. Together, these initiatives expand our addressable markets and reinforce the long-term growth potential of our platform. With a proven track record of delivering on what we set out to do, we are well positioned to continue creating long-term value while expanding access of transplantation and giving more patients as second chance at life. And with that, I’ll turn the call over to Waleed for closing remarks.

Waleed Hassanein: Thank you so much, Gerardo. Overall, we’re very proud of our 2025 results as we delivered 37% year-over-year growth and achieved positive cash flow from operating activities. We did this while investing in our pipeline and continuing to build our infrastructure to capitalize on our highly differentiated OCS technology and service offering. We are now laser focused on executing in our initiatives in the potentially transformative 2026 year and are excited about what’s ahead. In conclusion, we are humbled and proud of the significant life-saving impact of our OCS technology, NOP service and dedicated team and remain committed to our mission of expanding access and improving clinical outcomes to patients in need of organ transplantation worldwide. With that, I will now turn the call to the operator for Q&A. Operator?

Operator: [Operator Instructions] We will take our first question from Allen Gong from JPMorgan Chase & Company.

Q&A Session

K. Gong: Thanks for the question. Congrats on the really good quarter to end the year. I guess my question is going to be on guidance if I’m limiting it to one, you’re guiding a step above TheStreet even after factoring in being the quarter when we think about the midpoint of the range. You clearly have a lot of moving parts next year between underlying growth in liver and heart and the enrollment of the clinical trials and you also have Italy in the back half. So when it comes to those 3 dynamics, can you talk broadly about your expectations for those and how that factors into your guidance philosophy?

Waleed Hassanein: Thanks, Allen. As always, we take guidance very, very seriously at TransMedics and we have huge opportunities ahead of us as we outlined, Gerardo and myself. But also we have a few challenges — a few moving dynamics. So in our guidance, we factored in all of the above and issued what we believe is a realistic guidance that would enable us to execute and let the execution and performance dictate what do we do if we need to revisit the guidance. So we feel confident in the guidance that we are putting forth here. And as it bakes in all the uncertainties or the opportunities and uncertainties in front of us. So again, we would go and execute, and we let the execution and the results and the performance dictate if we need to revisit the guidance as we move forward throughout the year.

Operator: We will take our next question from the line of Josh Jennings from TD Cowen.

Joshua Jennings: Great to see the strong start to the end of the year. I appreciate the breakout of the catalyst late in 2026. I was hoping to ask a question on OCS Liver. Waleed, you’ve talked publicly about a registry publication coming up in the near term that it could be a huge catalyst for liver adoption. I know you can’t front run the results here, but I was wondering, one, just — I mean, could we see some cost effectiveness data published in the near term and just thinking about that element of OCS Liver as new competition is coming into place? And just are you seeing any competitive headwinds out there that are new in 2026 for the OCS Liver franchise?

Waleed Hassanein: I think — let me address that question in 3 pieces. The first piece is there are health economic data on liver transplant that’s already published, many of them for the last 2 years, single center experience. So that’s already in the print. But what’s coming is really the unequivocal drop-the-mic statistical superiority in the most important outcomes after liver transplantation, which would justify and support all the evidence that’s been built in having more than 14 or 15 publications now already in print out there. Those publications that are coming, they are aggregated of thousands of cases, they’re coming out of our registry and many of them are already under review. I cannot comment when are they going to come out, because obviously, I cannot interfere with the review process, given that these are very high impact journals.

The last piece, the comment about competition. Listen, we’re very cognizant of everything that moves in the field of organ transplant. We are not seeing competitive dynamic impacting our ability to execute in 2026 and beyond. And I will leave it at that.

Operator: Our next question comes from the line of Bill Plovanic from Canaccord Genuity.

Zachary Day: It’s Zachary on for Bill. Just a quick one on can you provide more details on NOP Connect 2.0? I believe you talked about that in the last earnings call saying it would provide you operational efficiencies. Can you talk about what you’ve seen early on so far?

Waleed Hassanein: Thank you, Zach. We’ve seen a lot. We’ve seen — it’s now at the platform. I would say the vast majority of our cases are now coming through the NOP Connect 2.0, and we’re seeing efficiency in the management. We’re seeing efficiency in the billing. But again, these are early days, early quarters. We are — as we look forward, we see continuous improvement and expansion of our digital ecosystem, this is our — this is going to be our second legacy after the OCS. This digital ecosystem is now fully integrated, fully supporting significant portion of the national transplant volume in the U.S. And our commitment is to continue to support it, continue to expand it to provide the best service for our customers, but the best and the broadest transparency about the status of the organ, the management of the organ as well as the financial billing around TransMedics services.

