This conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 5, 2026. And with that, I will now turn the call over to Waleed Hassanein, President and Chief Executive Officer.

Thank you so much, Hannah. Good afternoon, everyone, and welcome to TransMedics First Quarter 2026 Earnings Call. As always, joining me today is Gerardo Hernandez, our Chief Financial Officer. Our vision has always been bold and growth-oriented. Since inception, TransMedics has been relentless in our pursuit to transform organ transplant therapy by increasing utilization of donor organs and improving the clinical outcomes of transplant patients through technology and service innovation and by disrupting the status quo. To accomplish this, we've been deliberate yet aggressive in our strategic investment in growth initiatives. We believe that 2026 is a critical and transformational year that stands to cement TransMedics' near, mid- and long-term growth trajectories and global market position. In the U.S., we're actively engaged in growing our heart and lung franchises by advancing our ENHANCE heart and DENOVO lung programs to expand our clinical evidence to support broader adoption. In parallel, we are also completing the development of the OCS Kidney platform using our Gen 3.0 platform. Our OCS Kidney platform will enable us to access the largest segment of the global transplant market, which is kidney transplantation. This will happen for the first time in the history of TransMedics. We strongly believe that once regulatory approvals are in hand, OCS Kidney will drive significant growth for our abdominal franchise. And we're not stopping here. We're also actively engaged in upgrading our heart, lung and liver devices to the Gen 3.0 platform, which will enable us to gain significant future operating leverage and increase clinical adoption of the OCS platform in these critical organ transplant segments. Our growth initiatives also now go beyond warm perfusion. We recently unveiled the TransMedics Controlled Hypothermic Organ Preservation System, or CHOPS. CHOPS is designed to expand our product offering to cover new segments of the transplant market best served with cold static storage. And finally, our growth initiatives now extend beyond the U.S. to important international markets. In Europe, we are undertaking a bold initiative to replicate the NOP clinical service and transplant logistics model to catalyze European OCS adoption and potentially expand our total addressable market. I will provide details on each of these exciting initiatives on today's call. As you can see from our ongoing growth initiatives, our focus remains on long-term value creation with continued investment across each pillar of our growth strategy. Specifically, I want to highlight that this is a strategic and proactive decision, and we fully expect that our financial performance over the next several quarters will reflect these necessary investments in people, infrastructure and technology development as we capitalize on the opportunities in front of us. Based on everything we know today, we are highly encouraged and inspired by what's ahead for TransMedics. We are committed to executing our plan to drive significant growth for TransMedics and for the global transplant markets broadly. As I've stated repeatedly, I truly believe that TransMedics remain in the early innings of our long-term growth opportunity. I'm excited to report that our first quarter performance reflects a strong start for 2026. Despite broader volatility and the transient negative impact of the U.S. Transplant Modernization Act on OPO performance and overall donor numbers in the U.S., we managed to deliver a solid quarter to start the year. Here are the key operational highlights for first quarter 2026. Total revenue for the quarter was $174 million, representing approximately 21% growth year-over-year and approximately 8% sequential growth from fourth quarter 2025. U.S. transplant product revenue grew by 22% year-over-year and approximately 7% sequentially to $102 million, while OUS transplant revenue grew approximately 39% year-over-year and approximately 17% sequentially to $6 million. We delivered an adjusted operating profit of approximately $18.1 million in the quarter, representing approximately 10.4% of total revenue while continuing to make significant investment to fuel our growth. Importantly, we ended the quarter with $462 million of cash and cash equivalents, while making substantial investments in the growth initiatives I described. TransMedics transplant logistics services revenue for the quarter was approximately $32 million, up from $26.1 million in the year-ago quarter, representing approximately 22% year-over-year growth, and up from $28.6 million in the prior quarter, representing approximately 12% sequential growth. In the quarter, we maintained coverage of approximately 82% of our NOP mission requiring air transport. We expect to maintain 22 operational aircraft in the U.S. fleet throughout 2026. As we discussed, we are now focused on maximizing the utilization of our U.S. fleet and improving efficiency and capacity by double shifting a portion of the fleet to meet growing clinical demand. We will detail key findings from this initiative at year-end. Overall, we are pleased by our strong performance that was fueled by growing OCS case volume and increased clinical adoption. Importantly, we're also encouraged that we achieved these results without any contribution from ENHANCE and DENOVO clinical programs due to the enrollment timing of these important programs. Speaking of ENHANCE and DENOVO, let me shift to provide a detailed update on our strategic initiative to unlock these two important clinical programs to help us grow our cardiothoracic franchise in the U.S. At the recent ISHLT conference in April, we unveiled CHOPS. CHOPS is a true active cooling device designed to provide a variety of temperature conditions ranging from 4 to 12 degrees Celsius to meet users' needs. This represents a unique and optimized approach that we believe is superior to the Styrofoam boxes that are used for cold static storage of organs today. Those boxes use phase-changing material or cold packs that are extremely variable and are nearly impossible to control or adjust preservation temperatures. CHOPS will be an FDA-registered and regulated organ preservation device made by TransMedics and will serve as the control arm of the ENHANCE and DENOVO programs once the IDE supplement is approved. This would be a huge strategic win for TransMedics as it stands to help avoid any reliance on competitive products as we conduct our important clinical programs for heart and lungs. We plan to file the IDE supplement within the next few weeks, and we expect this to be approved and implemented in early third quarter 2026. Importantly, in