Hi, everybody. Welcome, and thanks for joining. Welcome to, I guess, the first day of the Morgan Stanley Global Healthcare Conference. So very excited. For important disclosures: morganstanley.com/researchdisclosures. So yeah, that's very exciting. Very excited today to have TransMedics. We've got Waleed, who's Founder and CEO, and Gerardo, CFO here. Really appreciate the time. Thanks for coming down. Thank you for inviting. Thank you. We were just saying how thematically appropriate having Staying Alive on the soundtrack was for an organ transplant company, so it kind of worked well. I guess so maybe starting kind of big picture, it's been a strong year. There's a lot on the pipeline. Sitting here today, and you had that original target of 10,000 organs, and how are you feeling about, in terms of view, the world and where the business is today? Just big picture. We feel great. As Gerardo said a few weeks back, we are already past the 10,000 target internally. We're already setting our eyes at 20,000, 30,000 transplants by 2030. Yeah, we feel great, and we're looking forward to just continuing to execute. If you think of the journey that you guys have been on, getting to where you are now, has any of this sort of surprised you? I mean, relative strength of liver versus heart, or how the aviation network integration is going, versus how you originally envisaged the business? Does it look today like you thought it would? It's a very interesting question. From where we are as a leader in the market, from a market share, from an impact on organ transplant, it could not be more exactly the same as we envisioned. However, the path to get there, we accelerated the NOP five years compared to what we originally planned. The vertical integration of aviation and logistics, again, we accelerated that quite a bit. So from an impact, it's exactly what we envisioned. How we got there? We got there a lot quicker with NOP and the vertical integration than we originally planned. Yeah. Makes sense. Q3 always has some seasonality associated with it. That's just always how it is. And I'll ask a sort of slightly new question. But as you know, people sometimes track the flights, and that's a dangerous thing to do. But there's an argument out there that that's been fairly soft. On the other hand, it hasn't escaped people's notice that you made a fairly sizable investment in TransMedics' stock yourself fairly recently. How should we think about Q3 seasonality in the context of those things? That's an excellent question. We've always said Q3 is transiently choppy. Underscore the word transiently. We're not concerned about it. Obviously, the data is clear. Yes, we're quarter to quarter, it appears that national transplant volume is down. But when you look at the first half of the year this year versus the first half of the year last year, we're actually doing great nationally, so as we stated publicly, we expect seasonality in Q3. We expect that TransMedics will be impacted by that. But we think this is a transient impact and that we will finish the year strong, and we're still focusing on executing the plan and the guidance as we outlined it, at least as of today. We'll see where the quarter ends. There's still several weeks to execute. Even transplant docs need a vacation at some stage, right? Exactly. And as far as tracking the tails, it's an interesting way for someone who doesn't have much to do. But we are moving as more and more people are getting comfortable with how long organs could stay in OCS. We shifted ground transportation from 20% or lower to now approaching 40% of the total NOP mission. So yes, it's a secondary measure, but it doesn't tell the full story. Also, we still have 20% of the aviation requirements that are done by third parties. So again, I'm not saying Q3 is not going to be impacted. I'm just saying that it is not the be-all, end-all. It's not the gold standard indication of how the business is doing. We still are a transplant company, and cases are the number one priority for us, not necessarily the logistics piece of it. How do you think about the, it's obviously very different from organs in totality, but the existing, let's say, waitlist backlog? How do you want to, can we get to a point where we make really meaningful progress pulling that back with DCD organs and DBD organs and just the whole infrastructure getting a lot better? Yeah. Actually, we're doing that today. We've been doing that for the last two years. We've seen many, many big institutions that whittle down the waitlist and they rebuild it again. As we've always said, it will happen. When we deliver more organs, the waitlist is a dynamic picture that gets replenished because the demand for organ transplant is not slowing down. It's growing. It's just the waitlist is—you do not want to give false hope to patients in need. So that waitlist gets replenished as it gets depleted with additional organs. But we're still early in the journey of really flexing the capabilities of OCS to deliver more organ transplants in the U.S. And we're now beginning to expand outside of the U.S. to