Why Shares of TransMedics Group Are Falling Friday

What happened

Shares of TransMedics Group (NASDAQ:TMDX) were down around 10% by 2:45 p.m. E.T. on Friday after the company announced second-quarter earnings. The healthcare stock is up more than 27% this year.

So what

TransMedics is a medical technology company that developed the Organ Care System (OCS), an organ transplant therapy for end-stage organ failure patients, to improve and speed transplant outcomes. The company reported second-quarter earnings on Thursday after the markets closed. It said that revenue for the quarter was $52.5 million, up 156% year over year.

The company said the increase was due to a greater use of its OCS products for lungs, hearts, and livers. The company also substantially trimmed its losses to $1 million, compared to a loss of $11.5 million in the same period a year ago.

Management raised guidance for 2023, saying it expects yearly revenue of between $180 million to $190 million, a rise of 93% to 103% compared to 2022. The company's prior estimate for 2023 revenue was between $160 million and $170 million.

Earlier this week, it bought out assets from a competitor, Bridge to Life, to bolster its moat in organ transplant deliveries.

Now what

So, if all the numbers were good and the company raised guidance, why did the stock go down? It comes down to an insider sale on Monday by CEO Waleed Hassanein of 7,500 shares, which was reported in a Securities and Exchange Commission filing by the company on Thursday.

It seems to be a bit of an overreaction as company insiders sell frequently for reasons that have little to do with the company's progress. And 7,500 shares are a relatively small amount, especially for a CEO.

10 stocks we like better than TransMedics Group
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now... and TransMedics Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of August 1, 2023

Jim Halley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends TransMedics Group. The Motley Fool has a disclosure policy.