Good morning. My name is Bill Plovanic, Senior MedTech Analyst here at Canaccord. Welcome to the Canaccord Genuity 44th Annual Global Growth Conference. Thank you, Bill. My name is Stephen Gordon. I'm the CFO of TransMedics, and thank you, everyone, for joining this discussion this morning. Slide two is our cautionary note. I would describe TransMedics as a very mission-driven company. The mission is pretty simple: It's to increase the number of organ transplants and to improve the outcome of those transplants. It's pretty simple to articulate. It's obviously not so easy to execute. What most people know is that there's not enough organs to go around, that anyone that needs a transplant doesn't always get one, and many people die waiting for a transplant. But what most people don't know is that even of the donor organs that are available, very few are actually transplanted. So on this slide, you can see that every year in the United States, there's about 16,000 donors. These are people that have died in a way they can donate their organs. So 16,000 hearts, 16,000 lungs, 16,000 livers. But we actually only transplant about 3,000 lungs and about 4,000 hearts and about 10,000 livers. So most of the organs that are available are never transplanted, and they're never even sought to transplant, and the main obstacle, the main reason, is the limitation of the way those organs are preserved using cold storage, or ice, because once you put an organ on ice, the organ starts to decay, and you really have no way of knowing if that organ's ever gonna perform well in your recipient. So most of the organs are turned down for transplant. But TransMedics is changing that, and the core of everything we do is with our technology, which is called the Organ Care System, the only portable medical device that can keep a human organ alive outside of the body. The heart is beating, the lung is breathing, liver is producing bile. And what that does, it allows the surgeon to know and assess the organ up until time of transplant. It removes any time and distance limitations, and you can even treat the organ on the Organ Care System. So the technology, heart, lung, and liver, all PMA level approved in late 2021. But at that time, we realized that just selling a device was not going to create the pace of adoption that we thought was appropriate for this wonderful technology. So we made probably the biggest strategic decision the company has ever made, which was introducing our National OCS Program or providing a clinical service to the hospital. We hired a staff of our procurement surgeons, we hired a staff of clinical specialists or nurses, and we stationed them geographically around the country, along with our device. And now, when a transplant hospital wants to get an organ, instead of going themselves, they call TransMedics. We send our team to that hospital, the donor hospital, we remove the organ, we put it on the OCS, and we deliver it to the hospital. And that has really been the catalyst that changed the, the growth path of TransMedics. You can see in 2022, we did about 1,000 transplants. 2023, we did over 2,300 transplants, and as you know, we're on pace to significant growth again this year. And we're also meeting the mission. We're growing transplants in the United States. Last year, heart and liver both grew about 12% from the prior year. That hadn't happened. Prior to that last 10 years, 1%-2% growth a year, and now suddenly in 2023, it grew 12%, and we know that's the impact of bringing the Organ Care System to the field. We're also improving outcomes. What this is showing is over time, as more hospitals began using our NOP, and this is heart in particular, the complication rate or primary graft dysfunction has gone down as our team has gotten more experienced than it has... We've moved from the transplant center team to the NOP. And also extremely important in the growth curve is removing some of the burden on the transplant center. Livers that use ice, about 60% of those livers are done in the middle of the night. That means, you know, double time pay, that means low acuity, that means surgeons can't operate the next day. On OCS, it's the opposite. Over 60% or 62% are done during the day. That means you know, standard procedures, that means you can do multiple transplants in a day as well. But we didn't stop there. So we had the product, we had the clinical service, but we realized as we were growing that, you know, 70% of all these transplants are logistically transported using a private charter airplane. And we knew that as we grew and did many transplants a day, going much longer distances, that the network of kind of fragmented brokers available, they were just not meeting our needs. So we made a big decision in 2023. We bought a small aviation company, and we've ramped up a fleet of very light, very efficient jets, and so we now have 17 jets in our fleet. And when a transplant mission comes to us, it's on our jet with our pilots, with our surgeons, with our nurses, and our clinical device, delivering that organ. So if you indulge me for about three minutes... we made this video. A lot of people have asked me about the process and how it works, and so we made this video, there's a longer version on our website, of how it works. And so what this is showing is some of you have seen our command center in Andover. Call comes in from the hospital. We have a coordinator on call 24/7 that kind of logs all the information. Where's the donor? What time is the OR? What organ is it? And then once that's logged, it gets passed over to our logistics coordinator, and that person is figuring out the most efficient route with our planes, with our cars, where our surgeons are, where our devices are, to figure out the most efficient route to get the organ from the donor to the recipient. In this case, it's going from Seattle to Boston. Now, that you really couldn't do that with ice. You can only do that with the OCS. What you're seeing here is our clinical specialist accepting the case. This is an example of what a hub might look like, where we have our device. Haley here is gonna pick the OCS Heart 'cause it's a heart device. It's all gonna be prepped and ready, and she's gonna start transporting