10-Q 1 tmdx-10q_20220930.htm 10-Q tmdx-10q_20220930.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 

Commission File Number: 001-38891

 

TransMedics Group, Inc.

(Exact name of registrant as specified in its charter)

 

 

Massachusetts

83-2181531

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

 

200 Minuteman Road

Andover, Massachusetts

01810

(Address of principal executive offices)

(Zip code)

 

(978) 552-0900

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class 

 

Trading Symbol(s) 

 

Name of each exchange on which registered 

Common Stock, No Par Value

 

TMDX

 

The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of October 31, 2022, the registrant had 31,924,220 shares of common stock, no par value per share, outstanding.

 

 

 

 


 

 

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements with respect to, among other things, our operations and financial performance. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “could,” “target,” “predict,” “seek” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those referenced in the section titled “Risk Factors,” which could cause actual results to differ materially. Moreover, we operate in a very competitive and rapidly changing environment and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in or implied by any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this report. You should not rely upon forward-looking statements as predictions of future events. We cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or reflect interim developments.

Some of the key factors that could cause actual results to differ include:

 

that we continue to incur losses;

 

our ability to attract and retain key personnel;

 

our existing and any future indebtedness, including our ability to comply with affirmative and negative covenants under our credit agreement to which we will remain subject until maturity;

 

the fluctuation of our financial results from quarter to quarter;

 

our need to raise additional funding and our ability to obtain it on favourable terms, or at all;

 

our ability to use net operating losses and research and development credit carryforwards;

 

our dependence on the success of the Organ Care System, or OCS;

 

our ability to expand access to the OCS through our National OCS Program;

 

the rate and degree of market acceptance of the OCS;

 

our ability to educate patients, surgeons, transplant centers and private and public payors on the benefits offered by the OCS;

 

our ability to improve the OCS platform;

 

our dependence on a limited number of customers for a significant portion of our net revenue;

 

our ability to maintain regulatory approvals or clearances for our OCS products in the United States and European Union;

 

our ability to adequately respond to the Food and Drug Administration, or FDA, follow-up inquiries in a timely manner;

 

the timing and our ability to commercialize and market our OCS products;

 

our ability to scale our manufacturing capabilities to meet increasing demand for our products;

 

the performance of our third-party suppliers and manufacturers;

 

price increases of the components of our products;

i


 

 

 

the timing or results of post-approval studies and any clinical trials for the OCS;

 

our manufacturing, sales, marketing and clinical support capabilities and strategy;

 

attacks against our information technology infrastructure;

 

the economic, political and other risks associated with our foreign operations;

 

the impact of the outbreak of the novel strain of coronavirus, or COVID-19, including variants of the virus and associated containment, remediation and vaccination efforts;

 

our ability to protect, defend, maintain and enforce our intellectual property rights relating to the OCS and avoid allegations that our products infringe, misappropriate or otherwise violate the intellectual property rights of third parties;

 

the pricing of the OCS, as well as the reimbursement coverage for the OCS in the United States and internationally;

 

regulatory developments in the United States, European Union and other jurisdictions;

 

the extent and success of competing products or procedures that are or may become available;

 

the impact of any product recalls or improper use of our products; and

 

our estimates regarding revenue, expenses and needs for additional financing.

ii


 

 

TransMedics Group, Inc.

Table of Contents

 

 

 

 

Page

 

PART I—FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1.

Financial Statements (Unaudited)

 

1

 

Consolidated Balance Sheets

 

1

 

Consolidated Statements of Operations

 

2

 

Consolidated Statements of Comprehensive Loss

 

3

 

Consolidated Statements of Stockholders’ Equity

 

4

 

Consolidated Statements of Cash Flows

 

6

 

Notes to Unaudited Consolidated Financial Statements

 

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

18

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

31

Item 4.

Controls and Procedures

 

31

 

 

 

 

 

PART II—OTHER INFORMATION

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

32

Item 1A.

Risk Factors

 

32

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

32

Item 5.

Other Information

 

32

Item 6.

Exhibits

 

33

Signatures

 

34

 

 

 

iii


 

 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

TRANSMEDICS GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

(Unaudited)

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

204,462

 

 

$

25,580

 

Marketable securities

 

 

 

 

 

66,872

 

Accounts receivable

 

 

22,035

 

 

 

5,934

 

Inventory

 

 

18,575

 

 

 

14,859

 

Prepaid expenses and other current assets

 

 

5,514

 

 

 

5,460

 

Total current assets

 

 

250,586

 

 

 

118,705

 

Property and equipment, net

 

 

18,472

 

 

 

9,841

 

Restricted cash

 

 

500

 

 

 

500

 

Operating lease right-of-use assets

 

 

5,315

 

 

 

5,847

 

Total assets

 

$

274,873

 

 

$

134,893

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

3,080

 

 

$

6,651

 

Accrued expenses and other current liabilities

 

 

15,976

 

 

 

16,337

 

Deferred revenue

 

 

226

 

 

 

250

 

Operating lease liabilities

 

 

1,407

 

 

 

 

Total current liabilities

 

 

20,689

 

 

 

23,238

 

Long-term debt, net of discount and current portion

 

 

58,540

 

 

 

35,197

 

Operating lease liabilities, net of current portion

 

 

7,787

 

 

 

8,604

 

Total liabilities

 

 

87,016

 

 

 

67,039

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock, no par value; 25,000,000 shares authorized; no shares

   issued or outstanding

 

 

 

 

 

 

Common stock, no par value; 150,000,000 shares authorized; 31,933,984

   shares and 27,791,615 shares issued and outstanding at September 30, 2022

   and December 31, 2021, respectively

 

 

660,061

 

 

 

510,488

 

Accumulated other comprehensive loss

 

 

(247

)

 

 

(188

)

Accumulated deficit

 

 

(471,957

)

 

 

(442,446

)

Total stockholders' equity

 

 

187,857

 

 

 

67,854

 

Total liabilities and stockholders' equity

 

$

274,873

 

 

$

134,893

 

 

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

1


 

TRANSMEDICS GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net revenue

 

$

25,683

 

 

$

5,370

 

 

$

62,084

 

 

$

20,594

 

Cost of revenue

 

 

7,568

 

 

 

1,597

 

 

 

17,515

 

 

 

6,421

 

Gross profit

 

 

18,115

 

 

 

3,773

 

 

 

44,569

 

 

 

14,173

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research, development and clinical trials

 

 

6,808

 

 

 

5,163

 

 

 

21,056

 

 

 

15,990

 

Selling, general and administrative

 

 

16,851

 

 

 

10,335

 

 

 

48,171

 

 

 

26,283

 

Total operating expenses

 

 

23,659

 

 

 

15,498

 

 

 

69,227

 

 

 

42,273

 

Loss from operations

 

 

(5,544

)

 

 

(11,725

)

 

 

(24,658

)

 

 

(28,100

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(787

)

 

 

(979

)

 

 

(2,719

)

 

 

(2,896

)

Other expense, net

 

 

(1,076

)

 

 

(249

)

 

 

(2,087

)

 

 

(532

)

Total other expense, net

 

 

(1,863

)

 

 

(1,228

)

 

 

(4,806

)

 

 

(3,428

)

Loss before income taxes

 

 

(7,407

)

 

 

(12,953

)

 

 

(29,464

)

 

 

(31,528

)

Provision for income taxes

 

 

(19

)

 

 

(9

)

 

 

(47

)

 

 

(19

)

Net loss

 

$

(7,426

)

 

$

(12,962

)

 

$

(29,511

)

 

$

(31,547

)

Net loss per share attributable to common stockholders,

   basic and diluted

 

$

(0.25

)

 

$

(0.47

)

 

$

(1.03

)

 

$

(1.14

)

Weighted average common shares outstanding,

   basic and diluted

 

 

30,229,936

 

 

 

27,701,252

 

 

 

28,729,649

 

 

 

27,564,589

 

 

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

2


 

TRANSMEDICS GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net loss

 

$

(7,426

)

 

$

(12,962

)

 

$

(29,511

)

 

$

(31,547

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(41

)

 

 

3

 

 

 

(95

)

 

 

(26

)

Unrealized gains (losses) on marketable securities,

   net of tax of $0

 

 

100

 

 

 

 

 

 

36

 

 

 

(10

)

Total other comprehensive income (loss)

 

 

59

 

 

 

3

 

 

 

(59

)

 

 

(36

)

Comprehensive loss

 

$

(7,367

)

 

$

(12,959

)

 

$

(29,570

)

 

$

(31,583

)

 

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

3


 

TRANSMEDICS GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Comprehen-

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

sive  Loss

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2021

 

 

27,791,615

 

 

$

510,488

 

 

$

(188

)

 

$

(442,446

)

 

$

67,854

 

Issuance of common stock upon the

   exercise of common stock options

 

 

164,503

 

 

 

202

 

 

 

 

 

 

 

 

 

202

 

Issuance of common stock in connection

   with employee stock purchase plan

 

 

12,465

 

 

 

203

 

 

 

 

 

 

 

 

 

203

 

Stock-based compensation expense

 

 

 

 

 

2,310

 

 

 

 

 

 

 

 

 