parallel to these clinical programs, we fully intend to file a 510(k) application to clear this device for commercial use in the U.S. Once cleared by FDA, CHOPS would expand TransMedics' platform of organ preservation technologies and enable us to address shorter preservation times for organs that may be best suited for cold storage. As we highlighted on our last call, the panic and confusion caused by competitive reactions to our clinical programs somewhat delayed our ENHANCE Part B and DENOVO enrollment. We not only addressed this challenge by introducing CHOPS, but we are now going after the niche market with superior, more validated cooling technology and our best-in-class NOP infrastructure. Beyond facilitating our trial enrollment, we are expanding our product portfolio to ensure that TransMedics is well positioned to provide transplant programs around the world with the widest range of products to meet their clinical needs across the full spectrum of organ transplantation. We plan to accomplish this goal based on best-in-class technologies, best-in-class clinical services and the most cost-efficient and reliable logistical network in the market. Now let me move to share updates on our strategic initiatives that we see as important catalysts for our business. First is the National Transplant Modernization Act. In March 2026, TransMedics submitted detailed comments on CMS proposed rule-making language for the new U.S. transplant system to advance U.S. transplant modernization initiatives. Our public comments focused on several key topics. First, the system-wide benefits of allowing new entities with proper national infrastructure that are not current OPOs to participate in the new transplant ecosystem by becoming either multiregional or national OPOs to help maximize U.S. donor organ utilization for transplants. Importantly, this would provide a mechanism for fair competition and maximize transparency while driving cost efficiency to the U.S. transplant ecosystem. Second, the benefit of using FDA-approved portable perfusion technologies to maximize donor organ utilization in the U.S. while limiting the use of unproven, fairly expensive and potentially detrimental techniques that were introduced into the market over the last several years. Third, the benefits of enabling for-profit entities to participate so long as they strictly adhere to all performance metrics proposed by CMS and comply with all financial disclosure requirements. Fourth, the benefits of allowing new entities to bid to replace as many of the decommissioned OPO regions as they can support. And finally, the potential benefits of requiring these new participating entities to provide technology and clinical support services to existing OPOs. Our proposal was intended to maximize benefits to the U.S. transplant ecosystem in general and not just to one entity. If CMS agrees with this direction, TransMedics fully intends to submit bids for donor service areas associated with decommissioned OPOs later this year or early next. Our goal is to drive efficiency, transparency, maximize patient access and organ utilization for transplant in the U.S. The second growth initiative is NOP Europe. As we've discussed, we are actively building infrastructure and staffing in Italy across four hubs to cover northern and southern Italy. Meanwhile, we're actively engaged and applying for Italian organ transplant air and ground logistics tenders for several Italian regions. We are also actively engaged with Benelux stakeholders to establish NOP in the Netherlands and Belgium to create NOP hubs staffed by a dedicated clinical TransMedics staff to manage OCS cases in these countries. Another important element to our European NOP strategy is to create the first-ever dedicated and integrated transplant logistics network to cover broad European transplant logistics demand. On that front, we announced last week that we've entered into a definitive agreement with a major European charter flight operator, PAD Aviation, to partner on creating this European air logistics network. PAD is located in Paderborn, Germany, which is within a one- to two-hour distance from all the major transplant hubs across Europe. Importantly, they operate a fleet of the same model aircraft that we use in our U.S. fleet, Embraer Phenom 300Es. Simply stated, we're planning to replicate the success of the U.S. NOP in Europe to potentially expand or nearly double our total addressable market, increase OCS clinical adoption and provide efficient and dedicated transplant logistics service across Europe using our dedicated logistics network. The third growth initiative is the OCS Kidney program. As we discussed on the last call, this represents our next frontier with kidney expected to be the first organ to launch on our OCS Gen 3.0 technology platform. The Gen 3.0 platform will comprise a completely redesigned form factor, hardware, software and perfusion system that is smaller, lighter with lower part count, purposely designed for automated assembly and high reliability. Currently, the development program is running at full speed, and we hope to introduce the final design device and potentially a working device at the American Transplant Congress in Boston in late June. Looking ahead, we are still targeting early 2027 for our U.S. IDE submission for our kidney program. We are extremely excited about this program as it stands to unlock a substantial incremental market opportunity measured in tens of thousands of kidney transplant procedures globally. The fourth growth initiative is the OCS Technology Gen 3.0 upgrade for liver, heart and lung systems. This program is running in parallel to the kidney program to bring significant technology upgrades to our current liver, heart and lung systems and help catalyze clinical adoption in these transplant segments. Again, we are intentionally developing our Gen 3 platform to gain supply chain and operating leverage with lower part counts and less reliance on critical third-party suppliers. As you can see, our growth strategy is multifaceted with catalysts lined up across the short, mid and long terms. We're excited and laser-focused on investing to ensure the successful execution of these initiatives throughout 2026 and beyond. Now let me conclude by stating that based on all the dynamics we see today, both in the U.S. transplant ecosystem and at the macro level, we are reiterating our revenue guidance for the full year 2026 between $727 million to $757 million, representing a 20% to 25% growth over full year 2025. We may revisit the guidance later in the year as we gain more visibility on the pace of ENHANCE and DENOVO enrollment and other dynamics in the U.S. transplant ecosystem. With that, let me turn the call to Gerardo to cover the detailed financial results for the quarter.

