What changed in this filing

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Item 1. Financial Statements

2021-11-09 compared with 2021-08-06 · 126 added, 80 removed, 532 unchanged (28% of the section changed)

3 unchanged sentences

(In thousands, except share amounts)

September 30,

Current assets:

24 unchanged sentences

150,000,000 shares authorized;

shares and 27,175,305 shares issued and outstanding at June 30, 2021

shares and 27,175,305 shares issued and outstanding at September 30, 2021

and December 31, 2020, respectively

7 unchanged sentences

(In thousands, except share and per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Cost of revenue

18 unchanged sentences

(In thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Other comprehensive income (loss):

Foreign currency translation adjustment

Unrealized gains (losses) on marketable securities,

Unrealized losses on marketable securities,

net of tax of $ 0

9 unchanged sentences

exercise of common stock options

Issuance of common stock in connection

with employee stock purchase plan

Issuance of common stock in

connection with employee stock

purchase plan

Stock-based compensation expense

8 unchanged sentences

Balances at June 30, 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 expense

Foreign currency translation

Balances at September 30, 2021

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

25 unchanged sentences

Balances at June 30, 2020

Issuance of common stock

upon the exercise of

common stock options

Issuance of common stock in

connection with employee

stock purchase plan

Reversal of estimated

offering costs

Stock-based compensation

Foreign currency

translation adjustment

Unrealized losses on

marketable securities

Balances at September 30, 2020

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

2 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

29 unchanged sentences

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

3 unchanged sentences

Purchases of property and equipment included in accounts payable and accrued expenses

Offering costs included in accounts payable and accrued expenses

Reconciliation of cash, cash equivalents and restricted cash:

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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 losses since inception, including net losses attributable to the Company of $ 18.6 million for the six months ended June 30, 2021 and $ 28.7 million for the year ended December 31, 2020.

As of June 30, 2021, the Company had an accumulated deficit of $ 416.8 million.

The Company has incurred recurring losses since inception, including net losses attributable to the Company of $ 31.5 million for the nine months ended September 30, 2021 and $ 28.7 million for the year ended December 31, 2020.

As of September 30, 2021, the Company had an accumulated deficit of $ 429.8 million.

The Company expects to continue to generate operating losses in the foreseeable future.

The Company believes that its existing cash, cash equivalents, and marketable securities of $ 112.2 million as of June 30, 2021 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 Quarterly Report on Form 10-Q.

The Company believes that its existing cash, cash equivalents, and marketable securities of $ 102.9 million as of September 30, 2021 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 Quarterly Report on Form 10-Q.

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

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The Company operates in an environment of rapid change in technology and competition.

The impact of the COVID-19 pandemic has been and will likely continue to be extensive in many aspects of society, which has resulted in and will likely continue to result in significant disruptions to the global economy, as well as businesses and capital markets around the world.

The impact of the COVID-19 pandemic has been and may continue to be extensive in many aspects of society, which has resulted in and may continue to result in significant disruptions to the global economy, as well as businesses and capital markets around the world.

Impacts to the Company’s business as a result of COVID-19 include:

the temporary disruption of transplant procedures at many of the organ transplant centers that purchase OCS products;

customer delays or reductions in customer capital expenditures and operating budgets and the related impact on our product sales;

customer delays or reductions in customer capital expenditures and operating budgets and the related impact on its product sales;

disruptions to the Company’s manufacturing operations and supply chain caused by facility closures, reductions in operating hours, staggered shifts and other social distancing efforts;

2 unchanged sentences

restrictions on or delays of the Company’s clinical trials and studies;

delays of reviews and approvals by the Food and Drug Administration (“FDA”) and other health authorities, including with respect to the Company’s OCS Heart Pre-Market Approval (“PMA”) application;

delays of reviews and approvals by the Food and Drug Administration (“FDA”) and other health authorities;

limitations on its employees’ and customers’ ability to travel, and delays in product installations, trainings or shipments to and from affected countries and within the United States.

2 unchanged sentences

Starting in May 2020, the Company resumed manufacturing and distribution operations to pre-COVID levels.

OCS product sales were negatively impacted by the COVID-19 pandemic from the second quarter of 2020 through the second quarter of 2021 and the Company anticipates a negative impact to OCS product sales to continue through 2021.

