What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-02-27 compared with 2024-02-27 · 361 added, 320 removed, 1117 unchanged (38% of the section changed)

4 unchanged sentences

Risk Factors” section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

We are a commercial-stage medical technology company transforming organ transplant therapy for end-stage organ failure patients across multiple disease states.

We are a medical technology company transforming organ transplant therapy for end-stage organ failure patients across multiple disease states.

We developed the OCS to replace a decades-old standard of care that we believe is significantly limiting access to life-saving transplant therapy for hundreds of thousands of patients worldwide.

1 unchanged sentence

As such, the OCS represents a paradigm shift that transforms organ preservation for transplantation from a static state to a dynamic environment that enables new capabilities, including organ optimization and assessment.

We have also developed our NOP, an innovative turnkey solution to provide outsourced organ retrieval, OCS organ management and logistics services, to provide transplant programs in the United States with a more efficient process to procure donor organs with the OCS.

In 2023, we enhanced our NOP offering with the addition of a logistics team to expand our transportation logistics capabilities.

Our logistics services include aviation transportation, ground transportation, and other coordination activity.

We have also developed our NOP, an innovative turnkey solution to provide outsourced organ procurement, OCS perfusion management and transplant logistics services, to provide transplant programs in the United States with a more efficient process to procure donor organs with the OCS.

Since 2023, we have offered logistics services through our NOP, including aviation transportation, ground transportation, and other coordination activity.

We believe the use of the OCS combined with the NOP has the potential to significantly increase the number of organ transplants and improve post-transplant outcomes

11 unchanged sentences

developing and expanding our market and distribution chain and providing general and administrative support for these operations.

To date, we have funded our operations primarily with proceeds from borrowings under loan agreements, proceeds from the sale of common stock in our public offerings, and revenue from clinical trials and commercial sales of our OCS products and NOP services.

Since our inception, we have incurred significant operating losses.

Our ability to generate revenue sufficient to achieve sustained profitability will depend on the continued growth in customer utilization of our products and services.

To date, we have funded our operations primarily with proceeds from borrowings under loan agreements, proceeds from the issuance of the Notes, proceeds from the sale of common stock in our public offerings, and revenue from commercial sales of our OCS products and NOP services and from sales of our OCS products for use in clinical trials.

Prior to 2024, we had incurred significant annual operating losses since inception and we have only recently achieved profitability.

Our ability to generate revenue sufficient to achieve sustained profitability will depend on the continued commercial sales of our OCS products and NOP services.

We generated total revenue of $441.5 million and had net income of $35.5 million for the year ended December 31, 2024.

We generated total revenue of $241.6 million and incurred a net loss of $25.0 million for the year ended December 31, 2023.

2 unchanged sentences

markets, including growing our commercial team, which will pursue increasing commercial sales of our OCS products;

growing our NOP, including by maintaining and growing our logistics capabilities, including aviation transportation, to support our NOP to reduce dependence on third party transportation, including by means of the acquisition of fixed-wing aircraft or other acquisitions, joint ventures or strategic investments;

growing our NOP, including by maintaining and growing our logistics capabilities, including hiring, training and retaining pilots to scale our aviation transportation operations, to support our NOP and reduce dependence on third party transportation, including by means of the acquisition, maintenance or replacement of fixed-wing aircraft or other acquisitions, joint ventures or strategic investments;

scaling our manufacturing and sterilization operations;

3 unchanged sentences

and operating as a public company.

Because of the numerous risks and uncertainties associated with product development, commercialization and regulations of our industry, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability on an annual basis.

Until such time, if ever, as we can generate substantial revenue sufficient to achieve sustained profitability, we may finance our operations through a combination of equity offerings, debt financings and strategic alliances.

We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms or at all.

If we are unable to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the further development and commercialization efforts of one or more of our products, or may be forced to reduce or terminate our operations.

If we are unable to raise capital or enter into such agreements as, and when, needed, we will have to delay, scale back or discontinue the further development and commercialization efforts of one or more of our products, or may be forced to terminate our operations.

In March 2023, the U.S.

Department of Health and Human Services’ Health Resources and Services Administration, or HRSA, announced initiatives designed to improve the Organ Procurement and Transplantation network, or OPTN, including its intent to solicit contract proposals to manage the OPTN, which

is currently operated by the United Network for Organ Sharing, or UNOS, under a contract that expires in March 2024.

Additionally, on July 25, 2023 and July 27, 2023, the U.S.

House of Representatives and U.S.

Senate, respectively, passed the Securing the U.S.

Organ Procurement and Transplantation Network Act, which expressly authorizes HRSA to award multiple grants, contracts or cooperative agreements to support the operation of the OPTN and specifies that the OPTN shall be operated through awards that are distinct from awards made to support the organization tasked with supporting the networks’ board of directors.

Department of Health and Human Services’ Health Resources and Services Administration, or HRSA, announced initiatives designed to improve the OPTN, including its intent to solicit contract proposals to manage the OPTN, which is currently operated by the United Network for Organ Sharing, or UNOS, under a contract that expired in March 2024.

Additionally, in September 2023, the Securing the U.S.

Organ Procurement and Transplantation Network Act was signed into law and expressly authorizes HRSA to award multiple grants, contracts or cooperative agreements to support the operation of the OPTN and specifies that the OPTN shall be operated through awards that are distinct from awards made to support the organization tasked with supporting the networks’ board of directors.

In September 2024, HRSA began awarding contracts aimed at supporting these initiatives.

The impact that the HRSA initiatives and the U.S.

Organ Procurement and Transplantation Network Act may have on our business, including on our NOP, is uncertain at this time.

In May 2023, we issued and sold $460.0 million in aggregate principal amount of our 1.50% Convertible Senior Notes due 2028, or the Notes, in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act.

The Notes were issued pursuant to an indenture, dated May 11, 2023.

The Notes bear interest at a rate of 1.50% per year, payable semi-annually in arrears on June 1 and December 1 of each year.

The Notes will mature on June 1, 2028, unless earlier converted, redeemed or repurchased.

As of December 31, 2023, we had cash of $394.8 million.

We believe that our cash will be sufficient for us to fund our operating expenses, capital expenditure requirements and debt service payments for at least 12 months following the filing of our Annual Report on Form 10-K.

We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.

See “—Liquidity and Capital Resources”.

Strategic Transactions

On August 16, 2023, we acquired Summit Aviation, Inc.

and Northside Property Group, LLC, or together Summit.

Summit was a charter flight operator based in Bozeman, Montana.

The acquisition enabled us to add aircraft transportation services to our NOP and become a comprehensive national provider of donor organ retrieval and delivery in the United States.

In separate transactions through December 31, 2023, we acquired 11 fixed-wing aircraft to transport donor organs as part of the services offered under our NOP.

We have acquired two additional aircraft in 2024 and intend to acquire additional fixed-wing aircraft as we scale our fleet of aircraft to reduce our dependence on third party transportation providers.

On August 2, 2023, we acquired certain assets related to lung and heart perfusion technology from Bridge to Life Ltd.

and its subsidiary Tevosol, Inc., or together BTL.

We intend to further develop these technologies to expand our product offerings and indications for organ transplantation.

Economic Impacts

5 unchanged sentences

To a lesser extent, we also generate product revenue from the sale of OCS Consoles to customers and the implied rental of OCS Consoles loaned to customers at no charge.

For each new transplant procedure, customers purchase an additional OCS disposable set for use on the customer’s existing organ-specific OCS Console.

We also generate service revenue by providing outsourced organ retrieval, OCS organ management and logistics services under our NOP in the United States.

With the acquisition of Summit, the purchase of fixed-wing transplant aircraft and the addition of a logistics team, we anticipate increased service revenue from our aviation transportation service offering.

Prior to the acquisition, Summit derived its revenue primarily from charter flight services.

For each new transplant procedure, these customers purchase an additional OCS disposable set for use on their existing organ-specific OCS Console.

We also generate service revenue by providing outsourced organ procurement, OCS perfusion management and transplant logistics services under our NOP in the United States.

With the acquisition of Summit in August 2023, the purchase of fixed-wing transplant aircraft and the addition of a logistics team, we anticipate increased service revenue from our logistics services.

Prior to our acquisition in 2023, Summit derived its revenue primarily from charter flight services.

To a lesser extent, Summit also derived revenue from providing flight school training, managing aircraft and other related services.

As part of the Summit integration, we have transitioned Summit's charter flight customers and are finalizing the transition of aircraft management customers to third parties.

Following this transition we do not anticipate generating revenue from charter flights or aircraft management and related services.

As part of the Summit integration, we transitioned Summit's charter flight and aircraft management customers to third parties.

We do not anticipate generating revenue from charter flights or aircraft management and related services.

We are continuing to offer flight school training services.

During the year ended December 31, 2023, service revenue of $4.9 million, including $3.0 million of charter flight and aircraft management and related services and $1.9 million of flight school training revenue, is from Summit's legacy operations and is unrelated to the NOP and organ transplant.

During the years ended December 31, 2024 and 2023 service revenue of $4.4 million and $4.9 million, respectively, was from Summit's legacy operations, unrelated to the NOP and organ transplant.

All of our OCS transplant-related revenue has been generated by sales to transplant centers and Organ Procurement Organizations, not-for-profit organizations responsible for recovering organs from deceased donors for transplantation, in the United States, Europe and Asia-Pacific, or, in some cases, to distributors selling to transplant centers in select countries.

Substantially all of our customer contracts have multiple-performance obligations that contain promises consisting of OCS Perfusion Sets and OCS Solutions and may also contain promises for organ retrieval, OCS organ management or logistics services under our NOP, and an OCS Console, whether sold or loaned to the customer.

Substantially all of our customer contracts have multiple-performance obligations that contain promises consisting of OCS Perfusion Sets and OCS Solutions and may also contain promises for organ procurement, OCS perfusion management or transplant logistics services under our NOP, and OCS Console, whether sold or loaned to the customer.

Through December 31, 2024, all of our sales outside of the United States have been commercial sales (unrelated to any clinical trials).

7 unchanged sentences

sales if national healthcare systems begin to reimburse transplant centers for the use of the OCS, if transplant centers utilize the OCS in more transplant cases and if more transplant centers adopt the OCS in their programs.

While we expect our revenue to increase over the long term, revenue from sales may fluctuate from quarter to quarter as the timing of organ transplant procedures is generally unpredictable, and we have observed periodic fluctuations in the availability of donor organs, which impacts the volume of transplants.

Cost of Revenue, Gross Profit and Gross Margin

1 unchanged sentence

Included in the cost of OCS disposable sets are the costs of our OCS Lung, OCS Heart and OCS Liver Solutions.

Cost of service revenue primarily consists of labor and overhead that directly support organ retrieval and OCS organ management services and transportation and logistics costs, including labor costs for pilots, aircraft depreciation, aircraft costs, fuel, crew travel, maintenance and third-party flight costs and ground transportation that support organ delivery.

For the year ended December 31, 2023, cost of service revenue also included approximately $4.4 million of costs related to charter flight and aircraft management and related services and flight school training revenue, from Summit's legacy operations, which is unrelated to the NOP and organ transplant.

Cost of service revenue primarily consists of labor and overhead that directly support organ procurement and OCS perfusion management services and transportation and logistics costs, including labor costs for pilots, aircraft depreciation, aircraft costs, fuel, crew travel, maintenance and third-party flight costs and ground transportation that support organ delivery.

For the years ended December 31, 2024 and 2023, cost of service revenue also included approximately $3.1 million and $4.4 million, respectively, of costs related to Summit's legacy operations, unrelated to the NOP and organ transplant.

Gross profit is the amount by which revenue exceeds cost of revenue in each reporting period and gross margin is gross profit divided by revenue.

Our overall gross margin will be impacted by the relative mix of product and service revenue, as product and service revenue have different margin profiles, and we expect our overall gross margin will decrease as service revenue increases as a proportion of overall revenue.

Our overall gross margin is impacted by the relative mix of product and service revenue, as product and service revenue have different margin profiles.

Product and service gross margins are also affected by a variety of factors, primarily production volumes, the cost of components and direct materials, manufacturing overhead costs, direct labor, the cost of services provided under the NOP and the selling price of our OCS products and NOP services.

19 unchanged sentences

Selling, general and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in our commercial team and personnel in executive, marketing, finance and administrative functions, and recruiting and temporary service fees for such personnel.