Thank you, Waleed. Good afternoon, everybody. I am pleased to share TransMedics first quarter 2026 results. Please note that a supplemental slide presentation with additional details is available in the Investors section of our website. As Waleed highlighted, we started 2026 with solid execution and continued momentum across our platform. Importantly, consistent with the priorities we highlighted on our previous earnings call and throughout 2025, Q1 also marked the beginning of an accelerated phase of investment and execution for TransMedics. We are advancing multiple initiatives designed to support future growth, strengthen our operating capabilities and position us to capture the opportunities ahead. These include continuous progress across our different programs, international expansion efforts, shops and as announced last week, our agreement to invest in PAD Aviation to support the development of a dedicated organ transplant logistics network in Europe that Waleed mentioned before. Together, these initiatives and these actions demonstrate our ability to move quickly and boldly in allocating capital to execute on strategic opportunities that we believe can further fuel long-term profitable growth. And as Waleed says, let me repeat, these actions are designed to further fuel long-term profitable growth. Beginning Q1, we are introducing certain non-GAAP financial measures, including adjusted R&D expense, adjusted SG&A expense, adjusted operating expenses, adjusted income from operations, adjusted net income, adjusted diluted earnings per share and adjusted operating margin. We use these non-GAAP financial measures to support financial and operational decision-making and to evaluate period-to-period performance. We believe these measures are useful to both management and investors because they provide meaningful supplemental information regarding our core operating performance, particularly as we begin to incur certain discrete expenses and because they offer greater transparency into the key metrics management uses in running the business. Examples of these discrete expenses include costs related to strategic initiatives, corporate development activities, headquarter relocation and the implementation of our new ERP. A reconciliation between GAAP and non-GAAP results is included in the supplemental materials available on our website. Now turning to our Q1 financial performance. Total revenue for the quarter was approximately $174 million, representing 21% growth year-over-year and 8% growth sequentially. Growth was led by strong liver performance, continued progress in heart and increasing contribution from our integrated logistics platform. U.S. transplant revenue was approximately $167 million, up 20% year-over-year and 8% sequentially. By organ, liver contributed with approximately $139 million, heart with approximately $26 million and lung with approximately $2 million. International revenue was approximately $5.6 million, up 39% year-over-year and 17% sequentially. International revenue growth was primarily driven by heart with smaller contribution from lung. We are encouraged by the progress we are seeing internationally as we continue to build our presence and advance our expansion plans. At the same time, the business remains at an early stage and quarterly variability is expected due to reimbursement and market dynamics. Total product revenue for the quarter was approximately $108 million, up 22% year-over-year and 8% sequentially, reflecting continued strong liver performance and modest growth in heart. Service revenue for the first quarter was approximately $66 million, up 19% year-over-year and 9% sequentially. Growth was driven primarily by logistics revenue, supported by increased utilization of the TransMedics aviation fleet. Together, these results reflect continued demand for the OCS platform and the value of our integrated NOP model. Total gross margin for the first quarter was approximately 58%, broadly consistent with recent quarters and down approximately 331 basis points year-over-year. The year-over-year decline was driven primarily by increased internal supply chain activity to replenish inventory across our hubs and position inventory in support of the DENOVO and ENHANCE programs as well as continued investment in NOP network, which together with certain one-time items impacted the margin, and we will expect this to normalize in the coming quarters. Sequentially, as mentioned before, gross margin remained broadly stable at approximately 58%. Underlying performance in the quarter was