The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on February 24, 2026 (the “2025 Form 10-K”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Item 1A. Risk Factors” section of this Quarterly Report on Form 10-Q and the “Item 1A. Risk Factors” section of our 2025 Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
We are a medical technology company transforming organ transplant therapy for end-stage organ failure patients across multiple disease states. We developed the OCS to replace a decades-old standard of care that we believe is significantly limiting access to life-saving transplant therapy for hundreds of thousands of patients worldwide. Our innovative OCS technology replicates many aspects of the organ’s natural living and functioning environment outside of the human body. As such, the OCS represents a paradigm shift that transforms organ preservation for transplantation from a static state to a dynamic environment that enables new capabilities, including organ optimization and assessment. We have also developed our NOP, an innovative turnkey solution to provide outsourced organ procurement, OCS perfusion management and transplant logistics services, to provide transplant programs in the United States with a more efficient process to procure donor organs with the OCS. Our transplant logistics services include aviation transportation, ground transportation, and other coordination activity. We believe the use of the OCS combined with the NOP has the potential to significantly increase the number of organ transplants and improve post-transplant outcomes.
We designed the OCS to be a platform that allows us to leverage core technologies across products for multiple organs. To date, we have developed three OCS products, one for each of heart, lung and liver transplantations, making the OCS the only FDA approved, portable, multi-organ, warm perfusion technology platform. All three of our products, OCS Heart, OCS Lung and OCS Liver, have received Pre-Market Approval from the FDA, for both organs donated after brain death, or DBD organs, and organs donated after circulatory death, or DCD organs.
Since our inception, we have focused substantially all of our resources on designing, developing and building our proprietary OCS technology platform and organ-specific OCS products; obtaining clinical evidence for the safety and effectiveness of our OCS products through clinical trials; securing regulatory approval; organizing and staffing our company; planning our business; raising capital; commercializing our products; developing and growing our NOP; developing and expanding our market and distribution chain and providing general and administrative support for these operations. To date, we have funded our operations primarily with proceeds from borrowings under loan agreements, proceeds from the issuance of the Notes, proceeds from the sale of common stock in our public offerings, and revenue from commercial sales of our OCS products and NOP services and from sales of our OCS products for use in clinical trials.
Prior to 2024, we had incurred significant annual operating losses since inception and we have only recently achieved profitability. Our ability to generate revenue sufficient to achieve sustained profitability will depend on the continued commercial sales of our products and services. We generated total revenue of $189.9 million and $363.9 million, and net income of $14.7 million and $22.0 million, for the three and six months ended June 30, 2026, respectively. As of June 30, 2026, we had an accumulated deficit of $256.0 million. We expect our operating and capital expenditures will continue to increase as we focus on growing commercial sales of our products in both the United States and select non-U.S. markets. Because of the numerous risks and uncertainties associated with product development, commercialization and regulations of our industry, we are unable to accurately predict the timing or amount of increased expenses or if we will be able to maintain profitability. Until such time, if ever, as we can generate substantial revenue sufficient to achieve sustained profitability, we may finance our operations through a combination of equity offerings, debt financings and strategic alliances. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms or at all. If we are unable to raise capital or enter into such agreements as, and when, needed, we will have to delay, scale back or discontinue the further development and commercialization efforts of one or more of our products, or may be forced to terminate our operations.
The United Network for Organ Sharing, or UNOS, operated the OPTN under a sole-vendor federal contract from 1986 until 2024. In March 2023, the U.S. Department of Health and Human Services’ Health Resources and Services Administration, or HRSA, announced initiatives designed to improve the OPTN, including its intent to solicit contract proposals to manage the OPTN under a multi-vendor model following the expiration of the sole-vendor contract between UNOS and HRSA on March 29, 2024. Additionally, in September 2023, the Securing the U.S. Organ Procurement and Transplantation Network Act was signed into law. This legislation expressly authorizes HRSA to award multiple grants,
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contracts or cooperative agreements to support the operation of the OPTN. It also specifies that the awards to operate the OPTN shall be distinct from awards to support the networks’ board of directors. In September 2024, HRSA began awarding contracts aimed at supporting the multi-vendor model.
HRSA has consistently exercised options to extend the contract for UNOS to operate OPTN, albeit in a more limited capacity, since March 2024. Most recently, in December 2025, HRSA and UNOS reached a new agreement that took effect on December 30, 2025. This contract allows HRSA to extend UNOS’ work for up to 12 months, until December 29, 2026, structured as four optional three-month periods. The new agreement reflects a shift of several former UNOS functions, including patient safety, reporting and tracking of donor-derived transmission events, and committee support, to HRSA or other contractors.
HRSA continues to implement efforts to improve and modernize the OPTN, including enhancements to patient data on organ procurement, expanded transparency through a publicly accessible data dashboard for allocation out of sequence (AOOS) events, expanded outreach and financial support for living organ donors, and a new OPTN fee collection process whereby HRSA directly collects and distributes patient registration fees under authorities originally granted by the 2025 Full-Year Continuing Appropriations and Extensions Act and extended by the 2026 Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act. The impact that HRSA’s initiatives and the U.S. Organ Procurement and Transplantation Network Act may have on our business, including on our NOP, is uncertain at this time.
