Q4 2024 TransMedics Group Inc Earnings Call
Please hold and operator will be with you shortly.
Speaker Change: [music] good afternoon chorus call, which conference that you'd like to join.
Speaker Change: May I have your first and last name.
Company or with David.
Speaker Change: Joining the call 12 million in the purchase of eight aircrafts reinforcing our commitment to skating or aviation and logistic capabilities.
Speaker Change: 2024 marked our first year of positive cash from operating activities as we generate the $48 8 million compared to 13 million outflow in 2023.
Speaker Change: This is a significant step towards sustained financial strength.
Speaker Change: Now, let me summarize our full year 2024 financial results.
Speaker Change: Full year revenue reached 441 5 million, representing an 82, 7% growth over 2023.
Speaker Change: Growth was led by Liberty revenue, which would you hold around three 4%, while heart and lung also deliver strong growth at 50.3, and 49, 6% respectively.
Speaker Change: U S transplant revenue reached $4 $21 9 million, reflecting a 96 year over year growth for.
Speaker Change: For international transplant revenue ended the year at $15 3 million, representing a 1% decline compared to 2023 and the armed reflecting limited reimbursement, which makes revenue from these markets inherently variable.
Speaker Change: Flight good revenue for the year was $4 4 million.
Speaker Change: Breaking it down by category product revenue reached two covenants and $73 9 million while service revenue contributed with 167 7 million.
Speaker Change: Breaking it down by Oregon lever revenue reached $309 6 million heart revenue reached $109 9 million and long reach $17.7 million.
Speaker Change: Gross margin for the full year was 59, 4% down 463.8 in 2023, primarily due to the increasing share of service revenue, which carries a lower gross margin.
Speaker Change: Total operating expenses were $224 6 million.
Speaker Change: At 22, 8% year over year, primarily driven by continued investment in Ocs platform expansion of MLP infrastructure and scaling of aviation capabilities to support business growth.
Speaker Change: It's important to note that 2023 operating expenses included a 27.2 million of acquired in process R&D expenses related to the breach to life acquisition. Excluding these onetime impact operating expenses growth was at 44, 3%, reflecting our strategic focus on support.
Speaker Change: In long term growth initiatives and expanding operational capacity.
Speaker Change: 2024 was a milestone year as we achieved operating profitability for the first time generated $37 5 million in operating profit compared to $28 7 million loss in 2023.
Net profit for the year was $35 5 million compared to $25 million loss in 2023.
Speaker Change: This performance reflects our ability to scale efficiently, while driving meaningful financial improvement and positioning us for sustained momentum in 2025.
Speaker Change: Earnings per share was $1.07 and diluted earnings per share was $1.01.
Speaker Change: On a full year basis, the basic and diluted weighted average common shares outstanding were 33 million $229 953, and 35 million to condense 16, 8, billion% to 37% respectively.
Speaker Change: Now turning to our total revenue guidance for 2025.
Speaker Change: We anticipate a 20% to 25% total revenue growth over the full year of 'twenty 'twenty, four which translates on a year revenue range of 530 million to $5 $52 million.
Speaker Change: Growth will continue to be driven primarily by increased ocs adoption and service revenue.
Speaker Change: At what he'd mentioned, we expect some level of quarter to quarter variability, reflecting the dynamic nature of organ transplantation. However, we believe that that buyer variability tends to normalize in subsequent quarters.
Speaker Change: In 2025, we anticipate continued gross margin improvement across both product and service driven by scale efficiencies in operational improvement.
Speaker Change: However, the increasing proportion of service revenue, which operate at a lower margin will moderate the overall margin expansion.
Such we expect a relatively modest gross margin expansion in 2025 compared to the full year of 2024.
Speaker Change: Overall, we also anticipate modest operating leverage gains at total operating expense level.
Speaker Change: While we continue making targeted investments in growth and innovation, we remain focused on balancing fatigue expansion with financial discipline to drive sustainable profitability.