encouraging with operational improvement largely offset by ongoing internal supply chain costs to support the DENOVO and ENHANCE programs, continued investments in NOP capabilities and certain one-time items that we will expect to normalize in the coming quarters, as mentioned before. Adjusted operating expenses for the first quarter were approximately $83 million, up approximately 42% year-over-year and 17% sequentially. Adjusted R&D increased approximately 45% versus the first quarter of 2025, primarily driven by the continued development of our OCS kidney program and our next-generation OCS platform. The increase also reflects ongoing product development activities in Mirandola, Italy and headcount growth as we continue to strengthen our development capability across the U.S. and the Mirandola site. Sequentially, the increase in adjusted R&D was primarily driven by continued investment in OCS Kidney and our next-generation OCS platform with a smaller contribution from increased product development activity in Mirandola. Adjusted SG&A increased approximately 41%, primarily reflecting the continued investment to strengthen NOP network and IT capabilities, the initial impact of our new headquarters in Somerville and consulting and market research in support of international expansion plans. Some of these factors also drove the sequential increase, particularly continued investment in NOP network and international expansion initiatives. Adjusted income from operations for the quarter was approximately $18 million, representing an adjusted operating margin of approximately 10%. The year-over-year decrease in operating margin primarily reflects the timing and scale of our planned investment in 2026 as well as the gross margin dynamics discussed earlier. Adjusted net income was approximately $11 million or $0.30 per diluted share. As Waleed mentioned before, we ended the quarter with approximately $462 million in cash. Cash generation from operations remained solid during the quarter, and our balance sheet remains strong and continues to provide us with the flexibility to invest in the business, support our clinical and international expansion plans and evaluate strategic opportunities that can strengthen our platform. Now turning to our 2026 financial outlook. We are reiterating our full year 2026 revenue guidance of $727 million to $757 million, representing a 20% to 25% growth over full year 2025. We continue to expect growth to be driven primarily by increased transplant volume supported by OCS and NOP platforms, expansion of service revenue and progress across our clinical and international initiatives. In terms of gross margin, we continue to expect our long-term gross margin profile to remain around the 60%. As I shared before, as we continue to invest ahead of growth and expand geographically, we do expect some near-term pressure. We feel confident in our long-term profitability goals. As we continue to scale the business, we expect to capture additional operating leverage while also benefiting from initiatives that are planned to be margin accretive over time, including our kidney program and our next-generation OCS. Taken together, these factors reinforce our confidence in the long-term profitability potential of the business. And again, as Waleed said, let me repeat, taken together, these factors reinforce our confidence in the long-term profitability potential of the business. In terms of capital allocation, our focus remains on driving long-term value. We are concentrating our investment in three key areas: first, fueling growth through continued R&D investment, strengthening our NOP network and targeting expansion into selected international markets. Second, building a stronger foundation through enhanced systems, processes, talent and organizational capabilities to improve efficiency, scalability and execution. And third, enhancing our infrastructure and strategic optionality, including our new global headquarters, manufacturing and product development upgrades and selected strategic opportunities that can further strengthen our platform. Overall, our first quarter performance reflects continued execution, disciplined investment and progress across several strategic initiatives that aim to expand our TAM and materially strengthen TransMedics' long-term position. We are moving with conviction and investing strategically in capabilities required to support future growth, improve scalability and drive long-term value creation. And with that, I'll turn the call over to Waleed for closing remarks.