Selling, general and administrative expenses also include direct and allocated facility-related costs, costs to facilitate the NOP, promotional activities, marketing, conferences and trade show costs as well as professional fees for legal, patent, consulting, investor and public relations, accounting and audit services and amortization of sales and marketing-related intangible assets.

We expect to continue to increase headcount in our commercial team and increase marketing efforts as we continue to grow commercial sales of our OCS products in both U.S.

and select non-U.S.

Selling, general and administrative expenses also include direct and allocated facility-related costs, costs to support the NOP, promotional activities, marketing, conferences and trade show costs as well as professional fees for legal, patent, consulting, investor and public relations, accounting and audit services and amortization of sales and marketing-related intangible assets.

We expect that our selling, general and administrative expenses will increase over the long term as we increase our headcount to support the expected continued sales growth of our OCS products and our NOP.

5 unchanged sentences

In May 2023, we issued and sold $460.0 million in aggregate principal amount of our 1.50% convertible senior notes, due 2028.

Other Income (Expense), Net

Other income (expense), net includes interest income, realized and unrealized foreign currency transaction gains and losses and other non-operating income and expense items unrelated to our core operations.

Interest Income and Other Income (Expense), Net

Interest income and other income (expense), net includes interest income, realized and unrealized foreign currency transaction gains and losses and other non-operating income and expense items unrelated to our core operations.

Interest income consists of interest earned on our invested cash balances.

14 unchanged sentences

Research, development and clinical trials

Acquired in-process research and development expenses

Acquired in-process research and development

Selling, general and administrative

Total operating expenses

Loss from operations

Income (loss) from operations

Other income (expense):

Interest expense

Other income (expense), net

Interest income and other income (expense), net

Total other income (expense), net

Loss before income taxes

Income (loss) before income taxes

(Provision) benefit for income taxes

Net income (loss)

OCS transplant-related revenue consists of:

11 unchanged sentences

Liver total revenue

Total all other countries OCS transplant revenue

Total all other countries OCS transplant

Total OCS transplant revenue

We also had service revenue unrelated to OCS transplant of $4.9 million, including $3.0 million of charter flight and aircraft management and related services and $1.9 million of flight school training revenue, from Summit's legacy operations for the year ended December 31, 2023.

We also had service revenue unrelated to OCS transplant of $4.4 million and $4.9 million for the years ended December 31, 2024 and 2023, respectively.

Revenue from customers in the United States related to OCS transplant was $421.9 million in the year ended December 31, 2024 and increased by $200.5 million compared to the year ended December 31, 2023, primarily due to higher sales volumes of our OCS Liver and OCS Heart disposable sets.

Revenue for each organ in the table above includes net product revenue from sales of disposable sets as well as service revenue for organ retrieval, OCS organ management and logistics services under the NOP in the United States.

Revenue for each organ in the table above includes net product revenue from sales of disposable sets as well as service revenue for organ procurement, OCS perfusion management and transplant logistics services under the NOP in the United States.

Establishing the NOP, which launched in late 2021, has allowed us to broaden our customer base and increase utilization of the OCS in organ transplantation.

Significantly all of our customers in the United States now participate in the NOP.

By adding logistics to our NOP offering, we have been able to further increase product and service revenue.

Revenue from customers outside the United States was $15.4 million in the year ended December 31, 2023 and increased by $6.0 million compared to the year ended December 31, 2022.

Revenue outside of the United States increased for the year ended December 31, 2023 compared to the year ended December 31, 2022 due primarily to increased sales volume of OCS Heart disposable sets.

Substantially all of our customers in the United States now participate in the NOP.

By adding logistics to our NOP offering in late 2023, we have been able to further increase product and service revenue.

Revenue from customers outside the United States was $15.3 million and $15.4 million in the years ended December 31, 2024 and 2023, respectively.

Cost of Revenue, Gross Profit and Gross Margin

Cost of net product revenue increased by $17.3 million in the year ended December 31, 2024 compared to the year ended December 31, 2023.

Cost of service revenue increased by $35.3 million in the year ended December 31, 2023 compared to the year ended December 31, 2022 as we expanded and increased utilization of the NOP.

Cost of service revenue increased by $74.6 million in the year ended December 31, 2024 compared to the year ended December 31, 2023 as we increased utilization of the NOP.

Gross profit increased by $108.0 million in the year ended December 31, 2024 compared to the year ended December 31, 2023.

Cost of service revenue included approximately $4.4 million of costs related to charter flight and aircraft management and related services and flight school training revenue, from Summit's legacy operations, which is unrelated to the NOP and organ transplant.

Cost of service revenue included approximately $3.1 million and $4.4 million for the years ended December 31, 2024 and 2023, respectively, of costs from Summit's legacy operations, unrelated to the NOP and organ transplant.

Overall gross margin was 59% and 64% for the years ended December 31, 2024 and 2023, respectively.

1 unchanged sentence

Gross margin from net product revenue was 79% and 77% for the years ended December 31, 2024 and 2023, respectively.

The decrease in gross margin was primarily a result of increasing manufacturing capacity and increased costs of certain parts.

Gross margin from service revenue was 29% and 21% for the years ended December 31, 2023 and 2022, respectively, and consisted primarily of organ retrieval, OCS organ management and logistics services under our NOP.

Service revenue gross margin during the year ended December 31, 2023, included the introduction of transportation and logistics services and the purchase and integration of Summit in the third quarter of 2023.

Service revenue gross margin during the year ended December 31, 2022 included our initial launch of the NOP program and did not include a full period of our NOP service offering.

The increase in product gross margin was primarily as a result of increased sales volume and increased sales of higher margin OCS disposable sets.

Gross margin from service revenue was 28% and 29% for the years ended December 31, 2024 and 2023, respectively, and consisted primarily of organ procurement, OCS perfusion management and transplant logistics services under our NOP.

The decrease in service gross margin was primarily due to investments in our NOP network, including aviation-related expenditures, to prepare for future growth.

Service revenue gross margin for the year ended December 31, 2023, included the introduction of transportation and logistics services and the integration of Summit.

Operating Expenses

8 unchanged sentences

Facility related and other

Total research, development and clinical trials

Total research, development and clinical

trials expenses

Total research, development and clinical trials expenses increased by $19.9 million from $36.1 million in the year ended December 31, 2023 to $56.0 million in the year ended December 31, 2024.

Personnel related costs increased by $5.7 million primarily due to increased headcount to support development efforts for our next generation OCS program and overall compensation increases.

Personnel related costs increased by $6.4 million primarily due to increased headcount to support development efforts for our next generation OCS and overall compensation increases.

Personnel related costs included stock-based compensation expense of $4.2 million and $2.8 million for the years ended December 31, 2024 and 2023, respectively.

Consulting and third-party services costs increased by $7.1 million due to development efforts by our external development consultants for our next generation OCS, other product development and digital tools.

Laboratory supplies and research materials costs increased by $6.1 million from the year ended December 31, 2023 to the year ended December 31, 2024 primarily due to our increased need for supplies and materials used for development of our next generation OCS.

Facility related and other costs increased by $0.9 million from the year ended December 31, 2023 to the year ended December 31, 2024 due primarily to the increased costs of supporting a larger group of research and development personnel and their development efforts.

Clinical trial costs decreased by $0.7 million due to the timing of pre-approval and post-approval clinical trials.

Clinical trial costs decreased by $0.6 million due to the timing of clinical trials.

Acquired In-Process Research and Development Expenses

IPR&D in 2023 was related to the acquisition of certain assets related to lung and heart perfusion technology from BTL.

IPR&D in 2023 was related to the acquisition of certain assets related to lung and heart perfusion technology from Bridge to Life Ltd.

and its subsidiary Tevosol, Inc., together BTL.

Selling, General and Administrative Expenses

6 unchanged sentences

Facility related and other

Total selling, general and administrative expenses

Total selling, general and administrative expenses increased by $49.7 million from $69.9 million in the year ended December 31, 2022 to $119.6 million in the year ended December 31, 2023 due to increases in personnel related costs, professional and consultant fees, NOP support costs and facility related and other costs.

Personnel related costs increased by $32.2 million primarily due to the continued expansion of our team to support the growth in our business, as well as an increase in stock-based compensation expense of $7.8 million, due primarily to additional grants to new and existing employees.

Professional and consultant fees increased by $9.4 million due primarily to increased consulting, legal and audit fees related to the business growth.

Professional and consultant fees also included transaction costs related to our acquisitions of $2.0 million.

The increase in NOP support of $3.5 million was due to the continued growth and expansion of our NOP, including our national command and dispatch center.

Facility related and other costs increased by $4.8 million due primarily to increased facilities costs and depreciation and amortization expense due to the growth in our business.

Total selling, general and administrative

Total selling, general and administrative expenses increased by $49.1 million from $119.6 million in the year ended December 31, 2023 to $168.6 million in the year ended December 31, 2024 due primarily to increases in personnel related costs, and facility related and other costs.

Personnel related costs increased by $36.8 million primarily due to the continued expansion of our team to support the growth in our business.

Stock-based compensation expense increased by $11.0 million, due primarily to additional grants to new and existing employees and the modification of stock awards pursuant to the transition agreement with our former Chief Financial Officer.

Facility related and other costs increased by $11.3 million due primarily to increased costs associated with post-approval studies and information technology infrastructure costs, and depreciation and amortization expense due to the growth in our business.

Professional and consultant fees increased by $0.9 million due primarily to increased fees in 2024 related to information technology and other enterprise solutions costs to support the growth in our business.

Professional and consultant fees in the year ended December 31, 2023 included transaction costs of $2.0 million related to our Summit acquisition.

Other Income (Expense)

1 unchanged sentence

Interest expense was $14.4 million and $10.8 million for the years ending December 31, 2024 and 2023, respectively.

The increase was due primarily to interest expense for our $460.0 million principal amount of the Notes, which were issued in May 2023.

Interest expense also increased due to an increase in the principal amount of the CIBC loan outstanding compared to the principal that had been outstanding under our prior credit agreement with OrbiMed, partially offset by the lower average interest rate for our indebtedness under the CIBC Credit Agreement.

Other Income (Expense), Net

Other income (expense), net for the years ended December 31, 2023 and 2022 included interest income of $12.5 million and $0.9 million, respectively, from interest earned on invested cash balances, due to higher invested cash balance and to a lesser extent higher interest rates.

Other income (expense), net included $0.3 million of realized and unrealized foreign currency transactions gains during the year ended December 31, 2023.

Other income (expense), net included $1.3 million of realized and unrealized foreign currency transactions losses during the year ended December 31, 2022.

Other expense, net for the year ending December 31, 2022 also included a loss on extinguishment of debt of $0.6 million.

The increase was due primarily to interest expense on the $460.0 million principal amount of the Notes, which were issued in May 2023.

Interest Income and Other Income (Expense), Net

Interest income and other income (expense), net for the years ended December 31, 2024 and 2023 included interest income of $13.4 million and $12.5 million, respectively, from interest earned on invested cash balances.

Other income (expense), net included $0.7 million of realized and unrealized foreign currency transactions losses for the year ended December 31, 2024, and $0.3 million of realized and unrealized foreign currency transactions gains during the year ended December 31, 2023.

(Provision) Benefit for Income Taxes

We recorded a tax benefit of $1.7 million for the year ended December 31, 2023 for the release of a portion of our valuation allowance related to the net deferred tax liabilities recorded in purchase accounting.

Income taxes for the years ended December 31, 2024 and 2023 included a tax provision of $0.3 million and less than $0.1 million, respectively, related to state and foreign income taxes.

For the year ended December 31, 2023, we also recorded a tax benefit of $1.7 million for the release of a portion of our valuation allowance related to the net deferred tax liabilities recorded in purchase accounting.

As part of the allocation of the purchase price of Summit, we recorded deferred tax liabilities for the differences between the fair value recognized in purchase accounting and the tax basis of property, plant and equipment and intangible assets.

6 unchanged sentences

Liquidity and Capital Resources

Since our inception, we have incurred significant annual operating losses.

To date, we have funded our operations primarily with proceeds from borrowings under loan agreements, proceeds from the issuance of our convertible senior notes, proceeds from the sale of common stock in our public offerings and revenue from clinical trials and commercial sales of our OCS products and NOP services.