Economic Impacts
Inflation, changes in trade policies, and the imposition of or changes in the amount of duties and tariffs have and could continue to adversely impact the price or availability of raw materials, the components of our products as well as shipping and transportation costs. For example, tariffs related to a small portion of components that we import moderately increased our cost of revenue in 2025. The global economy has experienced extreme volatility and disruptions, including significant volatility in commodity, other material and labor costs, declines in consumer confidence, declines in economic growth, supply chain interruptions, uncertainty about economic stability and record inflation globally. Unfavorable economic conditions have and could continue to result in a variety of risks to our business, including impacts on demand and pricing for our products and pricing and availability of raw materials and components for our products, which could make it difficult to forecast our inventory needs and financial results.
Key Components of Our Results of Operations
Revenue
We generate net product revenue primarily from sales of our single-use, organ-specific disposable sets used on our organ-specific OCS Consoles. To a lesser extent, we also generate product revenue from the sale of OCS Consoles to customers and the implied rental of OCS Consoles loaned to customers at no charge. For each new transplant procedure, customers purchase an additional OCS disposable set for use on their existing organ-specific OCS Console. We also generate service revenue by providing outsourced organ procurement, OCS perfusion management and transplant logistics services under our NOP in the United States.
All of our OCS transplant-related revenue has been generated by sales to transplant centers and Organ Procurement Organizations, not-for-profit organizations responsible for recovering organs from deceased donors for transplantation, in the United States, Europe and Asia-Pacific, or, in some cases, to distributors selling to transplant centers in select countries. Substantially all of our customer contracts have multiple-performance obligations that contain promises consisting of OCS Perfusion Sets and OCS Solutions and may also contain promises for organ procurement, OCS perfusion management or transplant logistics services under our NOP, and OCS Console, whether sold or loaned to the customer.
Our sales outside of the United States have been commercial sales (unrelated to any clinical trials). Sales in the EU are dependent on obtaining and maintaining the Conformité Européene mark, or CE mark, certifications for each of our OCS products. As required by Regulation (EU) 2017/745, or the MDR, we received recertification of the CE mark in September 2022 for each of the OCS Heart and OCS Lung systems, which includes the OCS Console, the OCS disposables, and the OCS solution additives. We also received the recertification of the CE mark in September 2022 for the OCS Liver Console and disposables. We received the CE mark for the OCS Liver combined with our solution additives under the MDR in May 2023, with an effective date of April 2023. In addition, we received a Class II Medical Device License from Health Canada for our OCS Liver combined with our solution additives in October 2023 to complement our existing Health Canada licenses for OCS Heart and OCS Lung.
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We expect that our revenue will increase over the long term as a result of the continued growth of the NOP in the United States. We also expect that our revenue will increase over the long term as a result of anticipated growth in non-U.S. sales if national healthcare systems begin to reimburse transplant centers for the use of the OCS, if transplant centers utilize the OCS in more transplant cases and if more transplant centers adopt the OCS in their programs. While we expect our revenue to increase over the long term, revenue from sales may fluctuate from quarter to quarter as the timing of organ transplant procedures is generally unpredictable, and we have observed periodic fluctuations in the availability of donor organs and transplant center surgeons, which impacts the volume of transplants.
Cost of Revenue, Gross Profit and Gross Margin
Cost of net product revenue consists of costs of components of our OCS Consoles and disposable sets, costs of direct materials, labor and the manufacturing overhead that directly supports production and depreciation of OCS Consoles. Included in the cost of OCS disposable sets are the costs of our OCS Lung, OCS Heart and OCS Liver Solutions. Cost of service revenue primarily consists of labor and overhead that directly support organ procurement and OCS perfusion management services and transportation and transplant logistics costs, including labor costs for pilots, aircraft depreciation, aircraft costs, fuel, crew travel, maintenance and third-party flight costs and ground transportation that support organ delivery.
Gross profit is the amount by which revenue exceeds cost of revenue in each reporting period and gross margin is gross profit divided by revenue. Our overall gross margin is impacted by the relative mix of product and service revenue, as product and service revenue have different margin profiles. Product and service gross margins are also affected by a variety of factors, primarily production volumes, the cost of components and direct materials, manufacturing overhead costs, direct labor, the cost of services provided under the NOP and the selling price of our OCS products and NOP services.
We expect that overall cost of revenue will increase or decrease in absolute dollars primarily as, and to the extent that, our revenue increases or decreases. We expect that the cost of net product revenue as a percentage of net product revenue will moderately decrease and gross margin and gross profit will moderately increase over the long term as our sales and production volumes increase and our cost per unit of our OCS disposable sets decreases due to economies of scale, our product enhancements and improved manufacturing efficiency. We intend to use our design, engineering and manufacturing capabilities to further advance and improve the efficiency of our manufacturing processes, which we believe will reduce costs and increase our product gross margin. We also expect to see modest improvements in the future in our services gross margin as we provide more services and the efficiency in provisioning of these services improves due to scale and experience, including effectively managing fluctuating aircraft fuel prices. While we expect our gross margins to increase over the long term, they will likely fluctuate from quarter to quarter.