do the same thing. To your point, how many of the missions end up being, the NOP missions end up being sort of longer dated versus however you want to define it, but shorter distance in that way proportionally? I need to refresh my memory with the exact numbers, but we do both missions because it's not just about how far the donor is anymore. It's about how the OCS has transformed the timing of the surgical procedure, so we get called for missions that the donor is an hour away, and we get called for missions like this week, we got called for donors in Hawaii and Alaska for recipients in the East Coast, so I would say 50/50. The thing that is so transparent and so obvious that the OCS now is transforming the timing of the surgical procedure from being a middle-of-the-night emergent procedure to a more semi-scheduled procedure in the morning hours, and that's, again, it's early innings, and it's going to continue to grow. We're hoping that we can bring that success that we're experiencing in liver for heart and lung as well with our next-generation clinical programs. This might be a sort of off-the-wall question, but the ability to have the surgery just functionally be a little bit more planned. Are there other efficiencies for the hospital side that that enables, like faster OR turnarounds, that kind of thing? You know what I mean? Of course, there's several. The shifting organ transplantation to a morning procedure has a huge impact on hospital financial resource management. Rather than paying double time or more in the middle of the night, they pay regular time. Two, it gives the hospital the ability to do more than one transplant a day, which used to be something unheard of because you're doing it in the middle of the night. You can't have the team working around the clock. Today, we're seeing our centers doing two, three, sometimes four for a large volume center. And doing them between 7:00 A.M. and 7:00 P.M., that is huge, huge value. And that the hospital administrators are recognizing. It's not just about work-life balance of the clinical staff. It's really about the better quality of the surgical procedure and better financial management for the hospital. I mean, on the topic of financial management for you guys, as the ground missions proportionally have gone up a little bit because you've got more flexibility on the organ transplantation time, how should we think about that capital investment spend, the aviation network, and the spend on that side? Yeah. To get to our 10,000 transplant goal and beyond, we certainly will need an additional fleet. We are running our double-shifting program, which is going to help us to really right-size the fleet. And based on that, we'll be opportunistic, right? I mean, if we see jets that are at the right price, we'll move forward. Otherwise, we'll hold on when we find the right opportunity. But we will need to get more jets to get to the 10,000 and beyond. Yeah. And just to build on what Gerardo said, I don't want the community to misunderstand what we're saying. There will always be the majority of the organs will always be flying, especially with OCS because we can go further distance. But we just saw that interesting shift from 20% to 40% or near 40%. We wanted to highlight that. But the majority still is flying. And the more the LCS will take more of the lion's share of the market, we will fly more as we continue to expand the reach of transplant programs to reach donors and organs across the country and across the world. There's some areas of healthcare that I've seen over the years get maybe unfair, undue amounts of, how to put it?, emotional or political attention, like nursing homes, dialysis, and to some degree, organ transplants, right? It just gets that extra focus because there's an emotive quality associated with it. There's been a few articles in the press, not connected to you, but to the DCD area in general. How do you feel about that? Do you think that has any impact at all? Or what should we think about when we read some of those articles? Sure. Again, what we're seeing in the press is really a poor reflection of what really happened in the field. These cases happened two years ago in the early days of implementing DCD donation. There's a lot that we can talk about to improve, but these two cases are not really the be-all, end-all. We think that DCD donation is here to stay. The community is sophisticated enough to understand that these were in the early days when these OPOs were just trying to implement DCD programs, and with anything new, there's always some missteps, so we're not seeing a significant negative impact as we were afraid that it might result in because it's old, and now DCD is here to stay, and it's growing, and you can see it in the national numbers. DCD is nearly 50% of the donors in the United States. We hope that doesn't change, so. Do you think there's an adequate understanding in the system of the administration that those organs, which ended up mostly saving people's lives, wouldn't just not have been used before? Is that well understood? I think it's very