Prior to 2024, we had incurred significant annual operating losses since inception and we may continue to incur losses in the future.

To date, we have funded our operations primarily with proceeds from borrowings under loan agreements, proceeds from the issuance of our Notes, proceeds from the sale of common stock in our public offerings and revenue from commercial sales of our OCS products and NOP services and from sales of our OCS products for use in clinical trials.

On May 11, 2023, we issued $460.0 million aggregate principal amount of the Notes in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act.

4 unchanged sentences

(in thousands)

Net cash used in operating activities

Net cash provided by (used in) operating activities

Net cash provided by (used in) investing activities

2 unchanged sentences

restricted cash

Net increase in cash, cash equivalents and restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash

Operating Activities

During the year ended December 31, 2024, operating activities provided $48.8 million of cash, primarily resulting from our net income of $35.5 million and net non-cash charges of $58.3 million, partially offset by net cash used by changes in our operating assets and liabilities of $45.0 million.

Net cash used by changes in our operating assets and liabilities for the year ended December 31, 2024 consisted primarily of an increase in accounts receivable of $34.3 million, an increase in inventory of $8.4 million and an increase in prepaid expenses and other current assets of $6.3 million, partially offset by an increase in accounts payable and accrued expenses and other current liabilities of $6.5 million.

During the year ended December 31, 2023, operating activities used $13.0 million of cash, primarily resulting from our net loss of $25.0 million and net cash used by changes in our operating assets and liabilities of $44.3 million, partially offset by net non-cash charges of $56.3 million, which included an IPR&D charge of $27.2 million.

Net cash used by changes in our operating assets and liabilities for the year ended December 31, 2023 consisted primarily of an increase in accounts receivable of $33.8 million, an increase in inventory of $28.1 million and an increase in prepaid expenses and other current assets of $2.1 million, partially offset by an increase in accounts payable and accrued expenses and other current liabilities of $21.2 million.

During the year ended December 31, 2022, operating activities used $45.8 million of cash, primarily resulting from our net loss of $36.2 million and net cash used by changes in our operating assets and liabilities of $26.8 million, partially offset by net non-cash charges of $17.2 million.

Net cash used by changes in our operating assets and liabilities for the year ended December 31, 2022 consisted primarily of an increase in accounts receivable of $21.7 million and an increase in inventory of $8.0 million, partially offset by a decrease in prepaid expenses of $2.5 million.

Changes in accounts receivable, inventory, prepaid expenses and other current assets, accounts payable, and accrued expenses and other current liabilities in each reporting period are generally due to growth in our business and timing of invoices and payments.

Investing Activities

During the year ended December 31, 2024, net cash used in investing activities of $129.3 million consisted primarily of purchases of property, plant and equipment of $129.7 million, including an increase of $110.2 million in transplant aircraft.

During the year ended December 31, 2023, net cash used in investing activities of $194.0 million consisted of purchases of property, plant and equipment of $151.8 million, including $141.9 million of transplant-related aircraft purchases, the purchase of IPR&D assets from BTL for $27.2 million and the purchase of Summit for $14.9 million, net of cash received.

During the year ended December 31, 2022, net cash provided by investing activities of $54.5 million consisted of proceeds from sales and maturities of marketable securities of $76.9 million, partially offset by $10.5 million in purchases of marketable securities and $11.9 million in purchases of property and equipment.

Financing Activities

During the year ended December 31, 2024, net cash provided by financing activities of $22.9 million consisted of proceeds from the issuance of common stock upon exercise of stock options of $20.8 million and proceeds from the issuance of common stock in connection with the 2019 Employee Stock Purchase Plan of $2.1 million.

During the year ended December 31, 2023, net cash provided by financing activities of $400.4 million consisted of net proceeds from the issuance of our Notes of $445.4 million, partially offset by payments of $52.1 million for associated capped calls, proceeds from the issuance of common stock upon exercise of stock options of $6.2 million and proceeds from the issuance of common stock in connection with the 2019 Employee Stock Purchase Plan of $1.0 million.

During the year ended December 31, 2022, net cash provided by financing activities of $167.9 million consisted of net proceeds from our public offering in August 2022 of $139.9 million, net proceeds from the issuance of long-term debt of $58.5 million, proceeds from the issuance of common stock upon exercise of stock options of $4.7 million, proceeds from the issuance of common stock in connection with the 2019 Employee Stock Purchase Plan of $0.5 million and proceeds from the issuance of common stock upon exercise of warrants of $0.4 million, partially offset by the repayments of long-term debt of $36.1 million.

For a discussion of our cash flows for the year ended December 31, 2022, see Item 7.

17 unchanged sentences

In addition, calling any Note for redemption will constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted after it is called for redemption.

A conditional conversion feature of the Notes was triggered on June 30, 2024 and again on September 30, 2024, as the last reported sale price of our common stock was greater than or equal to 130% of the conversion price of the Notes for at least 20 trading days during the period of 30 consecutive trading days ending on and including the last trading day of each of the quarters ended June 30, 2024 and September 30, 2024, respectively, and the Notes therefore became convertible at the noteholders’ election in the immediately following calendar quarters ended September 30, 2024 and December 31, 2024, respectively.

If this condition or another conversion condition is met in the future, the Notes may again become convertible, otherwise the Notes will be convertible at the noteholders’ election from March 1, 2028 through the close of business on the second scheduled trading day immediately before the maturity date.

Long-Term Debt

In July 2022, we entered into a credit agreement with CIBC as amended by the First Amendment to Credit Agreement, dated as of May 8, 2023, by and among the Company and CIBC, or the First Amendment, the Second Amendment to Credit Agreement, dated as of June 23, 2023, by and among the Company and CIBC, or the Second Amendment, and the Third Amendment to Credit Agreement, dated as of November 9, 2023, by and among the Company and CIBC, or the Third Amendment, pursuant to which we borrowed $60.0 million, referred to herein as the CIBC Credit Agreement.

We used proceeds of the CIBC Credit Agreement to repay all amounts due under our previously outstanding credit agreement with OrbiMed, which was entered into in June 2018.

On May 8, 2023, we entered into the First Amendment, which among other items, allowed for the issuance of the Notes and capped call transactions.

On June 23, 2023, we entered into the Second Amendment, which among other items, permits us to make acquisitions of equity or assets of another entity, subject to the conditions under the Second Amendment, including acquisitions, without further consent of CIBC, up to a maximum amount of $50.0 million for the cash payable in connection with an individual acquisition and a maximum amount in aggregate of $150.0 million for the total cash consideration payable for all acquisitions made by us on or after June 23, 2023.

The definition of consolidated adjusted EBITDA was also amended by the Second Amendment to add a provision for the pro forma effect of any acquisitions that occur during the period.

Additionally, pursuant to the Second Amendment, we and CIBC agreed to extend the start of the principal repayment period to July 31, 2026, on which date we are obligated to begin repayment of the term loans in equal monthly installments until the maturity date in July 2027.

On November 9, 2023, we entered into the Third Amendment, which, among other items, permits us to make acquisitions of equity or assets of another entity, subject to the conditions under the Third Amendment, without further consent of CIBC, for cash consideration in a maximum aggregate amount of $300.0 million for all such acquisitions made by the Company on or after November 9, 2023.

Borrowings under the CIBC Credit Agreement bear interest at an annual rate equal to either, at our option, (i) the secured overnight financing rate for an interest period selected by us, subject to a minimum of 1.50%, plus 2.0% or (ii) 1.0% plus the higher of a) the prime rate, subject to a minimum of 4.0% or b) the Federal Funds Effective Rate, plus 0.5%.

At our option, we may prepay borrowings outstanding under the CIBC Credit Agreement, subject to a prepayment fee of 2.0% of outstanding borrowings if paid prior to 12 months after the closing date, and 1.0% if paid after 12 months but prior to 24 months after the closing date.

At our option, we may prepay borrowings outstanding under the CIBC Credit Agreement, without a prepayment fee.

All obligations under the CIBC Credit Agreement are guaranteed by us and each of our material subsidiaries.

1 unchanged sentence

Under the CIBC Credit Agreement, we have agreed to customary representations and warranties, events of default and certain affirmative and negative covenants to which we will remain subject until maturity.

The financial covenants include, among other covenants, (x) a requirement to maintain a minimum liquidity amount of the greater of either (i) the consolidated adjusted EBITDA loss (or gain) for the trailing four month period (only if EBITDA is negative) and (ii) $10.0 million, and (y) a requirement to maintain total net revenue of at least 75% of the level set forth in the total revenue plan presented to CIBC.

As discussed above, the definition of consolidated adjusted EBITDA was amended to include the pro forma effect of acquisitions.

The financial covenants include, among other covenants, (x) a requirement to maintain a minimum liquidity amount of the greater of either (i) the consolidated adjusted EBITDA loss (or gain), as defined, for the trailing four month period (only if EBITDA is negative) and (ii) $10.0 million, and (y) a requirement to maintain total net revenue of at least 75% of the level set forth in the total revenue plan presented to CIBC.

The obligations under the CIBC Credit Agreement are subject to acceleration upon the occurrence of specified events of default, including payment default, change in control, bankruptcy, insolvency, certain defaults under other material debt, certain events with respect to governmental approvals (if such events could cause a material adverse change in our business), failure to comply with certain covenants and a material adverse change in our business, operations or financial condition.

As of December 31, 2023, we were in compliance with all covenants of the CIBC Credit Agreement.

As of December 31, 2024, we were in compliance with all financial covenants of the CIBC Credit Agreement.

During the continuance of an event of default, the interest rate per annum will be equal to the rate that would have otherwise been applicable at the time of the event of default plus 2.0%.

6 unchanged sentences

For example, if the demand for our products exceeds our existing manufacturing and sterilization capacity, our ability to fulfill orders would be limited until we have sufficiently expanded such operations.

In addition, following the closing of our IPO, we have incurred and expect to continue to incur additional costs associated with operating as a public company.

The timing and amount of our operating and capital expenditures will depend on many factors, including:

10 unchanged sentences

• the cost of development of the next generation OCS;

• the costs associated with building our commercial operations, including the NOP;

• the costs associated with maintaining and growing our logistics capabilities, including by means of the acquisition of fixed-wing aircraft for our aviation transportation services or other acquisitions, joint ventures or strategic investments;

• the cost of maintaining, replacing or acquiring additional fixed-wing aircraft;

• the costs associated with maintaining and improving our commercial operations, including the NOP;

• the costs associated with maintaining and growing our logistics capabilities, including by means of attracting, training and retaining pilots, and the acquisition, maintenance, or replacement of fixed-wing aircraft for our aviation transportation services or other acquisitions, joint ventures or strategic investments;

• the costs of preparing, filing and prosecuting patent applications and maintaining, enforcing and defending intellectual property-related claims;

6 unchanged sentences

Our contractual obligations include amounts payable as principal and interest payments under the CIBC Credit Agreement.

As of December 31, 2023, our outstanding principal balance was $60.0 million and is due in 2027.

As of December 31, 2024, our outstanding principal balance was $60.0 million, which is repayable in equal monthly installments starting in July 2026 until its maturity in July 2027.

We estimate we will pay $3.9 million in interest payments during 2025.

Our estimate of payments is based on an assumed rate of 6.4%, which was the interest rate in effect at December 31, 2024.

On May 11, 2023, we issued $460.0 million aggregate principal amount of Notes due 2028.

On May 11, 2023, we issued $460.0 million aggregate principal amount of the Notes.

The Notes bear interest at a rate of 1.50% per year, payable semi-annually in arrears on June 1 and December 1 of each year.

3 unchanged sentences

We also lease facilities under short-term leases, for which we expect to pay approximately $1.5 million in 2025 under existing leases.

In connection with our acquisition of Summit we acquired a construction contract for the completion of a commercial aircraft hangar at Bozeman Yellowstone International Airport in Bozeman, Montana.

We anticipate we will incur approximately $3.0 million to $4.0 million in 2024 to complete construction of the hangar.

We intend to acquire additional fixed-wing aircraft as we scale our fleet of aircraft.

During the year ended December 31, 2023, we acquired 11 transplant-related fixed-wing aircraft with an aggregate purchase price of $141.9 million and we plan to acquire additional aircraft in 2024, including two aircraft purchased in January and February 2024.

