Organs Through a Subscription!?

One of the world's most distinctive and important businesses. An airline, SaaS, and organ transplants all operate under the same model.

Today’s newsletter is about a company we recently analyzed for our TDI Premium members. What we found was a highly unique and life-saving invention being sold as a high-margin subscription.

Revenue grew from $93.5 million in FY22 to $605.5 million in FY25, a 70% CAGR over three years.

The company holds the only FDA-approved portable warm perfusion platform covering heart, lung, and liver simultaneously.

It completed over 7,000 organ transplants that, by its own account, would not have happened under the old cooler-and-ice regime.

You can’t argue with the growth numbers or the fact that the mission is genuine. Another point that is hard to argue with is that TransMedics is no longer a company that makes just medical devices. Sometime between acquiring a Montana charter operator in August 2023 and parking 22 private jets in a national maintenance hub in Dallas, it became something harder to categorize and harder to value.

The real question here is whether that change was a brilliant strategic move or a way to make more money by using incentives that encourage the wrong behaviors.

What TransMedics Actually Sells

Let’s start with first principles.

The Organ Care System (OCS) is a portable, rolling cart that keeps a donor organ alive outside the body by pumping warm, oxygenated blood through it. A heart inside the OCS actually beats. A liver produces bile. They are an alternative to putting an organ in a zip-lock bag on ice and hoping the flight is short enough. Static cold storage (SCS), the decades-old standard, gives surgeons roughly four hours with a donor heart before it deteriorates beyond use. The OCS extends that window to six to eight hours or more, dramatically expanding geographic reach and the pool of usable organs.

TransMedics makes money from this in two ways:

1. selling the OCS hardware, and

2. selling the single-use disposable perfusion sets required for every procedure.

The disposables reportedly run around $47,000–$70,000 per case and are proprietary. Hospitals cannot source them elsewhere. Think of it as a printer-and-ink model, except the printer is on loan and each cartridge costs more than most cars.

Product gross margins sit at roughly 80%. It was the core of what TransMedics IPO’d on in 2019 and what drove the initial surge in adoption as hospitals started using OCS technology seriously from 2022 onward.

Then came the National OCS Program (NOP), which changed everything.

How TaaS Works

The NOP is worth explaining carefully because it is the key to understanding both the bull and bear case.

Launched around 2022–2023, it is a full-service, end-to-end outsourcing program for organ procurement. When a hospital joins the NOP and a compatible donor organ becomes available, TransMedics does not just ship a device. It dispatches a team, a specialized transplant coordinator or surgeon, along with the OCS hardware, on one of TransMedics’ own private jets, to retrieve the organ from the donor site and deliver it directly to the recipient hospital’s operating room. TransMedics handles the flight, the ground transport, the perfusion management, and the clinical oversight, all bundled into a single service contract.

This is Transplant as a Service, or TaaS. Not SaaS with different acronyms, an actual vertically integrated end-to-end transplant logistics network.

They currently own 22 private jets. In early 2026, the company entered into a definitive investment in PAD Aviation in Germany, replicating the model for European expansion. TransMedics also announced a collaboration with Mercedes-Benz Group to deploy a dedicated ground transport fleet across Italy.

The NOP revenue per case is substantially higher than selling a disposable kit alone. In Q1 2026, product revenue was $108 million against service revenue of $66 million, with service revenue growing faster than product. The bundled NOP case generates somewhere in the range of $117,000–$120,000 per procedure on average, versus the disposable kit alone at roughly $47,000–$70,000.

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Once a hospital integrates fully into the NOP, with its logistics dependencies, clinical protocols, and aviation scheduling, switching requires simultaneously rebuilding a supply chain, renegotiating device contracts, and training a replacement procurement team. The switching costs are structural.

TransMedics owns the full value chain from device to delivery. The more NOP cases it runs, the better its routing algorithms, the more efficient its fleet utilization, and the richer its clinical dataset become.

The problem is what it costs to run it.

Airline-like Margins

When TransMedics was purely a medical device company, its gross margins ran around 66–70%. Introducing the NOP service business brought those consolidated margins down to roughly 59–61%, where they have stabilized. This compression is structural. Service revenue, which includes pilot salaries, aircraft depreciation, fuel, maintenance, and third-party charter costs when own aircraft are unavailable, carries a fundamentally different cost profile than selling a proprietary consumable.

But the model is now operating leverage in both directions. With 22 private jets, salaried pilots, a national command center, and a European expansion underway, the fixed cost base is large and does not shrink when case volume softens. Net debt-to-EBITDA moved from 0.3 to 3 in a single quarter as TransMedics loaded its balance sheet with nearly $350 million in new leases, a 10-fold jump. Total liabilities reached $940.8 million, up 65% YoY.

This is not the balance sheet of a capital-light device company anymore.

Our Verdict

TransMedics built something genuinely unusual.

A vertically integrated, end-to-end transplant logistics network with hard-to-replicate assets, FDA approvals across three organs, 7,000 clinical cases worth of data, a national aviation fleet, and deep relationships does not get built twice easily. The NOP’s switching costs are real. The path to $1.2 billion by 2028 is not obviously wrong.

The technology and market opportunity are real. Whether the business model and the incentive structure that runs it are aligned with long-term shareholder value is a different and open question.

For a more in-depth look into TransMedics, including an hour-long podcast, check out TDI-Terminal.com.

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Until next time,

The Dutch Investors
Bouke, Mathijs & Siem