to the donor hospital in Seattle, where she'll meet our surgeon to do the actual procurement surgery. So this is an example of our surgeon. That surgeon's communicating constantly with the transplant surgeon at the recipient hospital, getting kind of a go sign to say, "Go ahead, remove the organ." They're gonna get to the donor hospital. They're gonna work together to remove that organ and put it on the OCS. And so here, this is Dennis, one of our surgeons, and he's gonna be instrumenting it and putting it on the OCS, and this is something that the transplant center would do in the past, but now they've outsourced this to TransMedics. And we've now done thousands of cases, so it kinda works like clockwork. All of the information about that organ is being communicated back to the hospital via our OCS Connect app, and then Haley's on her way. Now she's gonna meet our aviation team at the airport. People are wondering about the jets. It's called an Embraer Phenom 300E. We have a unified fleet, so all the jets are the same type, and they're all vintage between 2021 and most of them are 2023 or 2024. And then she's gonna bring that organ. She's gonna take blood samples and do tests on the way, and then deliver that to the Massachusetts hospital several hours later. So in shortness of time, I'll just kinda move on to the next slide, so but I think that gives a good overview of the process. You can see the results. We've been doing extremely well, building a lot of momentum. Went from $30 million to $90 million to $240 million, and our guidance this year is $425 million to $445 million. So what's coming next? We've talked a lot over the last two earnings calls about three clinical programs that we're bringing to the market, one for lung and two for heart. Really to continue to grow deeper penetration in those organ markets. A lot about longer perfusion time and bringing that daytime transplant to the lung and heart market. And then, as we look out further, a huge opportunity outside the U.S. It's a-- the same utilization problem exists, and we can bring a lot of the same technology, once we get kind of the reimbursement challenges corrected. And then, beyond that, there's even a next generation of OCS in the works. So we're excited where we are. We've built, we think, a very unique moat, including technology, IP portfolio, the clinical evidence, but most importantly, this kind of national program with TransMedics Aviation. And so I hope, Bill, we did that within 10 minutes, and we can move on from there. Thank you very much. I'm gonna have Stephen and Tamer join me for our fireside chat. Thank you, Stephen. And thanks, Stephen and Tamer, for joining us today, and thank you for the audience for being here. I'm gonna kick this off. You know, I hate to do this, but you're public. We've got to ask financial questions to start. That's why I'm here. It's the way the game goes. Just so you raised guidance on the second quarter call. Very impressive results, and now you're projecting sales for the fourth quarter of $445, and that still implies flattish quarter-over-quarter growth. That's hard to fathom for me, given the success you've had year to date. Can you give us just the puts and takes on the guidance and what can really drive the outperformance in your view? Is it underlying growth, NOP, aviation- Yeah. Like, where do we get the upside from? Yeah, I mean, first let me talk about there's always headwinds, right? So while we're being somewhat conservative, we know, like, international has had a great first half that probably won't repeat itself in the second half. There's some stocking there. We know lung is kind of ups and downs. It's not really a trended market yet until we bring out the new program. We also talked about some of the headwinds from some of the planes being in maintenance in the second half. So there's definitely some headwinds. The growth is the momentum and continued momentum in heart and liver. We saw a great sequential growth quarter in heart. You know, we think that's here to stay, and liver continues to be an influential part of the market. We're growing share, we're growing the number of liver transplants, and, you know, we're continuing to execute in that area. Let's talk about gross margins. I've gotten a lot of questions on this. Mm. It's. I think people are trying to get their heads around where we saw the service gross margin go down a lot. Yep. ... yeah, what, what drove that? How quickly can that go back up? You know, it's help us understand kind of how that's, you know, how that works. Yeah, so a big part of the service margin, gross margin is the aviation. All costs, depreciation on planes, fuel, pilots, everything is in cost of service. And we're spending ahead, right? We're adding more pilots, we're preparing for maintenance of a bigger fleet, we're spending on crew, crew support, training of the pilots, and we're doing all that ahead of the planes coming on because we think that the best and most efficient way to run this is to run the planes as much as possible, and we'd rather invest in pilots than more planes. So there's a lot of opportunity for that service margin to grow. Is it next quarter? We'll see, but probably over the next six quarters as we go through 2025, we want that to be, you know, high thirties and overall gross margin, mid-sixties. That's the model for the business. So it's a people issue. So you're onboarded all the people- It's people, training- Leverage their time- Yeah, that's right. ... 