TransMedics Group, Inc. (NASDAQ:TMDX) Is About To Turn The Corner

With the business potentially at an important milestone, we thought we'd take a closer look at TransMedics Group, Inc.'s (NASDAQ:TMDX) future prospects. TransMedics Group, Inc., a commercial-stage medical technology company, engages in transforming organ transplant therapy for end-stage organ failure patients in the United States and internationally. The US$4.8b market-cap company posted a loss in its most recent financial year of US$25m and a latest trailing-twelve-month loss of US$10m shrinking the gap between loss and breakeven. The most pressing concern for investors is TransMedics Group's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for TransMedics Group

Consensus from 9 of the American Medical Equipment analysts is that TransMedics Group is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$34m in 2024. The company is therefore projected to breakeven around 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 42% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving TransMedics Group's growth isn’t the focus of this broad overview, but, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with TransMedics Group is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of TransMedics Group which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at TransMedics Group, take a look at TransMedics Group's company page on Simply Wall St. We've also compiled a list of important aspects you should look at:

1. Valuation: What is TransMedics Group worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether TransMedics Group is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on TransMedics Group’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com