After seeing recovery in transplant volumes in the second quarter of 2021, the Delta variant of the virus that causes COVID-19 has had a negative impact on overall transplant volumes in the third quarter of 2021 as compared to the previous quarter , with l ung transplants impacted more heavily than heart and liver transplants.

Therefore, we expect the negative impact on OCS product sales due to the COVID-19 pandemic to continue through 2021 and into 2022 .

The extent of the future impact on the Company’s operations and financial condition will depend on the length and severity of the pandemic, its consequences, the effects of any variants as new strains evolve and containment and vaccination efforts.

While the FDA approved emergency use authorization of vaccines starting in December 2020 and vaccination efforts have been ongoing in the United States, it is not yet fully known how vaccination efforts will impact the COVID-19 pandemic, including with respect to the duration o f the efficacy of the vaccines , their effectiveness against the Delta variant or any other variants as new strains of the virus evolve .

While vaccination efforts are ongoing in the United States, it is not yet fully known how the availability and administration of vaccines will impact the ongoing COVID-19 pandemic, including with respect to vaccination rates, the duration o f the efficacy of the vaccines and their effectiveness against the Delta variant or any other variants as new strains of the virus evolve .

The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

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These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of June 30, 2021 and results of operations for the three and six months ended June 30, 2021 and 2020 and cash flows for the six months ended June 30, 2021 and 2020 have been made.

The Company’s results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2021.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of September 30, 2021 and results of operations for the three and nine months ended September 30, 2021 and 2020 and cash flows for the nine months ended September 30, 2021 and 2020 have been made.

The Company’s results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2021.

Use of Estimates

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

For the three months ended June 30, 2021, no customer accounted for 10 % or more of net revenue.

For the six months ended June 30, 2021, one customer accounted for 10% of net revenue.

For the three and six months ended June 30, 2020, one customer accounted for 17 % and 11 % of net revenue, respectively.

As of June 30, 2021, no customer accounted for 10 % or more of accounts receivable.

For the three months ended September 30, 2021, two customers accounted for 16 % and 12 % of net revenue, respectively.

For the nine months ended September 30, 2021, one customer accounted for 10 % of net revenue.

For the three months ended September 30, 2020, two

customer s accounted for 12 % and 14 % of net revenue , respectively .

For the nine months ended September 30, 2020, two customers accounted for 13 % and 12 % of net revenue, respectively.

As of September 30, 2021 , two customer s accounted for 20 % and 11 % of accounts receivable , respectively .

As of December 31 , 20 20 , one customer accounted for 30 % of accounts receivable.

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Revenue Recognition

The Company generates revenue primarily 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 OCS products.

component of the Company’s OCS products.

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

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The performance obligation of the OCS Console includes customer training and equipment set-up.

Revenue for each OCS Console is recognized at the point in time at which control is transferred to the customer, which is typically only after the console has arrived at the customer site and the training and equipment set-up have been completed by the Company because the customer cannot benefit from the OCS Console without the training and equipment set-up having been completed.

Revenue for each OCS Console is recognized at the point in time at which control is transferred to the customer, which is typically only after the console has

arrived at the customer site and the training and equipment set-up have been completed by the Company because the customer cannot benefit from the OCS Console without the training and equipment set-up having been completed.

At that time, the Company believes that the customer has the significant risks and rewards of ownership.

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Reductions of revenue related to such payments made to customers for reimbursements are recognized when the Company recognizes the revenue for the sale of its OCS disposable sets.

The Company recorded reimbursable clinical costs as a reduction of revenue of $ 0.5 million and $ 1.1 million for the three and six months ended June 30, 2021, respectively, and $ 0.5 million and $ 1.2 million for the three and six months ended June 30, 2020, respectively, as presented below in disaggregated revenue.

The Company recorded reimbursable clinical costs as a reduction of revenue of less than $ 0.1 million and $ 1.1 million for the three and nine months ended September 30, 2021, respectively, and $ 0.9 million and $ 2.1 million for the three and nine months ended September 30, 2020, respectively, as presented below in disaggregated revenue.

The Company has also 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) do 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 represents the fair value of the distinct good or service received by the Company.