Operating Expenses
Research, Development and Clinical Trials Expenses
Research, development and clinical trials expenses consist of costs incurred for research activities, product development, hardware and software engineering and clinical trial activities, including salaries and related costs, including stock-based compensation, facility and IT related costs, laboratory supplies, depreciation, testing, regulatory, data management and consulting costs.
We expense research, development and clinical trials costs as incurred. In the future, we expect that research, development and clinical trials expenses will increase over the long term due to ongoing product development and approval efforts. We expect to continue to perform activities related to obtaining additional regulatory approvals for expanded indications in the United States and other served geographies, as well as developing the next generation of our OCS technology platform.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in our commercial team and personnel in executive, marketing, finance and administrative functions, and recruiting and temporary service fees for such personnel. Selling, general and administrative expenses also include direct and allocated facility and IT related costs, costs to support the NOP, promotional activities, marketing, conferences and trade show costs as well as professional fees for legal, patent, consulting, investor and public relations, accounting and audit services and amortization of sales and marketing-related intangible assets. We expect that our selling, general and administrative expenses will increase over the long term as we increase our headcount and infrastructure to support the expected continued sales growth of our OCS products and our NOP.
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Other Income (Expense)
Interest Expense
Interest expense consists of interest expense associated with outstanding borrowings under our loan agreement and our Notes as well as the amortization of debt discounts associated with such agreements. In July 2022, we entered into a credit agreement with Canadian Imperial Bank of Commerce, or CIBC, under which we borrowed $60.0 million. In May 2023, we issued and sold $460.0 million in aggregate principal amount of our Notes. Interest expense also includes imputed interest on our finance lease entered into in January 2026.
Interest Income and Other Income (Expense), Net
Interest income and other income (expense), net includes interest income, realized and unrealized foreign currency transaction gains and losses and other non-operating income and expense items unrelated to our core operations. Interest income consists of interest earned on our cash balances. Foreign currency transaction gains and losses result from intercompany transactions as well as transactions with customers or vendors denominated in currencies other than the functional currency of the legal entity in which the transaction is recorded.
Income Taxes
Our (provision) benefit for income taxes is based on applying our forecasted annual effective tax rate to year-to-date income before income taxes, and adjusting for discrete items occurring in the quarter. Our forecasted annual effective tax rate may vary from period to period based on many factors including changes in management’s forecast, deductibility of certain expenses and changes to tax laws.
We expect our full year 2026 effective income tax rate to be between 25% and 27%. The change in the effective tax rate from 2025 relates primarily to the release of our valuation allowance in the fourth quarter of 2025. To the extent allowed, we intend to use our available net operating loss carryforwards and tax credits to reduce cash tax payment obligations.
Results of Operations
Comparison of the Three Months Ended June 30, 2026 and 2025
The following table summarizes our results of operations for the three months ended June 30, 2026 and 2025:
Three Months Ended June 30,
2026 2025 Change
(in thousands)
Revenue:
Net product revenue $ 111,158 $ 96,100 $ 15,058
Service revenue 78,790 61,270 17,520
Total revenue 189,948 157,370 32,578
Cost of revenue:
Cost of net product revenue 25,566 19,421 6,145
Cost of service revenue 51,184 41,360 9,824
Total cost of revenue 76,750 60,781 15,969
Gross profit 113,198 96,589 16,609
Operating expenses:
Research, development and clinical trials 31,632 15,934 15,698
Selling, general and administrative 57,830 44,088 13,742
Total operating expenses 89,462 60,022 29,440
Income from operations 23,736 36,567 (12,831 )
Other income (expense):
Interest expense (7,225 ) (3,476 ) (3,749 )
Interest income and other income (expense), net 2,894 3,091 (197 )
Total other expense, net (4,331 ) (385 ) (3,946 )
Income before income taxes 19,405 36,182 (16,777 )
Provision for income taxes (4,723 ) (1,275 ) (3,448 )
Net income $ 14,682 $ 34,907 $ (20,225 )
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Revenue
OCS transplant-related revenue consisted of:
Three Months Ended June 30,
2026 2025 Change
(in thousands)
OCS transplant revenue by country by organ:
United States
Lung total revenue $ 2,253 $ 4,154 $ (1,901 )
Heart total revenue 33,381 32,171 1,210
Liver total revenue 147,989 115,862 32,127
Total United States OCS transplant revenue 183,623 152,187 31,436
All other countries
Lung total revenue 409 421 (12 )
Heart total revenue 4,587 3,495 1,092
Liver total revenue 245 244 1
Total all other countries OCS transplant revenue 5,241 4,160 1,081
Total OCS transplant revenue $ 188,864 $ 156,347 $ 32,517
We also had service revenue unrelated to OCS transplant of $1.0 million for each of the three months ended June 30, 2026 and 2025.
Revenue from customers in the United States related to OCS transplant was $183.6 million in the three months ended June 30, 2026 and increased by $31.4 million compared to the three months ended June 30, 2025, due to higher sales volumes of our OCS Liver disposable sets and increased usage of the NOP. Revenue for each organ in the table above includes net product revenue from sales of disposable sets as well as service revenue for organ procurement, OCS perfusion management and transplant logistics services under the NOP in the United States.