'cause you're doing the training and maybe the headhunter costs, and- All that Whatever it is, so your upfront cost, but that's, as I think about it, that's kind of a static cost, maybe a little with the little working a little more hours, but it's not something that scales with revenue. Yeah. The key is to run the planes as much as possible, and then that will have an improvement in margin. At that point, the variable cost is the fuel, and everything else is fixed. Yeah, I think one of the things that's surprised investors over the last year has really been the leverage you've seen in the G&A, and the sales and marketing. And kind of, is all the costs really going into gross margin to support growth? Like, how much more do you need to build out your, your G&A, right? Yeah. I mean, there's some- Sales and marketing. Like, how do we even. Do you even have salespeople? Like... Well, sales happens in TransMedics' business by the quality of the outcome. That's what's been driving adoption and penetration and increasing our footprint. So it's not sales per se, but it's the clinical team, the NOP team, that we've built over the last 2.5 years, that's now driving adoption. So as Stephen said, we're not scaling up the team as much as we did before. It's just incremental growth now because we now have enough resources around the country in every NOP hub that can meet our demand. And as we grow, we grow incrementally also in that field. So it's not sales as sales is defined usually in business, it's clinical sales. How do you get a new hospital on board? Like, who, who, who goes to the hospital, or are they coming to you? Help us understand, because... And, and part of the question here is, I think you said you have 130 between the different, but there's a lot of overlap when you talk about programs. And if I remember, it's like 40 hospitals-50 hospitals or programs own 80% of each of these markets. Kinda, how do you get a new one? How many new ones do you actually need, or is it at this point, it's like: "No, we, we got, we just need to go deep and, and funnel all of them into the ones we have? It's mostly about going deeper now into most of these accounts, because most of these centers have already come to us, or we've reached out to them, and they've used OCS, and now it's about handholding them and educating them continuously on the clinical front, and mainly on the reimbursement and administrative front. That's something that they need help with, and that's what our team is good at. It's really penetration more than reaching out to new centers. Centers are coming to us across the command center, from anywhere in the U.S., not necessarily us reaching out to them. It's all about how many times they come back, deeper penetration. Gotcha. So I guess, just to summarize, though, as we talk about, you know, the sales, marketing, G&A, it's kind of built adds here and there, but nothing major. Mm-hmm. In terms of the NOP and the aviation, sounds like you just went through the big pilot hiring spree, and what happened to you? So- Yeah. Yeah. You know, I would say there's more investment, right? We're not done yet, but certainly not at the pace that we've seen in the last two years. Yeah. But we're not quite done yet. I mean, one of the things, as we were building the commercial team and the aviation and the NOP, we didn't do as much on the infrastructure of the company, so we're doing that, you know, a lot of that now as well. So on the G&A side, we're making some investments. But, you know, the mantra is always, it's got to be at a much lower rate than revenue. So the idea is to have this drop down, and I think by not having hundreds of salespeople, you know, is really a big driver of leverage for the operating profit. I think, you know, it's now, you know, you think you might have said it once, and it's like, "Hey, we're gonna have a 30% operating margin at some point." You as a CFO, it's a- Yes ... it's a day you regret everything- Yes those things by a certain time point? I have no doubt that that is the mature margin of the company. People are trying to pin me on the time. Is it end of 2025? Is it 2026? It's not that important, but, you know, we're focused on growth, and I think as the growth comes, you know, as we get to, you know, greater than $500 million, $600 million, $700 million of revenue, it will be there. I think, you're much different than a classic Med Tech company. Very different. 'Cause given your background, you've seen a lot of those in your career. Yes, very different. Very- I love not having a 300 salespeople. And I think you actually hit my next question, which was $600 million-$800 million, somewhere in there, you think you'll get to the 30%. What are you gonna do with all this positive free cash flow? I mean, my numbers say you're gonna hit, like, $200 million in 2026. Yeah. I mean, I think... Look, we have to look at our fleet and see kind of what's next. I think we'll get to about 20 planes by the end of this year. We'll probably pause and see if we can run those as efficiently as possible. But we need - we'll need more to get to 10,000 transplants. We're looking at a couple maybe super mid-range planes, which are a little more expensive, so that we can go coast to coast without a fuel stop. We can go to Hawaii, Alaska, Puerto Rico. And, you know, we scan the environment for potential acquisition that will help us get to, you know, other areas that we can focus on. Just last question on guidance is, I don't, as a med tech analyst, I've never seen somebody talk about jet maintenance. So just help us understand that. What does that mean? Is that like a jet, the plane's down for six months, and it costs you $2 million? Or how do I think about it- So there's. 'Cause if you're paying, what, $10 million, $12 million, $14 million for a plane- Yep ... is it 10% a year, 10% every couple years? Yep. How do we think about that? Yeah. I think there's a couple levels. So there's annual maintenance, so every plane needs annual maintenance. Probably a brand-new plane might be down for two weeks. You know, older plane might be down for a month. If it's five or six years old, it might be down for three or four months, you know, so there's different levels of that. All of our planes are in the last few years, so we don't have those big maintenance. We will in a few years from now. And then there's everyday maintenance, like something, a seatbelt breaks or something happens, and we have to get it fixed right away, or we can't fly. And you should think of it like when your car breaks down, like, you have to... There's a garage. We have to get it to the garage. We have to pay. You know, we use third-party maintenance today. What we're working on is doing for annual maintenance, creating our own maintenance hub, and we're pretty far along in doing that, so we'll have our own staff. It doesn't have to be a huge staff, you know, five or six maintenance people, maintenance controller, kind of, you know, making