As a result, these payments made to the customers for information related to post-approval studies or standard-of-care protocols 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 $ 0.7 million and $ 1.2 million for the three and six months ended June 30, 2021, respectively, and $ 0.4 million and $ 0.8 million for the three and six months ended June 30, 2020, respectively, 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 $ 0.4 million and $ 1.6 million for the three and nine months ended September 30, 2021, respectively, and $ 0.3 million and $ 1.1 million for the three and nine months ended September 30, 2020, respectively, as operating expenses.

Variable Consideration

1 unchanged sentence

The Company only includes estimated variable amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.

Revenue from reimbursements of out-of-pocket expenses, including travel, lodging, and meals, is accounted for as variable consideration and was insignificant during each of the three and six months ended June 30, 2021 and 2020.

The Company does not consider shipping to be a contract performance obligation.

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Contract assets arise from unbilled amounts in customer arrangements when revenue recognized exceeds the amount billed to the customer and the Company’s right to payment is not just subject to the passage of time.

The Company had no contract assets as of June 30, 2021 and December 31, 2020 .

The Company had no contract assets as of September 30, 2021 and December 31, 2020.

Contract liabilities represent the Company’s obligation to transfer goods or services to a customer for which it has received consideration (or the amount is due) from the customer.

1 unchanged sentence

The Company generally satisfies performance obligations within one year of the contract inception date.

As of June 30, 2021, the Company’s wholly- or partially-unsatisfied performance obligations totaled $ 1.3 million and are expected to be completed within the next year.

As of September 30, 2021, the Company’s wholly- or partially-unsatisfied performance obligations totaled $ 0.8 million and are expected to be completed within the next year.

Disaggregated Revenue

1 unchanged sentence

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Gross revenue from sales to customers

2 unchanged sentences

The Company disaggregates revenue from contracts with customers by product type and geographical area as it believes this presentation best depicts how the nature, amount, timing and uncertainty of the Company’s revenue and cash flows are affected by economic factors, as shown below (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Net revenue by OCS product:

3 unchanged sentences

Total net revenue

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Net revenue by country(1):

28 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 three and six months ended June 30, 2021 and 2020.

The Company reported a net loss attributable to common stockholders for each of the three and nine months ended September 30, 2021 and 2020.

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 June 30,

As of September 30,

Warrants to purchase common stock

3 unchanged sentences

The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and elected not to “opt out” of the extended transition related to complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company will adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and will do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company.

Since the Company’s common stock held by non-affiliates exceeded $ 700.0 million as of June 30, 2021, the Company will cease to qualify as an emerging growth company as of December 31, 2021 and will instead be a “large accelerated filer”.

Since the Company’s common stock held by non-affiliates exceeded $ 700.0 million as of June 30, 2021, the Company will become a “large accelerated filer” and as such cease to qualify as an emerging growth company from January 1, 2022.

As a result, the Company will be subject to certain requirements that apply to other public companies but did not previously apply to the Company due to its status as an emerging growth company, including the provisions of Section 404 of the Sarbanes-Oxley Act, which requires that the Company’s independent registered public accounting firm provide an attestation report on the effectiveness of the Company’s internal control over financial reporting in the Company’s Annual Report on Form 10-K for the year ending December 31, 2021.

In February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842) (“ASU 2016-02”), which sets out the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a contract (i.e., lessees and lessors).

2016-02, Leases (Topic 842) (“ASU 2016-02”), and has since issued several additional amendments thereto, collectively referred to herein as ASC 842.

ASC 842 sets out the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a contract (i.e., lessees and lessors).

The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee.

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2020-05, which grants a one-year effective-date delay for nonpublic entities to annual reporting periods beginning after December 15, 2021 and to interim periods within years beginning after December 15, 2022.

Since the Company will cease to be an emerging growth company as of December 31, 2021, the Company is required to adopt the standard during the fourth quarter of 2021.

The Company plans to adopt ASU 2016-02 using the modified retrospective approach transition method as of the date of adoption such that prior periods will not be restated.

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

In July 2021, FASB issued ASU 2021-05 Lessors – Certain Leases with Variable Lease Payments (“ASU 2021-05”), which amended ASU 2016-02 to allow for sales-type or direct financing leases with certain variable payments that meet certain criteria to continue to be accounted for as operating leases as such leases had been treated under ASC 840.