Revenue from customers outside the United States was $5.2 million and $4.2 million for the three months ended June 30, 2026 and 2025, respectively. The increase was due primarily to higher sales volumes of our OCS Heart disposable sets.
Cost of Revenue, Gross Profit and Gross Margin
Cost of net product revenue increased by $6.1 million in the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Cost of service revenue increased by $9.8 million in the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Gross profit increased by $16.6 million in the three months ended June 30, 2026 compared to the three months ended June 30, 2025.
Overall gross margin was 60% and 61% for the three months ended June 30, 2026 and 2025, respectively. The decrease in gross margin from 2025 to 2026 was driven primarily by a higher mix of service revenue, which carries a lower gross margin than product revenue, as well as a decrease in gross margin from product revenue. Gross margin from net product revenue was 77% and 80% for the three months ended June 30, 2026 and 2025, respectively. Gross margin from net product revenue decreased from the three months ended June 30, 2025 to the three months ended June 30, 2026 primarily due to higher freight costs and certain inventory-related costs that we believe are temporary, including strategic stocking costs at hub locations and incremental product costs related to our clinical trials. Gross margin from service revenue was 35% and 32% for the three months ended June 30, 2026 and 2025, respectively, and consisted primarily of organ procurement, OCS perfusion management and transplant logistics services under our NOP. Gross margin from service revenue increased during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 primarily due to efficiencies in our NOP operating model.
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Operating Expenses
Research, Development and Clinical Trials Expenses
Three Months Ended June 30,
2026 2025 Change
(in thousands)
Personnel related (including stock-based compensation expense) $ 7,754 $ 5,964 $ 1,790
Laboratory supplies and research materials 6,218 5,206 1,012
Consulting and third-party services 12,866 2,302 10,564
Clinical trials costs 1,615 267 1,348
Facility and IT related and other 3,179 2,195 984
Total research, development and clinical trials expenses $ 31,632 $ 15,934 $ 15,698
Total research, development and clinical trials expenses increased by $15.7 million from $15.9 million in the three months ended June 30, 2025 to $31.6 million in the three months ended June 30, 2026. Personnel related costs increased by $1.8 million primarily due to increased headcount to support development efforts for our next generation OCS program and overall compensation increases. Personnel related costs included stock-based compensation expense of $1.1 million and $1.2 million for the three months ended June 30, 2026 and 2025, respectively. Consulting and third-party services costs increased by $10.6 million due to development efforts by our external development consultants for our next generation OCS program and other product development, including our OCS Kidney device. Clinical trials costs increased by $1.3 million due primarily to patient enrollment in our clinical trials. Facility and IT related and other costs increased by $1.0 million from the three months ended June 30, 2025 to the three months ended June 30, 2026 due primarily to the increased cost of supporting a larger group of research and development personnel.
Selling, General and Administrative Expenses
Three Months Ended June 30,
2026 2025 Change
(in thousands)
Personnel related (including stock-based compensation expense) $ 30,931 $ 27,307 $ 3,624
Professional and consultant fees 10,318 5,696 4,622
NOP support 1,923 1,932 (9 )
Tradeshows and conferences 1,721 1,549 172
Facility and IT related and other 8,648 5,960 2,688
Depreciation and amortization expense 4,289 1,644 2,645
Total selling, general and administrative expenses $ 57,830 $ 44,088 $ 13,742
Total selling, general and administrative expenses increased by $13.7 million from $44.1 million in the three months ended June 30, 2025 to $57.8 million in the three months ended June 30, 2026. Personnel related costs increased by $3.6 million primarily due to the continued expansion of our team to support the growth in our business. Personnel related costs included stock-based compensation expense of $7.2 million and $7.8 million for the three months ended June 30, 2026 and 2025, respectively. Professional and consultant fees increased by $4.6 million due primarily to transaction-related costs of $1.7 million related to strategic initiatives and corporate development activities, and to costs related to international expansion and process improvement initiatives. Facility and IT related and other costs increased by $2.7 million due primarily to increases in IT infrastructure, travel costs and property tax expenses for properties in Somerville, Massachusetts. Depreciation and amortization expense increased by $2.6 million primarily due to $2.1 million of amortization of our finance lease for our new headquarters that commenced in January 2026.
Other Income (Expense)
Interest Expense
Interest expense was $7.2 million and $3.5 million for the three months ended June 30, 2026 and 2025, respectively. Interest expense of $2.4 million for each of the three months ended June 30, 2026 and 2025 related to the $460.0 million
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principal amount of the Notes that carry a 1.5% interest rate. Interest expense of $1.0 million for each of the three months ended June 30, 2026 and 2025 related to the $60.0 million principal amount of the CIBC loan that carries a variable interest rate, which was 6.2% as of June 30, 2026. Additionally, for the three months ended June 30, 2026, interest expense included $3.8 million of imputed interest on our finance lease entered into in January 2026.
Interest Income and Other Income (Expense), Net
Interest income and other income (expense), net for the three months ended June 30, 2026 and 2025 included interest income of $3.0 million and $2.5 million, respectively, from interest earned on cash balances. Interest income and other income (expense), net for the three months ended June 30, 2026 and 2025 also included $0.1 million of realized and unrealized foreign currency transactions losses and $0.6 million of realized and unrealized foreign currency transactions gains, respectively.
Income Taxes
Our effective tax rate of 24.3% for the three months ended June 30, 2026 differed from the statutory federal corporate tax rate of 21% primarily due to state income taxes, which increased the effective tax rate.
For the three months ended June 30, 2025, our income tax expense consisted primarily of state income taxes. Until the fourth quarter of 2025, we maintained a valuation allowance on our overall net deferred tax assets.
Comparison of the Six Months Ended June 30, 2026 and 2025
The following table summarizes our results of operations for the six months ended June 30, 2026 and 2025:
Six Months Ended June 30,
2026 2025 Change
(in thousands)
Revenue:
Net product revenue $ 219,130 $ 184,334 $ 34,796
Service revenue 144,751 116,573 28,178
Total revenue 363,881 300,907 62,974
Cost of revenue:
Cost of net product revenue 49,874 35,733 14,141
Cost of service revenue 99,648 80,357 19,291
Total cost of revenue 149,522 116,090 33,432
Gross profit 214,359 184,817 29,542
Operating expenses:
Research, development and clinical trials 56,511 33,094 23,417
Selling, general and administrative 120,815 87,713 33,102
Total operating expenses 177,326 120,807 56,519
Income from operations 37,033 64,010 (26,977 )
Other income (expense):
Interest expense (14,395 ) (6,937 ) (7,458 )
Interest income and other income (expense), net 5,252 5,785 (533 )
Total other expense, net (9,143 ) (1,152 ) (7,991 )
Income before income taxes 27,890 62,858 (34,968 )
Provision for income taxes (5,893 ) (2,269 ) (3,624 )
Net income $ 21,997 $ 60,589 $ (38,592 )
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Revenue
OCS transplant-related revenue consisted of:
Six Months Ended June 30,
2026 2025 Change
(in thousands)
OCS transplant revenue by country by organ:
United States
Lung total revenue $ 4,450 $ 7,790 $ (3,340 )
Heart total revenue 59,238 58,437 801
Liver total revenue 286,959 224,577 62,382
Total United States OCS transplant revenue 350,647 290,804 59,843
All other countries
Lung total revenue 1,036 796 240
Heart total revenue 9,598 7,045 2,553
Liver total revenue 255 384 (129 )
Total all other countries OCS transplant revenue 10,889 8,225 2,664
Total OCS transplant revenue $ 361,536 $ 299,029 $ 62,507
We also had service revenue unrelated to OCS transplant of $2.3 million and $1.9 million for the six months ended June 30, 2026 and 2025, respectively.
Revenue from customers in the United States related to OCS transplant was $350.6 million in the six months ended June 30, 2026 and increased by $59.8 million compared to the six months ended June 30, 2025, due to higher sales volumes of our OCS Liver disposable sets and increased usage of the NOP. Revenue for each organ in the table above includes net product revenue from sales of disposable sets as well as service revenue for organ procurement, OCS perfusion management and transplant logistics services under the NOP in the United States.
Revenue from customers outside the United States was $10.9 million and $8.2 million for the six months ended June 30, 2026 and 2025, respectively. The increase was due primarily to higher sales volumes of our OCS Heart disposable sets.
Cost of Revenue, Gross Profit and Gross Margin
Cost of net product revenue increased by $14.1 million in the six months ended June 30, 2026 compared to the six months ended June 30, 2025. Cost of service revenue increased by $19.3 million in the six months ended June 30, 2026 compared to the six months ended June 30, 2025. Gross profit increased by $29.5 million in the six months ended June 30, 2026 compared to the six months ended June 30, 2025.
Overall gross margin was 59% and 61% for the six months ended June 30, 2026 and 2025, respectively. The decrease in gross margin from 2025 to 2026 was driven primarily by a higher mix of service revenue, which carries a lower gross margin than product revenue, as well as a decrease in gross margin from product revenue. Gross margin from net product revenue was 77% and 81% for the six months ended June 30, 2026 and 2025, respectively. Gross margin from net product revenue decreased from the six months ended June 30, 2025 to the six months ended June 30, 2026 primarily due to higher freight costs and certain inventory-related costs that we believe are temporary, including strategic stocking costs at hub locations and incremental product costs related to our clinical trials. Gross margin from service revenue was 31% for each of the six months ended June 30, 2026 and 2025, and consisted primarily of organ procurement, OCS perfusion management and transplant logistics services under our NOP.
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Operating Expenses
Research, Development and Clinical Trials Expenses
Six Months Ended June 30,
2026 2025 Change
(in thousands)
Personnel related (including stock-based compensation expense) $ 16,162 $ 12,216 $ 3,946
Laboratory supplies and research materials 10,359 10,162 197
Consulting and third-party services 21,275 6,475 14,800
Clinical trials costs 2,320 348 1,972
Facility and IT related and other 6,395 3,893 2,502
Total research, development and clinical trials expenses $ 56,511 $ 33,094 $ 23,417
Total research, development and clinical trials expenses increased by $23.4 million from $33.1 million in the six months ended June 30, 2025 to $56.5 million in the six months ended June 30, 2026. Personnel related costs increased by $3.9 million primarily due to increased headcount to support development efforts for our next generation OCS program and overall compensation increases. Personnel related costs included stock-based compensation expense of $2.5 million for each of the six months ended June 30, 2026 and 2025. Consulting and third-party services costs increased by $14.8 million due to development efforts by our external development consultants for our next generation OCS program and other product development, including our OCS Kidney device. Clinical trials costs increased by $2.0 million due primarily to patient enrollment in our clinical trials. Facility and IT related and other costs increased by $2.5 million from the six months ended June 30, 2025 to the six months ended June 30, 2026 due primarily to the increased cost of supporting a larger group of research and development personnel.
Selling, General and Administrative Expenses
Six Months Ended June 30,
2026 2025 Change
(in thousands)
Personnel related (including stock-based compensation expense) $ 65,037 $ 54,978 $ 10,059
Professional and consultant fees 22,494 13,254 9,240
NOP support 3,503 4,338 (835 )
Tradeshows and conferences 2,990 1,975 1,015
Facility and IT related and other 16,440 10,282 6,158
Depreciation and amortization expense 10,351 2,886 7,465
Total selling, general and administrative expenses $ 120,815 $ 87,713 $ 33,102
Total selling, general and administrative expenses increased by $33.1 million from $87.7 million in the six months ended June 30, 2025 to $120.8 million in the six months ended June 30, 2026. Personnel related costs increased by $10.1 million primarily due to the continued expansion of our team to support the growth in our business. Personnel related costs included stock-based compensation expense of $15.3 million and $15.2 million for the six months ended June 30, 2026 and 2025, respectively. Professional and consultant fees increased by $9.2 million due primarily to transaction-related costs of $4.5 million related to strategic initiatives and corporate development activities, and to costs related to international expansion and process improvement initiatives. Facility and IT related and other costs increased by $6.2 million due primarily to increases in IT infrastructure, travel costs and property tax expenses for properties in Somerville, Massachusetts. Depreciation and amortization expense increased by $7.5 million primarily due to $4.1 million of amortization of our finance lease for our new headquarters that commenced in January 2026 and $1.9 million of incremental amortization due to a change in estimated useful life of acquired intangible assets.
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Other Income (Expense)
Interest Expense
Interest expense was $14.4 million and $6.9 million for the six months ended June 30, 2026 and 2025, respectively. Interest expense of $4.9 million for each of the six months ended June 30, 2026 and 2025, related to the $460.0 million principal amount of the Notes that carry a 1.5% interest rate. Interest expense of $1.9 million and $2.1 million for the six months ended June 30, 2026 and 2025, respectively, related to the $60.0 million principal amount of the CIBC loan that carries a variable interest rate, which was 6.2% as of June 30, 2026. Additionally, for the six months ended June 30, 2026, interest expense included $7.6 million of imputed interest on our finance lease entered into in January 2026.
Interest Income and Other Income (Expense), Net
Interest income and other income (expense), net for the six months ended June 30, 2026 and 2025 included interest income of $5.7 million and $4.8 million, respectively, from interest earned on cash balances. Interest income and other income (expense), net for the six months ended June 30, 2026 and 2025 also included $0.7 million of realized and unrealized foreign currency transactions losses and $1.0 million of realized and unrealized foreign currency transactions gains, respectively.
Income Taxes
Our effective tax rate of 21.1% for the six months ended June 30, 2026 differed from the statutory federal corporate tax rate of 21% primarily due to state income taxes, which increased the effective tax rate, offset by discrete items occurring during the period.
For the six months ended June 30, 2025, our income tax expense consisted primarily of state income taxes. Until the fourth quarter of 2025, we maintained a valuation allowance on our overall net deferred tax assets.
Liquidity and Capital Resources
Prior to 2024, we had incurred significant annual operating losses since inception and we may incur losses in the future. To date, we have funded our operations primarily with proceeds from borrowings under loan agreements, proceeds from the issuance of our Notes, proceeds from the sale of common stock in our public offerings and revenue from commercial sales of our OCS products and NOP services and from sales of our OCS products for use in clinical trials. At June 30, 2026, our principal source of liquidity was cash of $472.7 million.
Cash Flows
The following table summarizes our sources and uses of cash for each of the periods presented:
Six Months Ended June 30,
2026 2025
(in thousands)
Net cash provided by operating activities $ 41,842 $ 88,754
Net cash used in investing activities (43,749 ) (36,113 )
Net cash provided by financing activities 4,732 10,117
Effect of exchange rate changes on cash and restricted cash (578 ) 1,167
Net increase in cash and restricted cash $ 2,247 $ 63,925
Operating Activities
During the six months ended June 30, 2026, operating activities provided $41.8 million of cash, primarily resulting from net income of $22.0 million and net non-cash charges of $56.6 million, partially offset by net cash used by changes in our operating assets and liabilities of $36.8 million. Net cash used by changes in our operating assets and liabilities for the six months ended June 30, 2026 consisted primarily of an increase in accounts receivable of $19.9 million, an increase in inventory of $10.2 million, a net decrease in accounts payable and accrued expenses and other current liabilities of $2.6 million, an increase in prepaid expenses and other current assets of $2.4 million and a decrease in operating lease liabilities of $1.6 million.
