These statements include material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements. Accordingly, you should not place undue reliance on these statements. Additional information regarding these risks and uncertainties appears under the heading Risk Factors. Of our Form 10 ks filed with the Securities and Exchange Commission on 02/27/2025. Our subsequent SEC filings and the forward looking statements, including today's earnings press release, which are available at www.sec.gov. And on our website at www.transmedics.com. TransMedics disclaims any intention or obligation except as required by law to update or revise any financial projections or forward looking statements whether because of new information, future events or otherwise. This conference call contains time sensitive information and is accurate only as of the live broadcast today, 05/08/2025. And with that, I will now turn the call over to Wally Tassimene, President and Chief Executive Officer.

Thank you so much, Lane. Good afternoon, everyone. And welcome to TransMedics' first quarter twenty twenty five earnings call. Joining me today is Gerardo Hernandez, our Chief Financial Officer. As we discussed previously, we view 2025 as an important year for TransMedics mainly to transition and shift into our second year of growth for TransMedics OCS and OP platform. Despite external distractions in January, we remained laser focused throughout Q1 on our business fundamentals, operational execution and our unwavering support for our clinical transplant partners and users. In doing so, we continue to be successful in expanding the utilization of available donor organs for transplantation, and increased OCSNOP adoption. All resulting in our core mission of delivering what we believe to be the best possible clinical outcomes and the most cost efficient therapy for our transplant recipients. The results speak for themselves. Our 1Q performance demonstrates that strength of our business fundamentals the effectiveness of our strategy, and the unrivaled value of our business model. Importantly, our ability to execute at a very high level despite unexpected external pressures, is a testament to the strong support of the transplant clinical community to TransMedics mission and the resilience of our incredible team.

Now let me proceed to discuss our business performance throughout the first quarter of the year. Which was our strongest quarter to date the history of TransMedics. Here are the key operational highlights for 1Q. Total revenue for 1Q twenty twenty five was $143,500,000 representing approximately 48% growth year over year and approximately 18% sequential growth from 4Q twenty twenty four. [indiscernible] Growth was driven primarily by higher overall utilization and center penetration of OCS and OP in The U. S. For liver and heart transplants. And that happened across both DVD and DCD organs. This enabled us to achieve a new high watermark for overall case volume in 1Q twenty twenty five. Meanwhile, TransMedics transplant services revenue for 1Q with approximately $55,300,000 up from $35,500,000 in Q1 'twenty four and up from $46,700,000 in Q4 'twenty four. Representing approximately 56% year over year and 18.5% sequential growth. Our overall gross margins for 1Q improved to 61.5% up from 59% in 4Q twenty twenty four. Finally, we delivered operating profit of $27,400,000 in 1Q, representing approximately 18% I'm sorry, nineteen % of total revenue and up from $8,600,000 or 7% of total revenue in 4Q twenty twenty four. Shifting now to TransMedics Transplant infrastructure and performance.

For the quarter. Transplant logistics services revenue for 1Q was 26,100,000.0 representing approximately 80% year over year and 20% sequential growth. Throughout 1Q, our daily average aircraft availability was approximately 15.4 up from 14,000,000 in 4Q twenty twenty four. Given that we reached a critical mass of owned aircraft capacity, we will retire the reporting of this metric going forward. Throughout the first quarter, we were able to cover 78% of our NOP emissions requiring air transport. Compared to 75% in Q4 of twenty twenty four. As we've discussed previously, we are now focusing our effort in 2025 on efficiently operating our fleet by double shifting a portion of our planes to the extent possible. Before investing in additional aircraft to the fleet. We will be opportunistic however in adding one or more aircrafts in 2025 to reach our stated goal of 22 owned aircraft before year end. Overall, we are very pleased with our strong performance in 1Q. We are focused on maintaining this momentum throughout twenty twenty twenty five. In addition, we are planning to launch two new heart and lung clinical programs later in the year to further catalyze our growth in 2026 and beyond. Our 1Q performance underscores the unique attributes of TransMedics business.