During the year ended December 31, 2024, we acquired eight transplant-related fixed-wing aircraft with an aggregate purchase price of $109.6 million and we plan to acquire additional aircraft in 2025, including two aircraft purchased in January 2025 and February 2025 with an aggregate purchase price of $28.4 million.

In January 2021, we entered into an unconditional $9.5 million purchase commitment in the ordinary course of business, for goods with specified annual minimum quantities to be purchased through December 2029.

2 unchanged sentences

We also enter into other contracts in the normal course of business with consulting firms, material suppliers and other third parties for clinical trials and testing and manufacturing services.

These contracts do not contain minimum purchase commitments

and are cancelable by us upon prior written notice.

These contracts do not contain material minimum purchase commitments and are cancelable by us upon prior written notice.

Payments due upon cancellation consist only of payments for services provided or expenses incurred, including noncancelable obligations of our service providers, up to the date of cancellation.

These payments are not included in the discussion above as the amount and timing of such payments are not known.

Critical Accounting Policies and Significant Judgments and Estimates

Critical Accounting Policies and Significant Estimates

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States.

6 unchanged sentences

To a lesser extent, we also generate revenue from the sale of OCS Consoles to customers and the implied rental of OCS Consoles loaned to customers at no charge.

For each new transplant procedure, customers purchase an additional OCS disposable set for use on the customer’s existing organ-specific OCS Console.

We also generate service revenue by providing outsourced organ retrieval, OCS organ management and logistics services under our NOP in the United States.

For each new transplant procedure, these customers purchase an additional OCS disposable set for use on their existing organ-specific OCS Console.

We also generate service revenue by providing outsourced organ procurement, OCS perfusion management and transplant logistics services under our NOP in the United States.

We recognize revenue from sales to customers applying the following five steps:

1 unchanged sentence

Substantially all of our customer contracts have multiple-performance obligations that contain deliverables consisting of OCS Perfusion Sets and OCS Solutions.

Customer contract deliverables may also include organ retrieval, OCS organ management and logistics services under our NOP or an OCS Console, whether sold or loaned to the customer.

Customer contract deliverables may also include organ procurement, OCS perfusion management and transplant logistics services under our NOP or OCS Console, whether sold or loaned to the customer.

We evaluate each promise within a multiple-performance obligation arrangement to determine whether it represents a distinct performance obligation.

The primary performance obligations in our customer arrangements from which we derive revenue are the OCS Perfusion Sets, the OCS Solutions, the OCS Console, organ retrieval services, OCS organ management services and organ transportation logistics.

The primary performance obligations in our customer arrangements from which we derive revenue are the OCS Perfusion Sets, the OCS Solutions, the OCS Console, organ procurement, OCS perfusion management and transplant logistics services.

When a customer order includes an OCS Console, we have determined that customer training and the equipment set-up of the OCS Console, each performed by us, are not distinct because they are not sold on a standalone basis and can only be performed by us in conjunction with a sale or loan of our OCS Console.

10 unchanged sentences

Revenue from sales to customers of OCS Perfusion Sets, OCS Solutions and OCS Consoles is classified as net product revenue in the our consolidated statements of operations.

Revenue from sales to customers of organ retrieval, OCS organ management services and organ transportation is classified as service revenue in our consolidated statements of operations.

Revenue from sales to customers of organ procurement, OCS perfusion management and transplant logistics services is classified as service revenue in our consolidated statements of operations.

Revenue is recognized when control is transferred to the customer in an amount that reflects the consideration we expect to be entitled to in exchange for the product or services.

When a customer order includes disposable sets and organ retrieval, OCS organ management or logistics services, we have determined that the disposable sets and services constitute separate performance obligations and we recognize revenue as the disposable sets and services are each delivered to the customer.

When a customer order includes disposable sets and organ procurement, OCS perfusion management or transplant logistics services, we have determined that the disposable sets and services constitute separate performance obligations and we recognize revenue as the disposable sets and services are each delivered to the customer.

Payments Made to Customers

13 unchanged sentences

The reserve for excess and obsolete inventory was $2.5 million and $0.8 million as of December 31, 2024 and 2023, respectively.

At the end of each reporting period, we assess whether losses should be accrued on long-term manufacturing purchase commitments in accordance with ASC 330, Inventory , which requires that losses that are expected to arise from firm, noncancelable and unhedged commitments for the future purchase of inventory, measured in the same way as inventory losses, should be recognized in the current period in the statements of operations unless they are deemed recoverable through firm sales contacts or when there are other circumstances that reasonably assure continuing sales without price decline.

At the end of each reporting period, we assess whether losses should be accrued on long-term manufacturing purchase commitments in accordance with ASC Topic 330, Inventory , which requires that losses that are expected to arise from firm, noncancelable and unhedged commitments for the future purchase of inventory, measured in the same way as inventory losses, should be recognized in the current period in the consolidated statements of operations unless they are deemed recoverable through firm sales contracts or when there are other circumstances that reasonably assure continuing sales without price decline.

As of the end of each reporting period presented in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we did not identify any potential losses arising from remaining future purchase commitments as compared to estimated future customer sales through the remainder of the term of the manufacturing purchase commitment and, as a result, did not recognize in a current period any loss provision for future-period remaining purchase commitments.

6 unchanged sentences

Fair value and useful life determinations are based on, among other things, valuations that use information and assumptions provided by management, which consider management’s best estimates of inputs and assumptions that a market participant would use.

Actual results may vary from these estimates and may result in adjustments to goodwill and acquisition date fair values of assets and liabilities during a measurement period or upon a final

determination of asset and liability fair values, whichever comes first.

Actual results may vary from these estimates and may result in adjustments to goodwill and acquisition date fair values of assets and liabilities during a measurement period or upon a final determination of asset and liability fair values, whichever comes first.

Adjustments to fair values of assets and liabilities made after the end of the measurement period are recorded within operating results.

9 unchanged sentences

Foreign currency transaction gains (losses) are included in the consolidated statements of operations as a component of other income (expense).

We recognized foreign currency transaction gains of $0.3 million during the year ended December 31, 2023.

We recognized foreign currency transaction losses of $0.7 million during the year ended December 31, 2024.

Foreign currency translation exposure results from the translation of the financial statements of our subsidiaries whose functional currency is not the U.S.

4 unchanged sentences

dollars using average exchange rates in effect during each period.

The effects of these foreign currency translation adjustments are included in accumulated other comprehensive loss, a separate component of stockholders’ equity on our consolidated balance sheets.

We recorded a foreign currency translation gain of less than $0.1 million during the year ended December 31, 2023.

The effects of these foreign currency translation adjustments are included in accumulated other comprehensive income (loss), a separate component of stockholders’ equity on our consolidated balance sheets.

We recorded a foreign currency translation loss of $0.2 million during the year ended December 31, 2024.

For the year ended December 31, 2024, 3% of our revenue and 2% of our operating costs and expenses were generated by subsidiaries whose functional currency is not the U.S.

3 unchanged sentences

dollar and Euro would not materially impact our operating results or financial position.

We have experienced and we will continue to experience fluctuations in our net loss as a result of revaluing our assets and liabilities that are not denominated in the functional currency of the entity that recorded the asset or liability.

We have experienced and we will continue to experience fluctuations in our net income (loss) as a result of revaluing our assets and liabilities that are not denominated in the functional currency of the entity that recorded the asset or liability.

At this time, we do not hedge our foreign currency risk.

Interest Rate Sensitivity

As of December 31, 2024, we had cash of $336.7 million, including cash held in savings accounts.

Interest income is sensitive to changes in the general level of interest rates;

however, due to the nature of our savings accounts, an immediate 10% change in interest rates would not have a material effect on the fair market value of our cash balance.

In July 2022, we entered into our CIBC Credit Agreement with CIBC.

13 unchanged sentences

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Comprehensive Income (Loss )

Consolidated Statements of Stockholders’ Equity

5 unchanged sentences

We have audited the accompanying consolidated balance sheets of TransMedics Group, Inc.

and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, of comprehensive loss, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2023, including the related notes (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, of comprehensive income (loss), of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because a material weakness in internal control over financial reporting existed as of that date as the Company did not design and maintain effective controls to verify that inventory movements are appropriately recorded in the interim financial statements.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

The material weakness referred to above is described in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A.

We considered this material weakness in determining the nature, timing, and extent of audit tests applied in our audit of the 2024 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A.

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in management’s report referred to above.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

9 unchanged sentences

We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Annual Report on Internal Control over Financial Reporting, management has excluded Summit Aviation, Inc.

from its assessment of internal control over financial reporting as of December 31, 2023 because it was acquired by the Company in a purchase business combination during 2023.

We have also excluded Summit Aviation, Inc.

from our audit of internal control over financial reporting.

Summit Aviation, Inc.

is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent 2% and 2%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2023.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and

dispositions of the assets of the company;

A company’s internal control over financial reporting includes those policies and procedures that

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

6 unchanged sentences

Revenue Recognition

As described in Note 2 to the consolidated financial statements, the Company recorded $241.6 million in total revenues for the year ended December 31, 2023.

The Company generates product revenue, from sales of its single-use, organ-specific disposable sets (i.e., its organ-specific OCS Perfusion Sets sold together with its organ-specific OCS Solutions) used on its organ-specific OCS Consoles, each being a component of the Company’s Organ Care System (OCS) products, and service revenue, by providing outsourced organ retrieval, OCS organ management and logistics services under the Company’s National OCS Program.

As described in Note 2 to the consolidated financial statements, the Company recorded $441.5 million in total revenue for the year ended December 31, 2024.

The Company generates product revenue, from sales of its single-use, organ-specific disposable sets (i.e., its organ-specific OCS Perfusion Sets sold together with its organ-specific OCS Solutions) used on its organ-specific OCS Consoles, each being a component of the Company’s Organ Care System (OCS) products, and service revenue, by providing outsourced organ procurement, OCS perfusion management and transplant logistics services under the Company’s National OCS Program.

Substantially all of the Company’s customer contracts have multiple-performance obligations.

5 unchanged sentences

Control is transferred for the OCS products typically only after the product has arrived at the customer site and, in addition for OCS Consoles, the training and equipment set-up have been completed by the Company.

Additionally, under the National OCS program, service deliverables available to customers include organ retrieval, OCS organ management, and transportation logistics which are distinct performance obligations and are recognized as service revenue when the services occur.

Additionally, under the National OCS program, service deliverables available to customers include organ procurement, OCS perfusion management, and transplant logistics services which are distinct performance obligations and are recognized as service revenue when the services occur.

The principal considerations for our determination that performing procedures relating to revenue recognition is a critical audit matter are the high degree of auditor effort in performing procedures and in evaluating audit evidence related to management’s determination of the point in time when control of the OCS product or products is transferred to the customer or services are performed and revenue is recognized.

36 unchanged sentences

150,000,000 shares authorized;

shares and 32,141,368 shares issued and outstanding at December 31, 2023

and December 31, 2022, respectively

shares and 32,670,803 shares issued and outstanding as of

December 31, 2024 and 2023, respectively

Accumulated other comprehensive loss

19 unchanged sentences

Total operating expenses

Loss from operations

Income (loss) from operations

Other income (expense):

Interest expense

Other income (expense), net

Interest income and other income (expense), net

Total other income (expense), net

Loss before income taxes

Income (loss) before income taxes

(Provision) benefit for income taxes

Net loss per share attributable to common stockholders,

basic and diluted

Net income (loss)

Net income (loss) per share:

Weighted average common shares outstanding:

basic and diluted

The accompanying notes are an integral part of these consolidated financial statements.

TRANSMEDICS GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

Year Ended December 31,

Net income (loss)

Other comprehensive income (loss):

Foreign currency translation adjustment

Unrealized gains (losses) on marketable securities,

Unrealized gains on marketable securities,

net of tax of $ 0

Total other comprehensive income (loss)

Comprehensive loss

Comprehensive income (loss)

The accompanying notes are an integral part of these consolidated financial statements.

4 unchanged sentences

Balances at December 31, 2021

Issuance of common stock

upon the exercise of

common stock options

Issuance of common stock in

connection with employee

stock purchase plan

Stock-based compensation

Foreign currency

translation adjustment

Unrealized losses on

marketable securities

Balances at December 31, 2021

Issuance of common stock in public

27 unchanged sentences

Balances at December 31, 2023

Issuance of common stock upon the

exercise of common stock options

Issuance of common stock in

connection with employee stock

purchase plan

Issuance of common stock in

connection with exercise of warrants

Issuance of restricted common stock

Vesting of restricted stock units

Conversion of convertible senior notes

into common stock

Stock-based compensation expense

Foreign currency

translation adjustment

Balances at December 31, 2024

The accompanying notes are an integral part of these consolidated financial statements.