Speaker Change: With that I'll turn the call over to Waleed for closing remarks.
Waleed: Thank you Geraldo.
Waleed: Overall, we're very proud of our 24 results as we delivered 83% year over year growth achieved positive cash flow for up from operating activities, while investing in our pipeline and continuing to build our infrastructure to capitalize on our highly differentiated technology and service offering.
Waleed: We now look forward to continuing to execute across several strategic initiatives throughout 2025.
Waleed: In conclusion.
Waleed: We are humbled and proud of the significant life saving impact of our Ocs technology NLP service and dedicated team and remain committed to our mission of expanding access and improving clinical outcomes to patients in need of organ transplants around the world with that I will now turn the call to the operator for Q&A.
Waleed: Operator.
Waleed: Thank you we will now begin the question and answer session. As a reminder to ask a question you May Press Star then one on your telephone keypad. If you are using a speakerphone. Please pick up your handset before pressing the keys.
Waleed: If you would like to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
And today's first question comes from Allen Gong with J P. Morgan. Please proceed.
Waleed: Okay.
Allen Gong: Hi team. Thanks for the question and congratulations on a solid close to the year and I guess just for my first question you know a variety you touched upon kind of seasonality and how you expect to see some quarter to quarter variability I understand it might be hard given you know the kind of the nature of the market to kind of predict that but how should we be.
Allen Gong: Be thinking about the quarter to quarter cadence implied in your guide should we be thinking about third quarter as Danielle another soft quarter like this year just some help there.
Speaker Change: Hi, Alan Thank you for the question is will lead and let me start and I'll pass it onto our Arbor for additional color as you know Alan we don't issue quarter to quarter guidance.
Allen Gong: Our quarterly guidance.
Allen Gong: The variability in the transplant market, we usually see it you know in any quarter, we wanted to be proactive and remind the market that of what we saw in 2023.
Allen Gong: But we are not identifying or highlighting a specific quarter.
Allen Gong: Generally speaking the two quarters we.
Allen Gong: Experienced some of the volatility before generally speaking was Q3 and Q4, giving the summer holidays in there and the Christmas holidays. However, sometimes we see that variability in other quarters as well.
Rob: Pass it onto Rob.
I think just I mean, thank you for the question. The only point that I will add is just bear in mind that we absolutely believe that variability tends to normalize at speeds of sequent quarters. So just keep that in mind when we go through through the year.
Rob: Got it and then just.
Rob: Follow up kind of on the Oregon specific growth rate. This was a really strong close to the year for both heart and liver when we think about the growth trajectories through 2025 should we essentially assume that kind of the mix of growth should look similar to this year with the lenders still driving the majority of the gorilla.
Rob: At least until you know maybe you start getting some hard clinical trial revenues in the back half just kind of curious about that thank you.
Speaker Change: Thank you for the question Alan Yes.
Speaker Change: I think it's safe to assume that lever will continue to lead our growth until we see contribution from both the heart and lung clinical programs, which will hit in the second half of the year. So I hope that we see.
Speaker Change: Stronger signs as the programs become more active and broadly broadly utilized in the U S. So I'm looking forward to reporting on that by hopefully by Q by year end and 25 and into early 2026.
Speaker Change: And our next question comes up.
Speaker Change: And our next question comes from Josh Jennings with TD Cowen. Please proceed.
Josh Jennings: Hi, good afternoon, it's great to see a strong finish to the year.
Josh Jennings: Well, if there had been some concerns about the potential attrition of high volume customers clearly that was not in play in the fourth quarter, but was hoping you could just comment on your confidence level that that high volume customers are going to be just that in 2025 or are you seeing any change in your car.
Josh Jennings: Customer base or evolution outside of adding new customers.
Josh Jennings: Thank you Josh for the question.
Josh Jennings: I think that concern is not a broad concern I think that concern is came from the comparable relation that we saw in the short report.
Josh Jennings: We have not seen that dynamic the results speak for themselves in fact, I will go out and <unk>.
Josh Jennings: Highlight our underscored some important information the four centers that were cited in the short report are active users of the Ocs in Q4 were active users in Q4 and they are active users in Q1 and I'll leave it at that.
Speaker Change: Appreciate it.
Speaker Change: Wanted to just ask about.
Speaker Change: Share gains from over another.
Speaker Change: Bucket of concern is just on the competitive risk of via an RP approach.
Speaker Change: Again fourth quarter <unk>.
Speaker Change: Yes, the whole offering took share by our math, but can you just talk about any any trends that you're seeing in the fourth quarter in the D. C D delivering hard segments.
Speaker Change: Within our Pea and and how they're trending in Q25, so far thanks a lot.
Speaker Change: I think.
Speaker Change: I think the.
Speaker Change: They're only.
Speaker Change: Market, where an ERP could imply taking shared from from US is in the liver.
Speaker Change: Where we're seeing actually an overall growth in the DCD liver penetration for ots.
Speaker Change: And again in our Pea is not a mutually exclusive of Ocs, we do we do.
Speaker Change: N O P liver cases post MRP MRP is nothing but a surgical procedure.
Speaker Change: To try to convert the DCD donor to a DVD donor, but it's not as simple as that you still need to preserve the liver you still need to assess deliver you still need to protect the liver. So again as I stated before we do not see an RP as a threat to our liver DCD franchise and based on the data.
Speaker Change: We've actually seen market share increase in <unk> and in the year to 53%.
Speaker Change: Thanks, so much.
Bill: And our next question comes from Bill <unk> with Canaccord. Please proceed.
Bill: Yeah, great. Thanks for taking my questions and good evening. So a quick just a first question his thoughts on the New York Times article today in the Oregon allocation in the line jumping and then.
Investors are asking what role if any does translate X play in that allocation process. What's your exposure to the skipper sites and is this something you feel they get their hands theft or something happens that theres an impact too.
Bill: To your revenue that's my first question.
Speaker Change: Thank you. Thank you bill.
You know where we're at we're in one aspect. We're encouraged that there is public awareness now more and more public awareness about the challenges of organ transplant. However.
Speaker Change: You know some of the some of these.
Speaker Change: Physicians are missing the full picture.
Speaker Change: And needs additional education.
Speaker Change: As you called it not.
Speaker Change: <unk> us calling it you know national allocation or broader allocation or what you called it as line jumping doesn't happen.
Speaker Change: Or for an everyday cases unless centers declined Oregon. So in fact, if we are if we want to see improvement in utilization of donor organs and overall growth. This has to happen because if centers keep declining the Oregon. Historically these oregon's would go by the wayside and we never.
Speaker Change: Utilize them. So there is a missing element to the New York Times article today that came out today that is just a piece of information and education and you know we we as we've stated publicly we are going to play a more active role in continuing to educate the public community about the challenges of organ transplant.
Speaker Change: And you know.
Speaker Change: We're encouraged that there are more and more public interest in Oregon transplantation.
Speaker Change: Okay, and then do not we do not we do not see that article.
Speaker Change: Or or.
Speaker Change: Their issue that that article and highlight are impacting our business meaningfully belt to beat to be clear.
Speaker Change: Okay, and then just on the first quarter, Yeah. The Eunice weekly transplant data is improving both year over year and quarter over quarter yield core month to date through the seven week data.
Speaker Change: Just any thoughts on maybe why we're seeing that improvement and how does that impact you.
Bill: So bill.
Speaker Change: Why.
Speaker Change: Again. This is the variability that we've been talking about for three plus years since we got FDA approval across all three organs.
Speaker Change: This happens in Oregon transplants every year, there's a variability quarter over quarter month over month, that's why we only report our overall volume and penetration data in that level of granularity at year end. So when everything is settled.
Speaker Change: How does it impact our business of course, when the numbers are up we should be up as well.
Speaker Change: But I think we also learn.
Speaker Change: Just on the in the our results from a second half of last year that our performance.
Speaker Change: As you know relies on many variables one of which is the national volume. The other is the MLP volume and our ability to penetrate in a different market segment, and we are where we plan to continue to do.
Speaker Change: To do both of the above so.
Speaker Change: So it's a it's a great time, it's important to see transplant volumes recovering.
Speaker Change: We were hoping to see that because as you know Q4, the overall national volume was kind of flattish or a little bit down. So it makes sense as hard as I said, our expectation is we always see at when one or two quarters are flat or down that it normalizes. Afterwards. So this is this is a welcomed.
Our transition.
Speaker Change: Yeah, and then just on the guide just any any commentary on Q1, I mean typical seasonal up as expected and then you mentioned on the guide it just with the benefit of having the the heart and lung programs. How much is that are you bake all of the 2025% growth how much is.
Speaker Change: The back half heart and lung a contributor there and thanks for taking my questions and good quarter.
Speaker Change: Thank you Bill Thank you.
Speaker Change: Our our guidance.
Speaker Change: Films.
Speaker Change: That the different variability quarter to quarter as well as variability in the start of the clinical trial.
Speaker Change: How much of the clinical trial.
Speaker Change: We're anticipating in this year.
Speaker Change: You know miniscule.
Speaker Change: Estimated to be between two 5% maximum so the guide contemplates all these variability both at the national level and the initiation of the trial time point, our timeline to 2% to 5% of growth are 2% to 5% of total revenues.
Speaker Change: The growth the growth.
Speaker Change: Okay, so without that it would be.
Speaker Change: 20% to 23% and it's the programs are taking it up from 25% is that yeah, I just want to be clear on what that contribution you're seeing is I would say I would say roughly to be roughly speaking at bell and a you know it's not a guidance and we said a range of two to five.
Speaker Change: Percent so yeah.
Speaker Change: Yeah.
Speaker Change: Okay. Thanks.
Speaker Change: Our next question comes from Suraj Kalia with Oppenheimer. Please proceed.
Speaker Change: Oh, well each or auto congrats on a strong finish to the year can you hear me all right.
Speaker Change: We can hear you just find it.
Speaker Change: Perfect.
Speaker Change: So well leave.
Speaker Change: Your independent review done by Kirkland and Ellis.
Speaker Change: What was the scope of the review.
Speaker Change: Help us understand the independence of this review because it was concluded in six weeks and will this be made public.
Speaker Change: Thank you Suraj we.
Speaker Change: We do not comment on any of our.
Speaker Change: Internal or board initiated dynamic.
Speaker Change: It is a full independent review it was reported to the audit Committee.
Speaker Change: And it was a pretty exhaustive review.
Speaker Change: And now we'll leave it at that.
Speaker Change: Got it.
Josh Jennings: Well, if they just want to piggyback on Josh is earlier question. Obviously your FY 'twenty five guide is strong right. The math is implying roughly around 5000 5000 organs.
Speaker Change: Yeah.
Speaker Change: Part of the part of the noise right now what leads you to the the concern is that it would dampen enthusiasm at new sites.
Speaker Change: But you guys are telegraphing.
Speaker Change: Share gains I think so in your prepared or in your comments you you you mentioned share gains and the confidence there off.
Speaker Change: Help us understand walid okay.
Speaker Change: In the Rearview Mirror Q4 has gone great.
Kudos to everyone, but obviously you guys have to be seeing something ahead in terms of share gains that gives you the confidence to put this guide out helped us, especially given all the noise help us understand what is giving you the confidence for continued share gains gentlemen, thank you and congrats again.
Speaker Change: So raj. Thank you so much for the thoughtful question.
Speaker Change: Suraj I Wanna be crystal clear.
Speaker Change: Noise does not drive transmit X.
Speaker Change: It does not drive our planning does not drive our business period full stop.
Speaker Change: <unk>.
Speaker Change:
Speaker Change: We reported significant share gain.
Speaker Change: In 24 over 23, yet we're reported single digit.
Speaker Change: Penetration in DVD segments for liver and heart.
Speaker Change: We reported a.
Speaker Change: 53% penetration in DCD liver Theres a lot ahead of us there's a big greenfield opportunity for growth ahead of us.
Speaker Change: We have not even though the noise claim or alleged that we are.
Speaker Change: Losing market share or losing a major users we're not seeing any of this and again we are.
Speaker Change: Bullish about 2025, our plans contemplate the guidance, we set out and from everything we're seeing.
In the business and our interactions with our users and the operation and our logistics, we feel highly confident in the guidance that we set out in front of the street.
Speaker Change: Yeah.
Speaker Change: And the next question comes from Chris Pasquale with Nephron Research. Please proceed.
Chris Pasquale: Thanks <unk>.
Speaker Change: The ramp in logistics utilization has been nice to see you talked about adding one more plane gets you to 22 and then it sounds like you plan to pause for a while.
Speaker Change: How do you think about the capacity that that fleet gives you and balancing the desire to really work those assets versus giving yourself. Some cushion. So if one does go down for maintenance you don't lose case coverage.
Chris Pasquale: Chris Great question.
Chris Pasquale: Listen we want to.
Chris Pasquale: In our in our remarks, we will run that we wanted to highlight that our primary focus right now is to make sure that.
Chris Pasquale: We optimize the operation and really reach.
Chris Pasquale: Semi steady state on on the efficiency that we can build an operation that is our primary goal, but if we see the demand is growing rapidly if we see variability or high rate of.
Chris Pasquale: Unexpected maintenance events, we're not going to we're not going to starve the operation I think Colorado is very clear.
Chris Pasquale: That we are still in growing mode. We are extremely fortunate to deliver 83% growth and our.
Chris Pasquale: Our profitability, but we are not going to starve that business, we still have a long way to go and a long runway of Greenfield opportunity I'll stop here and I'll pass it onto Gerardo to add any additional comments from his perspective.
Speaker Change: Yes, Chris.
Speaker Change: Chris. Thank you for the question I think what we can think in tumor use what we have seen sort of the JP Morgan conference respect to pulse it around 22 aircrafts that should give us the.
Speaker Change: Capacity of around having 18 to 20 aircraft operational in average every month.
Speaker Change: And when we add on top of that our buyback plan of double shifting it certainly increases significantly the capacity. That's what these are very and that's why we went to test these year to make sure that we can sweat.
Speaker Change: Sweat the assets and improve the operational efficiency and margins. So so we still have a long way to go before we continue to acquire more airplanes.
Speaker Change: What I would say.
Speaker Change: Thanks, that's helpful.
Speaker Change: And then maybe one for you Geraldo just as we look at R&D spending over the last couple of years, it's more than doubled you come into 25 with a lot on your to do list in terms of projects and clinical trials, how should we think about spending growth this year for R&D versus SG&A and desire.
Speaker Change: Or do you need to step up as those clinical trials get started in the back half.
Speaker Change: Right, Let me tell you that.
Speaker Change: We expect to have some more.
Speaker Change: Modest.
Speaker Change: The gains in operating leverage.
Speaker Change: That said.
Speaker Change: Expecting that the overall Oh.
Speaker Change: Operating expenses will grow at a lower pace vinyl revenue.
Speaker Change: Now R&D, we will continue to invest strongly in R&D are.
Speaker Change: We have.
Speaker Change: Ocs innovation, we have a next generation OS yes, we want to continue to advance our kidney program and we want to strengthen we will strengthen our product development capabilities. So we will continue to strongly invest in our long term growth.
Speaker Change: After that we're going to be.
