Phase Space AI

Financial Model Notes

TransMedics Group [TMDX]

TransMedics Group [TMDX] — Financial Model Notes

Every figure here is traced to a primary filing. XBRL companyfacts for CIK 0001756262 were pulled fresh on 2026-07-29 and cross-checked against the rendered R-files of the FY2025 10-K (accession 0001193125-26-067032) and the Q1 2026 10-Q (accession 0001193125-26-206453).

Recency assertion. Latest financial filing: Q1 2026 10-Q, filed 2026-05-05, period ending 2026-03-31 (119 days old at analysis date). Latest 8-K: 2026-05-21 (Item 5.07, annual meeting). No filing gap. The GOOGL/Alcon staleness failure mode does not apply.

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1. Quarterly revenue — the full filed series

Derived from the Revenues XBRL tag. Q4 of each year is FY − (Q1+Q2+Q3); every derived Q4 reconciles.

Q3 2025 was a sequential decline (157.4 → 143.8, −8.6%) — the only one since 2021 other than the Q3 2024 dip (114.3 → 108.8).

TTM revenue — the reconciliation the brief demanded

157.370 + 143.823 + 160.764 + 173.933 = 635.890 — matches the screen's revenue_ttm exactly. The TTM is one of the screen's correct inputs. No Q4 was skipped (the MU/SNDK failure mode).

The demonstrated-CAGR windows

635.890 / 296.9 = 2.1417, and 2.1417^(1/3) − 1 = 28.9% — the screen's figure. It applied a three-year exponent to a two-year window. Corrected, the three-year CAGR is 74.8%.

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2. Income statement — filed quarterly

* TTM net income is not economically meaningful — Q4-25 contains the $82.8m tax benefit (§4).

Annual:

FY2023's operating loss includes $27.212m of acquired in-process R&D (the Bridge to Life / Tevosol asset acquisition). Ties: 241.623 − 87.530 − 36.055 − 119.553 − 27.212 = −28.727 ✓.

FY2025 is the peak operating-margin year at 17.9%. TTM is 14.9% and Q1-26 is 7.6%.

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3. The product / service split — the memo's central exhibit

Source: ASC 280 significant-segment-expense tables. FY2025 10-K R81; Q1 2026 10-Q R56. These are the only public disclosure of the split — the revenue-disaggregation footnote is explicitly bundled ("Total OCS transplant revenue includes product and service revenue").

Derivation of TTM: FY2025 − Q1-2025 + Q1-2026. Check: TTM product COGS 85.818 + TTM service COGS 174.333 = 260.151, which equals the sum of the four filed quarterly cost-of-revenue figures (60.781 + 59.248 + 67.350 + 72.772). ✓

The blended-margin arithmetic

0.617 × 78.1% + 0.383 × 28.5% = 59.1% — matches the filed TTM blended gross margin exactly. At a 45% service mix: 0.55 × 78.1% + 0.45 × 28.5% = 55.8%.

From gross margin to a 19% terminal operating margin

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4. The FY2025 tax benefit — quantified

Valuation-allowance roll-forward (10-K R69):

Effective tax rate reconciliation (10-K R66): FY2025 ETR −77.0%, of which "Change in deferred tax asset valuation allowance: −108.3%". Federal valuation-allowance change −$116.448m; state release $31.5m, partially offset by $12.1m from the §382 assessment on Massachusetts NOLs and R&D credits.

Forward tax: Q1-26 effective rate 14.0% against a 21% statutory rate, with management noting a $2.5m increase in income tax expense. The company now reports after tax. Any model rolling FY2025 EPS forward overstates earnings by ~2.4×.

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5. Balance sheet and capital structure

Working-capital quality:

Both improving materially. Q1-2025 AR spiked to $142.026m (89 days) and normalised the following quarter. No AAOI-style receivable build.

Share count — verified against primary filings:

Matches the screen exactly. Single class of common stock (no par value, 150,000,000 authorised) — no dual-class tagging issue. Basic WASO Q1-26 34,384,207; diluted 36,194,023 (FY2025 diluted was 40,540,694 under if-converted, which fell as the stock dropped below the $94.00 conversion price).

EPS cross-check: FY2025 190.291 ÷ 33.993 = $5.598 vs filed basic $5.60 ✓ · Q1-26 7.315 ÷ 34.384 = $0.213 vs filed $0.21 ✓.

Latent dilution: the converts represent 4,893,834 shares (459,996,000 ÷ 1,000 × 10.6388) — +14.2% on the current basic count — in the money above $94.00. Capped calls ($52.1m of premium, May 2023) offset this economically; the cap price was not located in the filings read and no benefit is taken for them anywhere in this memo.

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6. Cash flow and capex

PP&E composition, gross (Q1-26 10-Q, R36):

Aviation is 69.0% of gross PP&E (295.563 + 3.100 + 3.717 = 302.380 of 435.393) — and it was flat in Q1 2026. The Q1 capex re-acceleration to 21.1% of revenue is Somerville land and building, not aircraft.

Answer to the brief's capex question: the aviation fleet buildout suppressed returns in FY2024 (capex 29.4% of revenue, FCF −$80.9m); it ended in FY2025 (FCF +$133.6m); and it has been succeeded by a real-estate commitment roughly three times a year of peak fleet capex.

