What TMDX does!

I’m writing this in response to a subthread on the Sentinel Thread about how AI did, or didn’t, explain correctly what TMDX does, and a lot of confusion by the posters about what TMDX actually does do. I’m starting a new thread so that anyone interested in TMDX will be aware of it.

This is all paraphrased from an excellent post by WSM007, back in December, so I’m amazed that there is so much misunderstanding.

What they do

Transmedics solves a big problem on the supply side of the organ transplant supply chain. There is a huge demand for organs, which currently cannot be met due to inefficiencies in the supply side which leads to most donated organs being thrown away. Transmedics solves this with new technology and a better supply chain for the process.

Transmedics is replacing cold storage of donated organs (organs on ice) with their OCS product as the standard of care . Their system keeps organs warm and artificially perfused (=warm blood/fluid being pumped through the organ to keep it “alive”). This results in organs staying relatively healthy and usable for much longer than keeping them on ice.

In addition, most donated hearts have historically been thrown away without even an attempt to get them transplanted. This is because most people die from heart stoppage and not from brain death, and historically only/mostly organs harvested from people dying from brain death (and hence with their heart still beating) could be used. Organs die quickly if not properly perfused and also relatively quickly when on ice. Because TMDX puts the organs on “life support”, even organs deemed not feasible in the past due to the way the person died, are now considered feasible for transplantation, resulting in an expansion of the market.

TMDX also provide the logistical service of distributing the organs from the donor to the transplanting hospital, thereby alleviating this difficult and non-core logistical problem for the transplanting hospital.

In addition, doctors can now inspect organs pre-transplantation to see if they are suitable and and also treat the organs pre-transplantation with hormones etc. that increase the success of transplants.

Lastly, because organs can now be “kept alive” safely for longer, doctors and the transplanting team at the hospitals doing the transplants now no longer need to rush in to do a transplant whenever someone with the right donor organ dies (i.e. unscheduled, middle of the night), but can schedule the procedure during the day and when there is operating room capacity.

Taken together, these improvements are huge as it solves problems and reduces costs for everyone in the chain (except the donors, of course…): recipients benefit as there is now more usable organ supply and the outcomes are better, the medical teams doing the transplants now can do a procedure during the day and don’t need to get up and rush to the hospital at 3am, OR’s benefit as they can schedule the procedures and hence do more of them (and hence make more money), and health care insurers benefit as doing a transplant is cheaper than keeping patients alive with alternative care, hence doing more transplants is in their interest.

TMDX has in the last year or so gotten regulatory approval for three organs: heart, lung, liver. And they are working on providing kidney in the future.

And kidney transplants is a big deal, as there are many, many more patients in need of a kidney than all 3 other organs combined:


Jonah Lupton did an awesome DEEEEEEP dive on TMDX 2 years ago. I don’t think the article is behind a paywall anymore, I think his are only behind a paywall for the first couple months or so.


Here are my notes from the TMDX earnings call that concluded a moment ago.

TMDX Q4 FY22 Analyst Q/A

Waleed Hassanein, CEO
Stephen Gordon, CFO

Here are the financial highlights published by TMDX, followed by my notes from the earnings call. Sequential revenue growth was 22% as noted during the earnings call.

Recent Highlights

  • Total revenue of $31.4 million in the fourth quarter of 2022, a 225% increase compared to the fourth quarter of 2021
  • Total revenue of $93.5 million in the full year of 2022, a 209% increase compared to the full year of 2021
  • Appointed Nick Corcoran as Senior Vice President of Supply Chain and Operations in January 2023

Gross margin for the fourth quarter of 2022 was 66% compared to 72% in the fourth quarter of 2021.

Net loss for the fourth quarter of 2022 was $6.7 million compared to $12.7 million in the fourth quarter of 2021.

Net loss for the full year of 2022 was $36.2 million compared to $44.2 million in the full year of 2021.

2023 Financial Outlook
TransMedics expects total revenue for full-year 2023 to be in the range of $138 million to $145 million, which represents 48% to 55% growth compared to the company’s prior year revenue.

