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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended September 30, 2021

OR

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

For the transition period from                  to                 

Commission File Number: 001-38891

 

TransMedics Group, Inc.

(Exact name of registrant as specified in its charter)

 

 

Massachusetts

83-2181531

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

 

200 Minuteman Road

Andover, Massachusetts

01810

(Address of principal executive offices)

(Zip code)

 

(978) 552-0900

(Registrant’s telephone number, including area code)

 

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

 

Title of each class 

 

Trading Symbol(s) 

 

Name of each exchange on which registered 

Common Stock, No Par Value

 

TMDX

 

The Nasdaq Global Market

 

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

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

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

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

 

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

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

As of October 31, 2021, the registrant had 27,768,313 shares of common stock, no par value per share, outstanding.

 

 

 

 


 

 

FORWARD-LOOKING STATEMENTS

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

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

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

 

that we continue to incur losses;

 

our need to raise additional funding;

 

our existing and any future indebtedness, including our ability to comply with affirmative and negative covenants under our credit agreement to which we will remain subject to until maturity, and our ability to obtain additional financing or refinance existing indebtedness on favorable terms or at all;

 

the fluctuation of our financial results from quarter to quarter;

 

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

 

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

 

the rate and degree of market acceptance of the OCS;

 

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

 

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

 

our ability to improve the OCS platform;

 

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

 

the timing of and our ability to obtain and maintain regulatory approvals or clearances for our OCS products;

 

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

 

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

 

the performance of our third-party suppliers and manufacturers;

 

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

 

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

 

attacks against our information technology infrastructure;

 

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

 

our ability to attract and retain key personnel;

i


 

 

 

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

 

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

 

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

 

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

 

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

 

our use of proceeds from our equity offerings; and

 

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

ii


 

 

TransMedics Group, Inc.

Table of Contents

 

 

 

 

Page

 

PART I—FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1.

Financial Statements (Unaudited)

 

1

 

Consolidated Balance Sheets

 

1

 

Consolidated Statements of Operations

 

2

 

Consolidated Statements of Comprehensive Loss

 

3

 

Consolidated Statements of Stockholders’ Equity

 

4

 

Consolidated Statements of Cash Flows

 

6

 

Notes to Unaudited Consolidated Financial Statements

 

7

Item 2.

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

 

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

33

Item 4.

Controls and Procedures

 

33

 

 

 

 

 

PART II—OTHER INFORMATION

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

34

Item 1A.

Risk Factors

 

34

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

34

Item 6.

Exhibits

 

36

Signatures

 

37

 

 

 

iii


 

 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

TRANSMEDICS GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

(Unaudited)

 

 

 

September 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

22,495

 

 

$

24,581

 

Marketable securities

 

 

80,360

 

 

 

101,061

 

Accounts receivable

 

 

4,150

 

 

 

6,864

 

Inventory

 

 

14,869

 

 

 

11,934

 

Prepaid expenses and other current assets

 

 

3,703

 

 

 

2,326

 

Total current assets

 

 

125,577

 

 

 

146,766

 

Property and equipment, net

 

 

5,063

 

 

 

4,754

 

Restricted cash

 

 

500

 

 

 

500

 

Other long-term assets

 

 

6

 

 

 

6

 

Total assets

 

$

131,146

 

 

$

152,026

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,682

 

 

$

1,206

 

Accrued expenses and other current liabilities

 

 

12,769

 

 

 

10,317

 

Deferred revenue

 

 

320

 

 

 

263

 

Current portion of deferred rent

 

 

152

 

 

 

93

 

Total current liabilities

 

 

15,923

 

 

 

11,879

 

Long-term debt, net of discount and current portion

 

 

35,058

 

 

 

34,657

 

Deferred rent, net of current portion

 

 

1,616

 

 

 

1,599

 

Total liabilities

 

 

52,597

 

 

 

48,135

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

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

   issued or outstanding

 

 

 

 

 

 

Common stock, no par value; 150,000,000 shares authorized; 27,764,885

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

   and December 31, 2020, respectively

 

 

508,458

 

 

 

502,217

 

Accumulated other comprehensive loss

 

 

(131

)

 

 

(95

)

Accumulated deficit

 

 

(429,778

)

 

 

(398,231

)

Total stockholders' equity

 

 

78,549

 

 

 

103,891

 

Total liabilities and stockholders' equity

 

$

131,146

 

 

$

152,026

 

 

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

1


 