Speaker Change: Strengthening our MLP on a command center, we will continue to expand our clinical adoption beam and last lastly, we will grow in them modest weight or G&A functions upward, but overall, we're expecting to start to see some gains in operating a modest gain in operating leverage.
Speaker Change: Thanks.
Speaker Change: And our next question is from Matthew O'brien with Piper Sandler. Please proceed.
Matthew O'brien: Afternoon, Thanks for taking the questions maybe while we just for starters when I look at the amount of Oregon's you did in 24 versus 23, it's up just under 1400, so really nice progress.
Matthew O'brien: If I just multiply that by four added to how many orders you get in in 24, I'm still getting to more like 9200, Oregon's by 2028, and so I'm just wondering with a little bit more competition on the liver side, how do we bridge that extra 800, Oregon's to get to 10000 is the are the.
Speaker Change: Heart and lung.
Clinical studies that enough to get you there or is it more back end loaded to get you to that 10000.
Matt: Thank you Matt excellent question.
Speaker Change: Matt.
Today, we are driving growth from heart and liver or liver and heart in that order lung is really not driving much growth for us at all and even in my heart as I reported we have a single digit penetration in the DVD single digit.
Speaker Change: We are absolutely.
Speaker Change: Confident that the new clinical programs should contribute significantly one to raise erecting the lung program or the lung market for us to contribute to our growth and to increase our penetration in DVD heart transplants. We are bullish on these two programs and that how we.
Speaker Change: <unk>.
Speaker Change: Not only filling the gap of those seven or 800 additional Oregon's. We think we are gone we are going to do more than 10000 transplants into 2028, just from a heart lung and liver alone and not counting any additional oregon's that might be coming in the pipeline. So we're highly confident about that Matt.
Speaker Change: And your math is correct. If you assume that lung is dead.
Speaker Change: Or slow very very slow as we are or we have been for the last two years, but that's not our expectation and that's why we're prioritizing the investments in these clinical programs.
Speaker Change: Got it that's very clear thanks.
Speaker Change: And Matt just to highlight one thing it's back end loaded for 2025, but we still have this.
Speaker Change: These programs should be concluded by 26 and that gives us two years of full operating leverage with two additional market catalysts that we currently don't have especially on the lung front I'm, sorry, if I interrupted you.
Geraldo: No that's perfect. Thanks for that and then Geraldo.
Speaker Change: I don't want to get too specific but you know you saw a step function improvement in operating margins in 'twenty. Four you are saying modest improvement here in 'twenty five as you're continuing to invest in the business I don't know if that means a couple of hundred basis points 300 out of the how we should think about that but then do we get another step function.
Speaker Change: <unk> improvement in 2006 or do we need to wait until 2007 for that just given the investments on the clinical program side of things.
Speaker Change: Yeah.
Speaker Change: I do know that my share deals yet any longer term view in terms of margin.
Speaker Change: We still or I am still getting familiar into those long term planning, but for 2025.
Speaker Change: What I what I can tell you that we are expecting modest improvement in gross margin.
Speaker Change: And modest.
Speaker Change: Capture modest.
Speaker Change: Operating leverage at our operating expenses level that you'll give us some some improvements in the.
Speaker Change: And operating margin I would rather leave it there.
Speaker Change: Understood. Thank you.
Speaker Change: And the next question is from David rest clot with Baird. Please proceed.
Speaker Change: Oh, great. Thanks for taking the questions. Congrats on the strong finish to the year here, maybe just a follow up prior to on those comments just around around the margins in 'twenty five yeah. You ended the year on the service line with the high Twenty's.
Speaker Change: Number in Q4 for service gross margins you're at.
Mid to high single I guess and in operating margins.
Speaker Change: Does that high twenties service gross margin seem like a good kind of stepping off point for next year, you're still below that kind of mid <unk> that you were at before but when you think about the moderation through the year should this 29% number on the service gross margins be kind of that low bar or could there be more variable.
Speaker Change: <unk>.