So we’re very, very encouraged by what we’re seeing, and we’re going to continue to make strategic investments in the digital platform to continue to expand and efficientize our market adoption of OCS.

Operator: Our next question comes from the line of Suraj Kalia from Oppenheimer & Company.

Suraj Kalia: Waleed, Gerardo, Tamer, Nick, excellent quarter. Can you hear me all right, Waleed?

Waleed Hassanein: We can hear you loud and clear, Suraj.

Suraj Kalia: Perfect. So Waleed, forgive me, I’ll just kind of quickly sneak in 2. It seems like you guys gained about 400 bps of liver share in Q4. Why was that? And Waleed, your comments about Part B of ENHANCE, look, the numbers are suggesting you guys are going to exit FY ’26 with approximately 6,300 organs. But if I parlay your clinical trial commentary, it means like you’re not expecting a lot of contribution. You all must have put in some safeguards in place if Paragonics or others threw a wrench in the control arm, could you share some additional color on how do you keep the ball moving in Part B? Gentleman, congrats again.

Waleed Hassanein: Thank you, Suraj. The first part of the question about the liver execution. Listen, this is a testament to the outcomes of the OCS Liver. This is a testament to our clinical leadership of the liver program. This is pure TransMedics execution excellence, period, full stop. So that answer Part 1. Part B, listen, we were not — this is not our first rodeo. We are the company that have supported and completed the largest number of randomized and single-arm trials in the history of organ transplant. None of these cold static storage technologies have ever seen one FDA randomized or non-randomized trial. So we were prepared and we somewhat expected this. We will execute Part B, and it will be, hopefully, a significant success for TransMedics.

It might take a few extra months to navigate through this dynamic, but the bottom line is we’re extremely confident in our strategy, in our design, in our technology. And it says a lot when the control arm is worried about randomizing against OCS. So again, we’re humbled by it. We’re not letting that distract us from the task at hand. And as we committed, we are going to complete the study with the best protocol and the best randomization and with the control arm.

Operator: Our next question comes from the line of Ryan Daniels from William Blair.

Matthew Mardula: This is Matthew Mardula on for Ryan. Congrats on the quarter. And I kind of want to piggyback on that question, but I want to focus on the feedback you have received regarding the heart clinical trial. Given that you have already mentioned doing a handful of heart transplants for the trial, and I know it is still early in the process and ongoing, but I’m curious to hear what transplant surgeons feedback has been on the trial as they progress. And I kind of believe you previously mentioned in meeting all expectations. So I’m curious how that has trended? And is there anything in particular, transplant surgeons have called out regarding the device and maybe express more interest in using the device more in the future.

Waleed Hassanein: If I tell you — if I answer that — it’s a great question, Matt, and I appreciate the question. But if I answer that question, I might as well have seen the results. The trial is just early in the process. It’s good feedback. It speaks to the value of everything we’re trying to execute. I would leave it at that, and I hope to have more meaningful presentations by users of the technology, not by TransMedics, at the ISHLT symposium.

Operator: Our next question comes from the line of David Rescott from Baird.

David Rescott: Great. Congrats on the results here. I wanted to ask — I’ve been hopping around a bit. So I’m not sure if it’s been covered yet, but the CMS’ proposal on some of the OPO changes. There’s obviously a lot of stuff going on just on the OPO front in general. So wondering if you could give us some updated thoughts on the state of affairs, just on the broader OPO environment and whether or not there’s any benefit that you could see or if this is building out some of the thoughts on the OCS service in general and how we should think about this potentially over the longer term?

Waleed Hassanein: Thank you, David. All I could say is organ transplant system in the United States has gone through really significant transformation, hopefully, to the positive. We are supportive of the CMS language, proposed language. We’re supportive of Senator Wyden’s proposed bill to open up the historical closed transplant system to more competition, more transparency, more efficiency, more high standards of execution and metric — performance metrics and we are going to try to play a bigger role to support the vision, the growth in overall transplant in the United States, saving more American lives, delivering cost-effective therapy to patients in need, that’s costing CMS billions and billions of dollars, but also support existing OPOs in their missions. So we look at our role as — it’s a win-win opportunity for TransMedics to play a bigger role, but also support existing OPOs. That’s all I can comment on at the moment.