TransMedics not only TransMedics is not only a top line grower, but also an increasingly profitable business capable of generating significant bottom line leverage. We remain confident that this is just the beginning. And we believe we are well positioned to deliver sustainable long term financial results as we gain more efficiency of scale and continue to drive leverage throughout the operation. Moving now to provide a quick status update on our next gen OCS Heart and OCS Lung clinical programs. We filed both OCS Lung and Heart IDEs and are actively discussing the final details with FDA. Based on our interactions, we feel we are on track to initiate both programs in H2 2025 as we communicated earlier in the year. However, the precise launch time of the next gen lung and heart clinical programs is still fluid and depends on the exact timing of the FDA approval followed by the center's IRB processes. As we highlighted at our ISHLT symposium in April, and previously at our Investor Day in December of twenty four, we are planning to run a relatively large sized trial aimed at building the next generation of level one clinical evidence that is unrivaled in our industry.

As stated above, we see these new clinical programs as potential major growth catalysts for TransMedics twenty six and beyond, and we are not counting on these on these two clinical programs to contribute materially to our financial results in 2025. Now, I'd like to address the potential impact of geopolitical macroeconomic and tariff policies on TransMedics business. 2025. Let me start with the impact of tariffs that may have negatively impacted many device companies. I want to remind all of you that TransMedics is and will continue to be a proud U. S. Manufacturer of the OCS technology platform. Importantly, we also are focused on vertically integrating most of the critical technology blocks to minimize supply chain risks on our business. Based on what we know today, we believe that the currently proposed tariffs will have a minimal impact on our business. That said, this is a fluid environment and may change and may change should policies change. Additionally, we are leaning forward and have announced publicly our strategic plan to open a disposable design center of excellence and a new manufacturing facility in the premier Biomedical Device District of Mirandola, Italy. This district is renowned for its deep expertise in polycarbonate injection molding and disposable perfusion technologies.

We expect this plan to give TransMedics several key strategic advantages, First, it enables us to leverage the unique talent to rapidly integrate many of the key disposable critical components for OCS perfusion circuit. Second, provide an alternate disposable manufacturing source to ensure business continuity to our Andover facility. And finally, to provide us maximum flexibility in supplying OCS product [indiscernible] While reducing the potential impact of tariffs on our international business. Now, let me share our perspective on the impact of potential economic downturn on organ transplantation in general and our business in specific. Our experience over the past two decades reinforces our belief that organ transplantation is a lifesaving procedure. That is largely insulated from economic cycles. This is due to two important facts. One, the best clinical outcomes associated with the transplant procedure and the highly cost effective and the highly cost effectiveness of the therapy for payers managing very expensive chronic disease conditions that lead to organ failure. Let me now conclude my remarks by discussing our expectation for the remainder of 2025. As seen in our 1Q results, we began the year with a very strong performance. We are confident that we can maintain this momentum for the overall 2025 annual performance.

However, we may experience some level of variability or quarterly seasonality that could impact performance quarter to quarter as we've experienced last year. As a result of our strong 1Q performance, and the full year considerations I just outlined, we are raising our full year 2025 revenue guidance to between $565 and $585,000,000 representing approximately 28% to 32% growth over full year 2024. With that, let me turn the call to Gerardo to cover the detailed financial results for the quarter. Gerardo? Thank you, Warit. Afternoon everybody.

I'm pleased to be here to welcome TransMedics' strong first quarter results. Walid mentioned, Q1 twenty twenty five was a strong start to the year reflecting our disciplined execution, continued commercial momentum and the positive impact of our strategic investments. We saw solid performance across both product and service lines and positive sequential margin expansion and profitability gains. S. Transplant revenue was 139,000,000 up 51% year over year and 19% sequentially. By organ, liver contributed with 109,000,000 heart with $26,000,000 and loan with $4,000,000 OUS revenue was 4,000,000 down 1% from Q1 of twenty twenty four and up 4% sequentially. OUS revenue by Organ was $3,500,000 in Heart dollars 400,000.0 in lung and $100,000 in liver. Product revenue for the first quarter reached $88,000,000 up 444% year over year growth and 18% sequentially. Growth was driven by increased organ utilization in liver and continued OCS adoption across both liver and heart. Service revenue came came in at $55,000,000 reflecting 56% year over year growth and 18% sequential increase. The primary driver was logistics, grew 80% year over year and 20% sequentially fueled by the continued expansion and utilization of our aviation fleet, Total gross margin for the quarter was approximately 61%.

