Company Profile
Founding of the company
Dr. Waleed Hassanein, founder, president and CEO of TransMedics (ticker: TMDX), founded TransMedics in 1998 to revolutionize organ transplantation therapy for the treatment of end-stage lung, heart and liver failure.
Importance of this company
The company is focused on its innovative Organ Care System (OCS), which addresses key limitations of traditional refrigerated organ preservation methods by maintaining organs in a near-physiological state. This technology has had a major impact on the field of organ transplantation, leading to better outcomes in the treatment of end-stage organ failure.
Business
TransMedics is committed to changing the standard of care—increasing organ utilization, improving patient outcomes, and reducing transplant costs. The Organ Care System (OCS) platform is a revolutionary technology used to preserve organs for the treatment of end-stage heart, lung and liver failure.
Main business and products
Market demand
The heart and lungs must be transplanted within about four hours of being removed from the donor. The liver can be stored for 12-18 hours; the pancreas can be stored for 8-12 hours; the intestines can be stored for about 8 hours; and the kidneys can be stored for 24-48 hours.
Product
The TransMedics Organ Care System (OCS) Heart System is designed to preserve donor hearts prior to transplantation. The system includes: A portable housing that heats the donor heart and provides it with oxygen and nutrients.
In addition to the heart, TransMedics currently uses similar technology to launch similar products for the lungs and liver.
OCS
TransMedics’ OCS Console is the only FDA-cleared portable normothermic organ perfusion system available in three models: OCS Heart, OCS Lung, and OCS Liver.
Rather than simply preserving organs in what is essentially an ice box (which is the current standard), OCS maintains organs in a near physiological state outside the body by perfusing them with nutrient-rich, oxygenated blood/solution. thereby maintaining organ function.
This innovative approach extends organ viability, allows organs to be transported longer distances and expands the donor organ pool. OCS also enables immediate organ monitoring after perfusion, allowing the viability of more marginal organs to be assessed and then used for transplantation.
Product billing
As of 2019, the TransMedics Organ Care System costs approximately $40,000 per use.
NOP plan
TransMedics’ NOP (National Organ Care System Program) program is expanding the scope and capabilities of transplant programs across the United States to increase transplant volume to help patients in need.
Competitive landscape
The only FDA-approved device for multiple organs
TransMedics’ Organ Care System (OCS) is the only FDA-approved system for preserving “multiple organs.” Revenues for the heart and lungs are rising, but those organs don’t have the same growth potential as the liver. In 2024, liver transplantation will account for 70% of TransMedics’ total revenue. TransMedics is also the only solid organ transport device manufacturer with a fleet of jets dedicated to transporting donated organs.
Significant Acquisitions
In November 2023, TransMedics completed the acquisition of Summit Aviation, adding aviation services to NOP’s offerings and driving an immediate increase of $2.1 million in transplant-related revenue in the third quarter of 2023.
Market
During TransMedics’ 2023 fourth quarter earnings call, founder and CEO Waleed Hassanein revealed that the OCS platform accounts for 17% of liver transplants in the United States, about 16% of heart transplants, and only 4% of lung transplants.
Needham noted that the organ transplant market is worth more than $8 billion and that current penetration is less than 6%.
Potential market
According to 2022 data from the Global Donation and Transplantation Observatory, the United States accounts for 25% of the global liver transplant volume, 46% of the global heart transplant volume, and 40% of the global lung transplant volume. Assuming these ratios remain relatively stable through 2023, we can use our U.S. forecasts to estimate TransMedics’ global transplant-related revenue opportunity.
The monopoly is broken
The past rivals
TransMedics’ main competitors are Abiomed, Intercept Pharmaceuticals and Cubist Pharmaceuticals, among others in US.
Regarding Abiomed, please see my other post for a detailed discussion of “Abiomed acquired by Johnson & Johnson“
Ever closed to monopoly
TransMedics is one of the leading companies trying to solve this problem. With its Organ Care System (OCS), TransMedics fundamentally changes the way organs are procured, transported and transplanted. TransMedics has a near-monopoly in a largely untapped market and is making strides to fully capture this opportunity.
Reasons for the revenue slowdown
A few years ago, there was a lot of low-hanging fruit in the area of solid organ storage and delivery. Unfortunately for TransMedics’ investors, it’s not the only company with a next-generation organ storage device that has received FDA approval.
Paragonix makes ice-free refrigeration equipment for the heart, lungs, kidneys, etc. Its equipment is synced with digital services that clients or internal teams of organ transport experts can use to coordinate “logistics,” while TransMedics uses its own dedicated aircraft. This is not a preferred approach, but it is an alternative option that could limit TransMedics’ pricing power.
In February 2025, UK-based OrganOx raised $142 million to expand the market for its OrganOx metra device. The OrganOx, like TransMedics’ device, is a normothermic robotic care system approved by the FDA for preserving livers donated after DBD or DCD.