Thank you, Gerardo. Overall, we're proud of our success to date, but we're not stopping here. 2026 represents another critical period for TransMedics as we invest to deliver on several transformational growth catalysts. The strong financial position we've built over recent years has enabled us to pursue this multipronged approach, and we are more excited than ever for what lies ahead. In conclusion, we're humbled and proud of the significant life-saving impact of our OCS technology, NOP services and dedicated team and remain committed to our mission of expanding cases and improving clinical outcomes for patients in need of organ transplants worldwide. With that, I will now turn the call to the operator for Q&A. Operator?

The operator will now provide instructions for the question-and-answer session. Your first question comes from the line of Bill Plovanic of Canaccord Genuity.

I'm going to focus on CHOPS, if I could. And just could you please help us understand the strategy behind CHOPS, the thought on cannibalizing your existing uses? And then are you still planning on hitting that 10,000 organ target? Does that include CHOPS? Or is that incremental? And then also just any thoughts on CHOPS for liver and kidney?

Thank you, Bill. I want to clarify one thing up front. CHOPS is not cannibalizing anything. It targets a specific market segment: DBD hearts with about two hours of preservation that we are not serving today. CHOPS is additive to our market share and is focused on short transport runs that currently use static cold storage. Second, the strategy was to develop a better control arm with improved technique versus the standard Styrofoam boxes used for static cold storage, and to offer a broader product portfolio for centers with primarily short-distance volume that do not invest in DCD or long-distance organ procurement. Finally, our current focus is on heart and then lungs. It will, of course, be approved for cold static organ preservation, but we have not decided whether to roll it out for liver and kidney. We believe kidney cold static preservation is problematic and are working to shift toward machine perfusion. CHOPS is specifically designed for the cardiothoracic platform.

Your next question comes from the line of Joshua Jennings of TD Cowen.

Hoping to just build on the discussion on ISHLT and just with the ENHANCE Part A and Part B programs, optimal scenario being kind of a win-win-win potentially driving day-only surgeries for high-risk DCD hearts, showing superiority in DBD short transports and then also opening up this advanced cold storage CHOPS opportunity. And maybe just help me better understand the dynamics there, if you would, and how ENHANCE Part A, Part B can help drive stronger liver-heart penetration, OCS heart penetration.

Thank you, Josh. As we've stated before, ENHANCE was designed exactly to accomplish the goals you outlined. We wanted to give the market a safe, reproducible and effective way to do morning hour heart transplants. We wanted to give the market a better way to preserve DCD hearts and a better way to preserve long-distance and long-preservation-time, extended criteria hearts, minimizing edema and resulting in better function and enhancing function on OCS. That was primarily the design of ENHANCE. In addition, we wanted to penetrate that segment of the market that I called earlier, DBD hearts that are, call it, sub-4 hours of preservation, which currently the vast majority of those are being transported using Styrofoam boxes with cold packs. That's Part B of ENHANCE. So yes, the vision and strategy of ENHANCE is still intact. Unfortunately, the competitive dynamic caused a little bit of confusion and resulted in a little bit of a delay to launching these two parts, specifically Part B. And we found a solution for it that completely makes ENHANCE fully independent from any competitive dynamic. So we are as excited as always and as we've ever been about ENHANCE, and we just can't wait to get the IDE supplement approved and get the program rolling. So again, from where we sit here, we see this as a huge opportunity for us to catalyze adoption in heart across all market segments and still have optionality for centers that are, for whatever reason, not focused on the expanding portion of the heart market of DCD or long-distance procurement and are just happy with cold storage. In that case, TransMedics would offer CHOPS, which we believe will meet their expectations and potentially provide a better solution, but on our platform. So as you said, Josh, we look at this as a win-win-win from TransMedics' perspective. We just have to be patient. We have to execute on the strategy. We have to finish the program. From where we sit, Part A is going slightly ahead of schedule. We're excited about what we're seeing. The market is giving us early feedback on how the hearts are behaving coming off OCS, which is exactly as we predicted it would be. But again, we need to finish the program, and then we expect good things.

Your next question comes from the line of Allen Gong of JPMorgan.

I had a quick one on what you're seeing in the market. I know intra-quarter, you had talked to some disruption that you were seeing at OPOs, especially as they're grappling with some of the potential changes proposed in the OPTN modernization. But I'm curious to hear what you're seeing so far in the second quarter. Are you seeing the same level of challenges? Are you seeing it get better? Are you seeing it worsen? And how should we think about your growth in the second quarter in light of that?