4 unchanged sentences

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by

(used in) operating activities:

Depreciation and amortization expense

8 unchanged sentences

Unrealized foreign currency transaction (gains) losses

Loss on disposal of fixed assets

Changes in operating assets and liabilities, net of acquired assets and liabilities:

6 unchanged sentences

Operating lease liabilities

Net cash used in operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

6 unchanged sentences

Cash flows from financing activities:

Proceeds from issuance of convertible senior notes, net of issuance costs

paid of $ 14,620

Proceeds from issuance of convertible senior notes, net of

issuance costs paid of $ 14,620

Purchases of capped calls related to convertible senior notes

5 unchanged sentences

Proceeds from issuance of common stock upon exercise of warrants

Proceeds from issuance of common stock in connection with employee stock

purchase plan

Proceeds from issuance of common stock in connection with employee

stock purchase plan

Net cash provided by financing activities

Effect of exchange rate changes on cash, cash equivalents and restricted cash

Net increase in cash, cash equivalents and restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of period

4 unchanged sentences

Transfers of inventory to property, plant and equipment

Purchases of property, plant and equipment included in accounts payable and

accrued expenses

Purchases of property, plant and equipment included in accounts payable

and accrued expenses

Operating lease liabilities arising from obtaining right-of-use assets

Reconciliation of cash, cash equivalents and restricted cash:

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents and restricted cash shown in the statement of cash flows

Conversion of convertible senior notes into common stock

The accompanying notes are an integral part of these consolidated financial statements.

6 unchanged sentences

(“TransMedics”), an operating company and wholly owned subsidiary of TransMedics Group, was incorporated in the State of Delaware in August 1998.

The Company is a commercial-stage medical technology company transforming organ transplant therapy for end-stage organ failure patients across multiple disease states.

The Company is a medical technology company transforming organ transplant therapy for end-stage organ failure patients across multiple disease states.

The Company developed the Organ Care System (“OCS”) to replace a decades-old standard of care.

1 unchanged sentence

The Company’s OCS technology replicates many aspects of the organ’s natural living and functioning environment outside of the human body.

The Company also developed its National OCS Program (“NOP”), an innovative turnkey solution to provide outsourced organ retrieval, OCS organ management and logistics services, to provide transplant programs in the United States with a more efficient process to procure donor organs with the OCS.

Our logistics services include aviation transportation, ground transportation and other coordination activity.

The Company also developed its National OCS Program (“NOP”), an innovative turnkey solution to provide outsourced organ procurement, OCS perfusion management and transplant logistics services, to provide transplant programs in the United States with a more efficient process to procure donor organs with the OCS.

The Company's logistics services include aviation transportation, ground transportation and other coordination activity.

On August 16, 2023, the Company acquired Summit Aviation, Inc.

1 unchanged sentence

Summit was a charter flight operator based in Bozeman, Montana.

The acquisition enabled TransMedics to add aviation transportation services to its NOP and become a comprehensive national provider of donor organ retrieval and delivery in the United States.

The acquisition enabled TransMedics to add aviation transportation services to its NOP and become a comprehensive national provider of donor organ procurement and delivery in the United States.

The accompanying consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business.

The Company has incurred recurring annual losses since inception, including a net loss of $ 25.0 million for the year ended December 31, 2023.

Prior to 2024, the Company had incurred recurring annual losses since inception.

As of December 31, 2024, the Company had an accumulated deficit of $ 468.2 million.

The Company generated net income of $ 35.5 million for the year ended December 31, 2024.

The Company believes that its existing cash of $ 336.7 million as of December 31, 2024 will be sufficient to fund its operations, capital expenditures, and debt service payments for at least the next 12 months following the filing of this Annual Report on Form 10-K.

The Company may need to seek additional funding through equity financings, debt financings or strategic alliances.

The Company may not be able to obtain financing on acceptable terms, or at all, and the terms of any financing may adversely affect the holdings or the rights of the Company’s shareholders.

If the Company needs to seek additional funding through equity financings, debt financings or strategic alliances, the Company may not be able to obtain financing on acceptable terms, or at all, and the terms of any financing may adversely affect the holdings or the rights of the Company’s shareholders.

If the Company is unable to obtain funding when needed, the Company will be required to delay, reduce or eliminate some or all of its research and development programs, product expansion or commercialization efforts, or the Company may be unable to continue operations.

22 unchanged sentences

Significant customers are those that accounted for 10 % or more of the Company’s revenue or accounts receivable.

For the year ended December 31, 2023 , no customer accounted for more than 10 % of revenue.

For the years ended December 31, 2022 and 2021, one customer accounted for 14 % of revenue and one customer accounted for 11 % of revenue, respectively.

As of December 31, 2023 and 2022 , no customer accounted for 10 % or more of accounts receivable.

For the years ended December 31, 2024 and 2023 , no customer accounted for more than 10 % of revenue.

For the year ended December 31, 2022, one customer accounted for 14 % of revenue.

As of December 31, 2024 and 2023 , no customer accounted for more than 10 % of accounts receivable.

Certain of the components and subassemblies included in the Company’s products are obtained from a sole source, a single source or a limited group of suppliers, as are sterilization services.

8 unchanged sentences

Related to this separate cash balance, the Company classified $ 0.5 million as restricted cash (non-current) on its consolidated balance sheets as of December 31, 2024 and 2023.

Cash, cash equivalents and restricted cash on the consolidated statements of cash flows includes $ 0.5 million of restricted cash in each of the years presented.

Accounts Receivable

2 unchanged sentences

The Company provides reserves against accounts receivable for estimated credit losses, if any, that may result from a customer’s inability to pay based on the composition of its accounts receivable, current economic conditions and historical credit loss activity.

Amounts deemed uncollectible are

charged or written-off against the reserve.

Amounts deemed uncollectible are charged or

written-off against the reserve.

As of December 31, 2024 and 2023 , the Company had no allowance for credit losses.

During the years ended December 31, 2023, 2022 and 2021, the Company did no t record any provisions for credit losses.

During the year ended December 31, 2022, the Company wrote off less than $ 0.1 million of accounts receivable balances.

During the years ended December 31, 2023 and 2021, the Company did no t write off any accounts receivable balances.

During the years ended December 31, 2024, 2023 and 2022, the Company did no t record any provisions for credit losses and has written off only insignificant balances.

Inventory is valued at the lower of cost or net realizable value.

Cost is computed using the first-in, first-out method.

The Company regularly reviews inventory quantities on-hand for excess and obsolete inventory and, when circumstances indicate, records charges to write down inventories to their estimated net realizable value, after evaluating historical sales, future demand, market conditions and expected product life cycles.

Such charges are classified as cost of revenue in the consolidated statements of operations.

Any write-down of inventory to net realizable value creates a new cost basis.

At the end of each reporting period, the Company assesses whether losses should be accrued on long-term manufacturing purchase commitments in accordance with ASC Topic 330, Inventory , which requires that losses that are expected to arise from firm, noncancelable and unhedged commitments for the future purchase of inventory, measured in the same way as inventory losses, should be recognized in the current period in the consolidated statements of operations unless they are deemed recoverable through firm sales contracts or when there are other circumstances that reasonably assure continuing sales without price decline.

As of the end of each reporting period presented in the accompanying consolidated financial statements, the Company did not identify any potential losses arising from remaining future purchase commitments as compared to estimated future customer sales through the remainder of the term of the manufacturing purchase commitment and, as a result, did no t recognize any loss provision for future-period remaining purchase commitments for the year ended December 31, 2024 .

Spare Parts Inventory

Spare parts are used in aviation operations and are generally not for sale.

Spare parts inventory is comprised of repairable and expendable spare aircraft parts, which are valued at the lower of cost or net realizable value, using the specific identification method.

Storage costs and miscellaneous materials and supplies costs related to inventory or to support flight equipment are expensed as incurred.

As of December 31, 2024, spare parts inventory of $ 4.0 million is included within prepaid expenses and other current assets on the accompanying consolidated balance sheets.

The Company had no spare parts inventory as of December 31, 2023.

The Company determines, based on the evidence that exists, whether or not it is appropriate to maintain a reserve for excess and obsolete spare parts inventory.

The reserve is based on historical experience related to the disposal of inventory due to damage, physical deterioration, obsolescence, or other causes.

As of December 31, 2024, the Company had no allowance for spare parts excess and obsolescence.

Business Combinations

11 unchanged sentences

Adjustments to fair values of assets and liabilities made after the end of the measurement period are recorded within operating results.

Transaction costs related to business combinations are expensed as incurred and are included in general and administrative expense in the consolidated statements of operations.

Transaction costs related to business combinations are expensed as incurred and are included in selling, general and administrative expense in the consolidated statements of operations.

Asset Acquisitions

8 unchanged sentences

Absent successful clinical results and regulatory approval for the asset applications, there was no alternative future use associated with the asset.

Accordingly, the value of the IPR&D asset of $ 27.2 million was expensed as research and development expense in the consolidated statements of operations.

Accordingly, the value of the IPR&D asset of $ 27.2 million was expensed as research and development expense during the year ended December 31, 2023 in the consolidated statements of operations.

Goodwill and Acquired Intangible Assets

21 unchanged sentences

Leasehold improvements

Shorter of term of lease or 15 years

Shorter of term of lease or the useful life of the improvement

Depreciation and amortization expense of aircraft is recognized over the estimated useful lives of each asset to their salvage value.

4 unchanged sentences

Costs for capital assets not yet placed into service are capitalized as construction-in-progress and depreciated once placed into service.

Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is included in loss from operations.

Expenditures for repairs and maintenance are charged to expense as incurred.

4 unchanged sentences

If an impairment review is performed to evaluate a long-lived asset group for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset group to its carrying value.

An impairment loss would be recognized in loss from operations when estimated undiscounted future cash flows expected to result from the use of an asset group are less than its carrying amount.

An impairment loss would be recognized in income (loss) from operations when estimated undiscounted future cash flows expected to result from the use of an asset group are less than its carrying amount.

The impairment loss would be based on the excess of the carrying value of the impaired asset group over its fair value, determined based on discounted cash flows.

2 unchanged sentences

The Company incurs costs to develop computer software that is embedded in the hardware components of the Company’s OCS Console and OCS Perfusion Sets.

Research and development costs related to this software are expensed as incurred, except

for costs of internally developed or externally purchased software that qualify for capitalization.

Research and development costs related to this software are expensed as incurred, except for costs of internally developed or externally purchased software that qualify for capitalization.

Software development costs incurred subsequent to the establishment of technological feasibility, but prior to the general release of the product, are capitalized and amortized over their estimated useful life.

4 unchanged sentences

Capitalization ceases upon completion of all substantial testing performed to ensure the product is ready for its intended use.

The Company did no t capitalize any software development costs related to internal-use software during the years ended December 31, 2023, 2022 and 2021 .

Inventory is valued at the lower of cost or net realizable value.

Cost is computed using the first-in, first-out method.

Such charges are classified as cost of revenue in the consolidated statements of operations.

Any write-down of inventory to net realizable value creates a new cost basis.

At the end of each reporting period, the Company assesses whether losses should be accrued on long-term manufacturing purchase commitments in accordance with ASC 330, Inventory , which requires that losses that are expected to arise from firm, noncancelable and unhedged commitments for the future purchase of inventory, measured in the same way as inventory losses, should be recognized in the current period in the statements of operations unless they are deemed recoverable through firm sales contacts or when there are other circumstances that reasonably assure continuing sales without price decline.

The Company capitalized costs associated with the development of internal-use software during the year ended December 31, 2024 (see Note 5).

The Company accounts for leases under ASC Topic 842, Leases (“ASC 842”).

5 unchanged sentences

otherwise, the Company uses its estimated secured incremental borrowing rate for that lease term.

The Company’s policy is to not record leases with an original term of twelve months or less on its consolidated balance sheets and recognizes those lease payments in the income statement on a straight-line basis over the lease term.

The Company’s policy is to not record leases with an original term of twelve months or less on its consolidated balance sheets and recognize those lease payments in the income statement on a straight-line basis over the lease term.

In addition to rent, the leases may require the Company to pay additional costs, such as utilities, maintenance and other operating costs, which are generally referred to as non-lease components.

5 unchanged sentences

The Company’s OCS Console implied rental agreements qualify as sales-type leases with certain variable payments that meet specified criteria such that a day-one loss would be recognized under ASC 842.

Therefore, in accordance with ASC 842, such

leases are accounted for as operating leases and the Company does not derecognize the leased asset (the OCS Console) at the time of the sale but depreciates the leased asset over the useful life of the asset.

Therefore, in accordance with ASC 842, such leases are accounted for as operating leases and the Company does not derecognize the leased asset (the OCS Console) at the time of the sale but depreciates the leased asset over the useful life of the asset.

Fair Value Measurements

11 unchanged sentences

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions.

The Company has developed and is commercializing a proprietary system to preserve and deliver human organs for transplant in a near-physiologic condition to address the limitations of cold storage organ preservation.

Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the Company’s chief operating decision maker, or decision-making group, in deciding how to allocate resources and assess performance.

The Company has determined that its chief operating decision maker is its Chief Executive Officer.

The Company’s chief operating decision maker reviews the Company’s financial information on a consolidated basis for purposes of allocating resources and assessing financial performance.

The Company has developed and commercialized a proprietary system to preserve and deliver human organs for transplant in a near-physiologic condition to address the limitations of cold storage organ preservation.

Product Warranties

4 unchanged sentences

The Company evaluates its warranty accrual at the end of each reporting period and makes adjustments as necessary.

As of December 31, 2023 and 2022 , the warranty accrual was less than $ 0.1 million each.

As of December 31, 2024 and 2023 , the warranty accrual was less than $ 0.1 million.

Revenue Recognition

1 unchanged sentence

To a lesser extent, the Company also generates product revenue from the sale of OCS Consoles to customers and the implied rental of OCS Consoles loaned to customers at no charge.

For each new transplant procedure, customers purchase an additional OCS disposable set for use on the customer’s existing organ-specific OCS Console.

The Company also generates service revenue by providing outsourced organ retrieval, OCS organ management and logistics services under its NOP in the United States.

For each new transplant procedure, these customers purchase an additional OCS disposable set for use on their existing organ-specific OCS Console.

The Company also generates service revenue by providing outsourced organ procurement, OCS perfusion management and transplant logistics services under its NOP in the United States.

The Company recognizes revenue from sales to customers applying the following five steps:

1 unchanged sentence

Substantially all of the Company’s customer contracts have multiple-performance obligations that contain deliverables consisting of OCS Perfusion Sets and OCS Solutions.

Customer contract deliverables may also include organ retrieval, OCS organ management services and organ transportation under the Company's NOP or an OCS Console, whether sold or loaned to the customer.

Customer contract deliverables may also include organ procurement, OCS perfusion management and transplant logistics services under the Company's NOP or OCS Console, whether sold or loaned to the customer.

The Company evaluates each promise within a multiple-performance obligation arrangement to determine whether it represents a distinct performance obligation.

The primary performance obligations in the Company’s customer arrangements from which it derives revenue are the OCS Perfusion Sets, the OCS Solutions, the OCS Console, organ retrieval services, OCS organ management services and organ transportation logistics.

The primary performance obligations in the Company’s customer arrangements from which it derives revenue are the OCS Perfusion Sets, the OCS Solutions, the OCS Console, organ procurement, OCS perfusion management and transplant logistics services.

When a customer order includes an OCS Console, the Company has determined that customer training and the equipment set-up of the OCS Console, each performed by the Company, are not distinct because they are not sold on a standalone basis and can only be performed by the Company in conjunction with a sale or loan of its OCS Console.

10 unchanged sentences

Revenue from sales to customers of OCS Perfusion Sets, OCS Solutions and OCS Consoles is classified as net product revenue in the Company's consolidated statements of operations.

Revenue from sales to customers of organ retrieval, OCS organ management services and organ transportation logistics is classified as service revenue in the Company’s consolidated statements of operations.

Revenue from sales to customers of organ procurement, OCS perfusion management and transplant logistics services is classified as service revenue in the Company’s consolidated statements of operations.

Revenue is recognized when control is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for the product or services.

When a customer order includes disposable sets and organ retrieval, OCS organ management or logistics services, the Company has determined that the disposable sets and services constitute separate performance obligations and recognizes revenue as the disposable sets and services are each delivered to the customer.

When a customer order includes disposable sets and organ procurement, OCS perfusion management or transplant logistics services, the Company has determined that the disposable sets and services constitute separate performance obligations and recognizes revenue as the disposable sets and services are each delivered to the customer.

Payments Made to Customers

16 unchanged sentences

Revenue is reported net of taxes.

The Company markets and sells its products primarily through its direct sales force, which sells its products to end customers globally.

The Company markets and sells its products to end customers globally.

A small portion of the Company’s revenue is generated by sales to a limited number of distributors in Europe and Asia-Pacific.

7 unchanged sentences

All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure.

Amounts incurred are classified as general and administrative expenses.

Amounts incurred are classified as selling, general and administrative expenses.

Foreign Currency Translation

3 unchanged sentences

dollars using average exchange rates in effect during each period.

The effects of these foreign currency translation adjustments are included in accumulated other comprehensive loss, a separate component of stockholders’ equity.

The effects of these foreign currency translation adjustments are included in accumulated other comprehensive income (loss), a separate component of stockholders’ equity.

The Company also incurs transaction gains and losses resulting from intercompany transactions as well as transactions with customers or vendors denominated in currencies other than the functional currency of the legal entity in which the transaction is recorded.

4 unchanged sentences

The fair value of restricted common stock awards is measured based on the difference between market value of the Company’s common stock on date of grant and the purchase price (if any).

The Company measures compensation expense for restricted common stock units based on the fair value on the date of grant using the market value of the Company’s common stock.

Generally, the Company issues awards with only service-based vesting conditions.

6 unchanged sentences

The Company’s only elements of other comprehensive income (loss) are foreign currency translation adjustments and unrealized gains (losses) on marketable securities.

Accumulated other comprehensive income (loss) on the consolidated balance sheets consists primarily of foreign currency translation adjustments.

Accumulated other comprehensive income (loss) attributable to unrealized gains (losses) on marketable securities has not been significant.

As of December 31, 2024, accumulated other comprehensive income (loss) on the consolidated balance sheets consists only of foreign currency translation adjustments.

Net Income (Loss) per Share

2 unchanged sentences

For periods in which the Company reports a net loss, diluted net loss per common share is the same as basic net loss per common share, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

The Company reported a net loss attributable to common stockholders for each of the years ended December 31, 2023, 2022 and 2021.

The Company’s potential dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share.

The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated above because including them would have had an anti-dilutive effect:

As of December 31,

Warrants to purchase common stock

Options to purchase common stock

Employee stock purchase plan

Restricted stock units

Restricted stock awards

Convertible senior notes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the financial statements or in the Company's tax returns.

8 unchanged sentences

The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties.

Recently issued accounting pronouncements

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

2 unchanged sentences

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently assessing the impact of the adoption of this guidance.

The Company adopted this guidance as of January 1, 2024 , and the adoption did no t have a material impact on its consolidated financial statements.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

1 unchanged sentence

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently assessing the impact of the adoption of this guidance.

The Company is currently assessing the impact of the adoption of this guidance on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) to improve financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods.

ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

ASU 2023-09 allows for adoption using either a prospective or retrospective method.

The Company is currently assessing the impact of the adoption of this guidance on its consolidated financial statements.

Acquisition of Summit

1 unchanged sentence

Summit was a charter flight operator based in Bozeman, Montana.

The acquisition enabled TransMedics to add aviation transportation services to its NOP and become a comprehensive national provider of donor organ retrieval and delivery in the United States.

The acquisition enabled TransMedics to add aviation transportation services to its NOP and become a comprehensive national provider of donor organ procurement and delivery in the United States.

The acquisition was accounted for as a purchase of a business under ASC Topic 805, Business Combinations .

1 unchanged sentence

The preliminary purchase consideration of $ 14.9 million reflected an upfront cash payment of $ 18.0 million, net of cash acquired and working capital adjustments.

The Company’s consolidated financial statements reflect the preliminary allocation of the purchase price to the assets and liabilities assumed based on fair value as of the date of the acquisition.

The Company's estimate of preliminary purchase consideration is subject to change upon finalizing working capital adjustments.

The Company’s preliminary estimate of the fair value of specifically identifiable assets acquired and liabilities assumed as of the date of acquisition is subject to change upon finalizing its valuation analysis.

During the three months ended December 31, 2023, the Company recorded an adjustment to goodwill of $ 0.3 million, representing an adjustment to its estimate of the fair value of accounts payable and deferred tax liabilities as of the acquisition date.

The final determinations, which are expected to be completed by August 2024, may result in additional changes in the fair value of certain assets and liabilities as compared to these preliminary estimates.

The following tables summarize the preliminary allocation of the purchase price (in thousands):

In 2024, the Company recorded a final working capital adjustment of $ 0.4 million to the purchase price and goodwill.

The Company’s consolidated financial statements as of December 31, 2024 reflect the final allocation of the purchase price to the assets and liabilities assumed based on fair value as of the date of the acquisition.

The following tables summarize the final allocation of the purchase price (in thousands):

Assets Acquired and Liabilities Assumed:

10 unchanged sentences

net of cash acquired

Property, plant and equipment consist primarily of flight school aircraft and construction-in-progress related to a commercial aircraft hangar that Summit is in the process of constructing.

Property, plant and equipment consisted primarily of flight school aircraft and construction-in-progress related to a commercial aircraft hangar that Summit was in the process of constructing at the date of acquisition.

Flight school aircraft were valued using market comparisons adjusted for aircraft-specific condition.

8 unchanged sentences

Deferred tax liabilities relate to the differences between the fair value recognized in purchase accounting and the tax basis of property, plant and equipment and intangible assets.

The net deferred tax liability is a source of income to support the recognition of a portion of our existing deferred tax assets.

Therefore, the Company recorded a tax benefit of $ 1.7 million for the release of a portion of its valuation allowance related to the net deferred tax liabilities recorded in purchase accounting.

The Company incurred total transaction costs of $ 2.0 million for third-party professional services utilized for the acquisition, which are included in selling, general and administrative costs in the consolidated statements of operations.

The operating results of the acquired entity have been included in the consolidated financial statements beginning on the acquisition date.

Pro forma results of operations for the acquisition have not been presented as they are not material to the Company’s consolidated results of operations.

The net deferred tax liability is a source of income to support the recognition of a portion of existing deferred tax assets.

Therefore, the Company recorded a tax benefit of $ 1.7 million in 2023 for the release of a portion of its valuation allowance related to the net deferred tax liabilities recorded in purchase accounting.

Inventory consisted of the following (in thousands):

2 unchanged sentences

Finished goods

The Company recorded an immaterial out-of-period adjustment in the fourth quarter of 2024 to reduce inventory by $ 2.1 million due to inventory-related transactions not being recorded timely and accurately.

This adjustment is immaterial to both the current and prior periods.

Property, Plant and Equipment, Net

10 unchanged sentences

During the years ended December 31, 2024, 2023 and 2022, total depreciation and amortization expense was $ 19.6 million, $ 8.1 million and $ 3.5 million, respectively.

Construction-in-progress as of December 31, 2023 primarily relates to construction of a commercial aircraft hangar at Bozeman Yellowstone International Airport in Bozeman, Montana.

Construction-in-progress as of December 31, 2024 primarily relates to capitalized internal-use software that has not yet been placed in service.

Construction-in-progress as of December 31, 2023 primarily related to construction of a commercial aircraft hangar at Bozeman Yellowstone International Airport in Bozeman, Montana.

The aircraft hangar was placed in service in June 2024 and is included in leasehold improvements as of December 31, 2024.

The Company capitalized costs associated with the development of internal-use software of $ 4.4 million in the year ended December 31, 2024, included in construction-in-progress.

The Company did no t have capitalized costs for internal-use software in the years ended December 31, 2023 and 2022.

Substantially all of the Company's property, plant and equipment are held in the United States.

Goodwill and Intangible Assets

The carrying amount of goodwill was $ 12.0 million as of December 31, 2023 related to the Company’s acquisition of Summit.