For public entities, the guidance is effective for annual reporting periods beginning after December 15, 2021, and interim periods within those annual reporting periods.

For nonpublic entities, the guidance is effective for annual reporting periods beginning after December 15, 2021 and interim periods within years beginning after December 15, 2022.

Early adoption is permitted for all entities.

For companies who have not yet adopted ASC 842, ASU 2021-05 may be adopted at the same time and in the same manner as ASU 2016-02.

Since the Company will cease to be an emerging growth company as of December 31, 2021, the Company is required to adopt ASC 842 during the fourth quarter of 2021 effective as of January 1, 2021.

The Company plans to adopt ASC 842 using the modified retrospective approach transition method as of the date of adoption such that prior periods will not be restated.

The Company expects that the adoption will result in the recognition of material right-of-use assets and lease liabilities on its consolidated balance sheet .

In June 2016, the FASB issued ASU No.

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Early application continues to be allowed.

Since the Company will cease to be an emerging growth company as of December 31, 2021, the Company is required to adopt the standard during the fourth quarter of 2021.

Since the Company will cease to be an emerging growth company as of December 31, 2021, the Company is required to adopt the standard during the fourth quarter of 2021 effective as of January 1, 2021.

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

1 unchanged sentence

2019-12 , Income Taxes – Simplifying the Accounting for Income Taxes (Topic 740) .

The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles as well as clarifying and amending existing guidance to improve consistent application.

The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general

principles as well as clarifying and amending existing guidance to improve consistent application.

For public entities, the guidance is effective for annual reporting periods beginning after December 15, 2020 and for interim periods within those fiscal years.

For nonpublic entities, the guidance is effective for annual reporting periods beginning after December 15, 2021 and to interim periods within fiscal years beginning after December 15, 2022.

For nonpublic entities, the guidance is effective for annual reporting periods beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022.

Early adoption is permitted for all entities.

Depending on the amendment, adoption may be applied on the retrospective, modified retrospective or prospective basis.

Since the Company will cease to be an emerging growth company as of December 31, 2021, the Company is required to adopt the standard during the fourth quarter of 2021.

Since the Company will cease to be an emerging growth company as of December 31, 2021, the Company is required to adopt the standard during the fourth quarter of 2021 effective as of January 1, 2021 .

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

1 unchanged sentence

Marketable securities by security type consisted of the following (in thousands):

June 30, 2021

September 30, 2021

Treasury securities (due within one year)

5 unchanged sentences

The following tables present the Company’s fair value hierarchy for its assets and liabilities that are measured at fair value on a recurring basis (in thousands):

Fair Value Measurements at June 30, 2021 Using:

Fair Value Measurements at September 30, 2021 Using:

Cash equivalents:

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government agency bonds were valued by the Company using quoted prices in active markets for similar securities, which represent a Level 2 measurement within the fair value hierarchy.

During the three and six months ended June 30, 2021 and 2020, there were no transfers between Level 1, Level 2, and Level 3.

During the three and nine months ended September 30, 2021 and 2020, there were no transfers between Level 1, Level 2, and Level 3.

Inventory consisted of the following (in thousands):

June 30, 2021

September 30, 2021

December 31, 2020

2 unchanged sentences

Finished goods

During the six months ended June 30, 2021 and 2020, the Company made non-cash transfers of OCS Consoles from inventory to property and equipment (OCS Consoles loaned to customers) of $ 0.8 million and $ 0.1 million, respectively.

During the nine months ended September 30, 2021 and 2020, the Company made non-cash transfers of OCS Consoles from inventory to property and equipment (OCS Consoles loaned to customers) of $ 0.9 million and $ 0.7 million, respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

June 30, 2021

September 30, 2021

December 31, 2020

6 unchanged sentences

Long-term debt consisted of the following (in thousands):

June 30, 2021

September 30, 2021

December 31, 2020

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and engaging in certain other business transactions.

As of June 30, 2021, the Company was in compliance with the financial covenants under the Credit Agreement.

As of September 30, 2021, the Company was in compliance with the financial covenants under the Credit Agreement.

The obligations under the 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 the Company’s business), failure to comply with certain covenants, including the minimum liquidity and unqualified audit opinion covenants, and a material adverse change in the Company’s business, operations or other financial condition.