sure that the annual maintenance is happening. The nice thing about doing it ourselves is we don't have to wait in line then to for the third party to do it. You know, as soon as we're ready, we'll bring the maintenance in. And then, a question on NOP, just going back. I remember when you started with just transporting the hearts on your system, and then it became, "Okay, let's have the surgeons to do the removals." Where are you in terms of liver, in terms of how many of those organs they request that your surgeons do the removals? And same question on heart. We're 98% utilization of our NOP service across all three organs. Well, I'm talking about the surgeon component of it, where they have the surgeon do the removal. Most, most of those are our surgeons doing the removals. On the liver? The only instances where our surgeons on the liver are not utilized is when we don't have enough surgeons, and we've got to go on a case, and we have a network of contracted surgeons that are not full-time employees but still working for TransMedics, and we utilize those. So it's nearly, and 98%, our surgeons. How about in heart? Same thing. We're that high. All, all, all three organs. So that's a- I recall when we started this- That's a big change. Absolutely. When we started it, every heart transplant center said, "No way, we're not going to use your surgeons." In the first quarter, we went to 12%. We considered this an achievement. Second quarter, 80%. Third quarter, 95%. In nine months, we changed. We transformed transplantation in the U.S. for heart transplant, the most critical. So, I'm gonna shift over. Second quarter was a strong quarter across the board. We talked about heart, which was very surprising, and I think investors were very pleased to see that's... I know it's been growing, but that was a big quarter for heart. What changed? Nothing. I know you say that, but that's not what the numbers say. So what happened really is we knew that this was gonna happen, meaning it's all about the clinical outcome, and our heart product and our heart NOP have been delivering on the outcome regardless of the donor indication, meaning DCD, DBD, longer distance, older age, it doesn't matter. The outcome is the best in the field, and the service component helped a lot. We knew that it's gonna take time for the distractions, the other modalities, to go to the wayside, and that you'll see the momentum gained and sustained, and that's exactly what's happening. Things in transplant and in clinical practice, in general, needs to take its time to settle in and to be adopted by the users, and then it, it's sustained. That's why I started by saying really nothing. We knew it's gonna happen. You guys were just more anxious than we are. So my words, not yours, but it sounds like, you know, kind of a lot of med tech we see, the doctor will do a couple cases, and they'll sit back and watch it and see how it does. Is that? That's exactly what happened. ...... That's exactly what happened, and now we're getting- That's exactly what it is. ... into 12 months -18 months- And to compare. ...... They're like, "Oh, that's fantastic outcomes. Why aren't we doing this across the board? Compare it to other distractions, as I said, and see the big difference. Yeah. Why am I doing what I'm doing? Okay, so that really flows into my next question on the sustainability of heart, 'cause I think that's... It's like, okay, we saw a great quarter. Now, is that sustainable? And it- Yes ... it just sounds like that's what's going on. Liver is growing nicely. Just walk through the way why that market really has embraced OCS, and, and now we're getting heart. What do we need from lung? Like, I mean, I think we're all sitting here going, "Okay, fantastic. Liver's going well. It's, you know, what are you gonna do for me next?" Not what have you done for me in the past. Thank you, and that's what we're doing exactly for the lung and even for the heart for next year. Clinical programs that can show the value in the practice, similar to what we've done in liver, i.e., extension of prolonged perfusion outside the body, and shift in transplant to a morning transplant, which, as Stephen showed, that's a huge transformation in transplantation practice for the liver. When we see this graph for the heart and lung, we can expect huge change in volumes of transplant in NOP for heart and lung, and that's what's gonna get them to be close and then equal to the liver, as they should be. When we think about these trials, I mean, you get a lot per case, and as your clinical programs, a couple in heart, one in lung, you know, with a warm perfusion product, my understanding is you would get the same pay for, you know, that product and that NOP, even if it's a trial, because it's already approved in that indication. Is that the same for lung because you're already approved for that indication, but in heart, if you do a cold perfusion product, would you get paid for that? And it's really a question of that might take some cases away that you currently have, and it you know- No, that's our- $70,000, $80,000 a case. No, that's our plan- A couple cases matter. But definitely the cold product will not be at the same price as the warm perfusion product. Right. Lesser value, different market segment, that's a whole different direction. But yes, we're expecting to get paid for both. I think we're coming up on the last question, so I have to flip through my list and go right through here. The last question I get from buyers or from investors is: what do you do longer term, and who would buy you? Because, I mean, as you've scaled, you're profitable, you know, you're doing all the things. You are standalone in the market. I mean, competitively, there's other people that are making noise, but it doesn't seem like anybody's making ground. But where do you fit? Like, w- Yeah, I don't think we're necessarily running the company to be an acquisition target, right? We're running the company to meet the mission, grow the number of transplants, improve outcomes, and, you know, we will become a great story and a very valuable company. I don't think we need to be purchased, you know, as we look forward. Perfect way to end it. Thank you so much. I appreciate