TransMedics Group, Inc. Leases Disclosure
11. Leases
The Company leases its office, laboratory and manufacturing space under two noncancelable leases that expire in and include a lease incentive, fixed payment escalations, and rent holidays. The leases include an option to renew for an additional five years. The option to extend the lease term was not included in the right-of-use asset and the lease liability as it was not reasonably certain of being exercised. The Company classified the leases as operating leases under ASC 842. Annual base rent increases at an average rate of 2.5% each year until the end of the term. The Company is also obligated to pay the landlord certain costs, taxes, and operating expenses, subject to certain exclusions. As these costs are generally variable in nature, they are not included in the measurement of the right-of-use asset and related lease liability. In June 2023, the Company amended one of its lease agreements to add space through the remainder of the lease term and under the existing terms of the lease.
In connection with the acquisition of Summit, the Company acquired a 20-year operating lease with one 10-year renewal option, for space at the Bozeman Yellowstone International Airport in Bozeman, Montana where the Company constructed a commercial aircraft hangar.
In June 2024, the Company entered into a lease for office and hangar space in Dallas, Texas that expires June 30, 2027, subject to certain early termination provisions. Fixed monthly payments total $1.7 million over the three-year term of the lease. The Company is also obligated to pay the landlord certain variable costs. The Company recorded a right-of-use asset and related lease liability of $1.5 million in the third quarter of 2024, upon commencement of the lease.
The Company also leases office space for its NOP and hangar space for its aircraft at various locations in the U.S. under both short-term and long-term leases, and leases space for distribution and commercial operations in Europe.
The components of the Company’s lease expense under ASC 842 are as follows (in thousands):
|
|
Year Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Operating lease cost |
|
$ |
2,682 |
|
|
$ |
2,215 |
|
|
$ |
1,692 |
|
Short-term lease cost |
|
|
2,408 |
|
|
|
1,861 |
|
|
|
1,606 |
|
Variable lease cost |
|
|
2,620 |
|
|
|
1,920 |
|
|
|
1,495 |
|
|
|
$ |
7,710 |
|
|
$ |
5,996 |
|
|
$ |
4,793 |
|
Supplemental disclosure of cash flow information related to the leases were as follows (in thousands):
|
|
Year Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Cash paid for amounts included in the measurement of |
|
$ |
3,447 |
|
|
$ |
2,916 |
|
|
$ |
2,246 |
|
The weighted-average remaining lease term as of December 31, 2025 and 2024 was 2.8 years and 3.7 years, respectively. The weighted-average discount rate as of December 31, 2025 and 2024 was 6.8% and 6.9%, respectively. Because the interest rate implicit in the leases was not readily determinable, the Company’s estimated incremental borrowing rate was used to calculate the present value of the leases. In determining its incremental borrowing rate, the Company considered its credit quality and assessed interest rates available in the market for similar borrowings, adjusted for the impact of collateral over the term of the leases.
Future payments for the Company’s operating lease liabilities as of December 31, 2025 are as follows (in thousands):
Year Ending December 31, |
|
|
|
|
2026 |
|
$ |
3,677 |
|
2027 |
|
|
3,341 |
|
2028 |
|
|
132 |
|
2029 |
|
|
25 |
|
2030 |
|
|
25 |
|
Thereafter |
|
|
559 |
|
Total future minimum lease payments |
|
|
7,759 |
|
Less: imputed interest |
|
|
(872 |
) |
Total operating lease liabilities |
|
$ |
6,887 |
|
The following table represents operating lease liabilities on the consolidated balance sheets (in thousands):
|
|
December 31, 2025 |
|
|
Current operating lease liabilities |
|
$ |
3,310 |
|
Operating lease liabilities, net of current portion |
|
|
3,577 |
|
Total operating lease liabilities |
|
$ |
6,887 |
|
In January 2026, the Company entered into a new lease agreement and purchased land in Somerville, Massachusetts to eventually replace its existing headquarters in Andover, Massachusetts (see Note 16).
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Mar 1, 2022 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.