TransMedics Provides Additional Information on the Impact of the Release of the Valuation Allowance on Deferred Tax Assets on Previously Reported Fourth Quarter Financial Results

Rhea-AI Summary

TransMedics (Nasdaq: TMDX) provided detail on its release of a $103.3 million U.S. tax valuation allowance, which produced a $83.8 million net income tax benefit in Q4 2025. The valuation release moved the reported 2025 effective tax rate to (77.0%) versus 19.1% without the release, a 96.1 percentage-point difference.

Reported Q4 income before tax was $21.6 million, reported Q4 net income was $105.4 million and diluted EPS was $2.62. Applying a 19.1% tax rate yields adjusted Q4 net income of $17.5 million and adjusted diluted EPS of $0.47. The company expects future quarterly tax provisions nearer to U.S. statutory rates.

Positive

• $83.8M net income tax benefit recognized in Q4 2025
• Released a $103.3M U.S. tax valuation allowance, unlocking deferred tax assets

Negative

• Effective tax rate swung 96.1 percentage points to (77.0%) in 2025
• Reported Q4 diluted EPS $2.62 vs adjusted EPS $0.47, large non-cash distortion

News Market Reaction – TMDX

+7.94%

27 alerts

+7.94% Session close to close

+4.1% Peak in 5 hr 27 min

$5.00B Market Cap

1.1x Rel. Volume

In the Feb 27 session, TMDX gained 7.94%, reflecting a notable positive market reaction. Argus tracked a peak move of +4.1% during that session. Our momentum scanner triggered 27 alerts that day, indicating elevated trading interest and price volatility.

Data tracked by StockTitan Argus on the day of publication.

Market Context

The stock moved +7.9% in the session following this news. A strong positive reaction aligns with a b...

Analysis

The stock moved +7.9% in the session following this news. A strong positive reaction aligns with a backdrop of consistent earnings growth and prior favorable responses to financial updates. The clarification of the $103.3 million valuation allowance and its impact on Q4’s $105.4 million net income may have reduced uncertainty around quality of earnings. However, historically large moves around earnings averaged 6.54%, and high expectations plus previous sensitivity to tax-related one-offs could make follow-through dependent on future results.

Key Figures

U.S. tax valuation allowance released: $103.3 million Net income tax benefit: $83.8 million Annual effective tax rate: (77.0)% +5 more

8 metrics

U.S. tax valuation allowance released $103.3 million Fourth quarter 2025

Net income tax benefit $83.8 million Fourth quarter 2025 from valuation allowance release

Annual effective tax rate (77.0)% Full year 2025 reported

Normalized effective tax rate 19.1% 2025 without valuation allowance release

Q4 income before taxes $21.6 million Fourth quarter 2025

Q4 adjusted tax expense $4.1 million Applying 19.1% tax rate to Q4 income

Q4 reported net income $105.4 million Fourth quarter 2025

Q4 adjusted EPS (diluted) $0.47 Fourth quarter 2025 at 19.1% tax rate

Previous Earnings Reports

5 past events · Latest: Feb 24 (Positive)

Same Type Pattern 5 events

Date	Event	Sentiment	24h Move	Catalyst
Feb 24	Q4/FY 2025 earnings	Positive	-4.3%	Strong Q4 and FY growth aided by one-time tax benefit.
Oct 29	Q3 2025 earnings	Positive	+1.1%	Q3 revenue and net income growth with raised 2025 guidance.
Jul 30	Q2 2025 earnings	Positive	+10.5%	Q2 revenue up 38% YoY and higher full-year guidance.
May 08	Q1 2025 earnings	Positive	+19.6%	Q1 revenue up 48% YoY with strong margins and guidance raise.
Feb 27	Q4/FY 2024 earnings	Positive	+5.8%	Q4 and FY 2024 revenue growth with rising profitability.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Pattern Detected

Earnings releases have generally been received positively, with most prior events showing double-digit gains or solid single-digit moves, though the most recent Q4 2025 report saw a negative reaction despite strong growth and a tax benefit.

Recent Company History

Over the past year, TransMedics has reported consistently strong growth across multiple quarters. Earnings events on May 8, 2025, July 30, 2025, and October 29, 2025 featured rising revenue, solid net income, and raised guidance, often followed by positive price reactions. The February 24, 2026 Q4/FY 2025 release highlighted robust revenue growth but also a one-time tax benefit from a valuation allowance release, which coincided with a -4.3% move. Today’s clarification directly addresses that tax-related item within this established growth story.