The carrying amount of goodwill was $ 11.5 million and $ 12.0 million as of December 31, 2024 and 2023, respectively, and related to the Company’s acquisition of Summit.

The decrease in goodwill from the year ended December 31, 2023 was due to final working capital adjustments to the purchase price of Summit.

Goodwill is not amortized, but instead is reviewed for impairment at least annually or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired.

6 unchanged sentences

Customer relationship

December 31, 2023

Weighted Average Useful Life

Accumulated Amortization

Carrying Value

Customer relationship

Amortization expense is recorded within selling, general and administrative expense.

Amortization expense for the year ended December 31, 2023 was $ 0.1 million.

Amortization expense for the years ended December 31, 2024 and 2023 was $ 0.2 million and $ 0.1 million, respectively.

Future amortization expense of the intangible assets as of December 31, 2024, is expected to be as follows (in thousands):

9 unchanged sentences

Convertible senior notes consisted of the following (in thousands):

December 31, 2023

Principal amount of convertible senior notes

21 unchanged sentences

The Company accounts for the Notes as a single liability in accordance with ASC 470-20 as the Company concluded that embedded conversion features within the Notes do not meet the requirements for bifurcation.

A conditional conversion feature of the Notes was triggered on June 30, 2024 and again on September 30, 2024, as the last reported sale price of the Company's common stock was greater than or equal to 130 % of the conversion price of the Notes for at least 20 trading days during the period of 30 consecutive trading days ending on and including the last trading day of each of the quarters ended June 30, 2024 and September 30, 2024, respectively, and the Notes therefore became convertible at the noteholders’ election in the immediately following calendar quarters ended September 30, 2024 and December 31, 2024, respectively.

The Company accounts for the Notes as a single liability in accordance with ASC Topic 470-20 as the Company concluded that embedded conversion features within the Notes do not meet the requirements for bifurcation.

Initial purchaser discounts and other debt issuance costs related to the Notes totaling $ 14.6 million were recorded by the Company as a debt discount.

The debt discount is reflected as a reduction of the carrying value of the Notes on the Company’s consolidated balance sheets and is being accreted to interest expense over the term of the Notes using the effective interest method.

During the year ended December 31, 2023 , the Company recognized $ 6.2 million in interest expense related to the 1.50 % cash coupon of the Notes and amortization of the debt issuance costs.

During the year ended December 31, 2023, the effective interest rate on the outstanding Notes was approximately 2.1 %.

During the years ended December 31, 2024 and 2023, the Company recognized $ 9.7 million and $ 6.2 million, respectively, in interest expense related to the 1.50 % cash coupon of the Notes and amortization of the debt issuance costs.

During the years ended December 31, 2024 and 2023, the effective interest rate on the outstanding Notes was approximately 2.1 % .

Capped Call Transactions

3 unchanged sentences

The Capped Calls are recorded in stockholders’ equity and are not accounted for as derivatives.

The cost of $ 52.1 million incurred to purchase the Capped Calls were recorded as a reduction to common stock on the accompanying consolidated balance sheets.

The cost of $ 52.1 million incurred to purchase the Capped Calls was recorded as a reduction to common stock on the accompanying consolidated balance sheets.

Each of the Capped Calls has an initial strike price of approximately $ 94.00 per share, subject to certain adjustments, which corresponds to the initial conversion price of the Notes.

9 unchanged sentences

Long-term debt, net of discount and current portion

Canadian Imperial Bank of Commerce Credit Agreement

In July 2022, the Company entered into a credit agreement with Canadian Imperial Bank of Commerce (“CIBC”), as amended by the First Amendment to Credit Agreement, dated as of May 8, 2023, by and among the Company and CIBC (the “First Amendment”), the Second Amendment to Credit Agreement, dated as of June 23, 2023, by and among the Company, and CIBC (the “Second Amendment”), the Third Amendment to Credit Agreement, dated as of November 9, 2023, by and among the Company, and CIBC (the “Third Amendment”) (as amended, the “CIBC Credit Agreement”), pursuant to which the Company borrowed $ 60.0 million.

6 unchanged sentences

Borrowings under the CIBC Credit Agreement bear interest at an annual rate equal to either, at the Company’s option, (i) the secured overnight financing rate for an interest period selected by the Company, subject to a minimum of 1.50 %, plus 2.0 % or (ii) 1.0 % plus the higher of a) the prime rate subject to a minimum of 4.0 % or b) the Federal Funds Effective Rate, plus 0.5 %.

At the Company’s option, the Company may prepay borrowings outstanding under the CIBC Credit Agreement, subject to a prepayment fee of 2.0 % of outstanding borrowings if paid prior to 12 months after the closing date, and 1.0 % if paid on or after 12 months after the closing date but prior to 24 months after the closing date.

At the Company’s option, the Company may prepay borrowings outstanding under the CIBC Credit Agreement, without a prepayment fee.

In connection with entering into the CIBC Credit Agreement, the Company paid upfront fees and other costs of $ 1.5 million, which were recorded by the Company as a debt discount.

15 unchanged sentences

As of December 31, 2024, the stated interest rate applicable to borrowings under the CIBC Credit Agreement was 6.4 % .

During the years ended December 31, 2024, 2023 and 2022, the Company recognized $ 4.7 million, $ 4.6 million and $ 3.7 million, respectively, in interest expense related to the stated interest rate on outstanding borrowings and amortization of the debt issuance costs.

During the years ended December 31, 2024, 2023 and 2022, the weighted average effective interest rate on outstanding borrowings under the CIBC Credit Agreement was approximately 7.7 % , 7.7 % and 6.6 %, respectively.

6 unchanged sentences

Through December 31, 2024 , no dividends had been declared or paid.

As of December 31, 2023 , the Company had outstanding warrants to purchase 14,440 shares of common stock at an exercise price of $ 17.47 per share with an expiration date of May 6, 2024 .

In April 2024, warrants for the purchase of 14,440 shares of common stock at an exercise price of $ 17.47 per share were exercised in a cashless exercise resulting in the issuance of 11,735 shares of common stock.

In November 2022, warrants were exercised to purchase 50,000 shares of common stock at an exercise price of $ 8.75 per share for total proceeds of $ 0.4 million.

As of December 31, 2024 , the Company had no outstanding warrants.

Stock-Based Compensation

21 unchanged sentences

A total of 371,142 shares of common stock of TransMedics Group were initially reserved for issuance under the 2019 ESPP.

During the year ended December 31, 2023 , 25,894 shares were issued under the 2019 ESPP and as of December 31, 2023, 264,559 shares remained available for issuance.

During the year ended December 31, 2024 , 31,303 shares were issued under the 2019 ESPP and as of December 31, 2024, 233,256 shares remained available for issuance under the 2019 ESPP.

Stock Option Valuation

21 unchanged sentences

The aggregate intrinsic value of stock options exercised during the years ended December 31, 2024, 2023 and 2022, was $ 80.1 million, $ 31.0 million and $ 15.0 million, respectively.

The weighted average grant-date fair

value of stock options granted during the years ended December 31, 2023, 2022 and 2021 was $ 41.75 per share, $ 11.32 per share and $ 18.63 per share, respectively.

The weighted average grant-date fair value of stock options granted during the years ended December 31, 2024, 2023 and 2022 was $ 57.12 per share, $ 41.75 per share and $ 11.32 per share, respectively.

The Company has no t granted any stock-based awards with performance-based vesting conditions.

6 unchanged sentences

Unvested restricted common stock as of December 31, 2024

The aggregate fair value of restricted stock that vested during the year ended December 31, 2023 was $ 1.7 million.

There was no restricted stock vesting during the years ended December 31, 2022 or 2021.

The Company granted restricted common stock during the year ended December 31, 2022 with a weighted average grant-date fair value of $ 28.74 per share.

The Company did no t grant restricted common stock during the year ended December 31, 2021.

The aggregate fair value of restricted stock that vested during the years ended December 31, 2024 and 2023 was $ 1.4 million and $ 1.7 million, respectively.

There was no restricted stock vesting during the year ended December 31, 2022.

The Company granted restricted common stock during the years ended December 31, 2024, 2023 and 2022 with a weighted average grant-date fair value of $ 156.00 , $ 72.75 and $ 28.74 per share, respectively.

Restricted Common Stock Units

3 unchanged sentences

Unvested restricted stock units as of December 31, 2024

The Company did no t grant restricted common stock units during the years ended December 31, 2022 or 2021.

The aggregate fair value of restricted stock units that vested during the year ended December 31, 2024 was $ 11.3 million.

There was no restricted stock units vesting during the years ended December 31, 2023 and 2022.

The Company granted restricted common stock units during the years ended December 31, 2024 and 2023 with a weighted average grant-date fair value of $ 89.60 and $ 63.74 per share, respectively.

The Company did no t grant restricted common stock units during the year ended December 31, 2022.

Stock-Based Compensation

2 unchanged sentences

Cost of revenue

Research, development and clinical trials expenses

Research, development and clinical trials

Selling, general and administrative expenses

As of December 31, 2024, total unrecognized compensation cost related to unvested share-based awards was $ 54.6 million, which is expected to be recognized over a weighted-average period of 2.1 years.

Income (Loss) Before Income Taxes

The domestic and foreign components of income (loss) before income taxes were as follows (in thousands):

Year Ended December 31,

United States

Tax Provision Components

During the years ended December 31, 2023, 2022 and 2021 , the Company recorded no income tax benefits for the net operating losses incurred or for the research and development tax credits generated in each year in the United States, due to the uncertainty regarding the realizability of these respective deferred tax assets.

The Company generated income in the Netherlands for the years ended December 31, 2023, 2022 and 2021 and, accordingly, recorded a foreign income tax provision of less than $ 0.1 million, $ 0.1 million and less than $ 0.1 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company recorded a tax benefit of $ 1.7 million for the release of a portion of its valuation allowance related to the net deferred tax liabilities recorded in purchase accounting during the year ended December 31, 2023.

The components of income taxes were as follows (in thousands):

Year Ended December 31,

Current income tax expense:

Deferred income tax expense (benefit):

Income tax expense (benefit)

The Company recorded a deferred tax benefit of $ 1.7 million for the release of a portion of its valuation allowance related to the net deferred tax liabilities recorded in purchase accounting during the year ended December 31, 2023.

As part of the allocation of the purchase price of Summit, the Company recorded deferred tax liabilities for the differences between the fair value recognized in purchase accounting and the tax basis of property, plant and equipment and intangible assets.

2 unchanged sentences

The Company maintains a valuation allowance on its overall net deferred tax asset as it deems it more likely than not that the net deferred tax asset will not be realized.

Loss Before Income Taxes

The domestic and foreign components of loss before income taxes were as follows (in thousands):

Year Ended December 31,

United States

A reconciliation of the U.S.

29 unchanged sentences

Net deferred tax assets

As of December 31, 2023, the Company had federal net operating loss carryforwards of $ 376.4 million, which may be available to offset future taxable income, of which $ 207.4 million of the total net operating loss carryforwards expire at various dates beginning in 2024 , while the remaining $ 169.0 million do not expire but are limited in their usage to an annual deduction equal to 80 % of annual taxable income.

As of December 31, 2023, the Company had state net operating loss carryforwards of $ 328.8 million, which may be available to offset future taxable income and expire at various dates beginning in 2030 .

As of December 31, 2024, the Company had federal net operating loss carryforwards of $ 404.1 million, which may be available to offset future taxable income, of which $ 204.6 million of the total net operating loss carryforwards expire at various dates between 2025 and 2037 , while the remaining $ 199.5 million do not expire but are limited in their usage to an annual deduction equal to 80 % of annual taxable income.

As of December 31, 2024, the Company had state net operating loss carryforwards of $ 349.6 million, which may be available to offset future taxable income and expire at various dates between 2030 and 2044 .

As of December 31, 2024, the Company also had U.S.

federal and state research and development tax credit carryforwards of $ 10.7 million and $ 6.5 million, respectively, which may be available to offset future tax liabilities and begin to expire in 2024 .

federal and state research and development tax credit carryforwards of $ 13.2 million and $ 8.3 million, respectively, which may be available to offset future tax liabilities and expire at various dates between 2025 and 2044 .

As of December 31, 2024 , the Company had no foreign net operating loss carryforwards.

7 unchanged sentences

Further, until a study is completed by the Company and any limitation is known, no amounts are being presented as an uncertain tax position.