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In addition, the Company may be required to prepay outstanding borrowings, subject to certain exceptions, with portions of net cash proceeds of certain asset sales and certain casualty and condemnation events.

As of June 30, 2021, the interest rate applicable to borrowings under the Credit Agreement was 9.5 %.

During the six months ended June 30, 2021, the weighted average effective interest rate on outstanding borrowings under the Credit Agreement was approximately 11.22 %.

As of September 30, 2021, the interest rate applicable to borrowings under the Credit Agreement was 9.5 %.

During the nine months ended September 30, 2021, the weighted average effective interest rate on outstanding borrowings under the Credit Agreement was approximately 11.2 %.

Preferred Stock

As of June 30, 2021, the Company’s articles of organization authorized the Company to issue up to 25,000,000 shares of preferred stock, no par value per share, all of which is undesignated .

As of June 30, 2021, the Company’s articles of organization authorized the Company to issue up to 150,000,000 shares of common stock, no par value per share.

As of September 30, 2021, the Company’s articles of organization authorized the Company to issue up to 25,000,000 shares of preferred stock, no par value per share, all of which is undesignated .

As of September 30, 2021, the Company’s articles of organization authorized the Company to issue up to 150,000,000 shares of common stock, no par value per share.

Each share of common stock is entitled to one vote on all matters submitted to a vote of the Company’s shareholders.

The holders of common stock are entitled to receive dividends, if any, as may be declared by the board of directors.

Through June 30, 2021, no dividends had been declared or paid.

As of June 30, 2021, the Company has outstanding warrants to purchase 50,000 shares of common stock at an exercise price of $ 8.75 per share with an expiration date of November 7, 2022 and 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 .

Through September 30, 2021, no dividends had been declared or paid.

As of September 30, 2021, the Company has outstanding warrants to purchase 50,000 shares of common stock at an exercise price of $ 8.75 per share with an expiration date of November 7, 2022 and 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 .

Stock-Based Compensation

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In addition, the number of shares available for issuance under the 2019 Plan (i) will not be increased by any shares delivered under the 2019 Plan that are subsequently repurchased using proceeds directly attributable to stock option exercises and (ii) will not be reduced by any awards that are settled in cash or that expire, become unexercisable, terminate or are forfeited to or repurchased by TransMedics Group without the issuance of stock under the 2019 Plan.

As of June 30, 2021, 1,543,355 shares of common stock were available for issuance under the 2019 Plan.

During the six months ended June 30, 2021, the Company granted options to its employees and directors with service-based vesting for the purchase of an aggregate of 910,675 shares of common stock with a weighted average grant-date fair value of $ 19.65 per share.

As of September 30, 2021, 1,550,057 shares of common stock were available for issuance under the 2019 Plan.

During the nine months ended September 30, 2021, the Company granted options to its employees and directors with service-based vesting for the purchase of an aggregate of 925,675 shares of common stock with a weighted average grant-date fair value of $ 19.58 per share.

2019 Employee Stock Purchase Plan

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A total of 371,142 shares of the Company’s common stock are reserved for issuance under the 2019 ESPP.

During the six months ended June 30, 2021, 14,951 shares of common stock were issued under the 2019 ESPP and as of June 30, 2021, 333,494 shares of common stock remained available for issuance.

During the nine months ended September 30, 2021, 27,849 shares of common stock were issued under the 2019 ESPP and as of September 30, 2021, 320,596 shares of common stock remained available for issuance.

2021 Inducement Plan

In August 2021, the Company’s board of directors approved the TransMedics Group, Inc.

Inducement Plan (the “Inducement Plan”).

Pursuant to the terms of the Inducement Plan, the Company may grant nonstatutory stock options, stock appreciation rights, restricted stock, unrestricted stock, restricted stock unit awards and performance awards to individuals who were not previously employees or directors of the Company or individuals returning to employment after a bona fide period of non-employment with the Company.

A total of 1,000,000 shares of the Company’s common stock were initially available for issuance under the Inducement Plan.

During the nine months ended September 30, 2021, the Company granted options to purchase an aggregate of 160,800 shares of common stock under the Inducement Plan to new employees, with a weighted average grant-date fair value of $ 15.18 per share.

As of September 30, 2021, 839,200 shares of common stock were available for issuance under the Inducement Plan.