-My Notes-
As soon as TMDX can address their supply/inventory and capacity constraints, which they expect will take place in the second half of 2023, then TMDX can begin to scale their business. They expect to accomplish their growth by:
1-Continue to add new liver, heart and lung transplants
2-Expand NOP infrastructure by expanding new launch points/locations
3-Developing a best in class air and ground organ transportation, which is critical to expanding their business. This will achieve a significant catalyst to their growth.
4-By investing in next gen OCS and organ transplants, to distance themselves from competitors.
Strongly believe they are creating an infrastructure to deliver the majority of the transplants that take place in the US. Grow their total addressable market.
Confident in their strategy and are laser focused on expanding their business.
They foresee this issue of inventory/scaling to continue until the end of Q2, at which time they expect their inventory .
Guidance for FY 2023 is $138 to $145 million in revenue.
22% sequential revenue increase and 225% year-over-year.
16 heart
11 liver
1 lung
Service revenue portion, which supports their core business was 20% of overall revenue.
Believe they’re in the early stages of a significant opportunity.
With OCS and NOP, TMDX is well-positioned for the future growth of the organization.

Q Please provide guidance by organ.
A Don’t comment by organ, rather, just overall revenue.

Q Durability of growth
A Demand was in early innings in 2022, and they are creating the infrastructure to meet the growing demand. Until they’re out of the supply capacity issue, they don’t see things expanding faster than by the end of the 2nd quarter this year.

Q Quantify impact of top line. How should we think about upside?
A Plan for Q1 or Q2 growth to be flat, until end of Q2, when they anticipate being past the supply capacity issue.

Q SG&A, ramp in 2023 and impact on margin?
A Slight sequential improvement throughout the year, don’t see supply constraints changing drastically.

Q Re: Growth, you mentioned earlier last year that OCS was spread between the 3 buckets you described in your remarks.
A Growing the overall transplant market, not just by DCD, rather also seeing DBD and OCS and using NOP. CEO was trying to highlight that OCS is being done across the gambit.

Q Matching donors with recipients? Stacking of organ transplant procedures and where you see these two buckets relative to contributing to growth?
A Stacking is their team’s process. Rapid deployment of NOP is just scratching the surface and we’re in the very early innings. Expect this to grow. Seeing OPO’s coming to them to do more of this. Evaluating this with a laser focus on expanding and growing while maintaining highest clinical quality.

Q Impact on supply in Q4? How many cases did you lose? How much impact did this have on adoption?
A Of course it impacted initiation and they explained why they could not do this when that was the NOPquantify the magnitude, and had 1-2 weeks of shortages and 2-3 weeks of shortages that impacted both liver and heart.

Q From mfg perspective, added a 2nd shift.
A By end of the 2nd quarter until incremental capacity comes on board at the 2nd half of the year. This is all going to change once they bring another cleanroom on line.

Q NOP pricing-do you have flexibility to increase the NOP pricing? How long of a process is this and how does it work?
A NOP is nothing but a tool, and they cannot overprice it. NOP prices do not include transportation costs. In the future they will reevaluate. Not expecting changes in the short term. Many of the contracts for transportation are middlemen and don’t even own a plane. More wanting to create the Amazon or FEDEX transportation system to drive costs down and improve service.

Q Ended the year with double the guide a year ago. What is the level of conservatism in the guide?
A Last year was the first year of commercialization. We have a lot more history and information with which we can provide our guide. We have to be conservative, at least in the 1st half of this year until they get past the supply chain issues. They have better visibility now in 2023. Have to be cautious and assume it will take the full year to update the lung numbers. Guide toward patients and long-term price. Will not have impact of this until after Q2 of this year.



Just a few perspectives:

  1. TMDX grew revenues 200%+ in 2022… and in their 4Q report presented in February 2022 LAST year, they guided to 62%-82% growth for 2022. Conclusion: They are world class sandbaggers.

  2. As I mentioned in an earlier TMDX post, they’re rapidly swinging toward profitability. Be patient.

  3. My last medical device investment was Intuitive Surgical, the daVinci robot people. Once upon a time, growth was great, profits kept rising… but the share price was stagnant for a whole YEAR. Then… the share price exploded. Conclusion: You folks probably don’t need to be reminded… but here is a reminder: Be patient. These guys are in a transformative biz… and they’re pretty close to being the only game in town. Should be worth the patience.

Disclosure: Maybe I shouldn’t have so much allocated, I was at about 20% allocation before the earnings report.

He is no fool who gives what he cannot keep to gain what he cannot lose.