TransMedics Group, Inc. (TMDX) experienced a dramatic 30% drop in its stock price during early morning trading, despite reporting impressive revenue growth. The company announced total revenue of $108.8 million for Q3 2024, representing a remarkable 64% increase compared to the same quarter last year. U.S. revenue was particularly strong, reaching $104.9 million, a 76% increase year-over-year.
In addition, TransMedics’ Transplant Logistics Service revenue surged to $20.1 million, up from just $2.1 million in Q3 2023. However, the company faced challenges as gross margins fell to 56%, down from 61% in Q2 2024, largely due to ongoing investments in logistics and a higher reliance on third-party logistics partners.
Despite achieving a GAAP operating profit of $3.9 million and a net income of $4.2 million, investors were likely concerned about several negative indicators. Total revenue saw a 5% sequential decline from Q2 2024, with U.S. sales down 3% and international sales plummeting by 45%. Additionally, the decline in U.S. national transplant volumes negatively impacted case volumes.
TransMedics also incurred approximately $2 million in non-recurring costs tied to logistics and infrastructure investments, further straining its financial performance. The company’s cash position remains robust at $330.1 million as of September 30, 2024, and it has set an ambitious annual revenue guidance of $425 million to $445 million, reflecting 76% to 84% growth over the full year 2023.
Looking ahead, TransMedics is investing in next-generation Organ Care System (OCS) heart and lung technologies, with plans to launch new clinical programs in 2025. However, the mixed earnings report and concerns over its financial headwinds have left investors cautious.