Shares of leading, next-gen organ transplant systems specialist TransMedics (TMDX -5.28%) are down 8% as of 1 p.m. ET Wednesday after the company reported underwhelming second-quarter earnings. Sales growth of 21% beat analysts' hopes, but adjusted net income was more than halved, falling short of expectations. While TransMedics' adjusted net income dropped from $35 million last year to $16 million in Q2 this year, it is worth noting that $19 million of this change comes from spending on a next-gen Kidney organ care system (OCS), two new clinical programs, and a manufacturing plant in Italy. Simply put, the company remains a growth stock happy to reinvest in its operations, so its earnings may be lumpy like this at times -- nothing to panic over.

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NASDAQ: TMDX

TransMedics Group

Today's Change

(-5.28%) $-4.26

Current Price

$76.49

Key Data Points

Market Cap

$2.8BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day's Range

$68.00 - $77.41

52wk Range

$60.10 - $156.00

Volume

3M

Avg Vol

1.3M

Gross Margin

58.76%

All in all, it was a solid Q2 for TransMedics as:

• product revenue rose 16%
• service sales increased 29%
• TransMedics' owned aircraft covered 86% of National OCS Program (NOP) donations
• sales outside the U.S. jumped 26%
• liver revenue soared 27% (TMDX's largest category)
• management boosted 2026 sales guidance from 20% to 25% growth to between 22% and 25%

Image source: The Motley Fool.

While TransMedics' growth rates may not be as lofty as they once were, the stock's 41% decline over the last year has it squarely on my radar for additions again, especially trading around 34 times next year's projected earnings. Furthermore, although sales growth may have slowed temporarily, TransMedics has several growth opportunities directly ahead.

First, the company's Enhance and Denovo clinical trials could restart growth within its heart and lung donation segments. These currently account for less than one-fourth of TransMedics' sales. Second, the company continues to work on a new kidney OCS, which could grant it access to "the single largest addressable segment available to us in organ transplantation in the U.S. and around the world," according to President and CEO Waleed Hassanein. This is still a couple of years out, but could be a big development for the stock.

This growth potential -- paired with ongoing expansion plans in Europe -- keeps TransMedics a buy for me after Q2's earnings.