TransMedics could finally be on the mend. Here’s the update.

• TransMedics appears to be back on the growth track, with fourth-quarter sales and profits that exceeded expectations.

• The expected launch of its new “OCS” organ-handling device later this year will be key to the successful execution of the firm’s longer-term growth strategy.

• Recently, allegations in an activist investors’ report, short-selling interest on more than 30% of the firm’s outstanding shares, and a selloff in high-growth companies have weighed on the stock price.

This stock has been Wall Street’s big medical drama lately. First, TransMedics saw its revenue growth slow, then its stock slipped, and then a short seller’s report called the whole operation into question. But now the medtech company I wrote about in a Research piece late last year appears to be roaring back to health: it just reported bigger-than-expected sales and profits in the fourth quarter, and reiterated its forecasts for a solid performance this year.

So let’s get caught up with the latest.

Here’s a recap if you’ve missed an episode along the way.

The US-based TransMedics, you’ll remember, aims to grow organ transplant volumes, with technology that allows organs to “live” longer outside of the body and with a logistics system that allows the firm to move organs from where they’re donated to where they’re needed. Its big innovations are its Organ Care System (OCS) for liver, heart, and lung transplants and its National OCS Program (NOP) – which is an expansive logistics operation with 17 strategic US hubs and a team that includes medical specialists, pilots, planes, and ground transport.

The firm saw sales growth start to slow down in the middle of last year, and so investors got nervous and sent shares tumbling, from around $175 to below $70 by year’s end. Then, in January, Scorpion Capital published its “short report”, a scathing write-up that accused the medtech company of “grotesque healthcare fraud” – sending its share price even lower. In response to the report’s claims, TransMedics hired an outside investigative firm – who, supported by an expert outside forensic accounting team, found no evidence of misconduct.

Nonetheless, the seeds of doubt were pretty firmly planted: short interest in the company had grown to as much as 33%. And even after the report’s allegations were refuted – both by the third-party investigators and a bunch of investment bank analysts – roughly 30% of those short bets stuck around. And, look, that’s exceptionally high. For context, anything more than 10% increases the risk of a short squeeze.

Investing is, of course, about predicting future sales, profits, and cash flows. But good governance is an important factor to consider. I have to admit that Scorpion’s allegations made me nervous. Investing in small- and mid-cap growth companies is difficult, even without factoring in the potential for underhanded activity by management. I considered throwing in the towel when I read those allegations, but decided to wait to see what the independent investigation uncovered and what the next quarterly results revealed.

And here’s what we learned in the fourth-quarter update.

TransMedics reported strong fourth-quarter results – with its better-than-expected sales and profits making the third-quarter shortfall look like a temporary blip.

• Revenues came in at $122 million, up 50% from the year-earlier period, and 11% ahead of analyst forecasts.

• Gross margins, meanwhile, were in line with the 59% consensus. That was a jump of about 3% compared to the quarter before, helped by the fact that the firm flew organs on its own planes more often, rather than depending on expensive charter flights.

• Earnings per share of $0.19 were bigger than the consensus view of $0.16.

• And the firm reassured investors about the year ahead, reiterating its 2025 revenue guidance of $530 million to $552 million – a 20% to 25% increase over 2024.

The update highlighted three key catalysts worth keeping an eye on.

Clinical trials. The firm’s top brass told shareholders they’re optimistic about the progress of TransMedics’s next-generation OCS Heart and Lung devices and are still planning to share pre-clinical results and the proposed clinical trial design at a big industry conference in April. The products, which are slated to launch late this year, are seen as pivotal in helping the company hit its goal of reaching 10,000 transplants by 2028 – a hefty leap from 3,715 OCS cases in 2024. And if the new OCS models gain FDA approval this year, as the firm hopes, that should remove any lingering sting from Scorpion’s report.

Valuations. With all the noise surrounding the company, you could hardly blame Wall Street’s stock analysts if they decided to run for cover over the past year. But so far, they haven’t: among the current ratings, there is one “strong buy”, five “buys”, and three “holds, with a target price range from $80 to $125. Not bad considering the current price of around $66.That puts TransMedics’s current market capitalization – on a share price of $67 – at $2.27 billion. Now, the firm is expecting 20% to 25% revenue growth in 2025 ($530 million to $552 million) – which is close to the current analyst consensus of $540 million. The stock is currently trading at 4.1x price-to-sales ratio (that is, market capitalization divided by revenue estimate) based on 2025 revenues. And that’s arguably too cheap for a medtech stock – analyst target prices appear to range from 5x to 8x price-to-sales.TransMedics is trading at a 41x P/E ratio, based on 2025 estimates, which drops to 27x based on 2026, 18x on 2027, and 11x if it meets its 2028 targets. With strong profit growth expected, the firm is trading at a price-to-earnings-to-growth (PEG) ratio of 0.7x over the next two years and a PEG of 0.55x for the next three years. You can see the assumptions in the Google worksheet here. (Note that you’ll have to make a copy before you can insert your own assumptions.)

Flight tracking. Logistics being the other big thing, the firm said 75% of flights in the last quarter of 2024 took place on its own airplane fleet (that’s good: charters cost more), compared to 61% in the prior quarter.

From an investor standpoint, those flights can be tracked online, and that gives some added visibility about the transplant volumes the company is fulfilling.

In the fourth quarter, the company flew an estimated 1,729 flights using its network, and revenues were $121.6 million. Now, not every flight is used for transplants, as sometimes the planes need to return to a hub or fly empty to pick up an organ. So far this quarter, the company is on a projected run rate of 2,000 flights, which is up 16.4% from last quarter. That indicates revenues this quarter could potentially be near $140 million, higher than the $123 million consensus estimate.

What’s the opportunity, then?

TransMedics’s current sales momentum may look strong, but its share price is another story – it’s still under pressure. Now, you could argue that all growth stocks have been hit hard these past couple of weeks. But, look, TransMedics is a US-focused company, which means it’s not going to be directly impacted by tariffs or trade wars. If anything, the recent dip in oil and jet fuel prices could actually help lower the firm’s costs. So maybe the issue is that the stock looks expensive based on its price-to-earnings (P/E) ratio – it’s trading at about 29x P/E based on 2026 earnings forecast.

And the question, then, is whether that multiple is justified – and with the company’s profits predicted to grow 60% annually over the next two years, there’s reason to believe it is. The next big mover for this stock is likely to be the success of its new OCS system.That said, the short interest remains extraordinarily high – if the firm posts another set of strong quarterly results and the company raises full-year guidance, that would likely lead to upgrades from the street and a major short squeeze. For now, I plan to give the firm the benefit of the doubt.

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