Representing a decrease of 45 basis points when compared to Q1 of twenty twenty four and a sequential improvement of two twenty six basis points. 45 basis point decline driven by a higher proportion of service revenue which carries a lower margin profile partly offset improvement in product gross margin. The sequential two twenty six basis point improvement was primarily driven by a recovering product margin which increased three fifty nine basis points driven by the absence of Q4 related charges Q4 inventory related charges and better cost absorption. Compared to Q1 of twenty twenty four, product gross margin improved four forty eight basis points driven by cost efficiencies and the absence of non recurring inventory charges. Service gross margin declined six thirty two basis points versus Q1 of twenty twenty four primarily driven by the higher proportion of aviation business. However, sequentially, service gross margin remained stable and we continue opportunities for margin expansion. Through operational efficiencies. Total operating expenses for the first quarter of twenty twenty five were 16 approximately 61,000,000 up 28% year over year. The growth was primarily driven by a 51% increase in R and D as we continue to invest in our innovation pipeline.

And a 21% increase in SG and A reflecting investment to strengthen our NOP and command center along with non recurring legal and consulting expenses tied to internal processes reviews conducted in Q1 of twenty twenty five. Sequentially, total operating expenses declined 4%. Largely due to lower SG and A following one time expenses recorded in Q4 twenty twenty four and timing of spend. Partially offset by the non recurring legal and consulting expenses I mentioned before. R and D grew 4% sequentially, consistent with our ongoing investment plan. Operating income for the quarter was 27,400,000.0 up 121% year over year and more than tripled sequentially. Operating margin expanded to 19.1% compared to 12.8% in prior year. Net income for the quarter was $25,700,000 representing a one hundred and eleven year on year increase and 275% sequentially. These results demonstrate that our business model can scale efficiently drive meaningful financial improvement and position the company for sustained momentum 2025 and beyond. We ended the quarter with $310,000,000 in cash. Down $26,500,000 from 12/31/2024. During Q1, invested approximately $24,000,000 in the purchase of two additional aircraft and we remain on track to purchase one more this year to reach our target of 22 owned jets by the end of twenty twenty five.

Earnings per share were $0.76 and diluted earnings per share $0.70 for the first quarter of twenty twenty five. In summary, we are off to a strong start. We feel confident in our momentum and remain focused on execution to continue to grow the number of transplant advanced key projects and programs and deliver strong results through the rest of the year. Looking ahead, based on the strength of the business, Walid mentioned, before, we are raising our full year revenue guidance to a range of $565,000,000 to $585,000,000 up from our prior range of $530,000,000 to $552,000,000 This reflects approximately 30% growth over 2024 at the midpoint of the guidance. Growth is expected to continue to be fueled by the expansion of total transplant volumes The increased OCS adoption and continued momentum across our service platform. We continue to expect some quarterly variability in terms of transplant volume growth. However, we are confident in our updated full year guidance. In terms of gross margin, we continue to expect expansion across both product and service gross margin. Driven by benefits of scale and operational efficiencies. However, the increasing proportion of service revenue which operates at a lower margin will moderate the overall gross margin expansion in 2025.

In Aviation, we are expecting scheduled maintenance activity to increase in the second half of the year ramping in Q3 and more significantly in Q4. While this may introduce some quarterly noise, does not change our expectation for modest gross margin expansion. In terms of capital allocation, we will remain focused on R and D and targeted investment that advance our pipeline, strengthened product development and enhanced logistics efficiency and process simplification. We are balancing strategic growth financial discipline to drive sustainable long term profitability. Finally, with stronger expected top line performance, continued efficiency continued efficiency gains and spend discipline we now expect to deliver at least 400 basis points of improvement in operating margin. In 2025 versus 2024. While quarterly variability is expected, we are confident in the full year step up driven largely by gaining leverage across our operating expense base. I'm encouraged by a strong start to the year and the disciplined execution across the organization. While there is more work to do, momentum we are seeing across the business combined with clear growth drivers give us conviction in our ability to deliver sustainable growth and continued margin expansion. And with that, I'll turn the call over to Walid for closing remarks.