Thank you, Allen. The specific things that we're seeing are what everybody is seeing, which is that the overall deceased donor numbers have been below expectation and below last year. We saw that throughout the first quarter and April continued. We hope that will reverse. We usually don't pay too much attention to inter-quarter variability, but we are paying attention this year because of the dynamic with the Modernization Act. And if you remember, we predicted that we will see some volatility in deceased donor numbers, which is the mechanism that OPOs kind of register their displeasure with the transformation. We've seen it, and we have all the confidence that it will reverse. When it will reverse, we don't know, but we don't expect this to be a chronic thing. We expect actually when it reverses, it will bounce — not just bounce back to baseline, but we expect some acceleration. That's what we've seen over the history over the last 20 years. When this happens, that dynamic kind of plays out as I outlined.

Got it. And sorry if I missed this in the prepared remarks when bouncing around. I understand that the new strategy that you are approaching for your clinical trials. Do you have an expectation for when you think you can get those IDE approvals and then how quickly you can get those trials started afterwards?

Yes. Thank you, Allen. As I stated in the prepared remarks, we plan to file the IDE supplement within the next couple of weeks, and we hope to be in the approval stage and implementation stage by early Q3.

Your next question comes from the line of Ryan Daniels of William Blair.

This is Matthew Mardula on for Ryan. And I might have missed this, so I apologize, but what is the guidance for operating margins this year? And is operating margin growth more weighted in the second half and investments more front loaded given what we've seen in Q1? Any more color into margins and its trajectory for the second half would be greatly appreciated.

Yes. What I mentioned on the last call is that we're expecting up to around 250 basis points below operating margin compared to last year, which now will be really adjusted operating margin below the number that we had in 2025. I would not like to go into more details in terms of phasing because we have an investment plan that needs to materialize for it to result in what we are seeing. So I'd rather not go into those level of details now.

Your next question comes from the line of Chris Pasquale of Nephron Research.

Waleed, I also wanted to ask about the ENHANCE, DENOVO trials. The CHOPS program seems like a great addition to the portfolio. But previously, you were comparing OCS to established hypothermic organ storage approaches in those studies. Now by including CHOPS in the trials, you effectively have two investigational arms being compared against each other. So I guess kind of a two-part question is, one, does that complicate the interpretation of the results? Do you worry at all about not having a clean outcome here in terms of physicians being able to interpret what the data says? And then two, you're theoretically introducing a harder control arm here if you really believe that you're going to do a better job controlling the temperature of those organs. Does that make you at all concerned about the margin of improvement you're going to be able to show in the studies?

Chris, excellent question, and thank you for asking it. So let me address it in several sections. The first segment is there is no such thing as well-established cold storage other than ice. What we've seen over the years is there are hypotheses and claims that are being thrown out there in the marketplace by a handful of newcomers to the space that haven't been really substantiated. In fact, even the variation in temperature we've seen at the last ISHLT did not show any significant difference between 4 degrees to 8 degrees versus 10 degrees — none of these hypotheses have really materialized. So for us, we aren't concerned at all that we are lowering the standard. The opposite is true. We're actually elevating the game and saying, if you, as a center, want your organ to be stored between 4 and 8, we have a device that we can validate it is between 4 and 8. If you want it at 10, we have a device that validates it at 10. That's number one. Number two, we've discussed the second part, which is comparing to an investigational arm. CHOPS will not be investigational by the time we interpret the trial results. That's the plan that we discussed with FDA, and I would leave it at that. Three, am I worried about raising the bar in the control arm? No. I think the OCS will prove its value because these programs are designed to show several value points. Even if we deliver superiority results, there will be a segment of the market that's still focused on cold static storage just because of cost, limited volume or other reasons. In that case, TransMedics would gain market share in that segment that today we don't have a product to sell to meet those needs. Net-net, we are extremely focused on getting these programs executed. We believe we found the best solution. In fact, I would — at risk of quoting the FDA — the FDA called it a creative and elegant solution. So we will execute the trials, and we are confident our strategy is going to pan out on many fronts. We just can't wait to get these programs fully activated and get out of the confusion created by the panic that was thrown into the mix by our competitors.

Your next question comes from the line of Suraj Kalia of Oppenheimer.

Waleed, can you hear me all right?

Can hear you perfect, Suraj.