As required by Accounting Standard Codification 740, management of the Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets, which are comprised principally of net operating loss carryforwards.

As required by ASC 740, management of the Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets, which are comprised principally of net operating loss carryforwards.

Management has determined that it is more likely than not that the Company will not recognize the benefits of federal and state deferred tax assets and, as a result, a valuation allowance has been recorded.

10 unchanged sentences

To the extent that the Company has carryforward attributes, the tax years in which the attribute was generated may still be adjusted upon examination by federal, state or local tax authorities if they either have been or will be used in the future.

Changes in the valuation allowance for deferred tax assets during the year ended December 31, 2024 related primarily to current year federal and state net operating losses generated, capitalized research and development costs, and federal and state research and development tax credits generated, partially offset by an increase in deferred tax liabilities related to depreciation expense.

Changes in the valuation allowance for deferred tax assets during the year ended December 31, 2023 related primarily to current year federal and state net operating losses generated, acquired IPR&D and capitalized research and development costs.

Changes in the valuation allowance for deferred tax assets during the year ended December 31, 2022 related primarily to the capitalization of research and development costs required under Section 174 and current year federal and state net operating losses generated, partially offset by a decrease in deferred tax assets related to state net operating loss carryforwards due to a change in the state effective tax rate.

Changes in the valuation allowance for deferred tax assets during the year ended December 31, 2021 related primarily to the increase in net operating loss carryforwards in 2021.

The changes in the valuation allowance were as follows (in thousands):

12 unchanged sentences

In June 2023, the Company amended one of its lease agreements to add space through the remainder of the lease term and under the existing terms of the lease.

In connection with the acquisition of Summit, the Company acquired a 20-year operating lease with one 10-year renewal option, for space at the Bozeman Yellowstone International Airport in Bozeman, Montana where the Company is constructing a commercial aircraft hangar (see Note 3).

In connection with the acquisition of Summit, the Company acquired a 20-year operating lease with one 10-year renewal option, for space at the Bozeman Yellowstone International Airport in Bozeman, Montana where the Company constructed a commercial aircraft hangar (see Note 3).

In June 2024, the Company entered into a lease for office and hangar space in Dallas, Texas that expires June 30, 2027 , subject to certain early termination provisions.

Fixed monthly payments total $ 1.7 million over the three-year term of the lease.

The Company is also obligated to pay the landlord certain variable costs.

The Company recorded a right-of-use asset and related lease liability of $ 1.5 million in the third quarter of 2024, upon commencement of the lease.

The Company also leases office space for its NOP and hangar space for its aircraft at various locations in the United States under short-term leases.

9 unchanged sentences

The weighted-average remaining lease term as of December 31, 2024 and 2023 was 3.7 years and 4.7 years, respectively.

The weighted-average discount rate as of December 31, 2023 and 2022 was 6.9 % and 6.7 % , respectively.

The weighted-average discount rate as of December 31, 2024 and 2023 was 6.9 % .

Because the interest rate implicit in the leases was not readily determinable, the Company’s estimated incremental borrowing rate was used to calculate the present value of the leases.

14 unchanged sentences

This plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis.

As of December 31, 2022, the Company had no t made any contributions to the plan.

Effective January 1, 2023, the Company instituted an employer matching program for the 401(k) plan pursuant to which the Company will match 100 % of the first 3 % of each participating employee’s eligible compensation contributed to the plan and 50 % of up to an additional 2 % each participating employee’s eligible compensation contributed to the plan.

For the year ended December 31, 2023, the Company recorded expense of $ 1.4 million related to these matching contributions.

For the years ended December 31, 2024 and 2023, the Company recorded expense of $ 3.3 million and $ 1.4 million, respectively, related to these matching contributions.

Prior to 2023, the Company had no t made any contributions to the plan.

Indemnification Agreements

In the ordinary course of business, the Company has agreed to defend and indemnify its customers against third-party claims asserting infringement of certain intellectual property rights, which may include patents, copyrights, trademarks, or trade secrets.

The Company’s exposure under these indemnification provisions is generally limited to the total amount paid by the end-customer under the agreement.

However, certain agreements include indemnification provisions that could potentially expose the Company to losses in excess of the amount received under the agreement.

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners, and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties.

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to customers, vendors, lessors, business partners, and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements, negligence or willful misconduct, or from intellectual property infringement claims made by third parties.

In addition, the Company has entered into indemnification agreements with members of its board of directors that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or services as directors or officers.

7 unchanged sentences

Legal Proceedings

The Company is not currently party to any material legal proceedings.

On February 14, 2025, a class action captioned Merly Jewik v.

TransMedics Group, Inc., et al., Case No.

1:25-cv-10385, was filed against the Company in the United States District Court for the District of Massachusetts.

The complaint purports to assert claims against the Company and certain of its current and former officers pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder, on behalf of a putative class of investors who purchased or otherwise acquired the Company’s shares between February 28, 2023 and January 10, 2025 (the “class period”).

Plaintiff seeks to recover damages allegedly caused by purported misstatements and omissions contained in certain risk disclosures set forth in the Company’s 2022 and 2023 Annual Reports.

The complaint alleges the disclosures at issue were false or misleading, because they failed to describe what plaintiff alleges were coercive business and marketing tactics, anticompetitive conduct and fraudulent billing activities on the part of the Company.

The complaint claims these alleged statements and omissions operated to artificially inflate the price paid for the Company's common stock during the class period.

At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies.

At this time, the Company is unable to predict the outcome of the class action litigation or reasonably estimate a range of possible losses.

The Company expenses as incurred the costs related to such legal proceedings.

The Company has determined that the payments made to the customer for reimbursement of clinical trial materials and customer’s costs incurred to execute specific clinical trial protocols related to the Company’s OCS products do not provide the Company with a distinct good or service transferred by the customer, and therefore such payments are recorded as a reduction of revenue from the customer in the Company’s consolidated statements of operations.

The Company records the reduction of revenue in the same period as the revenue is recognized and records a corresponding accrual for its estimate of the payments.

As clinical trials reach the closeout phase, the Company updates its accrual estimates with corresponding adjustments to revenue.

The Company will continue to update its clinical trial accrual estimates as information related to clinical trial payments is received.

The reconciliation of gross product revenue to net product revenue for these certain payments is shown below (in thousands):

Year Ended December 31,

Gross product revenue from sales to customers

clinical trial payments

Total net product revenue

The Company determined that payments made to customers to obtain information related to post-approval studies or existing standard-of-care protocols (i.e., unrelated to the Company’s OCS products) meet the criteria to be classified as a cost because the Company receives a distinct good or service transferred by the customer separate from the customer’s purchase of the Company’s OCS products and the consideration paid to the customer represents the fair value of the distinct good or service received.

As a result, such payments made to the customers are recorded as operating expenses.

The Company recorded payments made to customers related to post-approval studies and for documentation related to existing standard-of-care protocols of $ 0.9 million, $ 1.0 million and $ 2.1 million for the years ended December 31, 2023, 2022 and 2021, respectively, as operating expenses.

Summit makes payments to its aircraft management customers who had opted in to Summit's charter program.

Summit pays the aircraft owner a fee for the use of the aircraft for charter flight services.

The Company determined that fees incurred for the use of aircraft management customers' aircraft meet the criteria to be classified as a cost because the Company receives a distinct good or service transferred by the customer separate from the customer’s purchase of Summit's aircraft management services and the consideration to the customer represents the fair value of the distinct good or service received.

As a result, such fees are recorded as cost of sales.

The Company recorded expense for the use of customers' aircraft of $ 1.1 million for the year ended December 31, 2023.

As part of the Summit integration, Summit's legacy aircraft management customers are being transitioned to third parties and following this transition, the Company will no longer make such payments to customers.

Revenue and Segment Information

Disaggregated Revenue

1 unchanged sentence

Year Ended December 31,

OCS Transplant Revenue by country by organ(1)(2):

OCS transplant revenue by country

by organ(1)(2):

United States

2 unchanged sentences

Liver total revenue

Total United States OCS transplant revenue

Total United States OCS

transplant revenue

All other countries

1 unchanged sentence

Liver revenue

Total all other countries OCS transplant revenue

Total all other countries OCS

transplant revenue

Total OCS transplant revenue

(1) Revenue by country is categorized based on the location of the end customer.

Total revenue includes product and service revenue.

(2) Service revenue unrelated to OCS transplant, which was $ 4.9 million for the year December 31, 2023 , is not included in this table.

Total OCS transplant revenue includes product and service revenue.

(2) Service revenue unrelated to OCS transplant, which was $ 4.4 million and $ 4.9 million for the years ended December 31, 2024 and 2023, is not included in this table.

Payments to Customers

In connection with its clinical trials, the Company makes payments to customers for reimbursement of clinical trial materials and customer’s costs incurred to execute specific clinical trial protocols related to the Company’s OCS products, which are recorded as a reduction of revenue.

The Company records the reduction of revenue in the same period as the revenue is recognized and records a corresponding accrual for its estimate of the payments.

The Company updates its clinical trial accrual estimates as information related to clinical trial payments is received with a corresponding adjustment to revenue.

The reconciliation of gross product revenue to net product revenue for these certain payments is shown below (in thousands):

Year Ended December 31,

Gross product revenue from sales to customers

clinical trial payment estimates

Total net product revenue

The Company also makes payments to customers to obtain information related to post-approval studies or existing standard-of-care protocols unrelated to the Company's OCS products and records such payments as operating expenses.

For the years ended December 31, 2024, 2023 and 2022, the Company recorded $ 6.0 million, $ 2.4 million and $ 1.9 million, respectively, of operating expense related to these costs.

Segment Information

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions.

Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the Company’s chief operating decision maker, or decision-making group (the “CODM”), in deciding how to allocate resources and assess performance.

The CODM of the Company is the Chief Executive Officer .

The CODM assesses performance

and allocates resources based on the Company’s consolidated statements of operations and the Company’s operations are managed on a consolidated basis to decide where to allocate and invest additional resources within the business to continue growth.

The CODM also utilizes the consolidated balance sheet for resource allocation and segment asset information is not provided to the CODM to allocate resources.

As a single reportable segment entity, the Company’s segment performance measure is net income (loss).

Significant segment expenses, as provided to the CODM, are presented below (in thousands):

Year Ended December 31,

Total Revenue

Cost of net product revenue

Cost of service revenue

Research, development and clinical trials:

Personnel related (including stock-based

compensation expense)

Laboratory supplies and research materials

Consulting and third-party services

Clinical trials costs

Facility related and other

Acquired in-process research and development

Selling, general and administrative:

Personnel related (including stock-based

compensation expense)

Professional and consultant fees

Tradeshows and conferences

Facility related and other

Other segment items(1)

Net income (loss)

(1) Other segment items include interest income, interest expense, foreign currency exchange gains and losses and income taxes.

See the consolidated financial statements for other financial information regarding the Company’s operating segment.

Net Income (Loss) per Share

Basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding for the period.

Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the period, including potential dilutive common shares assuming the dilutive effect of outstanding stock awards, using the treasury stock method, and outstanding convertible notes, using the if-converted method.

A reconciliation of the numerators and the denominators of the basic and dilutive net income (loss) per common share computations are as follows (in thousands, except share and per share amounts):

Year Ended December 31,

Net income (loss)

Weighted average basic common shares

Effect of dilutive securities:

Options to purchase common stock

Restricted stock units

Warrants to purchase common stock

Restricted stock awards

Employee stock purchase plan

Weighted average dilutive common shares

Net income (loss) per share:

The Company excluded the following potential common shares, presented based on weighted average shares outstanding, from the computation of diluted net income (loss) per share because including them would have had an anti-dilutive effect:

Year Ended December 31,

Convertible senior notes

Options to purchase common stock

Employee stock purchase plan

Restricted stock units

Restricted stock awards

Warrants to purchase common stock

Related Party Transactions

4 unchanged sentences

The Company paid Dr.

Amira Hassanein $ 0.4 million in total compensation in each of the years ended December 31, 2023, 2022 and 2021 , respectively, for her services as an employee.

Amira Hassanein $ 0.5 million in total compensation in the year ended December 31, 2024 and $ 0.4 million in total compensation in each of the years ended December 31, 2023 and 2022, for her services as an employee.

Subsequent Events

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis