earlier today I posted a video about transmedics a stock who that has taken its shareholders on a wild ride over the past year and the way that I set it up left people it is clear to me now believing that I was going to share my guidance on that that is not something I'm always going to be able to do and I'll explain why later but it is clear that the way that I constructed it was not straightforward to people so I'm re-shooting this and letting people know exactly what I'm doing with transmedics so let's
get started with what's going on with the company now for those that are unfamiliar with transmedics a stock that I own it has created an FDA approved uh platform that helps keeps Hearts lungs and liver alive for longer outside of the body so that they can be used in organ donations and transplants and they have streamlined the process to take care of everything from transportation and Logistics retrieving the organ having that technology that I just showed you as well as having a metal medical expert along with for every step of the way and last year
they went one step further by building out an aviation unit to help get these organs from one place to another when time is absolutely of the essence and they have a nationwide system the national OCS platform which is the Oregon care system to transport these organs as quickly as they can now a little bit of background on my own history with the company I first bought shares in November of last year at about $47 a share and again in early April of this year at about $72 a share by the time late August early September
came around the shares were trading for $176 a piece and at that point in time as you can see in this case late September transmedics was a stock that made up almost 10% of my portfolio the third largest position that I have however since then the stock is down 56% and without making any changes to my allocation not buying anymore or selling anymore it's actually down to my third smallest position at just 4% of my portfolio as of today November 25th so what's going on with the company looking forward well I think that there are
three scenarios that we can lay out that might help explain different ways of viewing this now there's no way that any of these scenarios will play exactly as I'm about to show you this is more of different mental models to try on as you're thinking about what you might do with the company now the first is the bease during the conference call the company and its CEO went out of their way to say that they did not lose market share during the quarter now that sounds good to some people however when that's what you're saying
you also have to listen to what was not said and what was not said was that the company did not gain Market market share during the quarter and here's why that matters last year from 2022 to 2023 the volume of heart and liver transplants in the United States grew by 12% but the transplant volume for transics over that same time frame grew over 130% now I know lungs are part of that but they're a very small part of it the bottom line is this transmedics volume of transplants was growing at 10 times the rate expanding
at 10 times the rate as the market itself so it was expanding very quickly and now we've got management just saying we didn't lose market share that's disconcerting and if we're looking for why this might be the case a a type of operation which has been around for a long time but is really starting to be adopted through as best I can tell through anecdotal evidence in organ transplants is something called n RP neurotherm Regional profusion and the the reason that this is popular is that transmedics OCS solution is expensive it costs over $100,000 per
organ being transplanted whereas NRP is not nearly as expensive there's no company behind this procedure it can use inhouse parts and staff to get things done now that's not to say it's not without its drawbacks because the basics of NRP is is that a patient who dies a circulatory death is brought back to life somewhat with blood pumping through their system while that blood is being cut off from the brain so that the organs can stay as fresh as possible to be taken out and taken to the nearest possible transplant recipient now there are ethical
questions with this and those ethical questions have yet to be resolved however it is it appears to be a more sustain economically sustainable solution that could help ease some of the problems when it comes to the shortage of organs for transplants and that on the face of it is not great news for transmedic investors on the other hand the bull case would just say that the disappointing quarter last quarter came down to two things which are both short-term in nature the first being the fact that transmedics Aviation unit which is still just getting off the
ground had a lot of planes that were sideline for the quarter because they knew it would be a seasonally slow quarter more on that in just a second if that was the case it makes sense that management would plan for that necessary maintenance to happen during this quarter which could have held back the number of transplants that it helped facilitate during the quarter and in the fourth quarter with things getting back to normal then it would no longer be a concern the other part of that as I said is that the company said it was
an an unusually low quarter terms of seasonality and there is some data to back that up that in the spring and summer those are usually the the ones that account for the largest percentage of organ donations and that that falls in the fall and winter we will wait to see how that continues to play out in the further quarters but if that is the case it makes sense that the company might seem like a good deal right now given where the stock was just a few months ago but I want to consider what I might
what I think of the more nuanced case and the more nuanced case tries to take a more holistic picture and that picture it when you paint that picture here's what you see that there's over a 100,000 men women and children in the United States that are on the national transplant waiting list and this of course includes more than just the heart lung and liver but those are still important parts of it and every day sadly 17 people die while waiting for an organ transplant something that is a national tragedy and something that we should hope
that can be solved the idea here being that NRP could be a way to sustainably and economically increase the pool of organs that are available for the people that need them and that could capture more of the market share but transmedics does not necessarily need to be per se damaged by this at least the company it's and its investors aren't because the overall pie for the organ donation pool could grow so much because of this procedure that transmedics could focus on a niche within this larger pie perhaps the end state has them capturing less market
share than investors might have been hoping for a year or two ago but because the overall pie is growing larger transmedics can focus on using their machines to transplant these organs over longer distances when that's necessary and that alone could help the investors over the long run benefit from both of these doing well side by side now the part that I did not include in my previous video for my own portfolio I am comfortable keeping my allocation where it is the reason for that is that I think that there's a lot up in the air
at a 4% allocation that seems reasonable to me when I'm still waiting for many of these things to play out I don't need to double down on it right now because if this is a truly life-changing technology one I'll be benefiting by already owning 4% of it in my portfolio but if it's not and if I don't truly understand the effects that NRP could have on transmatics then I'm going to be glad that I kept my allocation where it is a lot of times in investing it doesn't need to be black and white and it
pays to see the gray and that's something I've tried to regularly teach members of a new service that I have called Stock Investing Mentor now this year shows my investing results over the last 10 years the green being my results the NASDAQ Composite and yellow and the red being the S&P 500 stock investing Mentor yes does allow you to see my portfolio in real time and if you'd like to see the other 14 positions that I have in my portfolio you can do so by becoming a member but I would argue that that is not
even the most valuable part of the service every week there are one-hour live sessions where I try and teach one nugget with live Q&A and it is recorded as well as 247 access to a live private investing Community if that interests you then I then I encourage you to click on the link in the show notes above for a 10% off Black Friday special to join the community however that deal does expire on Friday November 29th at 11:59 p.m. eastern time so that is my thinking on trans medics where I am sitting as an investor
and let me know in the comments section what your take is on this what are you going to be doing based on the information available let me know what I might have missed and again I apologize if my first video was misleading in its content I will not always be able to or willing to give real-time updates in my own portfolio because that is something reserved for members of this community but I do believe in making sure that I'm delivering on what's promised and clearly I miss the mark in that regard make sure you subscribe
to the channel so that you can get further updates on this company and all the companies we follow especially during earning season until then Brian out