Key Terms

valuation allowance, deferred tax assets, effective tax rate, statutory corporate income tax rates

4 terms

valuation allowance financial

"issued additional information on the impact of the valuation allowance on deferred tax assets"

A valuation allowance is a reserve set aside to reduce the value of certain assets on a company's financial records when there is uncertainty about whether they will generate the expected benefits. It acts like a caution sign, indicating that some assets might not be fully recoverable or worth their recorded amount. This matters to investors because it provides a more realistic picture of a company's financial health and potential risks.

deferred tax assets financial

"impact of the valuation allowance on deferred tax assets reported in the Company's fourth quarter"

An item on a company’s balance sheet showing tax benefits it can use later to reduce future tax bills — think of it as an IOU from the tax system for past losses or timing differences. It matters to investors because it can boost future cash flow and apparent value if the company expects profits ahead, but those benefits vanish if the company cannot generate taxable income and the asset must be reduced.

effective tax rate financial

"TransMedics' annual effective tax rate in 2025 was (77.0)%. TransMedics' annual effective tax rate in 2025, without"

The effective tax rate is the percentage of a company's profits that it pays in taxes. It shows how much of its earnings go to taxes after all deductions and credits are considered. For investors, it indicates how much of the company's income is taken by taxes, impacting overall profitability and financial health.

statutory corporate income tax rates financial

"expects to recognize a quarterly income tax provision more in line with U.S. statutory corporate income tax rates."

Statutory corporate income tax rates are the legally set percentages governments charge on a company’s taxable profits, like a fixed slice taken from a business’s profit “pie.” Investors care because those rates directly reduce after-tax earnings, cash available for dividends, debt repayment, or reinvestment, and they influence company valuation, competitiveness, and where firms choose to operate or report profits.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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ANDOVER, Mass., Feb. 27, 2026 /PRNewswire/ -- TransMedics Group, Inc. ("TransMedics") (Nasdaq: TMDX), a medical technology company that is transforming organ transplant therapy for patients with end-stage lung, heart, and liver failure, today issued additional information on the impact of the valuation allowance on deferred tax assets reported in the Company's fourth quarter financial results for the year ended December 31, 2025.

As previously disclosed, in the fourth quarter of 2025, TransMedics released a $103.3 million U.S. tax valuation allowance, which drove recognition of a net income tax benefit of $83.8 million in the fourth quarter. The Company released the U.S. tax valuation allowance because it determined that it had become more likely than not that future income would result in use of deferred tax assets.

TransMedics' annual effective tax rate in 2025 was (77.0)%. TransMedics' annual effective tax rate in 2025, without the impact of the tax valuation allowance release, was 19.1%, a difference of 96.1 percentage points. 

An annual effective tax rate of 19.1% applied to fourth quarter income before income taxes of $21.6 million results in adjusted quarterly tax expense of $4.1 million.  Fourth quarter net income was $105.4 million and net income per diluted share was $2.62.  If the company applies an annual effective tax rate of 19.1%, fourth quarter adjusted net income is $17.5 million and net income per diluted share is $0.47.

In future periods, TransMedics expects to recognize a quarterly income tax provision more in line with U.S. statutory corporate income tax rates. 

About TransMedics Group, Inc.
TransMedics is the world's leader in portable extracorporeal warm perfusion and assessment of donor organs for transplantation. Headquartered in Andover, Massachusetts, the company was founded to address the unmet need for more and better organs for transplantation and has developed technologies to preserve organ quality, assess organ viability prior to transplant, and potentially increase the utilization of donor organs for the treatment of end-stage heart, lung, and liver failure.

Non-GAAP Measures
This release includes certain financial measures that were not prepared in accordance with U.S. generally accepted accounting principles (GAAP). Reconciliations of those non-GAAP financial measures to the most directly comparable GAAP financial measures are included in this release. The Company uses these non-GAAP measures as key performance indicators for the purpose of evaluating performance internally. We also believe that these non-GAAP measures provide investors with useful information with respect to our ongoing operations. Any non-GAAP financial measures presented are not, and should not be viewed as, substitutes for financial measures required by GAAP, have no standardized meaning prescribed by GAAP, and may not be comparable to the calculation of similar measures of other companies.