Thank you, Gerardo.

As I said before, we're very pleased by our strong start of the year and performance in Q1 that we expect to carry this forward for the remainder of the year. As we stated before, our 1Q results demonstrate the unique and unrivaled attributes of TransMedics business. We remain confident that this is only the beginning and we are well positioned to continue to drive profitable growth while generating leverage to drive strong sustainable financial results. In conclusion, we are humbled and proud of the strong clinical user support for TransMedics the resilience of our wonderful team. We remain committed to delivering the highest quality OCS NOP products and services to expand access to our life saving transplant technology. With that, I will now turn the call to the operator for Q and A. Operator, The first question comes from Alan Gong from JPMorgan. Please go ahead.

Hi, team. Thanks for the question.

Congrats on just what's really a really strong quarter I guess starting with where I think it looks like a lot of the upside came from in liver, kind of funny, one of your main competitors in that space actually had some news announced today as well. But how should we think about the main drivers of your growth in liver? We know that you're seeing more morning adoption, continued growth in DCD. But if you could just break down the drivers of that out outperformance in liver and what you're seeing so far in April as well?

Thank you, Alan, for the question. I cannot comment on the news that came out today from the from the other technology out there. I can only comment on our dynamic as you'd expect me to do. Are extremely confident in our liver platform. Are seeing growth across the verticals. DBD, DCD, we're seeing more utilization of deceased donors across both DVD and DCD. DCD. We're gaining share. We're gaining momentum. Again, it's early in the year, but we are bullish about our ability to continue to execute. And continue to deliver the results we're delivering. Because we are convinced that we have the best I repeat again, the best platform for liver preservation. All the pseudo competitors out there cannot deliver the value that the OCS can deliver in liver transplantation. And the upcoming publications will prove it unequivocally based on data and evidence, not just based on opinions.

Got it.

And then just a quick follow-up. Just curious what you're seeing so far in [indiscernible] raised the guide by more than the beat, but still given the outperformance in the quarter, it looks like there could be some room for upside if you carry some of that momentum forward. So just curious what you're seeing so far in April?

Thanks, Alan. Think you and others know that we are we take guidance very seriously. Q1 results speak for themselves. It's still early in the year. And we wanted to make sure that we also are putting guidance that can that can be achieved. And factor in some potential headwinds coming up in Q2 or Q3 or Q4. So we feel very strongly that the momentum we experienced in Q1 will continue for the full year results, but we expect some variability between quarters, potential seasonality as we've seen last year. That's why the guidance accommodated for all of that. Based April results, feel confident in the guidance range we put out in front of community. Harald, would you care to comment on that?

No. I feel we have plenty of tailwinds not only in product sales, but also in service revenue. We have our adoption has increased consistently. We saw adoption increase in Q4. We saw adoption increase in Q1. As Walid mentioned. It's not only the adoption, but it's organ utilization. It's penetration of organs in different centers, it's a power adoption. So, plenty of tailwinds.

The next question comes from Matthew O'Brien from Piper Sandler. Please go ahead. Hi, this is Sam on for Matt. Thank you for taking our question. I guess first I want to touch on your next or your two next gen products for the heart and lung.

We know that you can generate product revenue when these trials are ongoing, but you can you talk a little bit about the service revenues and you anticipate product and service margins could be impacted during these trials?

Thank you for the questions. I'd like to comment only on the product revenue at at the moment until we have all the trial design completed and approved by FDA. We know we have high degree of confidence that we will be incurring product revenue We expect to incur service revenue certainly on the OCS [indiscernible] But we have to stay silent on what should we expect on service revenue on the control arm. That remains to be an area of discussion. So I do not like to comment on it just yet. But we certainly feel very confident that we will be incurring product revenue throughout the heart and lung clinical programs.

Okay, perfect. Thank you. And then we don't just want to touch on liver again. Obviously, continues to do really well in The U. S. There are a couple of competitors anticipated to enter the market later year. So just what kind of gives you that confidence in your guidance and any impact, if any, that you anticipate in the second half of this year?