So Waleed, I wanted to follow up on Chris' question just with a slightly different flavor. One of the pushbacks we got after the CHOPS announcement was, how do you know CHOPS is optimally designed, i.e., it isn't really designed as an inferior product. I'd love for you to push back on that notion. This is a new product. How do you know this is optimally designed as is? Hence, you can — I think, so Chris was looking at one side of the spectrum in terms of good outcomes of the control arm. What I'm saying is at least one pushback we got was, what if it is suboptimally designed and you get bad outcomes in the control arm, hence, you automatically look good. I'd love for you to push back on that notion of thought.

Great, Suraj. Thank you for asking this important question. The opposite is true. This question implies the market is actually working with highly scientific, highly validated technologies. The opposite is true. There are transplant programs going to consumer cooler solutions and they're operating with them day in and day out. None of these coolers have been validated or designed or even FDA approved for that intended purpose. We are elevating the game. We are a company that prides itself on developing and delivering Level 1 evidence to the highest clinical standards and to FDA standards. That's number one. Number two, as I said in my prepared remarks, CHOPS is designed to be a fully registered and regulated FDA medical technology, which means, by definition, as you know, that we have to go through an exhaustive amount of testing to validate that the design meets the intended purpose. None of the technologies I'm talking about have gone through that. So that assumption is a hyperbole. The opposite is true: we are elevating the control arm. But even then, we are not concerned because we see significant value and provide solutions across the spectrum of values that would be achieved in ENHANCE and DENOVO.

Your next question comes from the line of Matthew O'Brien of Piper Sandler.

This is Samantha on for Matt. Also wanted to talk about the clinical trials and CHOPS. I guess, first, kind of a two-parter. Can you first just quantify and put into numbers for us how much of the market CHOPS is expected to address? And then I'm also trying to square the design of these trials. You mentioned the superiority. So these trials are essentially trying to say that OCS is a better technology versus now cold storage and CHOPS, but then also the decision to launch CHOPS, presumably this inferior technology.

Sure. Sam, that's an excellent question. So let me address the latter piece first. Again, as I stated earlier, we all know — everybody on this call and the listeners who have spoken to clinicians in the field of organ transplantation — ask ten transplant surgeons one question and you will get many different answers. So we know for a fact that even when we prove superiority, there will be a handful of centers or a segment of the market that will still prefer cold storage technique in certain cases. Why not provide them that solution and go through the effort of providing a fully FDA-approved regulated device that gives them that flexibility. So that's number one. Number two, I will quantify: 2025 U.S. heart transplant total volume was 4,646 hearts. You need to know that 46% of that total market, which is 2,131, were DBD hearts preserved less than 4 hours. Our portion of that market is measured in single digits. So that is a market that is today all going to cold storage techniques: the Styrofoam cooler, consumer coolers, etc. Why not provide an answer to that? Yes, we should gain a greater portion of that by demonstrating superiority or demonstrating better outcomes. But there will be a segment of that market where the surgeon or clinicians will still use cold storage techniques. Let's provide them the solution and provide them the clinical service of NOP and the logistics associated with it.

Your next question comes from the line of Daniel Markowitz of Evercore.

Thanks for taking my question. I wanted to talk about energy prices. It sounds like you're able to pass this along to customers via surcharges. Can you just talk through the dynamic a little bit? What's the exposure here? Are you able to pass it all along? And how does this flow through the P&L? And what's contemplated in the guidance on that front, both on the revenue and on the COGS side?

Daniel, thank you for asking this important question, which, as we understand, has been creating an overhang. People sometimes forget who TransMedics is and which market segment we deal with. We're not a major commercial airline. We are an organ transplant company. So everyone needs to remember that we operate in a highly competitive environment where there are other charter operators and companies that service the same market that we are servicing from a logistics standpoint. Historically, for the last four or five decades, transplantation has survived and grown when oil prices were high and when oil prices were low. How? Because the market has mechanisms to recover the cost when prices go up. Because of that competitive dynamic, I cannot share on an open mic the detail of how TransMedics is doing it. All I can share is I can assure you and the listeners that TransMedics is doing the right thing by our customers, and we have the ability to control our logistics and our fleet. The network effect we've created gives us operating leverage in dealing with fuel prices. I'll give you one example: we monitor fuel prices by hub, and we have the flexibility of moving hubs and repositioning our fleet to avoid incurring unnecessarily higher fuel charges, so we don't pass these unnecessarily high fuel charges to the transplant programs. But again, the results speak for themselves. If fuel charges were an unsurmountable challenge, we would not be able to report the results we did. Fuel charges are a small component of our operating flight hour cost. So it is covered, and our network is the most cost-efficient way to deal with this problem until it's resolved.

