Shares of leading organ transplant platform TransMedics (NASDAQ: TMDX) were down 14% as of noon ET on Wednesday, according to data provided by S&P Global Market Intelligence.
TransMedics issued a positive news release yesterday evening about the hiring of Gerardo Hernandez as its new chief financial officer, but one sentence at the end of the announcement seemed to spook the market.
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This final sentence reads, “TransMedics now expects revenue for the full year 2024 to be in the range of $428 million to $432 million, which represents 77% to 79% growth compared to the Company’s prior year revenue.” This projection fell into the lower range of the company’s prior guidance for $425 million to $445 million, or growth of 80% at the midpoint, prompting the market to continue reining in TransMedics’ once-stretched valuation.
Following a disappointing third-quarter earnings report that saw the company only maintain market share in the transplant industry — after growing by 10 times the market’s rate in the prior year — investors were hoping for a rebound in Q4. While the new guidance would imply a 35% sales growth rate upcoming in Q4, this is markedly lower than the triple-digit growth rates TransMedics delivered in 10 of its last 11 quarters, hence the continued sell-off.
However, with shares now down 59% from their highs, TransMedics trades at 6.3 times sales — its lowest mark since going public in 2019. Ultimately, TransMedics remains a top dog and first mover in the organ transplant industry it is actively disrupting.
Yes, growth slowed. Nevertheless, investors must remain focused on the company’s decades-long potential rather than reacting to 180 days’ sales. Investors should note that TransMedics will hold an analyst day on Dec. 10, which should offer new insights and guidance going forward.
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