As I stated earlier, the community needs to step back and understand why is deliver doing so well for us. There is a good reason for that. The good reason is TransMedics and OCS Liver platform is delivering the best results in the history of liver transplantation. And we're doing that while providing the most convenient the most cost efficient way of delivering the liver transplantation at the Transplant Institute. This is why the market is adopting our platform. Anybody could claim that they have a potential competing technology. They need to prove it. We stand by our product. We stand by our data. And as I said, this is all going to be coming out to light very soon. In major publication in peer reviewed journal that highlights all the value that I just outlined. That's why the liver program is doing well, and that's why we expect the liver program to continue to do well. And I'm going to go on a limb and I say, is not just stopping at where we are, TransMedics is working very hard to ensure that the OCS Liver platform is the next standard of care in DVD and DCD liver transplantation in The United States and around the world.

Anybody could claim anything. We have the evidence to support us. And we are not stopping. We are continuing to push innovation, clinical programs, data to ensure that this leadership position of our liver platform will continue to lead. From the front.

Great. Thank you. The next question comes from Bill Plavanek from Canaccord. Please go ahead.

Great. Thanks. Good evening. Thanks for taking my question. As we look at the quarter, mean, was fantastic and we've talked about that already. We did see receivables go up pretty significantly from the fourth quarter. Just any commentary there? And then on the guidance, Hamed, you basically it assumes flat line the rest of the year. You did make some commentary about the trials. Do you still think that the clinical trials will add 2% to 5% to the numbers this year or have you pulled that out and they're basically saying it's next year?

Let me start with the last part, Bill. We've always stated that the clinical trials for this year will be a very, very small contributor We estimated it to be between two percent and five percent. We think it's still within that range, maybe towards the lower end of that range. But really, we have always stated that these clinical programs are the catalyst for 2026 and beyond. And I'll let Gerardo specifically address the AR question.

Hi, Bill. Yes, the increase in receivables basically is is really related to the timing of billing. [indiscernible] couple of elements that affected Q1. And the billing that we had to do through the quarter actually was done later in the quarter. So, delayed that process. And what I can tell you is that now we're in [indiscernible] let's say, recovering the receivables and we're in good position to go back. Our original plan We are expecting to end the year more or less in somewhere around our 45,000,000 to sixty day DSO. And we should see recovery already in Q2.

Bill, if you allow me to just add one additional commentary to Gerardo's points. As we've stated before, we are transitioning our entire NOP platform to be managed completely through our new NOP digital ecosystem. Part of that transition is a full automated billing mechanism that will significantly reduce that time between the completion of the case and the bill being generated. And that's coming in the second half of the year. That will help achieve the goal as stated by Gerardo.

Okay. And I just want to just to go back to the first question on the guidance, Willy. You did that 143,000,000 and change in the first quarter. It's basically flat line for the year. Is that how we should of the second quarter to be very similar to the first quarter? Or is it like last year where it kind of went up a little and then kind of the back half of the year slowed down a lot? I mean, how should we just think about the second quarter here?

I really think, Bill, we can comment in the second quarter given that we're already close to the mid of second quarter, but from a high level expectation, expect we always expect to do better. That's not a secret. But we also expect some some seasonality. Maybe it will hit in Q2, maybe it will hit in Q3. So that's why the guidance is structured the way it's structured. But we're trying to reflect in the guidance the way we see how the businesses operating. But based on the early signals in Q2, we expect to see a little bit a modest improvement over Q1. But we still have some weeks to go.

Thanks for taking my questions.

The next question comes from Justin Wang from Morgan Stanley. Please go ahead.

Hey, thanks for taking our questions. I'm stepping in for Patrick here. Was wondering if you can talk a little bit more on the durability of OCS and NOP pricing? I understand that it adds solid value to transplant centers and payers, but do you think that competitive entries in a more cost sensitive CMS could pressure your pricing here? Thank you so much.

