TransMedics Group, Inc.

Total revenue was approximately $190 million, up approximately 21% year over year and approximately 9% sequentially. U.S. transplant revenue was approximately $184 million, up 21% year over year and 10% sequentially; product revenue was approximately $111 million, up 16% year over year and 3% sequentially; service revenue was approximately $79 million, up 29% year over year and 19% sequentially. Total gross margin was 59.6%, down approximately 180 basis points year over year and up approximately 140 basis points sequentially. Adjusted income from operations was approximately $25.8 million, adjusted operating margin was 13.6%, adjusted net income was $16.2 million, and adjusted diluted EPS was $0.44. The company ended the quarter with approximately $473 million in cash and cash equivalents and approximately $18 million in restricted cash. For 2026, management raised the low end of revenue guidance to $737 million-$757 million, representing 22% to 25% growth, excluding any revenue contribution from PAD Aviation and assuming no meaningful revenue from ENHANCE Part B or DENOVO. For the second half of 2026, management expects gross margin excluding PAD Aviation of approximately 59%, and full-year adjusted operating margin excluding PAD Aviation of approximately 12.5% to 14%.

Waleed Hassanein said the quarter showed TransMedics’ platform is widening its moat across OCS, logistics, digital workflow and clinical services, and he repeatedly framed the company as a growth-first business. He highlighted four initiatives underpinning the long-term plan: heart/lung expansion via ENHANCE Part B and DENOVO, kidney development, Europe expansion through PAD Aviation and NOP/logistics, and Gen 3.0 to improve scale and operating leverage. His tone was confident but deliberate, emphasizing that the company will keep funding these programs over the next 18 to 24 months even if that pressures near-term margins.

Gerardo Hernandez said the quarter delivered record revenue, sequential gross margin improvement and materially higher service profitability, with service margin rising to 35% from about 27% in Q1. He attributed the higher adjusted operating expenses of $87 million to investment in OCS Kidney, next-gen OCS, ENHANCE/DENOVO, headquarters and the Mirandola manufacturing facility, while noting that excluding those investments operating expenses declined sequentially. He also noted $7.2 million of interest expense in the quarter, including about $3.8 million tied to the new Somerville headquarters lease, and reiterated that the company is maintaining a strong liquidity position with $473 million in cash.

Analysts focused on why service revenue outpaced product revenue, the status of ENHANCE Part B and DENOVO, the pace of dry runs, and how to model PAD Aviation and 2027 margins. Management said it did not see an increase in dry runs, instead citing market share gains in logistics, better fleet efficiency, pricing adjustments and new centers as drivers of service growth. On clinical programs, Waleed said CHOPS 510(k) is likely a first-half 2027 topic, ENHANCE Part A should finish before year-end, and ENHANCE Part B and DENOVO have only seen a handful of cases so far pending FDA approvals and site activation. He also clarified that PAD Aviation is a Germany-based strategic foothold for Europe, not an immediate Germany growth story, and said more detail on PAD’s P&L should come in Q3.