Outside the U.S., where OrganOx has a broader presence, liver accounts for about 1% of TransMedics Group sales. If OrganOx uses its newly raised cash to compete as aggressively in the U.S. as it does overseas, TransMedics could see a significant revenue contraction.
Operating performance
2024 Fourth Quarter Results
2024 Q4 Results are below:
- GAAP EPS of $0.19.
- Revenue of $121.62 million, up 50% year-over-year.
- Net profit was US$6.9 million, an annual growth of 43.44%.
How does the market react? The next day, TransMedics’ stock price soared 5.82%.
Stock pull back from mid-2024 high
During the six months from late April to October 2024, TransMedics’ stock price experienced a sharp rise and then fell back, mainly because the second quarter financial report of 2024 was too impressive. The revenue growth rate in the past few quarters has soared by more than 100% due to the company’s acquisition of Summit Aviation, which has driven the market crazy.
When the effect of the acquisition of Summit Aviation decreases, the revenue growth rate will fall to 64% in the second quarter of 2024. At the end of October 2024, the company’s stock price began to fall from its peak.
However, TransMedics’ stock price has risen by 172.02% since the company went public as of March 7, 2025. The current share price is $67.46.
Market Valuation
Despite the company’s promising prospects, the stock is still a bit expensive at present, with a high price-to-earnings ratio of 67.
But in the long run, TransMedics still looks like a long-term winner. It is worthy of investors’ continued observation, and it is not recommended to buy rashly.
Famous Shareholders
Vanguard Group
On September 30, 2024, Vanguard Group, the world’s second largest company known for its low-cost mutual funds and ETFs, acquired a total of 1,068,659 shares of TransMedics, which increased Vanguard Group’s total holdings in the company to 3,595,059 shares, demonstrating significant recognition of TransMedics’ market potential and innovation in organ transplantation technology.
Gotham Asset Management
Gotham Asset Management, founded by famed value investor Joel Greenblatt, also holds a large stake in TransMedics, a sign that major Wall Street investors are interested in the company. have a strong interest in its growth potential. Especially when the company’s technology further gains market acceptance and drives revenue growth in the organ transplant industry, they are all optimistic about the company’s future, and continued investment in TransMedics may generate substantial returns in the future.
Conclusion
TransMedics is a company revolutionizing an industry in desperate need of disruption. Their OCS technology is dramatically expanding the availability of viable donor organs, potentially saving countless lives. OCS adoption has shown increasing promise, and I expect this trend to continue as the technology improves.
It is believed that the real driver of future growth will come from TransMedics’ NOP and logistics services capabilities, which will significantly increase the value the company provides to transplant facilities, thereby increasing OCS adoption and creating additional revenue streams.
Buy the stock at current price levels simply because TransMedics stock looks like a long-term holding thanks to its meaningful market opportunity, near-monopoly position in its niche, and economic moat. But a bear market correction of about 20% for the stock would seem more likely to make investors seriously consider the dip.
Negative report
Scorpion Capital’s short report
On January 10, 2025, after Scorpion Capital released a short report, TransMedics’ stock price fell sharply, falling by more than 15%. The report accused the company of engaging in unethical practices under the guise of a medical device company, including “mafia-style” extortion and an organ trafficking scheme.
The report further alleges that TransMedics engaged in kickbacks, billing fraud, unreported device malfunctions, and widespread off-label abuse of the Organ Care System (OCS).
In response to these allegations, Scorpion Capital announced plans to file a citizen petition with the FDA requesting a stay of premarket approval (PMA) of TransMedics OCS. They also plan to send an open letter to members of Congress investigating abuses in the U.S. organ transplant system.
Influenced by this short-selling report, TransMedics Group’s stock price plummeted by more than 18% in two days.
TransMedics response
On January 13, 2025, TransMedics issued the following statement regarding the Scorpion Capital short report:
We firmly believe that the claims made in the Scorpion Capital report are without merit and are primarily intended to manipulate the market for financial gain. The report fails to accurately reflect TransMedics’ business, technology, diverse culture, and unwavering commitment to providing superior products and services to meet the needs of the global transplant community.
Conclusion
TransMedics is a company that is revolutionizing an industry that is in dire need of disruption. Their OCS technology is greatly expanding the availability of viable donor organs, saving countless lives. The adoption of OCS has shown increasing promise, and I expect this trend to continue as the technology improves.
We believe the real driver of future growth will come from TransMedics’ capabilities in NOP and logistics services, which will significantly increase the value the company provides to transplant facilities, thereby increasing OCS adoption and creating additional revenue streams.
TransMedics stock looks like a good buy for the long term. But if you are really happy with the stock’s decline, it seems more likely that investors will seriously consider buying on the dip.
I am the author of the original text, the essence of this story was originally featured on Smart Magazine, Issue of April 2025
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