Your next question comes from the line of David Rescott of Baird.

I want to follow up on some of the margin commentary, gross and operating. First on the gross margin side. Historically, Q1 is typically or has been over the past two or three years the high watermark for gross margin. So curious, one, if that is the way that we should be thinking about the cadence for the year, if there's any maybe transient impacts there? And then I appreciate some of the comments already on the operating margin side. But just trying to get a sense maybe for some of the puts and takes that you saw in Q1 versus what you're expecting to maybe normalize or work its way out as you get into the back half of the year. Maybe CHOPS is a piece of that. Just be curious on any more color on the gross and operating margin numbers in the quarter and then for the year.

Thank you, David, for the question. In terms of gross margin, as I shared in the call, we're expecting and we're confident that the right margin for the business is around 60%. We are investing ahead of that and because of that we are seeing some short-term pressure. We saw a significant positive operational impact in the quarter in Q1 that was mostly offset by a good portion of transient expenses. My view is that for the rest of the year, we should see a recovery toward our long-term goal. I'm not sure we'll get all the way to the long-term goal this year or even next year — that's why it's long term — but I believe this quarter should be more the floor rather than the ceiling.

Your next question comes from the line of Young Li of Jefferies.

I think you mentioned the ENHANCE Part A trial is enrolling slightly ahead of schedule. I guess I'm wondering how that informs or changes your expectations for Part B enrollment timing once that restarts in 3Q. Is 12 to 18 months still the right timeframe for ENHANCE Part B and DENOVO enrollment? Or can you enroll faster than that?

Thank you. I'll answer the second part first. We are still holding the 12 to 18 months timeframe. I caution comparing Part A to Part B. There are two different components, but it's the same centers that will be enrolling in Part A or Part B. It's about value. If the center sees the value and sees clinical outcomes, we expect enrollment to pick up. Right now, I'm focused on getting the IDE supplement approved, getting CHOPS into the control arm and removing the confusion created by competitors so we can get Part B enrolled. DENOVO is actively enrolling and we've enrolled a handful of patients already despite some confusion, thanks to transplant programs stepping up. We expect acceleration once CHOPS is introduced as the control arm or an option for the control arm.

Your next question comes from Mike Matson of Needham & Company.

So just on the CHOPS devices that are going to be used in the trials, will you be getting paid for those? And then generally, can you talk about what kind of pricing we should expect on that, both in the trials and then when you're selling it to customers in the open market?

Mike, I appreciate the question. Unfortunately, I cannot discuss the commercial structure of CHOPS yet. The priority is to get it through the IDE process. All I can say is this is going to be part of our NOP service offering, and I'll leave it at that.

Your next question comes from Tom Stephan of Stifel.

Apologies if this has been asked, jumping between calls. Gerardo, for the 20% to 25% guidance on revenue in the core business for '26, when I look at growth over the last year or so — 40% plus growth in 1H, 30% plus in 2H and then 1Q was a bit over 20% — what gives you confidence that the growth rate for the rest of the year will remain stable or even accelerate to hit that full year 20% to 25%?

Thank you for the question. When we look at the phasing and the history of transplant volume in the U.S., we can see how the remainder of the year continues to strengthen. We are not expecting any change to the global volume, except for the potential disruption due to the Modernization Act. We believe we can deliver within the 20% to 25% growth range. We're seeing the results and the adoption, and together with last year's performance, it shows the market trend. So there is nothing that would prevent us from getting to that range, at least as I see it today.

And Tom, let me add also, we don't comment on penetration and market share midyear because of the choppiness. But we're watching our market share: in Q1, despite the overall donor numbers being a bit below last year, we're maintaining and growing our market share, which tells me that we're taking some market share in Q1. That's what gives us the confidence that organically, without even talking about ENHANCE and DENOVO, we should be able to meet the target range we set for ourselves.

There are no further questions at this time. I will now turn the call over to Waleed Hassanein, President and Chief Executive Officer, for closing remarks.

Thank you all very much for spending your afternoon with us. We're looking forward to one-on-one calls. I appreciate it. Have a great evening, everyone.

This concludes today's conference call. You may now disconnect.