Justin, thank you for the question. Think as I've stated before, the question is not about pricing. The question should be about value. We priced our technology based on the significant value that the OCS delivers to the transplant center to the payer and to the patient. In fact, we believe that we're leaving some value on the table because it's always been our culture. Not to gouge the market, We're there to be their long term partner We're there to be the next standard of care for organ transplant. In the long term. Unfortunately, because of our value any how do I state this? Any potential competitor is just taking a 20% discount from our price and saying I'm cheaper than TransMedics. People need to step back and say, what is your value? Most of these competitors, specifically in the liver, we should ask what is your value? What are you delivering? You should be at zero. Or near zero from a price standpoint because you're not delivering much value. What is the value of a machine perfusion that deliver has to be preserved on ice for six or eight hours before you perfuse it. So where is the value of machine perfusion?

You've just killed the value of machine perfusion. And why do you do that? Because the technology is not capable of being portable. Even if it is, has wings to it. It's not delivering the physiologic perfusion and value of preservation and assessment that the OCS is delivering. So based on this, based on these facts and based on the significant economical efficiency that is gained throughout the paradigm of organ transplantation from reducing the waitlist time to improving the post transplant complication rate, to increasing the survivability of the recipient with the originally transplant organ and significantly reducing the retransplant rate we are delivering significant cost efficiency to payers, to transplant programs and certainly the best quality of life and best life expectancy for the patient. Based on that, we think CMS will continue to reimburse for OCS on commercial payers, not just CMS, because we're delivering significant economic value to these payers. And again, the data speaks for itself. You so much.

The next question comes from Chris Pasquale from Nephron Research. Please go ahead.

Thanks. I wanted to ask a couple of questions about margins. The updated guidance for four points of full year operating margin expansion represents great progress. You actually delivered more than seven points here in 1Q. So was there any spending that got pushed out of 1Q and is going to come later in the year to drive that dynamic? Or are there other margin headwinds that you're contemplating with that outlook?

Hi, Chris. No, the majority as I mentioned, vast majority of the operating margin increase is going to be driven by gain in operating leverage, in operating expenses. So, basically what is happening most of the or a large part of our investment is planned for later in the year. And that's what basically is going to balance out. So that's why we're comfortable on the full year 400 basis points, at least that's what I mentioned, at least.

Okay. That's helpful. And then on gross margin, nice result this quarter on the product side of the business. The service gross margin was similar to what we saw in 4Q even though service revenue improved sequentially.

What's the real gating item to get that service gross margin higher? You've got basically the fleet of planes you would like to have Is it just a matter of really increasing the utilization of those assets? Or is there something else that sort of triggers a change in the profitability of that piece of the business? Business?

No, that's exactly what you mentioned. It's doing the utilization of the assets. Let me give you a couple of examples. In Q1 last year, I mean, just to share. In Q1 last year, we [indiscernible] 14 planes The average operating aircraft per day was nine. And we were servicing only 49% of our NOPs emissions. Today, we own 21 planes We have around 16 average operational aircraft in Q1 and we are servicing 78% So, what I'm trying to say here is there is plenty of room continue to utilize our fixed assets. And as long as we as much as we continue to do so, we will be able to expand the margins. That's why we are exploring double shifting project. That's why we are exploring other elements within the logistics team to improve the efficiency of the fleet. It's basically volume. It's basically volume, Chris.

Okay. Thank you.

The next question comes from from Suraj Kalia from Please go ahead.

Waleed, Gerardo, congrats on a fantastic quarter. So, Waleed, thank you for giving all the details. On the external disturbance you referenced in your remark, Waleed, there was probably not one surgeon or hospital administrator who had not heard of the allegations and there was fear this could lead to softness yet the math implies you guys actually picked up share. So maybe if you can help us understand how new stores, same stores sales shaped up in the quarter Did you see pockets of softness? How you'll overcame if any, the disturbance as you mentioned external disturbance that you mentioned.

Thank you, Suraj. If you allow me to correct you, I didn't say disturbance, I said distraction. Fair And frankly, it's a nuisance distraction. I think the results speak very loudly that the clinical transplant community have voted with their action. Not with their word. We reached out to every user of the OCS platform and non user. In The United States across all three platforms, when this garbage came out in January. And we've made our points clear and the results [indiscernible] their position. So, look at these results with a high degree of pride and humility [indiscernible] we are continuing to laser focus on our users servicing our users' needs and making sure that we're there for them as they have been there for us throughout Q1. And again, we're doing this because we're delivering significant value to the transplant community across all three platforms. And we're looking forward to the next next phase this year, later this year when we get the heart and lung programs kicking to start getting momentum in the cardiothoracic aspect of this. We did not see any softness. The opposite is true. And again, now the focus of our entire team is to making sure that we are here and have the capacity to meet the demand.