well understood. And I think specifically on the HRSA and CMS side, they definitely understand that. And what they're trying to do is just to bring a higher level of accountability that didn't exist in the transplant system in the United States. And it's something to be applauded, but we got to be careful not to throw the baby with the bathwater and make sure that, yes, there are some areas of improvement, but the transplant system in the United States is one of the best in the world. And that remains to be a fact, so. When you're thinking about the industry, the transplant industry as a whole, obviously, there was a fairly big bit of news flow recently with Terumo coming in and buying one of your peers. What did you think when you first saw that news flow? What was the instinctive feeling on your end? As I've stated before, I mean, first, congratulations to the team from OrganOx and the team from Terumo in this great deal. The three points that we thought about is, well, great, this proves that that space that was very not well understood in the early days of TransMedics now has recreated a multi-billion dollar global opportunity that Terumo and others are focusing on. Two, it proves how undervalued TransMedics' stock is today and justifies the investments I made personally in the TransMedics stock. And three, it shows that transplant is living a period of renaissance. And again, it proves that we're in the early innings of this. This is really going to continue to grow. And we are fully committed to continue to innovate and be on the front end of this and drive the field forward as the pioneers that invented that field from whole cloth. So we were very excited to see this. And again, we welcome Terumo to the field. And it keeps us honest from a competitive dynamic standpoint. And it will invest innovations into this field that we love. Still, a lot of DCD organs end up not getting used. Does it help having another player actively pushing? Because people always focus on the cannibalistic nature of the organization, but there's also one of growing the market. How do you think about that in play? Yes. There are a lot of DCDs that are not being used. But we're not waiting for anybody to come in and allow them to be used. We're not stopping, guys. We are investing a lot to continue to innovate. And we are going to be the company that delivers innovations to continue to grow organ transplants. We're not waiting for Terumo or anybody else to tell us how to do the things we developed to make them be interested in the field. But obviously, competition keeps us always on our toes. And it's a healthy competition, and we love it. But we're not waiting for another company to show us how to do it. We're investing in our own programs to deliver more organ transplant, more DBD, better outcomes, more DCD organs, and continue to innovate on that front. If I think about one of the things that distinguishes you, one of the things is the aviation network, and it's been, what, 18 months? Two years since you really started that push? Two years, yeah. Yeah. It's been, yeah, only the first one. And how's that gone versus your expectations? And also, where are we on the journey? Because there's definitely this scale network effect of number of aircraft and number of missions and the liquidity of the capacity that you have. Where are we at on that journey? I would say we're in, I would say, the early phases of that journey. We're very excited that we finally have critical mass to be able to operate with a network effect in the United States. Now, as Gerardo said, we are experimenting with double-shifting the planes or a portion of our planes to really maximize the utilization of our fixed assets before we invest in more fixed assets or more aircraft, which we know we have to do. The question is, do we buy 10 more or five more? And the double-shifting will give us the answer to that. What's exciting about this is the success of the NOP logistics and NOP clinical services in the US now is catalyzing a lot of international interest that was dormant for a long time, thinking that TransMedics is only selling medical technology. Today, when we see the success of TransMedics, that TransMedics achieving in the United States and the ability to manage a turnkey service, we're getting a lot of interest from international markets that are wanting us to replicate that in their local geographies. I definitely want to touch on AUS in a second. When we think of missions in the middle of the night, I think you're always thinking about the surge and how difficult that is and how easy is it to find and hire pilots? Because, again, they're also having to do, on the one hand, they're saving lives rather than flying billionaires around, which is kind of cool but then it might also be in the middle of the night. How hard is that? Listen, our pilots, we love our pilots. They're very proud of their mission and mission of TransMedics. You can see them on LinkedIn. We were concerned about that dynamic. Today, we're approaching close to 150 pilots and growing rapidly. They're very, very motivated by the mission, and we can't speak highly enough of our pilots. We know it's not for everybody. We've been very transparent with our crew from day one when we made the acquisition of Summit that this is different than flying high-net-worth individuals. But to our pleasant surprise, the mission is resonating well with our pilots, and we are not having turnover. We're not having any issues retaining them. Also, we're very competitive in our compensation package, and I promised our crew that they will be one of the top because of the demand. They're going to be one of the top compensated crew in the industry. We're delivering on that promise, so. Where are we at? Because obviously, NOP got rolled out. It's basically full coverage now. Where are we at in terms of the concept of pricing? I don't mean the absolute price level. I mean the distinguishing between service and product, actually just becoming an end-to-end thing where the customers are really thinking about it as just, "I need an organ." This is just the price rather than distinguishing between OCS and NOP. I want to remind everyone that TransMedics is very unique in the fact that we have not increased our prices for the last seven years, really, since before the FDA approval. We intentionally priced NOP service at a nominal price to what the value we're delivering because we did not want that to be an impediment for adoption, and we have to charge fairly, and actually, we are the most efficient pricing on logistics, so the total combination now, we feel very strongly, to my original statement a few calls back, that we are delivering, we believe wholeheartedly that we're delivering the most cost-effective transplants in the world because the technology cost has not grown by a dime, we're delivering high, high value for fair pricing, the clinical service is appropriately priced, and the logistics is the most competitive pricing that we can do because we're managing the network. So I feel now it's not an issue for the centers that are adopting NOP. And it's just they're ordering the service across all three levels. There's no distinction between, "Oh, I only want the clinical service but not the logistics," or, "Not the logistics but the clinical service." Obviously, that won't fly. Yeah. Basically, we'll combine anyway. Okay. That makes sense. And we can all see how Medicare works. We understand how the mechanics there and the coverage. But the bit that we will get much less visibility on is the commercial side. How are most of those contracts typically structured mechanistically? And where is the pricing relative today to the newer contracts versus Medicare? Yeah. I think for anyone who's tracking organ transplant, as you know, you may know that transplant contract is one of the most coveted secrets in every major transplant institution. And every institution thinks that they have the most generous, most competitive contracts on the planet. That's a fact that they think that way. From our side, the only comforting comment that we can offer is we wouldn't be here. We wouldn't show the success and the adoption rates and the revenue growth that we have if the commercial players don't understand the value of OCS. And we started with this, if you remember, from the early days of NOP. We reached out to every commercial player in the United States to make sure they understand what we're doing, why we're doing, and the potential economic impact on their network. And they all get it, including CMS, by the way. CMS gets the value in space, and every interaction we have with the CMS team, they bring up, "When are you coming with the kidney?" Kidney is very important for us. There's hundreds of billions of dollars being spent that we need to make sure that we get similar outcomes from OCS and the kidney that could transform the financial profile of kidney transplants in the United States. So that gives us comfort and gives us confidence in what we're doing, but we're continuing to keep open dialogue, not just with payers, but also hospital administrators to make sure they understand the economic value. But they're clearly doing a great job reaching out to their third-party commercial payers, and the contracts are being appropriately scaled. Otherwise, we wouldn't see the adoption and the scale of adoption that we're seeing. I'd love to pivot, actually, to some of the individual organs, maybe starting with kidney. Kidney is obviously a little bit different because there's a known donor component to kidney relative to because you can deliver one. And so how much of that market do you think is just site-to-site known donor versus it's going to have to be transported somewhere? And connected to kidney as well, President Trump had previously been a big supporter of increasing kidney donations on the record in his first term. I covered the details, but I just want to say something about that. Does that play into and, in fact, how successful do you think it'll be to get more donor registry? Kidney is a huge giant in organ transplant. It's the largest transplant organ by volume. The Living Donor Kidney Program, which you're focusing on, only represents about 20% of the total volume. In the United States, there's approximately 23,000-25,000 deceased donor kidneys being transplanted every year. Those are the ones that we're targeting. And that's what gives us the focus on our kidney program to focus on those 20,000-25,000 deceased donors. Why are we doing a kidney program with OCS today? Because today, kidneys have two major problems that are at all-time high. The post-transplant clinical outcomes are now approaching 50-55% Delayed Graft Function rate, which means the kidneys that are transplanted are not functioning well, and the patient is back on dialysis. It's costing a significant amount of dollars and, frankly, comorbidities to the patients. Two, the kidney utilization is at all-time low. We're only utilizing kidneys at a rate of about 60%. When I started TransMedics, the kidney utilization was 90%. So we need newer technologies that can better protect kidneys to maximize utilization of kidneys and reduce the post-transplant delayed graft function. If we can achieve these two, there's no doubt in my mind that we will be a gold standard for preserving kidneys in the United States and around the world. And that's the target for the OCS Kidney Program. Yeah. I guess dialysis is like $90,000-$100,000 a year for a Medicare patient. So it doesn't take long again to pay back on having better transplants on that side. Okay. That makes a ton of sense. When you're thinking about kidney and the rollout, would that be incremental investment? Is there anything different about that market that you would then have to do to activate it relative to what you've already done in Lung and Liver? Yes. It's a much bigger market. Yes, the technology will be completely different. In fact, we always say the kidney device will be the front edge of Gen3 OCS technology. And I'll leave it at that because we haven't talked about it publicly yet. And we're working very hard right now to finalize the design and get that kidney device ready for clinical implementation by early 2027. So 2026 is going to be a very busy year for our kidney team in TransMedics from a development standpoint. Maybe then pivoting in towards liver, obviously a critical organ for you guys. How are you finding things? Have you seen anything from incremental competition? How's the base market looking? How do you feel about the liver franchise? We feel very good about the liver franchise. I think the market perceives anything that moves and does anything in the kidney as the case of that for TransMedics franchise. Guys, we are the lion's share of the liver market in the United States, especially in DBD. And the DCD segment is growing. Competition is competition. You need to remember that this competition existed in the market from day one when we started. The reason why we're taking market share and maintaining market share is the outcomes. If we don't have better outcomes, we wouldn't be here. Our rate of utilization is the highest reported in the entire history of liver transplant compared to the known competitors out there. Our rate is 97.6%. Their rate is somewhere between 50%-65%. Our rate of the most complicated, the most costly post-liver transplant complication is 2.1%. Their rate is just announced at the WTC at 15%, anywhere between 10% and 13%, depending on the way they cut the data. So yeah, there are competitors, but they're much inferior to the OCS with inferior outcomes. And that's why they're priced at a lower price. So we're not concerned about competition. We welcome competition. But our results speak for themselves. We're not threatened by any competitor. Sometimes we actually encourage centers that they bring up the price and say, "If I buy this X device, it's $5,000 or $10,000 cheaper than OCS." We say, "Go. Try it. Experience the outcome. You will come back." And that's exactly what happens. We need to be patient. We need to remember that we're early in this. We're only at 40%-45% penetrated in the liver market. We still have a long way to go. We're growing the top line in that market. We just need to be patient. We stick to our knitting and continue to support our technology and continue to invest in innovation in that field. Because as you said earlier, Patrick, we're still losing 50% of the DCD livers today. We want to be the company and the technology that can improve that rate of DCD donation. That will add significant top-line growth to the liver transplant market as well. Do you see a difference? Absolutely the same. I guess with transplants as well, the manner of outcomes are much more visible for the surgeon than. I don't know. Like putting a TAVR valve in and 15 years later it degrades. It's more immediately discernible. So to a point around switching, they're a little more sensitive maybe. Yeah. That's interesting. You did also mention earlier OUS. And I know it's less of a priority for, frankly, all of us for many reasons, at least for your market. But I'd love to hear which markets you feel would be particularly suited and the national systems that have reached out for you to help. I will keep it high level. I think Europe is very important for us. The Middle East is very important for us. Australia is very important for us. And I'll leave it at that. And stay tuned. We want OUS to be meaningful. Enough revenue that this group here focuses on. But we still have some work to do. How much does geography matter? I can't imagine the politics of taking a liver from Switzerland to Germany. You see what I mean? Like the national borders. Is it just like large landmass? Or are we just coming at it the wrong way and actually all these countries have DCD organs that need to be used and they're not getting used? All of the above. All of the above. Many of the countries except Germany have DCD organs. But we need to remember that they're not using. But we need to remember one important fact. European donors are a lot more challenging than U.S. donors. The average donor age in Europe is at least 10 years older. The complication of the donor dynamic with the high rate of smoking and high rate of hypertension, it's a much more challenging donor environment. So utilization rate is lower. The post-transplant outcomes are a lot worse than the United States. And the management of transplant logistics is a lot more complicated because they don't have the critical mass to manage this. I was just in Italy meeting with the head of the equivalent of UNOS. And he's telling me, "Lee, every organ for me is a national allocation. I need planes. I need a logistics network like the NOP you have in the United States because I'm losing organs every day because I don't have access to transportation." TransMedics and NOP can help many of the European geographies. At one point, you mentioned, Patrick, which is the sharing of organs among member state or non-member state. This is actually something that's happening today. If the OCS and NOP were to be active in Europe, that would increase sharing of organs across member states or non-member states in Europe. It's something that's already happening because they want to maximize every organ to be transplanted because just the utilization rate is much lower than the U.S. I've got a slightly hedge fund question for you guys, including on the guide, which is basically you've obviously got the heart and lung trials that are ongoing, and the numbers aren't small in terms of number of patients. How do we think about those volumes relative to your existing outlook and guide? Because are they incremental? Would they have been patients that you would have, to your mind, collected anyway? Do you see what I mean? It's not a small number of. Yeah. They're not impacting the guide for this year. They're impacting the growth for next year for sure. Just the timing is not going to really make any meaningful impact in 2025. But yeah, the numbers are large. And they should impact the growth for 2026. And no, we're not cannibalizing our existing market because if you look at the two trials, the lung is a complete it's literally we're resurrecting the lung completely. So every organ is an incremental organ. On the heart, the bulk of the heart trial is an indication that we currently do not have in the United States. So these are incremental organs. I just wanted it on paper. I always ask everybody this, but I feel like especially for your company, the market focuses on very specific areas and very specific topics. I won't ask what you think people focus on too much because I think I already know all the answers to that. But instead, it'll be like, what do you focus on and you're surprised that other people don't bring up? What doesn't get the attention that you think is worth it? I think, listen, if you're going to focus on every month-to-month viability, quarter-to-quarter viability in organ transplant, you should not hold TransMedics stock. Seriously, it's about looking at the long term. Look at TransMedics at 20 or 30 thousand organs under our wing in the United States alone and doubling that worldwide. That's what we're building in TransMedics, and yes, there will be seasonalities. There will be variabilities. There is a reason why TransMedics doesn't announce the full penetration except at year-end because we know there's variability. We've said that from day one. That's number one. Number two, we are still early. Yes, we've achieved significant success in a short period of time, but it's still early. We've got to allow the time for the health, the transplant market to digest the level of innovation that TransMedics have injected into it in the U.S. and watch what the potential is for OUS. We're very, very excited about where we are, and again, this is not just word of mouth. My personal action in this quarter speaks for itself, and somebody asked me earlier today, "Well, Lee, why now?" Guys, I wanted to buy stock a lot earlier than now, but I was prohibited by corporate counsel because I made a 10b5-1 transaction last October, and I had to wait six months. Otherwise, I would trigger some bad things. Perfect. I'm actually proud of and worthy. Thank you so much. Thank you. Thank you. Appreciate it. Okay. Thank you.