your time. Thank you. Thank you, Bill. My name is Stephen Gordon. I'm the CFO of TransMedics, and thank you everyone for joining this discussion this morning. Slide two is our cautionary note. Good morning. My name is Bill Plovanic. I would describe TransMedics as a very, mission-driven company. The mission is pretty simple. It's to increase the number of organ transplants and to improve the outcome of those transplants. It's pretty simple to articulate. It's obviously not so easy to execute. What most people know is that there's not enough organs to go around, that anyone that needs a transplant doesn't always get one, and many people die waiting for a transplant. But what most people don't know is that even of the donor organs that are available, very few are actually transplanted. So on this slide, you can see that every year in the United States, there's about 16,000 donors. These are people that have died in a way they can donate their organs, so 16,000 hearts, 16,000 lungs, 16,000 livers. But we actually only transplant about 3,000 lungs and about 4,000 hearts and about 10,000 livers. So most of the organs that are available are never transplanted, and they're never even sought to transplant, and the main obstacle, the main reason, is the limitation of the way those organs are preserved using cold storage, or ice. Because once you put an organ on ice, the organ starts to decay, and you really have no way of knowing if that organ's ever gonna perform well in your recipient... so most of the organs are turned down for transplant. But TransMedics is changing that, and the core of everything we do is with our technology, which is called the Organ Care System, the only portable medical device that can keep a human organ alive outside of the body. The heart is beating, the lung is breathing, liver is producing bile. And what that does, it allows the surgeon to know, and assess the organ up until time of transplant. It removes any time and distance limitations, and you can even treat the organ on the Organ Care System. So the technology, heart, lung, and liver, all PMA level approved in late 2021. But at that time, we realized that just selling a device was not going to create the pace of adoption that we thought was appropriate for this wonderful technology. So we made probably the biggest strategic decision the company has ever made, which was introducing our National OCS Program, or providing a clinical service to the hospital. We hired a staff of our procurement surgeons, we hired a staff of clinical specialists or nurses, and we stationed them geographically around the country, along with our device. And now, when a transplant hospital wants to get an organ, instead of going themselves, they call TransMedics. We send our team to that hospital, the donor hospital, we remove the organ, we put it on the OCS, and we deliver it to the hospital. And that has really been the catalyst that changed the, the growth path of TransMedics. You can see in 2022, we did about 1,000 transplants. 2023, we did over 2,300 transplants, and as you know, we're on pace to significant growth again this year. And we're also meeting the mission. We're growing transplants in the United States. Last year, heart and liver both grew about 12% from the prior year. That hadn't happened. Prior to that last 10 years, 1%-2% growth a year, and now suddenly in 2023, it grew 12%, and we know that's the impact of bringing the Organ Care System to the field. We're also improving outcomes. What this is showing is over time, as more hospitals began using our NOP, and this is heart in particular, the complication rate or primary graft dysfunction has gone down as our team has gotten more experienced and as we've moved from the transplant center team to the NOP. And also extremely important in the growth curve is removing some of the burden on the transplant center. Livers that use ice, about 60% of those livers are done in the middle of the night. That means, you know, double time pay, that means low acuity, that means surgeons can't operate the next day. On OCS, it's the opposite. Over 60% or 62% are done during the day. That means, you know, standard procedures, that means you can do multiple transplants in a day as well. But we didn't stop there. So we had the product, we had the clinical service, but we realized as we were growing that, you know, 70% of all these transplants are logistically transported using a private charter airplane. And we knew that as we grew and did many transplants a day, going much longer distances, that the network of kinda fragmented brokers available, they were just not meeting our needs. So we made a big decision in 2023. We bought a small aviation company, and we've ramped up a fleet of very light, very efficient jets, and so we now have 17 jets in our fleet. When a transplant mission comes to us, it's on our jet, with our pilots, with our surgeons, with our nurses, and our clinical device delivering that organ. So if you indulge me for about three minutes, we made this video. A lot of people have asked me about the process and how it works, and so we made this video. There's a longer version on our website of how it works. So what this is showing is some of you have seen our command center in Andover. Call comes in from the hospital. We have a coordinator on call 24/7 that kind of logs all the information. Where's the donor? What time is the OR? What organ is it? Then once that's logged, it gets passed over to our logistics coordinator, and that person is figuring out the most efficient route with our planes, with our cars, where our surgeons are, where our devices are, to figure out the most efficient route to get the organ from the donor to the recipient. In this case, it's going from Seattle to Boston. Now, that you really couldn't do that with ice. You can only do that with the OCS. What you're seeing here is our clinical specialist accepting the case. This is an example of what a hub might look like, where we have our device. Haley here is gonna pick the OCS Heart, 'cause it's a heart device. It's all gonna be prepped and ready, and she's gonna start transporting to the donor hospital in Seattle, where she'll meet our surgeon to do the actual procurement surgery. So this is an example of our surgeon. That surgeon's communicating constantly with the transplant surgeon at the recipient hospital, getting kind of a go sign to say, "Go ahead, remove the organ." They're gonna get to the donor hospital. They're gonna work together to remove that organ and put it on the OCS. And so here, this is Dennis, one of our surgeons, and he's gonna be instrumenting it and putting it on the OCS, and this is something that the transplant center would do in the past, but now they've outsourced this to TransMedics. And we've now done thousands of cases, so it kind of works like clockwork. All of the information about that organ is being communicated back to the hospital via our OCS Connect app... and then Haley's on her way. Now she's gonna meet our aviation team at the airport. People are wondering about the jets. It's called a Embraer Phenom 300E. We have a unified fleet, so all the jets are the same type. And they're all vintage between 2021, and most of them are 2023 or 2024. And then she's gonna bring that organ. She's gonna take blood samples and do tests on the way, and then deliver that to the Massachusetts Hospital several hours later. So just in shortness of time, I'll just kinda move on to the next slide, so, but I think that gives a good overview of the process. You can see the results. We've been doing extremely well, building a lot of momentum. Went from a $30 million to $90 million to $240 million, and our guidance this year is $425 million-$445 million. So what's coming next? We've talked a lot over the last two earnings calls about three clinical programs that we're bringing to the market, one for lung and two for heart. Really to continue to grow deeper penetration in those organ markets. A l about longer perfusion time and bringing that daytime transplant to the lung and heart market. And then, as we look out further, a huge opportunity outside the U.S. It's the same utilization problem exists, and we can bring a lot of the same technology, once we get kind of the reimbursement challenges corrected. And then, beyond that, there's even a next generation of OCS in the works. So we're excited where we are. We've built, we think, a very unique moat, including technology, IP portfolio, the clinical evidence, but most importantly, this kind of national program with TransMedics Aviation. And so I hope, Bill, we did that within 10 minutes, and we can move on from there. Thank you very much. I'm gonna have Stephen and Tamer join me for our fireside chat. Thank you, Stephen. And thanks, Stephen and Tamer, for joining us today, and thank you for the audience for being here. I wanna kick this off. You know, I hate to do this, but you're public. We gotta ask financial questions to start. That's why I'm here. It's the way the game goes. Just so you raised guidance on the second quarter call, very impressive results, and now you're projecting sales of $425, of $445, and that still implies flattish quarter-over-quarter growth. That's hard to fathom for me, given the success you've had year-to-date. Can you give us just the puts and takes on the guidance and what can really drive the outperformance in your view? Is it underlying growth, NOP, aviation- Yeah. Like, where do we get the upside from? Yeah, I mean, first let me talk about there's always headwinds, right? So while we're being somewhat conservative, we know, like, international has had a great first half that probably won't repeat itself in the second half. There's some stocking there. We know lung is kind of ups and downs. It's not really a trended market yet until we bring out the new program. We also talked about some of the headwinds from some of the planes being in maintenance in the second half. So there's definitely some headwinds. The growth is the momentum and continued momentum in heart and liver. We saw a great sequential growth quarter in heart. You know, we think that's here to stay, and liver continues to be an influential part of the market. We're growing share, we're growing the number of liver transplants, and, you know, we're continuing to execute in that area. Let's talk about gross margins. I've gotten a lot of questions on this. Mm-hmm. It's, I think, people are trying to get their heads around where we saw the service gross margin go down a lot. Yep. You know, what drove that? How quickly can that go back up? You know, it's... Help us understand kinda how that's, you know, how that works. Yeah, so a big part of the service margin, gross margin, is the aviation. All costs, depreciation on planes, fuel, pilots, everything is in cost of service. And so, and we're spending ahead, right? We're adding more pilots, we're preparing for maintenance of a bigger fleet, we're spending on crew, crew support, training of the pilots, and we're doing all that ahead of the planes coming on because we think that the best and most efficient way to run this is to run the planes as much as possible, and we'd rather invest in pilots than more planes. So there's a lot of opportunity for that service margin to grow. Is it next quarter? We'll see, but probably over the next six quarters as we go through 2025, we want that to be, you know, high 30s and overall gross margin, mid-60s. That's the model for the business. So it's a people issue. So you're onboarded all the people- It's people, training- Just gotta leverage their time- That's right. ’Cause you’re doing the training and maybe the headhunter costs and- All that ... whatever it is, so your upfront cost, but that's, as I think about it, that's kind of a stagnant cost, maybe a little with the little, working a little more hours, but it's not something that scales with revenue. Yeah, the key is to run the planes as much as possible, and then that will have an improvement in margin. At that point, the variable cost is the fuel, and everything else is fixed. Yeah, I think one of the things that's surprised investors over the last year has really been the leverage you've seen in the G&A and the sales and marketing, and kinda is all the costs really going into gross margin to support growth? Like, how much more do you need to build out your, your G&A right? Yeah. I mean, there's some. Sales and marketing. Like, how do we even? Do you even have salespeople? Like- Well, sales happens in TransMedics' business by the quality of the outcome. That's what's been driving adoption and penetration and increasing our footprint. So it's not sales per se, but it's the clinical team, the NOP team, that we've built over the last 2.5 years, that's now driving adoption. So as, as Steven said, we're, we're not scaling up the team as much as we did before. It's just incremental growth now because we now have enough resources around the country in every NOP hub that can meet our demand. And as we grow, we grow incrementally also in that field. So it's not sales as sales is defined usually in business. It's clinical sales. How do you get a new hospital on board? Like, who, who, who goes to the hospital, or are they coming to you? Help us understand, because... And, and part of the question here is, I think you said you have 130 between the different-- but there's a lot of overlap when you talk about programs. And if I remember, it's like 40 hospitals-50 hospitals or programs own 80% of each of these markets. Kinda, how do you get a new one? How many new ones do you actually need? Or is it at this point it's like, "No, we, we got-- we just need to go deep in, and funnel all of them into the ones we have? It's mostly about going deeper now into most of these accounts, because most of these centers have already come to us, or we've reached out to them. They've used OCS, and now it's about hand-holding them and educating them continuously on the clinical front, and mainly on the reimbursement and administrative front. That's something that they need help with, and that's what our team is good at. It's really penetration more than reaching out to new centers. Centers are coming to us across the command center from anywhere in the U.S., not necessarily us reaching out to them. It's all about how many times they come back, deeper penetration. Gotcha. So I guess just to summarize, though, as we talk about, you know, the sales, marketing, G&A, it's kind of built ads here and there, but nothing major. Mm-hmm. In terms of the NOP and the aviation, and sounds like you just went through the big pilot hiring spree and what happened to you, so- Yeah, you know, I would say there's more investment, right? We're not done yet, but certainly not at the pace that we've seen in the last two years. Yeah. But we're not quite done yet. I mean, one of the things as we were building the commercial team and the aviation and the NOP, we didn't do as much on the infrastructure of the company, so we're doing that, you know, a lot of that now as well. So on the G&A side, we're making some investments. But, you know, the mantra is always: It's got to be at a much lower rate than revenue. So the idea is to have this drop-down, and I think by not having a hundreds of salespeople, you know, is really a big driver of leverage for the operating profit. And I think, you know, it's now, you know, you think you might have said it once, and it's like, "Hey, we're gonna have a 30% operating margin at some point." As a CFO, it's a- Yes ... it's a day you regret everything- Yes those things by a certain time point? I have no doubt that that is the mature margin of the company. People are trying to pin me on the time. Is it end of 2025? Is it 2026? It's not that important, but, you know, we're focused on growth, and I think as the growth comes, you know, as we get to, you know, greater than $500 million, $600 million, $700 million in revenue, it, it will be there. I think, you're much different than a classic med tech company. Very different. Just given your background, you've seen a lot of those in your career. Yes, very different. Very. I love not having a 300 salespeople. I think you actually hit my next question, which was $600 million-$800 million, somewhere in there, you think you'll get to the 30%. What are you gonna do with all this positive free cash flow? I mean, my numbers say you're gonna hit, like, $200 million in 2026. Yeah, I mean, I think... Look, we have to look at our fleet and see kind of what's next. I think we'll get to about 20 planes by the end of this year. We'll probably pause and see if we can run those as efficiently as possible. But we'll need more to get to 10,000 transplants. We're looking at a couple maybe super mid-range planes, which are a little more expensive, so that we can go coast to coast without a fuel stop. We can go to Hawaii, Alaska, Puerto Rico. And, you know, we scan the environment for potential acquisition that will help us get to, you know, other areas that we can focus on. Just last question on guidance. As a MedTech analyst, I don't, I've never seen somebody talk about jet maintenance. So just help us understand that. What does that mean? Is that like a jet, the plane's down for six months, and it costs you a couple million bucks? Or how do I think about it? So there's- ... So... So if you're paying, what, $10 million, $12 million, $14 million for a plane- Yep ... is it 10% a year, 10% every couple years? Yep. How do we think about that? Yeah. I think there's a couple levels. So there's annual maintenance, so every plane needs annual maintenance. Probably a brand-new plane might be down for two weeks. You know, older plane might be down for a month. If it's five or six years old, it might be down for three or four months, you know, so there's different levels of that. All of our planes are in the last few years, so we don't have those big maintenance. We will in a few years from now. And then there's everyday maintenance, like something, a seatbelt breaks or something happens, and we have to get it fixed right away, or we can't fly. And you should think of it like when your car breaks down, like you have to... There's a garage. We have to get it to the garage. We have to pay. You know, we use third-party maintenance today. What we're working on is doing for annual maintenance, creating our own maintenance hub, and we're pretty far along in doing that. So we'll have our own staff. It doesn't have to be a huge staff, you know, five or six maintenance people, maintenance controller, kind of, you know, making sure that the annual maintenance is happening. The nice thing about doing it ourselves is we don't have to wait in line then to for the third party to do it. You know, as soon as we're ready, we'll bring the maintenance in. And then, a question on NOP, just going back. I remember when you started with just transporting the hearts on your system- Mm-hmm ... and then it became, "Okay, let's have the surgeons to do the removals." Where are you in terms of liver, in terms of how many of those organs they request that your surgeons do the removals? And same question on heart. Well, 98% utilization of our NOP service across all three organs. Well, I'm talking about the surgeon component of it, where they have the surgeon do the removal. Most, most of those are our surgeons doing the removals. On the liver? The only instances where our surgeons on the liver are not utilized is when we don't have enough surgeons, and we've gotta go on a case, and we have a network of contracted surgeons that are not full-time employees, but still working for TransMedics, and we utilize those. So it's nearly, and 98%, our surgeons. How about in heart? Same thing. We're that high? All three organs. So that's a- I recall when we started this- That's a big change. Absolutely. When we started it, every heart transplant center said, "No way, we're not gonna use your surgeons." In the first quarter, we went to 12%. We considered this an achievement. Second quarter, 80%; third quarter, 95%. In nine months, we changed, we transformed transplantation in the U.S. for heart transplant, the most critical. So, I'm gonna shift over. Second quarter was a strong quarter across the board. We talked about heart, which was very surprising, and I think investors were very pleased to see that's... I know it's been growing, but that was a big quarter for heart. What changed? Nothing. I know you say that, that's not what the numbers say. So what happened really is, we knew that this was gonna happen, meaning it's all about the clinical outcome, and our heart product and our heart NOP have been delivering on the outcome regardless of the donor indication, meaning DCD, DBD, longer distance, older age, it doesn't matter. The outcome is the best in the field. And the service component helped a lot. So we knew that it's gonna take time for the distractions, the other modalities, to go to the wayside, and that you'll see the momentum gained and sustained, and that's exactly what's happening. We just, you... Things in transplant and in clinical practice in general needs to take its time to settle in and to be adopted by the users, and then it, it, it's sustained. So that's, that's why I started by saying really nothing. We knew it's gonna happen. You guys were just more anxious than we are. So my words, not yours, but it sounds like, you know, kind of a lot of med tech we see, the doctor will do a couple cases, and they'll sit back and watch it and see how it does. Is that? That's exactly what it is. That's exactly what happened, and now we're getting- That's what it is. ... 12 months, 18 months, and they're like- To compare- Oh, that's fantastic outcomes. Why aren't we doing this across the board? Compare it to other distractions, as I said, and see the big difference. Yeah. Why am I doing what I'm doing? Okay, so that, that really flows into my next question on the sustainability of heart, because I think that's... It's like, okay, we saw a great quarter. Now, is that sustainable? And it- Yes ... it just sounds like that's what's going on. Liver is growing nicely. Just walk through the way why that market really has embraced OCS, and, and now we're getting heart. What do we need for lung? Like, I mean, I think we're all sitting here going: "Okay, fantastic. Liver's going well. It's, you know, what's, what are you gonna do for me next?" Not, "What have you done for me in the past? Thank you, and that's what we're doing exactly for the lung and even for the heart for next year. Clinical programs that can show the value in the practice, similar to what we've done in liver, i.e., extension of prolonged, prolonged perfusion ex vivo, outside the body and shift in transplant to a morning transplant, which, as Stephen showed, that's a huge transformation in transplantation practice for the liver. When we see this graph for the heart and lung, we can expect huge change in volumes of transplant in NOP for heart and lung, and that's what's gonna get them to be close and then equal to the liver, as they should be. And we think about these trials. I mean, you get a lot per case, and as your clinical programs, a couple in heart, one in lung, you know, with a warm perfusion product, my understanding is you would get you would get the same pay for, you know, that product and that NOP, even if it's trial, because it's already approved in that indication. Is that the... and same for lung because you're already approved for that indication, but in heart, if you do a cold perfusion product, would you get paid for that? And it's really a question of that might take some cases away that you currently have, and it, you know- No, that's our- $60,000, $70,000, $80,000 a case- No, that's our plan- ... a couple cases matter ... but definitely the cold product will not be at the same price as the warm perfusion product. Right. Lesser value, different market segment. That's a whole different direction, but, yes, we're expecting to get paid for both. I think we're coming up on the last question, so I have to flip through my list and go right through here. The last question I get from buyers or from investors is: What do you do longer term, and who would buy you? Because, I mean, as you've scaled, you're profitable, you know, you're doing all the things. You are standalone in the market. I mean, competitively, there's other people that are making noise, but it doesn't seem like anybody's making ground. But where do you fit, like- Yeah, I don't think we're necessarily running the company to be an acquisition target, right? We're running the company to meet the mission, grow the number of transplants, improve outcomes, and, you know, we will become a you know, a great story and a very valuable company. I don't think we need to be purchased, you know, as we look forward. Perfect way to end it. Thank you so much. I appreciate your time. Thank you. Thanks. Thanks, Bill.