Speaker Change: The lower end of that.
Yeah. Thanks for the question David first let me clarify that I have not say that we're going to target 35, four that's my expectation.
Speaker Change:
Speaker Change: Youre still going to be to the review of our long term views on what's really sustainable in the business.
Speaker Change: What I can tell you today, you got 42025, both in product and service margin, we're going to see some improvement. However, the increase proportion in the mix of therapies will moderate the overall margin improvement. That's that's how I can see that's how I see 2025.
Speaker Change: And David I would like to add to what her or his head.
Speaker Change: Your question was specific about the service.
Speaker Change: I think we all expect improvement.
Speaker Change: And the service margin. However, we want to caution that and if we get hit by unexpected.
Speaker Change: A high rate of maintenance as we had in Q3 of 24 that could negatively impact the margin because we will rely more heavily on third party.
Speaker Change: Logistics partner and not on our own operated aircraft. That's the only variability that might present itself, but on an overall year basis, we expect that the modest improvement as geraldo outlined.
Okay. That's helpful. When you think about some of the step up in and bringing on new planes might my guess is that maybe you have a I don't know if it would be a fixed amount of kind of pilot surgeons clinical support specialists for each plane.
Speaker Change: But when you think about bringing on some of those new planes should we think about it being you bring on a new plane you've got I don't know two pilot two surgeons eight kind of dedicated clinical support specialist to each of those or as you scale can you kind of spread across the clinical support staff for each plane, meaning that for every incremental claim that you bring on.
Speaker Change: And you wouldn't expect the same amount of kind of dollar of opex associated with that new play longer term. Thank you.
David Thank you very important question.
Speaker Change: No you should not model at all that eight each plane.
Speaker Change: Have an incremental <unk> <unk>.
Speaker Change: Clinical heads addition, our network is broad and our clinical network is broad from surgeons and clinical specialists.
Speaker Change: We do not tie the staffing our clinical staffing to claim the only thing that we need to.
Speaker Change: A link to a plane is two important things one we need a pilot crew to crew the plane and.
Speaker Change: The two to four weeks time that a plane needs to be.
Speaker Change: On the ground waiting for to be added to our part 135 alliances so not not the minute we buy a plane this plane can be operational.
Speaker Change: As far as pilots is concerned we have a critical mass of pilots we can operate.
Speaker Change: Those planes, but we are continuing to add because as it as we stated we are targeting to double shift somewhere between 20 and 30% of our fleet. So that will continue throughout the year and we will be monitoring the demand growth and we will be.
Speaker Change: Titrated those additions to make sure that where we're meeting that goal without running hot.
Speaker Change: Alright.
Speaker Change: And our next question is from Mike Matson with Needham and company. Please proceed.
Speaker Change: Yeah, Thanks for taking my questions.
Speaker Change: So I guess I just want to start with one on kind of the prices that you guys are charging I.
Speaker Change: Stan your arguments.
Speaker Change: It's compelling.
Speaker Change: Proposition and whatnot.
Speaker Change: But there is what I've talked to people who are customers in people's interests on the wall. There is a lot of.
Speaker Change: Concern hand, wringing pushed back about the pricing I've seen some third party research that cited the same thing you know I know you're continuing to see strong growth, but I'm. Just wondering is there anything that you can do that to try to you know.
Speaker Change: It proved that tell a perception that the pricing is too high.
Speaker Change: From a marketing standpoint or something like that.
Mike: Thank you for the question Mike but.
Speaker Change: Really.
Speaker Change: Again, we're delivering significant value to the market.
Speaker Change: We actually.
Wholeheartedly believe that the value we're delivering far exceeds.
Speaker Change: The price we're charging.
Speaker Change: That's number one the penetration rates and the growth rates.
Speaker Change: Speaks for themselves.
Market.
Speaker Change: See that value otherwise they would not have adopted the ocs.
Speaker Change: The growth in overall transplantation in the United States speaks for itself.
