TransMedics Group, Inc.'s (NASDAQ:TMDX) Shift From Loss To Profit

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$1.9b market-cap company posted a loss in its most recent financial year of US$36m and a latest trailing-twelve-month loss of US$18m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which TransMedics Group will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for TransMedics Group

According to the 6 industry analysts covering TransMedics Group, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$17m in 2024. The company is therefore projected to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 61% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth

Underlying developments driving TransMedics Group's growth isn’t the focus of this broad overview, though, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. TransMedics Group currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of TransMedics Group to cover in one brief article, but the key fundamentals for the company can all be found in one place – TransMedics Group's company page on Simply Wall St. We've also compiled a list of essential factors 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.