Forward-Looking Statements
This press release contains forward-looking statements. These forward-looking statements address various matters, including, among other things, future results and events, including our expectations for recognizing our quarterly income tax provisions in future periods. For this purpose, all statements other than statements of historical facts are forward-looking statements. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," "should," "could," "target," "predict," "seek" and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties. Our management cannot predict all risks, nor can we assess the impact of all factors or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in or implied by any forward-looking statements we may make. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this press release may not occur and actual results could differ materially and adversely from those anticipated in or implied by the forward-looking statements. Some of the key factors that could cause actual results to differ include: the fluctuation of our financial results from quarter to quarter; our ability to attract, train and retain key personnel; our dependence on the success of the Organ Care System ("OCS^TM"); our ability to expand access to the OCS through our National OCS Program ("NOP^TM"); our ability to improve the OCS platform, including by developing the next generation of the OCS products or expanding into new indications, and the development, and potential commercialization of our OCS Kidney device; the timing or results of clinical trials for the OCS, including pre- and post-approval studies; our ability to sustain profitability; our need to raise additional funding and our ability to obtain it on favorable terms, or at all; our ability to use net operating losses and research and development credit carryforwards; that we have identified a material weakness in our internal control over financial reporting, and that we may identify additional material weaknesses in the future; our ability to scale our manufacturing and sterilization capabilities to meet increasing demand for our products; the rate and degree of market acceptance of the OCS; our ability to educate patients, surgeons, transplant centers and private and public payors on the benefits offered by the OCS; our dependence on a limited number of customers for a significant portion of our revenue; our ability to maintain regulatory approvals or clearances for our OCS products in the United States, the European Union, and other select jurisdictions worldwide; our ability to adequately respond to the Food and Drug Administration ("FDA"), or other competent authorities, follow-up inquiries in a timely manner; the impact of healthcare policy changes, including recently enacted or potential future legislation or administrative actions affecting or reforming the U.S. healthcare system, Organ Procurement and Transplantation Network ("OPTN"), or the FDA; the performance of our third-party suppliers and manufacturers; our use of third parties to transport donor organs and medical personnel for our NOP and our ability to maintain and grow our transplant logistics capabilities to support our NOP to reduce dependence on third party transportation, including by means of attracting, training and retaining pilots, and the acquisition, maintenance or replacement of fixed-wing aircraft for our aviation transportation services or other acquisitions, joint ventures or strategic investments; our ability to maintain Federal Aviation Administration ("FAA") or other regulatory licenses or approvals for our aircraft transportation services; price increases of the components of our products and maintenance, parts and fuel for our aircraft; our manufacturing, sales, marketing and clinical support capabilities and strategy; attacks against our information technology infrastructure; the economic, political and other risks associated with our foreign operations; our ability to protect, defend, maintain and enforce our intellectual property rights relating to the OCS and avoid allegations that our products or services infringe, misappropriate or otherwise violate the intellectual property rights of third parties; the pricing of the OCS, as well as the reimbursement coverage for the OCS in the United States and internationally; regulatory developments in the United States, European Union and other jurisdictions; the impact of a shutdown of the U.S. government; the extent and success of competing products or procedures that are or may become available; our ability to service our 1.50% convertible senior notes, due 2028; our existing and any future indebtedness, including our ability to comply with affirmative and negative covenants under our credit agreements to which we will remain subject until maturity; the impact of any product recalls or improper use of our products; our international expansion plans and the costs related thereto; our estimates regarding revenue, expenses and needs for additional financing; and other factors that may be described in our filings with the Securities and Exchange Commission (the "SEC"). Additional information will be made available in our annual and quarterly reports and other filings that we make with the SEC. The forward-looking statements in this press release speak only as of the date of this press release. Factors or events that could cause our actual results to differ may emerge from time to time, and we are not able to predict all of them. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable law.

Investor Contact:
Brian Johnston
Laine Morgan
Gilmartin Group
332-895-3222
Investors@transmedics.com

 

TransMedics Group, Inc. NON-GAAP NET INCOME AND NET INCOME PER SHARE RECONCILIATIONS (in thousands, except per share data)
		Three Months Ended December 31, 2025
		Income before income taxes	(Provision) benefit for income taxes	Net Income	Net income per share: Diluted
Reported		$                      21,633	$                      83,750	$                   105,383	$                          2.62
Non-GAAP adjustments:
Benefit on release of valuation allowance			(103,301)	(103,301)	(2.52)
Impact of valuation allowance release on effective annual tax rate (1)			15,414	15,414	0.38
Adjusted		$                      21,633	$                      (4,137)	$                      17,496	$                          0.47

(1) Applies an annual effective tax rate of 19.1%, which is the annual effective tax rate for 2025 of (77.0)% adjusted by 96.1 percentage points due to the impact of the tax valuation allowance release.

 

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SOURCE TransMedics Group, Inc.

FAQ

What tax impact did TransMedics (TMDX) report for Q4 2025?

The company reported a $83.8 million net income tax benefit in Q4 2025. According to the company, that benefit resulted from releasing a $103.3 million U.S. tax valuation allowance, which materially lowered reported tax expense for the quarter.

How did the valuation allowance release affect TransMedics' 2025 effective tax rate (TMDX)?

The valuation release drove a 2025 effective tax rate of (77.0%) versus 19.1% without the release. According to the company, the difference is a 96.1 percentage-point swing tied to recognition of deferred tax assets.

What was TransMedics' reported and adjusted Q4 2025 EPS (TMDX)?

Reported Q4 2025 diluted EPS was $2.62; adjusted EPS applying 19.1% tax rate is $0.47. According to the company, the disparity reflects the one-time tax valuation allowance release that boosted reported net income.

What is TransMedics' (TMDX) Q4 2025 adjusted net income after tax-rate normalization?

Applying a 19.1% tax rate yields Q4 adjusted net income of $17.5 million. According to the company, this adjusted figure contrasts with the reported $105.4 million net income driven by the tax valuation release.

Why did TransMedics (TMDX) release the U.S. tax valuation allowance?

The company determined it became "more likely than not" that future taxable income will allow use of deferred tax assets. According to the company, that conclusion justified releasing the $103.3 million valuation allowance in Q4 2025.

Will TransMedics' (TMDX) future tax provisions remain abnormal after Q4 2025?

TransMedics expects future quarterly income tax provisions to align more with U.S. statutory corporate rates. According to the company, the Q4 result was an accounting recognition event and future quarters should show tax provision closer to normal levels.