2,310

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

(24

)

 

 

 

 

 

(24

)

Unrealized losses on marketable securities

 

 

 

 

 

 

 

 

(73

)

 

 

 

 

 

(73

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(10,562

)

 

 

(10,562

)

Balances at March 31, 2022

 

 

27,968,583

 

 

 

513,203

 

 

 

(285

)

 

 

(453,008

)

 

 

59,910

 

Issuance of common stock upon the

   exercise of common stock options

 

 

31,592

 

 

 

237

 

 

 

 

 

 

 

 

 

237

 

Stock-based compensation expense

 

 

 

 

 

2,316

 

 

 

 

 

 

 

 

 

2,316

 

Issuance of restricted common stock

 

 

23,120

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

(30

)

 

 

 

 

 

(30

)

Unrealized gains on marketable securities

 

 

 

 

 

 

 

 

9

 

 

 

 

 

 

9

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(11,523

)

 

 

(11,523

)

Balances at June 30, 2022

 

 

28,023,295

 

 

 

515,756

 

 

 

(306

)

 

 

(464,531

)

 

 

50,919

 

Issuance of common stock in public

   offering, net of discounts and

   issuance costs of $676

 

 

3,737,500

 

 

 

139,854

 

 

 

 

 

 

 

 

 

139,854

 

Issuance of common stock upon the

   exercise of common stock options

 

 

154,316

 

 

 

1,441

 

 

 

 

 

 

 

 

 

1,441

 

Issuance of common stock in

   connection with employee stock

   purchase plan

 

 

17,678

 

 

 

306

 

 

 

 

 

 

 

 

 

306

 

Issuance of restricted common stock

 

 

2,973

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted common stock forfeitures

 

 

(1,778

)

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

2,704

 

 

 

 

 

 

 

 

 

2,704

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

(41

)

 

 

 

 

 

(41

)

Unrealized gains on marketable

   securities

 

 

 

 

 

 

 

 

100

 

 

 

 

 

 

100

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(7,426

)

 

 

(7,426

)

Balances at September 30, 2022

 

 

31,933,984

 

 

$

660,061

 

 

$

(247

)

 

$

(471,957

)

 

$

187,857

 

 

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

 

4


 

 

TRANSMEDICS GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Comprehen-

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

sive  Loss

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2020

 

 

27,175,305

 

 

$

502,217

 

 

$

(95

)

 

$

(398,231

)

 

$

103,891

 

Issuance of common stock upon the

   exercise of common stock options

 

 

287,705

 

 

 

372

 

 

 

 

 

 

 

 

 

372

 

Issuance of common stock in connection

   with employee stock purchase plan

 

 

14,951

 

 

 

211

 

 

 

 

 

 

 

 

 

211

 

Stock-based compensation expense

 

 

 

 

 

1,112

 

 

 

 

 

 

 

 

 

1,112

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

(2

)

 

 

 

 

 

(2

)

Unrealized gains on marketable securities

 

 

 

 

 

 

 

 

8

 

 

 

 

 

 

8

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(7,917

)

 

 

(7,917

)

Balances at March 31, 2021

 

 

27,477,961

 

 

 

503,912

 

 

 

(89

)

 

 

(406,148

)

 

 

97,675

 

Issuance of common stock upon the

   exercise of common stock options

 

 

169,273

 

 

 

213

 

 

 

 

 

 

 

 

 

213

 

Stock-based compensation expense

 

 

 

 

 

1,808

 

 

 

 

 

 

 

 

 

1,808

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

(27

)

 

 

 

 

 

(27

)

Unrealized losses on marketable securities

 

 

 

 

 

 

 

 

(18

)

 

 

 

 

 

(18

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(10,668

)

 

 

(10,668

)

Balances at June 30, 2021

 

 

27,647,234

 

 

 

505,933

 

 

 

(134

)

 

 

(416,816

)

 

 

88,983

 

Issuance of common stock upon the

   exercise of common stock options

 

 

104,753

 

 

 

344

 

 

 

 

 

 

 

 

 

344

 

Issuance of common stock in connection

   with employee stock purchase plan

 

 

12,898

 

 

 

208

 

 

 

 

 

 

 

 

 

208

 

Stock-based compensation expense

 

 

 

 

 

1,973

 

 

 

 

 

 

 

 

 

1,973

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

3

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(12,962

)

 

 

(12,962

)

Balances at September 30, 2021

 

 

27,764,885

 

 

$

508,458

 

 

$

(131

)

 

$

(429,778

)

 

$

78,549

 

 

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

 

5


 

 

TRANSMEDICS GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(29,511

)

 

$

(31,547

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

2,193

 

 

 

1,351