TMDX Stock Gains Post Q1 Earnings & Revenue Beat, Gross Margin Down

TransMedics Group, Inc. TMDX delivered earnings per share (EPS) of 70 cents in the first quarter of 2025, which surged 100% year over year. The figure surpassed the Zacks Consensus Estimate by 141.4%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

TMDX’s Revenues in Detail

TransMedics registered revenues of $143.5 million in the first quarter, up 48.2% year over year. The figure surpassed the Zacks Consensus Estimate by 16.2%.

Per management, the uptick resulted from the increase in utilization of the Organ Care System (OCS), primarily in liver and heart through the National OCS Program (NOP), and additional revenues generated by the addition of TransMedics logistics services.

During the reported quarter, TMDX was able to cover 78% of its NOP missions requiring air transport compared with 75% in the fourth quarter of 2024.

Shares of this company gained nearly 14.5% in yesterday’s after-hours trading.

TransMedics’ Segment Details

TMDX derives revenues via two sources — Net product revenue and Service revenue.

In the first quarter of 2025, Net product revenues totaled $88.2 million, up 43.9% year over year. Growth was driven by increased organ utilization in liver and continued OCS adoption across both liver and heart.

Service revenues totaled $55.3 million, up 55.7% year over year, driven primarily by logistics.

Transplant Logistics services revenues for first-quarter 2025 were $26.1 million, up 80% year over year. This resulted from the continued expansion and utilization of TransMedics’ aviation fleet.

TransMedics Group, Inc. Price, Consensus and EPS Surprise

TransMedics Group, Inc. price-consensus-eps-surprise-chart | TransMedics Group, Inc. Quote

TMDX’s Margin Trend

In the quarter under review, TransMedics’ gross profit increased 47.1% year over year to $88.2 million. However, the gross margin contracted 45 basis points (bps) to 61.5%.

Selling, general and administrative expenses rose 20.6% year over year to $43.6 million. Research, development and clinical trials expenses surged 50.8% year over year to $17.2 million. Total operating expenses of $60.8 million increased 27.9% year over year.

Operating profit totaled $27.4 million, reflecting a 120.9% jump from the prior-year quarter. The operating margin in the first quarter expanded 629 bps to 19.1%.

TransMedics’ Financial Position

TransMedics exited first-quarter 2025 with cash of $310.1 million compared with $336.7 million at 2024-end. Total long-term debt at the end of first-quarter 2025 was $59.4 million compared with $59.4 million at 2024-end.

Net cash used in operating activities at the end of first-quarter 2025 was $2.9 million compared with $3.4 million a year ago.

TMDX’s Guidance

TransMedics has raised its revenue outlook for 2025.

For the full year, the company now expects revenues in the range of $565 million-$585 million (reflecting growth of 30% at the midpoint from the comparable 2024 figures). This is up from the prior outlook of $530 million to $552 million, reflecting growth of 20-25% from the comparable 2024 figures. The Zacks Consensus Estimate is pegged at $543.9 million.

Our Take on TransMedics

TransMedics exited first-quarter 2025 with better-than-expected results. The solid top and bottom-line performances and the uptick in Transplant Logistics services revenues were encouraging. Strength in both revenue sources was also impressive. The expansion of the operating margin bodes well.

Management confirmed that TransMedics plans to open a new disposables manufacturing facility in Mirandola, Italy. This will likely provide an alternate disposable manufacturing source to ensure business continuity to its Andover facility. TMDX is also planning to launch two new heart and lung clinical programs later in the year to further catalyze its growth in 2026 and beyond. These look promising for the stock.

However, TransMedics’ gross margin contraction does not bode well.

TMDX’s Zacks Rank and Key Picks

TransMedics currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are CVS Health Corporation CVS, Integer Holdings Corporation ITGR and Boston Scientific Corporation BSX.

CVS Health, carrying a Zacks Rank of 2 (Buy), reported first-quarter 2025 adjusted EPS of $2.25, beating the Zacks Consensus Estimate by 31.6%. Revenues of $94.59 billion outpaced the consensus mark by 1.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CVS Health has a long-term estimated growth rate of 11.4%. CVS’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 18.1%.

Integer Holdings reported first-quarter 2025 adjusted EPS of $1.31, beating the Zacks Consensus Estimate by 3.2%. Revenues of $437.4 million surpassed the Zacks Consensus Estimate by 1.3%. It currently sports a Zacks Rank #1.

Integer Holdings has a long-term estimated growth rate of 18.4%. ITGR’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 2.8%.

Boston Scientific reported first-quarter 2025 adjusted EPS of 75 cents, beating the Zacks Consensus Estimate by 11.9%. Revenues of $4.66 billion surpassed the Zacks Consensus Estimate by 2.3%. It currently carries a Zacks Rank #2.

Boston Scientific has a long-term estimated growth rate of 13.3%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.8%.

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This article originally published on Zacks Investment Research (zacks.com).

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