TRANSMEDICS GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net revenue

 

$

5,370

 

 

$

7,091

 

 

$

20,594

 

 

$

18,012

 

Cost of revenue

 

 

1,597

 

 

 

2,053

 

 

 

6,421

 

 

 

6,205

 

Gross profit

 

 

3,773

 

 

 

5,038

 

 

 

14,173

 

 

 

11,807

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research, development and clinical trials

 

 

5,163

 

 

 

4,155

 

 

 

15,990

 

 

 

14,283

 

Selling, general and administrative

 

 

10,335

 

 

 

5,493

 

 

 

26,283

 

 

 

18,012

 

Total operating expenses

 

 

15,498

 

 

 

9,648

 

 

 

42,273

 

 

 

32,295

 

Loss from operations

 

 

(11,725

)

 

 

(4,610

)

 

 

(28,100

)

 

 

(20,488

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(979

)

 

 

(971

)

 

 

(2,896

)

 

 

(3,014

)

Other income (expense), net

 

 

(249

)

 

 

499

 

 

 

(532

)

 

 

1,087

 

Total other expense, net

 

 

(1,228

)

 

 

(472

)

 

 

(3,428

)

 

 

(1,927

)

Loss before income taxes

 

 

(12,953

)

 

 

(5,082

)

 

 

(31,528

)

 

 

(22,415

)

Provision for income taxes

 

 

(9

)

 

 

(6

)

 

 

(19

)

 

 

(22

)

Net loss

 

$

(12,962

)

 

$

(5,088

)

 

$

(31,547

)

 

$

(22,437

)

Net loss per share attributable to common stockholders,

   basic and diluted

 

$

(0.47

)

 

$

(0.19

)

 

$

(1.14

)

 

$

(0.94

)

Weighted average common shares outstanding,

   basic and diluted

 

 

27,701,252

 

 

 

27,156,135

 

 

 

27,564,589

 

 

 

23,885,517

 

 

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

2


 

TRANSMEDICS GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net loss

 

$

(12,962

)

 

$

(5,088

)

 

$

(31,547

)

 

$

(22,437

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

3

 

 

 

16

 

 

 

(26

)

 

 

(10

)

Unrealized losses on marketable securities,

   net of tax of $0

 

 

 

 

 

(68

)

 

 

(10

)

 

 

(4

)

Total other comprehensive income (loss)

 

 

3

 

 

 

(52

)

 

 

(36

)

 

 

(14

)

Comprehensive loss

 

$

(12,959

)

 

$

(5,140

)

 

$

(31,583

)

 

$

(22,451

)

 

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

3


 

TRANSMEDICS GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Accumulated

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehen-

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

sive Income

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

(Loss)

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2020

 

 

27,175,305

 

 

$

502,217

 

 

$

(95

)

 

$

(398,231

)

 

$

103,891

 

Issuance of common stock upon the

   exercise of common stock options

 

 

287,705

 

 

 

372

 

 

 

 

 

 

 

 

 

372

 

Issuance of common stock in

   connection with employee stock

   purchase plan

 

 

14,951

 

 

 

211

 

 

 

 

 

 

 

 

 

211

 

Stock-based compensation expense

 

 

 

 

 

1,112

 

 

 

 

 

 

 

 

 

1,112

 

Foreign currency translation

   adjustment

 

 

 

 

 

 

 

 

(2

)

 

 

 

 

 

(2

)

Unrealized gains on marketable

   securities

 

 

 

 

 

 

 

 

8

 

 

 

 

 

 

8

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(7,917

)

 

 

(7,917

)

Balances at March 31, 2021

 

 

27,477,961

 

 

 

503,912

 

 

 

(89

)

 

 

(406,148

)

 

 

97,675

 

Issuance of common stock upon the

   exercise of common stock options

 

 

169,273

 

 

 

213

 

 

 

 

 

 

 

 

 

213

 

Stock-based compensation expense

 

 

 

 

 

1,808

 

 

 

 

 

 

 

 

 

1,808

 

Foreign currency translation

   adjustment

 

 

 

 

 

 

 

 

(27

)

 

 

 

 

 

(27

)

Unrealized losses on marketable

   securities

 

 

 

 

 

 

 

 

(18

)

 

 

 

 

 

(18

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(10,668

)

 

 

(10,668

)

Balances at June 30, 2021

 

 

27,647,234

 

 

 

505,933

 

 

 

(134

)

 