The demand is continuing to grow. Day over day, week over week, month over month.

Fair enough. And Walid, one of the other thing obviously is OCS economics, almost every discussion that comes up right? And in one of our recent events, some of the physicians said, hey, it would really help hospitals because they are not billing properly And the point was raised, it would really help if TransMedics develops a reimbursement team that can help us understand reimbursement and guide us through the process because where you'll have stepped in, it seems like it's helped the site. So walk us through if that is on the on the docket in terms of just helping transplant sites walk through the reimbursement steps. Gentlemen, congrats again and thank you for taking my my questions.

Thank you, Suraj. Suraj, unfortunately, that tells me that, that particular view comes from a new user or a new partner to TransMedics OCS. TransMedics has always had reimbursement experts, both full time internal and external that work and help all transplant programs in The United States and in Europe do the market access and billing work In fact, we are the only entity only technology that formed the national Transplant Administration Working Group. Assembled from leading transplant programs that are highly utilizing OCS with and have secured additional reimbursement from commercial payers to help other transplant programs in The U. S. Achieve the same results. Completely unpaid, completely independent of TransMedics. So, it's a great idea. We agree with that view for sure and we have been implementing that. And again, our results and our growth could not be achieved, could not have been achieved. Without making headway on on the proper billing, as you outlined. Next question, The next question comes from David Rescott from Baird. Please go ahead.

Great. Thanks for taking the questions and congrats on the really strong quarter here.

Walid, I wanted to follow-up on some of your comments already on just the way you're thinking about the rest of the year in the guide. I know historically, you've called out just the unknowns around whether or not Q2 or Q3 sees more seasonality. I think if you look at the past two years, Q2 was a seasonally stronger quarter, Q3 was a seasonally weaker quarter. And so if we were to pretty much take that mid single digit market growth that played out in liver and heart the past two years, it puts you around $150,000,000 or so in Q2. So I guess my question is, at this point, is there anything in your mind that leads you to believe that what we've seen in the past two years, meaning stronger Q3 Q2, kind of weaker Q3 on a seasonality basis, would not play out again this year. At this point, David, thank you for the question. At this point, perfectly outlined, it's either Q2 or Q3. And yes, the odds are looking at Q3, just because of the summer vacations. But we are also living in very volatile times. So one has to be prudent [indiscernible] If we just look looking at the past two years, I agree with you.

The Q2 should be an uptick from Q1. And Q3 is probably the higher probability where we see a little bit of slowdown because of the summer vacation impact and summer vacation on the overall transplant volume. But we don't see any any more tangible evidence that points us in one direction over the other at this point.

Okay, great. And then on the two clinical trials, liver sorry, lung and heart, I understand, the value to hospitals or physicians and participating in that trial. You know, when you think about the potential for on the heart side accounts to be in doing a heart transplant as a part of this trial, versus doing a heart transplant and not a part of the trial How do you think about the potential for the revenue coming in for heart patients to be incremental or something on top of the growth that you already would have as opposed to it maybe cannibalizing some of the underlying heart transplants that you likely, were going to capture, in the future at some point as well?

Thank you. Excellent question, David. I think we need to point out that we have two segments of the heart trial, one that is focusing on our current indication, and one much larger that is focused on a brand new indication that we currently don't have. And that is that cannot be cannibalized since we don't have that indication in the U. S. Anyway. And that's the indication that happens to be seven fifty patient trial versus the current indication segment of the trial is only 200. So we do not see this as cannibalization. We see this as an advancement. On both trials. But I just wanted to be giving you the black and white answer is, there's a seven fifty patient trial that is in an an indication we currently do not have in The U. S. So we're looking forward to the start of these trials and hopefully the results will will validate our view that this is not going to be cannibalizing, this is going to be additive because the significant advancements that we that users will see with the NextGen technology and solutions that we are deploying as a part of these programs. All right, perfect.

Thanks and congrats again.

The next question comes from Mike Matson from Needham and Company. Please go ahead.

Yes, thanks. Just curious on the decision to open the facility in Randola, Italy. I mean, you don't have a lot of international business, at least right now. I mean, I understand you're growing so fast, you probably need to add capacity somewhere, but why there versus somewhere in The U. S. Or elsewhere?

Mike, I can speak more granular other than saying that Mirandola Italy happens to be the Mecca for cardiopulmonary or perfusion technologies and innovation. Every major perfusion technology company whether in the dialysis, in the cardiopulmonary bypass, or ECMO company on the planet. Has a major R and D and manufacturing headquarter in Mirandola, Italy. Guess what? Our main revenue generating product is a perfusion disposable unit that is made of polycarbonate and polyurethane. And it has the same components that has significant engineering and design and manufacturing talent that exists in Mirandola, Italy. So that's one of the main reasons why I have to leave it at that.

The second is we are we grow and we're growing very rapidly, we need to start thinking about business continuity. And given that we're putting that infrastructure in Mirandola for R and D, it made perfect sense for us to add the manufacturing component to it, given the talent that exists in that region. Specifically on the vertically integrating key technology blocks that requires that talent. That doesn't exist in The U. S. And frankly, it doesn't exist in The U. S. As much as it is available. In abundance with significant expertise in Miranda, Italy.

Okay, got it. So it sounds like you're probably bringing something in house that you're having made in that kind of region to begin with and just deciding to kind of do it yourselves now that fair?

That's fair.

Okay.

All right. And then, just one on from a policy perspective, I know there's a of constant headlines out of TC, but I know there's some effort underway to kind of revamp the transplant policy at the federal level. So I was just wondering if there were any updates there, if you're hearing anything about the way things could potentially move Thanks.

Mike, we are not aware of anything imminent but we're keeping our eyes and ears wide open and we are actively engaged with many of the policymakers and the decision makers that are involved in that particular topic. So I'll leave it at that. Okay. Thank you.

Next question comes from Josh Jennings from TD Cowen. Please go ahead.

Hi, good afternoon.

Strong quarter. I was hoping to talk about ask about the clinical trials. Will lead at ISHLT. You made some at the symposium you obviously presented some high level details on the lung and heart trials. First on the lung trial, maybe you can just help us or report back on the enthusiasm or buzz that generated within the lung transplant surgeon community and the impetus or desire to get involved in this clinical program.

Thanks Josh. I think the buzz was pretty loud and it's not just in the lung. I think the buzz when the heart was as loud as the lung. If not louder. So, we are it was unfortunate that that we could not declare the two IDEs approved by the time of the ICCLT. But the buzz was loud. And what I tell you from our perspective, not just in The U. S, but as you've seen in our symposium, the buzz even OUS is becoming louder and saying why we need access to these innovations in Europe and Australia. So our team is working hard since the ICHLP trying trying to kind of garner harness that that momentum. [indiscernible] First things first, we need to get FDA approval in hand and move forward to executing our plans in The U. S. And definitely try to capitalize on the momentum and interest generated OUS as well.

Understood. And maybe on the heart program, there was a question kind of symposium from the surgeons just about the risks of designing the trial for superiority in low risk and low risk DBD trial. Lower risk. Know, head to head against a standard of care practice. Maybe you can just talk about your confidence level on OCS delivering superiority over standard of care? Thanks a lot.

Josh, I think, again, we we don't want to comment from our perspective That's why we designed the trial. That's why we are going to generate that first level one evidence head to head to standard of care. No other technology in the field from cold storage to cold perfusion to cold controlled cold storage have done that We're the only technology that is going to put it put that question to the test. And it's a very high bar. The test of a level one FDA pivotal PMA trial. [indiscernible] we'll let the data speak for itself. Appreciate that and looking forward to tracking along.

Thank you, Josh.

This concludes our question and answer session. I would like to turn the conference back over to Walid Hassanein for closing remarks.

Thank you, operator. Thank you all for your time this evening and we're looking forward to meeting again in few weeks and months here. Have a wonderful evening, everybody.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.