During the six months ended June 30, 2025, operating activities provided $88.8 million of cash, primarily resulting from net income of $60.6 million and net non-cash charges of $32.4 million, partially offset by net cash used by changes in our operating assets and liabilities of $4.2 million. Net cash used by changes in our operating assets and liabilities for the six months ended June 30, 2025 consisted primarily of an increase in accounts receivable of $6.6 million, a decrease in accounts payable and accrued expenses and other current liabilities of $2.8 million, and a decrease in operating lease liabilities of $1.4
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million, partially offset by a decrease in inventory of $5.7 million and a decrease in prepaid expenses and other current assets of $1.1 million.
Changes in accounts receivable, inventory, prepaid expenses and other current assets, accounts payable, and accrued expenses and other current liabilities in each reporting period are generally due to growth in our business and timing of invoices and payments.
Investing Activities
During the six months ended June 30, 2026, net cash used in investing activities of $43.7 million consisted of purchases of property, plant and equipment, primarily related to the purchase of two parcels of land and building in Somerville, Massachusetts.
During the six months ended June 30, 2025, net cash used in investing activities of $36.1 million consisted of purchases of property, plant and equipment, primarily related to the purchase of transplant aircraft.
Financing Activities
During the six months ended June 30, 2026, net cash provided by financing activities of $4.7 million consisted primarily of proceeds from the issuance of common stock upon exercise of stock options of $3.2 million and proceeds from the issuance of common stock in connection with the 2019 Employee Stock Purchase Plan of $1.7 million.
During the six months ended June 30, 2025, net cash provided by financing activities of $10.1 million consisted of proceeds from the issuance of common stock upon exercise of stock options of $8.8 million and proceeds from the issuance of common stock in connection with the 2019 Employee Stock Purchase Plan of $1.3 million.
Convertible Senior Notes
On May 11, 2023, we issued $460.0 million aggregate principal amount of the Notes, in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act, pursuant to an indenture dated May 11, 2023, by and between us and U.S. Bank Trust Company, National Association, or the Indenture.
The initial conversion price of the Notes is approximately $94.00 per share of common stock, which represents a premium of approximately 32.5% over the closing price of our common stock on May 8, 2023. The Notes will mature on June 1, 2028, unless earlier repurchased, redeemed or converted. We used $52.1 million of the proceeds from the sale of the Notes to fund the cost of entering into capped call transactions, described below. The proceeds from the issuance of the Notes were approximately $393.3 million, net of capped call transaction costs of $52.1 million and initial purchaser discounts and other debt issuance costs totaling $14.6 million. The Notes bear interest at a rate of 1.50% per year and interest is payable semiannually in arrears on June 1 and December 1 of each year. The initial conversion rate is 10.6388 shares of common stock per $1,000 principal amount of the Notes, which represents an initial conversion price of approximately $94.00 per share of common stock. The conversion rate and conversion price are subject to customary adjustments upon the occurrence of certain events as described in the Indenture.
Before March 1, 2028, noteholders have the right to convert their Notes only upon the occurrence of certain events, including certain corporate events, and during the five business days immediately after any ten consecutive trading days in which the trading price per $1,000 principal amount of Notes is less than ninety-eight percent (98%) of the as converted value. Additionally, noteholders can convert their Notes during any calendar quarter (and only during such calendar quarter), commencing after the calendar quarter ending on September 30, 2023 but before March 1, 2028, provided the last reported sale price of the common stock for at least 20 trading days is greater than or equal to 130% of the conversion price during the 30 consecutive trading days ending on the last trading day of a calendar quarter. From and after March 1, 2028, noteholders may convert their Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. We have the right to elect to settle conversions either in cash, shares or in a combination of cash and shares of our common stock.
Prior to June 8, 2026, the Notes were not redeemable. After June 8, 2026, we may redeem for cash all or any portion of the Notes (subject to the partial redemption limitation set forth in the Indenture), at our option, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption. In addition, calling any Note for redemption will constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted after it is called for redemption.
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Long-Term Debt
In July 2022, we entered into a credit agreement with CIBC, pursuant to which we have borrowed $60.0 million (as amended, referred to herein as the CIBC Credit Agreement).
Borrowings under the CIBC Credit Agreement bear interest at an annual rate equal to either, at our option, (i) the secured overnight financing rate for an interest period selected by us, subject to a minimum of 1.50%, plus 2.0% or (ii) 1.0% plus the higher of a) the prime rate, subject to a minimum of 4.0% or b) the Federal Funds Effective Rate, plus 0.5%. We are obligated to repay the outstanding principal amount in equal monthly installments commencing in July 2026 with the remaining balance due on the maturity date in July 2027. At our option, we may prepay the outstanding principal amount under the CIBC Credit Agreement, without a prepayment fee. All obligations under the CIBC Credit Agreement are guaranteed by us and each of our material subsidiaries.