Stock-Based Compensation

The Company recorded stock-based compensation expense in the following expense categories of its consolidated statements of operations (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Cost of revenue

1 unchanged sentence

Selling, general and administrative expenses

As of June 30, 2021, total unrecognized compensation cost related to unvested share-based awards was $ 20.9 million, which is expected to be recognized over a weighted average period of 3.0 years.

As of September 30, 2021, total unrecognized compensation cost related to unvested share-based awards was $ 21.3 million, which is expected to be recognized over a weighted average period of 2.8 years.

Commitments and Contingencies

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The Company’s lease agreements, as amended, include payment escalations, rent holidays, and other lease incentives, which are accrued or deferred as appropriate such that rent expense for each lease is recognized on a straight-line basis over the respective lease terms, recording deferred rent for rent expense incurred but not yet paid.

The Company recorded rent expense of $ 0.4 million and $ 0.5 million in the three months ended June 30, 2021 and 2020, respectively.

The Company recorded rent expense of $ 0.9 million and $ 1.0 million in the six months ended June 30, 2021 and 2020, respectively.

Under the amended operating leases, the landlord will contribute up to $ 3.4 million towards the Company’s leasehold improvements.

The Company recorded rent expense of $ 0.5 million and $ 0.4

million in the three months ended September 30, 2021 and 2020 , respectively .

The Company recorded rent expense of $ 1.4 million in each of the nine months ended September 30, 2021 and 2020 .

Under the amended operating leases, the landlord will contribute up to $ 3.4 mil lion towards the Company’s leasehold improvements.

Costs incurred by the Company for tenant improvements but not yet reimbursed by the landlord are presented on the accompanying consolidated balance sheets as a tenant receivable within prepaid expenses and other current assets.

As of June 30, 2021, the Company did no t have a tenant receivable.

Future minimum lease payments under operating leases as of June 30, 2021 are as follows (in thousands):

As of September 30, 2021 , the Company had a tenant receivable of $ 0.1 million .

Future minimum lease payments under operating leases as of September 30, 2021 are as follows (in thousands):

December 31, 2021 (remaining 3 months)

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patent covered by the VA license agreement, U.S.

The Company has been granted an interim patent term extension for this patent until September 23, 2021.

The Company has been granted an interim patent term extension for this patent until November 6, 2021.

The Company has not received final approval of the patent extension beyond the interim patent term extension already granted.

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Under the FDA’s analysis, the patent term extension of the ’082 patent would be until November 6, 2021 .

The Company has not yet received communication from the USPTO, but expects that the USPTO’s determination of patent term extension for the ’082 patent will maintain the November 6, 2021 expiration date.

The final determination of the length of the patent extension is not expected to impact the Company’s financial results.

The license includes the right to grant sublicenses, subject to approval by the VA and other restrictions, and is subject to the U.S.

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Company contributions to the plan may be made at the discretion of the board of directors.

As of June 30, 2021 and December 31, 2020, the Company had no t made any contributions to the plan.

As of September 30, 2021 and December 31, 2020, 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.

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.

3 unchanged sentences

To date, the Company has not incurred any material costs as a result of such indemnifications.

The Company is not currently aware of any indemnification claims and had not accrued any liabilities related to such obligations in its consolidated financial statements as of June 30, 2021 and December 31, 2020 .

The Company is not currently aware of any indemnification claims and had not accrued any liabilities related to such obligations in its consolidated financial statements as of September 30, 2021 and December 31, 2020.

Unconditional Purchase Commitment

8 unchanged sentences

Long-lived assets by geographical area are summarized as follows (in thousands):

June 30, 2021

September 30, 2021

December 31, 2020

10 unchanged sentences

The Company paid Dr.

Amira Hassanein $ 0.1 million and $ 0.2 million in total compensation for the three and six months ended June 30, 2021, respectively, and $ 0.1 million and $ 0.2 million in total compensation for the three and six months ended June 30, 2020, respectively for her services as an employee.

Amira Hassanein $ 0.1 million and $ 0.3 million in total compensation for the three and nine months ended September 30, 2021, respectively, and less than $ 0.1 million and $ 0.2 million in total compensation for the three and nine months ended September 30, 2020, respectively, for her services as an employee.

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-Q

Item 1. Financial Statements