 

(416,816

)

 

 

88,983

 

Issuance of common stock upon the

   exercise of common stock options

 

 

104,753

 

 

 

344

 

 

 

 

 

 

 

 

 

344

 

Issuance of common stock in

   connection with employee stock

   purchase plan

 

 

12,898

 

 

 

208

 

 

 

 

 

 

 

 

 

208

 

Stock-based compensation expense

 

 

 

 

 

1,973

 

 

 

 

 

 

 

 

 

1,973

 

Foreign currency translation

   adjustment

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

3

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(12,962

)

 

 

(12,962

)

Balances at September 30, 2021

 

 

27,764,885

 

 

$

508,458

 

 

$

(131

)

 

$

(429,778

)

 

$

78,549

 

 

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


4


 

 

TRANSMEDICS GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Accumulated

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehen-

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

sive Income

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

(Loss)

 

 

Deficit

 

 

Equity

 

Balances at December 28, 2019

 

 

21,184,524

 

 

$

424,134

 

 

$

(2

)

 

$

(369,483

)

 

$

54,649

 

Issuance of common stock upon the

   exercise of common stock options

 

 

146,793

 

 

 

75

 

 

 

 

 

 

 

 

 

75

 

Issuance of common stock in connection

   with employee stock purchase plan

 

 

12,163

 

 

 

197

 

 

 

 

 

 

 

 

 

197

 

Stock-based compensation expense

 

 

 

 

 

385

 

 

 

 

 

 

 

 

 

385

 

Foreign currency translation

   adjustment

 

 

 

 

 

 

 

 

16

 

 

 

 

 

 

16

 

Unrealized gains on marketable

   securities

 

 

 

 

 

 

 

 

213

 

 

 

 

 

 

213

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(8,852

)

 

 

(8,852

)

Balances at March 31, 2020

 

 

21,343,480

 

 

 

424,791

 

 

 

227

 

 

 

(378,335

)

 

 

46,683

 

Issuance of common stock

   upon the exercise of

   common stock options

 

 

42,882

 

 

 

92

 

 

 

 

 

 

 

 

 

92

 

Issuance of common stock

   in public offering, net of

   discounts and issuance

   costs of $628

 

 

5,750,000

 

 

 

75,042

 

 

 

 

 

 

 

 

 

75,042

 

Stock-based compensation

   expense

 

 

 

 

 

631

 

 

 

 

 

 

 

 

 

631

 

Foreign currency

   translation adjustment

 

 

 

 

 

 

 

 

(42

)

 

 

 

 

 

(42

)

Unrealized losses on

   marketable securities

 

 

 

 

 

 

 

 

(149

)

 

 

 

 

 

(149

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(8,497

)

 

 

(8,497

)

Balances at June 30, 2020

 

 

27,136,362

 

 

 

500,556

 

 

 

36

 

 

 

(386,832

)

 

 

113,760

 

Issuance of common stock

   upon the exercise of

   common stock options

 

 

12,169

 

 

 

27

 

 

 

 

 

 

 

 

 

27

 

Issuance of common stock in

   connection with employee

   stock purchase plan

 

 

10,534

 

 

 

160

 

 

 

 

 

 

 

 

 

160

 

Reversal of estimated

   offering costs

 

 

 

 

 

43

 

 

 

 

 

 

 

 

 

43

 

Stock-based compensation

   expense

 

 

 

 

 

700

 

 

 

 

 

 

 

 

 

700

 

Foreign currency

   translation adjustment

 

 

 

 

 

 

 

 

16

 

 

 

 

 

 

16

 

Unrealized losses on

   marketable securities

 

 

 

 

 

 

 

 

(68

)

 

 

 

 

 

(68

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(5,088

)

 

 

(5,088

)

Balances at September 30, 2020

 

 

27,159,065

 

 

$

501,486

 

 

$

(16

)

 

$

(391,920

)

 

$

109,550

 

 

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

 

5


 

 

TRANSMEDICS GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(31,547

)

 

$

(22,437

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

1,351

 

 

 

1,147

 

Stock-based compensation expense

 

 

4,893

 

 

 

1,716

 

Non-cash interest expense and end of term accretion expense

 

 

401

 

 

 

379

 

Net amortization of premiums on marketable securities

 

 

1,075

 

 

 

304

 

Unrealized foreign currency transaction (gains) losses

 

 

587

 

 

 

(523

)

Changes in operating assets and liabilities: