TransMedics Group, Inc. Income Taxes Disclosure

10. Income Taxes

Income (Loss) Before Income Taxes

Tax Provision Components

The One Big Beautiful Bill Act (“OBBBA”) was signed into law on July 4, 2025, which, among other provisions, permanently repeals the requirement to capitalize domestic research expenditures for federal income tax purposes for taxable years beginning after December 31, 2024, and allows for the accelerated deduction of any remaining unamortized domestic research expenditures over one or two years. Foreign research expenditures are still required to be capitalized and amortized ratably over 15

years. The OBBBA also allows the option to claim 100% accelerated depreciation deductions on qualified property. In accordance with ASC 740, the impacts of the OBBBA are reflected in the Company’s income tax benefit for the year ended December 31, 2025.

As of December 31, 2025, the Company had federal net operating loss carryforwards of $370.9 million, which may be available to offset future taxable income, of which $74.0 million expire at various dates between 2030 and 2037, while the remaining $296.9 million do not expire but are limited in their usage to an annual deduction equal to 80% of taxable income. As of December 31, 2025, the Company had state net operating loss carryforwards of $261.6 million, which may be available to offset future taxable income and expire at various dates between 2030 and 2045. As of December 31, 2025, the Company had U.S. federal and state research and development tax credit carryforwards of $7.3 million and $4.0 million, respectively, which may be available to offset future tax liabilities and expire at various dates between 2026 and 2045. As of December 31, 2025, the Company had no foreign net operating loss carryforwards.

Utilization of the U.S. federal and state net operating loss carryforwards and research and development tax credit carryforwards may be subject to limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, and corresponding provisions of state law, due to ownership changes that have occurred previously. Future ownership changes could result in additional limitations.

These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income or tax liabilities. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50% over a three-year period. During 2025, the Company completed a 382 assessment and determined that the Company underwent multiple ownership changes since inception. Net operating loss carryforwards and development tax credit carryforwards were limited by these changes. The Company recorded a reduction to its gross U.S. deferred tax assets of $44.7 million during the year ended December 31, 2025 relating to these limitations, with a corresponding decrease to its valuation allowance.

As required by ASC 740, management evaluated positive and negative evidence when assessing the realizability of its deferred tax assets, which are comprised principally of net operating loss carryforwards. During the fourth quarter of 2025, the Company concluded that it is more likely than not that the Company will realize substantially all its net U.S. Federal and state deferred tax assets and accordingly, recognized a benefit to income tax expense of $103.3 million related to the release of its valuation allowance against deferred tax assets. Management relied primarily on cumulative income over the preceding twelve quarters, recent operating profits and, to a lesser extent, expected future profits in its assessment to release the valuation allowance. A valuation allowance of $0.9 million was maintained on certain state tax attributes as it was considered more-likely-than-not that these tax attributes would expire before realization. As of December 31, 2024, the Company had a full valuation allowance against its U.S. federal and state deferred tax assets.

Changes in the valuation allowance for deferred tax assets during the year ended December 31, 2025 related to the valuation allowance release described above. Changes in the valuation allowance for deferred tax assets during the year ended December 31, 2024 related primarily to federal and state net operating losses generated, capitalized research and development costs, and federal and state research and development tax credits generated, partially offset by an increase in deferred tax liabilities related to depreciation expense. Changes in the valuation allowance for deferred tax assets during the year ended December 31, 2023 related primarily to current year federal and state net operating losses generated, acquired IPR&D and capitalized research and development costs.

As of December 31, 2025 and 2024, the Company had no uncertain tax positions and no accrued interest or penalties related to uncertain tax positions. The Company's policy is to record any interest or penalties related to income taxes as part of the income tax provision.

The Company files income tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending federal or state tax examinations. The Company has open tax years subject to examination in the United States from fiscal year 2022 to present. To the extent that the Company has carryforward attributes, the tax years in which the attribute was generated may still be adjusted upon examination by federal, state or local tax authorities if they either have been or will be used in the future.

During the years ended December 31, 2024 and 2023, income taxes paid were not material.