Depreciation is now a visible margin drag. D&A rose from $6.137m (Q1-25) to $11.864m (Q1-26), +93% YoY on 21% revenue growth, and the SG&A line item "Depreciation and amortisation expense" went from $1.242m to $6.062m. Add $2.073m of finance-lease ROU amortisation and $3.789m of finance-lease interest and the Somerville lease alone cost $5.862m in Q1-26 — 3.4% of revenue, for a building nobody occupies until 2028.

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7. Somerville finance lease — the full mechanics

Classified as a finance lease because the purchase option is one "the Company is reasonably certain to exercise."

Note a filing inconsistency: Item 2 (Properties) of the FY2025 10-K, filed 24 February 2026, describes the same agreement as "an operating lease for premises in Somerville." The Q1 10-Q accounts for it as a finance lease. The 10-Q treatment is plainly correct under ASC 842 given a purchase option reasonably certain of exercise; the discrepancy is recorded because the company has an open ICFR material weakness.

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8. Internal control — material weakness, unremediated

FY2025 10-K, Item 9A, verbatim in relevant part:

"The Company did not design and maintain effective controls over inventory movement within its manufacturing network … [resulting in immaterial misstatements of] product revenue, selling, general and administrative expenses and research and development expenses, in the interim consolidated financial statements for the quarterly period ended March 31, 2025 and the quarterly and year-to-date periods ended March 31, 2024, June 30, 2024 and September 30, 2024. Additionally, the material weakness could result in a misstatement of the aforementioned accounts …"

Why it matters to this memo specifically: the affected accounts include cost of net product revenue — the exact denominator of the 78.1% product gross margin that is the memo's central exhibit. The exhibit stands because it is the only public source, but it carries a company-disclosed control risk, and that is why the valuation is run across a terminal-margin range rather than at a point.

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9. Revenue by organ and geography — the concentration

• Liver = 76.1% of FY2025 revenue. US = 96.6% (10-K: revenue from outside the US was 3%, 3% and 6% in FY2025/24/23).
• Heart US declined YoY in Q1-26 after +15.7% in FY2025.
• Lung US has fallen for two consecutive years and is now $2.2m a quarter.
• No customer >10% of revenue or receivables in any of FY2023/24/25.

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10. Own EV/Sales multiple history — the 12-month-target anchor

Computed from filed quarter-end balance sheets (cash less converts, term loan and finance lease) and quarter-end closing prices, against TTM revenue at each date. Basic weighted-average shares; converts treated as debt, not shares, to avoid double-counting.

Post-regime sub-sample (bold rows above, Q4-2024 → Q1-2026, n=6): min 5.05x · median 6.44x · max 8.76x. Current 4.77x is below its minimum. The full history is declared UNIDENTIFIED as a target anchor (regime change: no owned logistics before Aug-2023, no converts before May-2023, growth 50–150% versus 21% now); the sub-sample is what the 12-month target uses. See TMDX_Valuation.md §3.2.

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11. Growth-matched exit-multiple comparator set

Drawn from the same scan universe, filtered to 8–22% demonstrated growth and positive operating margin, then narrowed to medical devices and diagnostics. Named, so it can be audited.

n=10 · median 25.9x · p25 21.3x · p75 35.2x · min 16.5x.

The screen's exit_multiple of 23.3x sits between p25 and median. It is the one screen valuation input that survives scrutiny, and it is used as the base.

Caveat, stated: not one member of this set carries a 38%-of-revenue charter-aviation segment or a $344m finance-lease obligation. There is no true comparable for TransMedics.

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12. Mention frequency — full series, all 31 earnings releases

Corpus: every 8-K Item 2.02 exhibit filed by CIK 0001756262, 2019-06-11 → 2026-05-05, retrieved from EDGAR. Raw occurrence counts, case-insensitive.

Search patterns: NOP = \bNOP\b|National OCS Program; logistics = \blogistic; aircraft/aviation = \baircraft\b|\baviation\b|\bfleet\b; clinical trial = clinical trial|ENHANCE|DENOVO|\bIDE\b; intl/Europe = \bEurope\b|\binternational\b|\bEU\b.

Four signals, in order of what they are worth:

1. "Operating margin": 0 in every release for seven years, then 7 in May 2026 — the quarter it fell from 19.1% to 7.6%. The same release introduces "adjusted operating margin" as a new non-GAAP metric. A term entering the disclosure vocabulary at the moment it deteriorates, accompanied by an adjusted version of itself, is the pattern this metric exists to detect.
2. The aviation pivot is dateable to a single release. 0 through May 2023 → 3 in August 2023 (the Summit close) → 6–11 since. The business model change is visible in the language before it is visible in the margin.
3. "NOP" is the durable frame — 0 (2019–20) → 3–7 (2021–23) → 10–13 (2025–26). TransMedics describes itself as a programme, not a device.
4. "Kidney" and "CHOPS" arrive exactly as growth decelerates — kidney first appears 2026-02-24, CHOPS 2026-05-05. Both are pipeline; neither is revenue inside 12 months.

The release itself has grown from ~1,600 words (2019) to 2,995 (May 2026) — the longest in the series, on the weakest operating result.

Limitation, stated: this is a press-release corpus, not a conference-call transcript corpus. Transcripts were not available to this run. A narrower corpus is disclosed as narrower; it is not padded with paraphrase.

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13. Data sources and reproduction