All obligations of us and each guarantor are secured by substantially all of our and each guarantor’s assets, including their intellectual property, subject to certain exceptions. Under the CIBC Credit Agreement, we have agreed to customary representations and warranties, events of default and certain affirmative and negative covenants to which we will remain subject until maturity. The financial covenants include, among other covenants, (x) a requirement to maintain a minimum liquidity amount of the greater of either (i) the consolidated adjusted EBITDA loss (or gain), as defined, for the trailing four month period (only if EBITDA is negative) and (ii) $10.0 million, and (y) a requirement to maintain total net revenue of at least 75% of the level set forth in the total revenue plan presented to CIBC. The obligations under the CIBC Credit Agreement are subject to acceleration upon the occurrence of specified events of default, including payment default, change in control, bankruptcy, insolvency, certain defaults under other material debt, certain events with respect to governmental approvals (if such events could cause a material adverse change in our business), failure to comply with certain covenants and a material adverse change in our business, operations or financial condition. As of June 30, 2026, we were in compliance with all financial covenants of the CIBC Credit Agreement. During the continuance of an event of default, the interest rate per annum will be equal to the rate that would have otherwise been applicable at the time of the event of default plus 2.0%. If an event of default (other than certain events of bankruptcy or insolvency) occurs and is continuing, CIBC may declare all or any portion of the outstanding principal amount of the borrowings plus accrued and unpaid interest to be due and payable. Upon the occurrence of certain events of bankruptcy or insolvency, all of the outstanding principal amount of the borrowings plus accrued and unpaid interest will automatically become due and payable. In addition, we may be required to prepay the outstanding principal amount, subject to certain exceptions, with portions of net cash proceeds of certain asset sales and certain casualty and condemnation events.
Funding Requirements
As we continue to pursue and increase commercial sales of our OCS products, we expect our costs and expenses to increase in the future, particularly as we expand our commercial team, grow our NOP, scale our manufacturing and sterilization operations, continue research, development and clinical trial efforts, including expanding our research and development and manufacturing capabilities in Italy, seek regulatory approval for the next generation OCS, new products and product enhancements, including new indications, both in the United States and in select non-U.S. markets, establish and relocate to a new long-term global headquarters, and seek greater control of air and ground transport for our NOP. If the demand for our products exceeds our existing manufacturing and sterilization capacity, our ability to fulfill orders would be limited until we have sufficiently expanded such operations. The timing and amount of our operating and capital expenditures will depend on many factors, including:
•the amount of product revenue generated by sales of our OCS Consoles, OCS disposable sets and other products that may be approved in the United States and select non-U.S. markets, revenue generated by our services, and growth of the NOP;
•the costs and expenses of expanding our U.S. and non-U.S. sales, marketing and logistics infrastructure and our manufacturing operations;
•the extent to which our OCS products are adopted by the transplant community;
•the ability of our customers to obtain adequate reimbursement from third-party payors for procedures performed using the OCS products;
•the degree of success we experience in commercializing our OCS products for additional indications, including OCS Kidney;
•the costs, timing and outcomes of pre- and post-approval studies or any future clinical studies and regulatory reviews, including to seek and obtain approvals for new indications for our OCS products, including OCS Kidney, or other product candidates, including CHOPS;
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•the emergence of competing or complementary technologies or procedures;
•the number and types of future products we develop and commercialize;
•the cost of constructing research and development and manufacturing facilities in Italy;
•the cost and timing of development of the next generation OCS;
•the costs associated with maintaining, improving and expanding our commercial operations, including the NOP, globally;
•the costs associated with maintaining and growing our transplant logistics capabilities, 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;
•the costs of preparing, filing and prosecuting patent applications and maintaining, enforcing and defending intellectual property-related claims;
•the level of our selling, general and administrative expenses; and
•the costs related to establishing and relocating to a new long-term global headquarters to accommodate the growing scale and complexity of our business.
We believe that our existing cash will enable us to fund our operating expenses, capital expenditure requirements, and debt service payments for at least 12 months following the filing of this Quarterly Report on Form 10-Q.
We may need to raise additional funding, which might not be available on favorable terms, or at all. See “Item 1A. Risk Factors—Risks Related to Our Financial Position and Need for Additional Capital” in our 2025 Form 10-K.
Material Contractual Obligations
We are in the process of contracting for engineering and construction services for the buildout of our new headquarters facility in Somerville, Massachusetts. We currently estimate total capital expenditures related to the new headquarters facility to be between approximately $200 million and $240 million, to be incurred over a multi-year period through 2030. As of June 30, 2026, we have entered into contractual commitments of approximately $12.7 million related to construction, design and project management services.
There have been no other material changes to our cash requirements from those disclosed in our 2025 Form 10-K.
Critical Accounting Policies and Significant Judgments and Estimates
Our condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We evaluate our estimates on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
There have been no material changes to our critical accounting policies and estimates from those disclosed in our consolidated financial statements and the related notes and other financial information included in our 2025 Form 10-K.
Recently Issued Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.