TransMedics’ Q1 2026 earnings call laid out a clear playbook: invest heavily in next-generation organ perfusion tech, expand logistics and clinical programs, and push international adoption while managing near-term margin pressure. Management highlighted revenue growth, cash runway, and a multi-year roadmap — from CHOPS to OCS Kidney and Gen 3.0 upgrades — all while reiterating full-year guidance and the bets that will drive adoption across heart, lung, liver and kidney transplantation.
Waleed Hassanein: Thank you so much, Hannah. Good afternoon, everyone, and welcome to TransMedics First Quarter 2026 Earnings Call. As always, joining me today is Gerardo Hernandez, our Chief Financial Officer. Our vision has been bold — our vision has always been bold and growth-oriented. Since inception, TransMedics has been relentless in our pursuit to transform organ transplant therapy by increasing utilization of donor organs and improving the clinical outcomes of transplant patients throughout — through technology and service innovation and by disrupting the status quo. To accomplish this, we’ve been deliberate yet aggressive in our strategic investment in growth initiatives.
The company reported $174 million in revenue for Q1, up about 21% year over year, and emphasized that the quarter reflects the start of a heavier investment phase. Management pointed to 22% U.S. product revenue growth and a healthy services lift from the integrated National OPO Program, which underpins their logistics-led expansion thesis. They closed the quarter with roughly $462 million in cash to fund R&D, international rollout and NOP expansion.
TransMedics outlined four main growth pillars. First, OCS Kidney on the Gen 3.0 platform aims to unlock the largest transplant market segment. Second, parallel Gen 3.0 upgrades for heart, lung and liver are intended to reduce part counts and improve manufacturability. Third, CHOPS, a controlled hypothermic device, is positioned to address short-duration cold storage cases and to act as a regulated control in clinical trials. Fourth, European expansion includes NOP hubs and an aviation partnership to replicate the U.S. logistics model.
Gerardo Hernandez: Thank you, Waleed. Good afternoon, everybody. I am pleased to share TransMedics first quarter 2026 results. Please note that a supplemental slide presentation with additional details is available in the Investors section of our website. As Waleed highlighted, we started 2026 with solid execution and continued momentum across our platform. Importantly, consistent with the priorities we highlighted on our previous earnings call and throughout 2025, Q1 also marked the beginning of an accelerated phase of investment and execution for TransMedics. We are advancing multiple initiatives designed to support future growth, strengthen our operating capabilities and position us to capture the opportunities ahead.
On margins and spend, management was frank: adjusted operating profit in Q1 was about $18 million and adjusted operating expenses rose materially as R&D and SG&A investments accelerated. Gross margin sat near 58%, pressured by inventory and one-time items tied to clinical program readiness and NOP investments. The company expects some near-term margin pressure but reiterated a long-term gross margin target around 60 percent as scale and Gen 3 efficiencies kick in.
Clinical execution remains central. Management said ENHANCE and DENOVO still matter for heart and lung adoption, and CHOPS is intended to remove enrollment friction by providing a standardized, regulated cold-storage arm. That dual approach is meant to broaden product fit: machine perfusion for higher-risk, longer transports and a validated cold storage device for short runs, both under TransMedics’ clinical and logistics umbrella.
Waleed Hassanein: Thank you, Bill. I want to clarify one thing right off the gate. CHOPS is not cannibalizing anything. CHOPS is tackling a segment of the market, specifically DBD hearts that are like 2 hours of preservation that we’re not being used at today. So that CHOPS is not cannibalizing. It’s additive to our market share, and it’s specifically focused on these short transport runs that are currently going on static cold storage. So that’s number one.
Timing for regulatory and trial steps is tight but defined. Management plans to file an IDE supplement imminently for CHOPS and expects approval and implementation by early Q3, which would clear the control arm path for the ENHANCE and DENOVO trials. The kidney Gen 3.0 device is slated for a public reveal with the potential to file a U.S. IDE in early 2027, setting up a new commercial opportunity for a vastly larger organ market.
Waleed Hassanein: Yes. Thank you, Allen. As I stated in the prepared remarks that we plan to file the IDE supplement within the next couple of weeks, and we hope to be in approval stage and implementation stage by early Q3.
International expansion is concrete, not aspirational. The company is building NOP hubs in Italy and Benelux and announced a deal to partner with a European charter operator that flies Embraer Phenom 300Es, mirroring their U.S. fleet. Management believes a dedicated European logistics network can meaningfully increase OCS adoption and nearly double the addressable market if executed well.
Operationally, TransMedics is doubling down on its aviation fleet and logistics play to drive higher service revenue and case throughput. Fuel volatility and operating costs were discussed, but management emphasized the network’s ability to optimize hub placement and recover costs via service models. They reiterated confidence in maintaining aircraft coverage and in improving utilization through shift and routing changes.
Guidance for 2026 was reaffirmed at $727 million to $757 million in revenue, representing roughly 20% to 25% growth year over year. Management signaled they may revisit guidance as ENHANCE and DENOVO enrollment ramps and as macro and transplant market dynamics settle, yet the company remains committed to funding the initiatives that should unlock long-term growth and margin expansion.
Waleed Hassanein: Thank you all very much for spending your afternoon with us. We’re looking forward to one-on-one calls. I appreciate it. Have a great evening, everyone.
Operator: This concludes today’s conference call. You may now disconnect.