Speaker Change: The competition pricing is.
Speaker Change: Is designed the way, it's designed because of the low value the comp the competitive.
Speaker Change: Technology bring.
Speaker Change: So we are not going to change our pricing because of our low value competitor decided to <unk>.
Speaker Change: Price their technology at a at a lower.
Speaker Change: Level than what <unk> is doing.
Speaker Change: So that's number one number two.
Operating the MLP and the full network effect of MLP gives us significant leverage to efficiently manage the entire process and pass some of that some of that cost efficiency back to the transplant program, none of our competitor can deliver that cost efficiency to transplant.
Speaker Change: Program I'll give you one example.
Speaker Change: For our N O P centers that are using the full spectrum of our service offering including logistics, they get a 50% discount on the DCD donor doesn't progress to become a donor.
Speaker Change: None of our competitor is even capable to even come close to making that are offering so yes that technology might be 40 or $50000.
Speaker Change: The overall cost of the procedure is probably higher than transmit X and that again, we usually do not comment on our pricing our pricing is standardized across the United States. Every center nodes are our pricing is if a user knows what our pricing is every transplant administrator knows what our pricing is.
Speaker Change: And again the results speak for themselves.
Speaker Change: Yeah, Okay, I mean, I guess I wasn't trying to say that you need at a lower price just maybe find a way to pay.
Speaker Change: Pitch it to people.
Speaker Change: More convinced that way or something but I understand that.
Speaker Change: I complete.
Speaker Change: I completely understand and and you know you highlighted right from a marketing perspective, where we're doing that Tamara and his team.
Speaker Change: Our are doing that and continuing to improve and refine the messaging to highlight the key points that I summarized.
Speaker Change: A couple of minutes ago.
Speaker Change: Okay understand thank you and then just with regard to the plane service. It almost sounds like are you at all.
Speaker Change: Have a great visibility into when it's required but I'm just wondering is there some way to.
Speaker Change: Schedule. It so it doesn't all sort of.
Fall into a particular quarter like it did last year I would say it also in the third quarter, but you had kind of abnormally high level of service in one quarter as a way to planet planet had and maybe spread that out or something or is it just really unpredictable.
Speaker Change: Okay.
Speaker Change: That's an excellent question. So for four scheduled service, we have full visibility in that and we.
Speaker Change: We spread it across the year and we have some flexibility to schedule it and manage it properly that the part that we don't have any visibility too.
Speaker Change: And it's it's part and parcel of operating our fleet.
Speaker Change: Is what what is called in the industry, a Oh Gee airplane on ground. These are unanticipated unexpected.
Speaker Change:
Speaker Change: Situations, where the plane is as is not airworthy and it could happen any day and it could happen.
Speaker Change: Even in the middle of emission.
Speaker Change: So these are the things that we don't have visibility to.
Speaker Change: But how do we manage it we manage it by having a robust.
Speaker Change: Fleet by managing our own internal maintenance ourselves and not rely on.
Speaker Change: 100% on third party, we can supplement with third party and.
Speaker Change: Building a network that we can scramble a jet from a nearby at transplant X yet from a nearby a hub to encase a plane is down unexpectedly in between and between mission missions.
Speaker Change: That's the part that we are our team is.
Speaker Change: Is is navigating and is doing great job navigating every quarter, we experienced a lot of that EOG events in Q3 with their team managed it extremely well in Q4, and we again, we continue to expect two to do that but sometimes.
Speaker Change: These things creep up on you and we have to deal with it on the spot.
Speaker Change: Okay got it thank you.
Speaker Change: At this time there are no further questioners in the queue and this does conclude our question and answer session I would now like to turn the conference back over to Waleed Hassanein for any closing remarks.
Waleed Hassanein: Thank you Chris. Thank you all very much for your time have a wonderful evening and we're looking forward to our next call bye.
Speaker Change: Bye bye.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: [music].