TransMedics Raises Outlook as Service Revenue Outpaces Products
Second-quarter revenue reached $189.9 million as service gained a larger share of sales.
TransMedics Group (TMDX), the organ-transplant technology company, raised the low end of its annual revenue outlook after second-quarter sales rose 21% from a year earlier.
Growth held at 21% for a second consecutive quarter, down from 32% in each of the two preceding quarters. Sequential growth accelerated to 9.2% from 8.2% in the first quarter, signaling firmer momentum within the slower year-over-year trajectory.
Revenue increased from $157.4 million a year earlier and $173.9 million in the first quarter. Net income fell to $14.7 million, or $0.41 a diluted share, from $34.9 million, or $0.92 a share, a year earlier. Earnings more than doubled sequentially from $7.3 million, or $0.20 a share.
Service revenue rose 29% to $78.8 million, outpacing product revenue growth of 16%. Service accounted for about 41.5% of total revenue, up from 38.9% a year earlier, as TransMedics expanded its role in organ-transport logistics.
The richer service mix weighed on profitability even as quarterly margins improved. Gross margin rose to 60% from 58% in each of the previous two quarters, remaining one percentage point below the year-earlier level. Annual compression was due to the service mix and temporary product costs, partly offset by logistics efficiencies.
Operating income declined 35% from a year earlier to $23.7 million as operating expenses climbed to $89.5 million. Research, development and clinical-trial spending nearly doubled to $31.6 million, reflecting investment in OCS Kidney, Gen 3.0 and clinical programs. Adjusted operating income was $25.8 million after exclusions that included $1.7 million of transaction-related costs and $0.2 million of ERP implementation costs.
TransMedics now expects 2026 revenue of $737 million to $757 million, lifting the low end by $10 million and implying growth of about 22% to 25%. The outlook excludes PAD Aviation revenue and incremental revenue from the ENHANCE Part B and DENOVO trials.
The company completed its strategic investment in PAD Aviation on July 1, advancing plans for a dedicated European organ-transplant air-logistics network. Cash ended June at $472.7 million, up from March and below the year-end balance, leaving TransMedics to fund that expansion alongside its heavier clinical-development program.