TransMedics Group (TMDX-Q)

They last reported good quarter. He has some knowledge of the organ transplant sector from his charity work, and feels this company is doing well.

TMDX's flagship product is the Organ Care System Lung (OCS Lung) which can be used to treat patients with end-stage lung failure who are waiting for a lung transplant. It claims that its technology has advantages over the traditional method of placing organs on ice. There are risks of regulatory uncertainties, approvals, and competition from companies like FREY, MDT, CLSN, and others.

The company is a $2.4B stock, which is expected to be profitable over the next year or so, and its historical sales growth rate has been excellent. It has improved its profit margins, but trades at a high valuation of 7.7X forward sales. It does not generate positive free cash flow and has a small balance sheet. We think the name looks interesting, its business model is intriguing and there appears to be demand for the technology, however, its fundamentals could see further improvement. As a more speculative, high-risk play, we would be OK with the name, while considering small-cap risks, position sizing, and the volatility of the underlying industry.
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Transplant therapy is so vital to America that it transcends the earnings. Likes the story.