Operator: Our next question comes from the line of Daniel Markowitz from Evercore ISI.

Daniel Markowitz: Congrats on the quarter. I wanted to ask on the operating margin guide for 2026. It sounds like the gross margins may see some volatility as you expand internationally, and then OpEx as a percent of sales is expected to increase as well to get to that 250 bps of contraction year-on-year. I guess, can you give us the breakout of how much of the margin contraction is coming from some expansion dynamics that weren’t really areas of investment yet in 2025, things like international expansion, the trial spend that are kind of, I guess, onetime in nature. And with so many exciting investment opportunities, what are you looking at that tells you that it will make sense to get the business back to significant margin expansion in 2027 and 2028 as opposed to continuing to bring money into investments.

Gerardo Hernandez: Right. So the big drivers of almost 50% of the incremental investment that we have in 2026 is driven by really 3 elements. One is our — the completion of our clinical programs, OCS ENHANCE and DENOVO. We have — the second part is the completion of our OCS Kidney development. And the third one is the continued development of our OCS Next Generation or 3.0 as we are calling it recently. Those 3 elements account for — I think with more than half of incremental investment. And those, by nature, are transitory. So once we complete those elements, that’s what gives me the confidence that spend should normalize and then we should be able to start capture an operating leverage as we continue to grow. I hope that answers the question.

Operator: Our next question comes from the line of Mike Matson from Needham & Company.

Michael Matson: Yes. So just wanted to get some clarification on your comments on the Part B of the ENHANCE trial around the competitive issue that you called out. So I guess the competitor is static cold storage. So does that — I guess I would have assumed that was just putting the organ on ice, but does that really mean one of these cooler type technologies that’s out there? And then is the competitor sort of trying to prevent their product from being used in the trial or being enrolled in this trial, is that the issue? I guess I don’t completely understand what’s happening there.

Waleed Hassanein: Yes. That’s exactly what’s happening. Not everybody is using ice. Static cold storage boxes using face changing elements are being used. And the makers of that styrofoam box is refusing to randomize their technology to ours.

Michael Matson: And I mean, I guess, how do you plan to kind of work around that or address that.

Waleed Hassanein: Wait and see. Yes. I mean we have to — we had hoped that this won’t be the case, but we are kind of somewhat expecting it. So we have a plan to bypass that. And at the end of the day, it’s the transplant programs that need to take control of the trial and TransMedics will support them with the right control arm that would be acceptable to FDA. Anymore questions?

Operator: Yes, Mr. Hassanein, we have our next question coming from the line of Chris Pasquale from Nephron.

Christopher Pasquale: Waleed, you had a really nice quarter in liver, but heart and lung were both a little bit lower than we expected. Was there anything that you noticed in those segments of the business around the end of the year? In particular, I’m wondering if the trials, which got going a little bit slower than expected might have caused any disruption or if there are any other dynamics there that would sort of explain the deceleration we saw?

Waleed Hassanein: The lung — Chris, as you know — thank you for the question. The lung as you know, it’s a rounding error for us. So really, I wouldn’t read too much into the lung dynamic. I think most — frankly speaking, most of the lung centers were waiting to see the FDA approval to start launching into DENOVO. The heart, I would say, has a similar impact, but also there has been a couple of other activities in trials wrapping up in the second half of 2025 that may have played a role. One is the cold perfusion trial, but that’s wrapped up. And then the other one is a couple of centers decided to do something — that they are doing organically. And that, again, we will address all these dynamics at the ISHLT symposium. As we sit here, we don’t — any of these dynamics, we believe, wholeheartedly, it’s transient in nature.

And all that’s going to get washed with ENHANCE firing up and DENOVO hopefully getting initiated here pretty soon. So we’re looking forward to seeing the impact of ENHANCE Part A and Part B. And hopefully, we can reverse these dynamics throughout ’26 and then to ’27. Anymore questions, operator?

Operator: No, sir. We don’t have any further questions. That concludes our question-and-answer session. I will now pass it back over to our CEO, Waleed Hassanein, for closing remarks.

Waleed Hassanein: Thank you all very much, and looking forward to speaking again to report on Q1 results. Have a wonderful evening, everyone. Thank you.

Operator: The meeting has now concluded. Thank you all for joining. You may now disconnect.