TransMedics Group, Inc. TMDX recently issued a statement refuting the claims made in a report by short-seller Scorpion Capital on Jan. 10, 2025, stating them as inaccurate and misleading.
Per the statement issued, TransMedics not only refuted the allegations made by the short-seller but also reaffirmed its mission and operational integrity, seeking to reassure stakeholders and maintain confidence in its business practices.
Likely Trend of TMDX Stock Following the News
Following the announcement, shares of the company have lost 10.8% and closed at $57.2 on Friday. In the past three months, TMDX shares have plunged 54% against the industry’s 1.2% growth. The S&P 500 increased 3.4% in the same time frame.
However, the controversy surrounding the Scorpion Capital short-seller report on TransMedics could ultimately benefit the company’s share price in the long run, provided it is managed effectively. While the report accused the company of unethical practices, TransMedics responded decisively, categorically denying the allegations and emphasizing its commitment to compliance, ethical practices, and innovation. This strong rebuttal showcases the company’s transparency and operational integrity, which could reassure investors and strengthen their confidence in the business.
Meanwhile, TMDX currently has a market capitalization of $1.92 billion. In the last reported quarter, TMDX missed the earnings estimate by 57.14%.
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More on TMDX & Scorpion Capital Controversy
Scorpion Capital, an activist short-selling firm, released a report targeting TransMedics earlier this month. The report, provocatively titled "Walk Like An Egyptian: A 'Mafia-Style' Extortion, Racketeering, And Organ Trafficking Scheme Masquerading As A Medical Device Company," accused TransMedics of engaging in unethical and illegal activities. Specifically, Scorpion Capital alleged that the company was involved in kickbacks, billing fraud and unreported device failures. The report also accused the company of steering damaged or rejected organs to select transplant centers, engaging in off-label use of its Organ Care System (OCS), and overcharging hospitals through its National OCS Program (NOP).
The report further claimed that these practices were leading to a customer exodus and a rapidly unfolding financial decline, assigning TransMedics a target stock price of $0. The allegations prompted shareholder rights firms Bragar Eagel & Squire, P.C., and Hagens Berman Sobol Shapiro LLP to investigate whether TransMedics violated federal securities laws by allegedly issuing misleading statements and failing to disclose critical information to investors.
In response, TransMedics issued a statement on Jan. 13, 2025, denying the allegations. The company asserted that the claims were baseless and primarily intended to manipulate the market for financial gain. TransMedics emphasized its commitment to high-integrity practices, compliance with all applicable laws, and dedication to improving clinical outcomes in organ transplantation. The company highlighted that its OCS technology NOP had facilitated over 7,000 organ transplants, enabling surgeons to utilize donor organs that would have otherwise been unutilized due to historical limitations.
TransMedics also mentioned engaging legal advisors to consider all available options in response to the report. The allegations and ensuing legal scrutiny come as TransMedics prepares for significant business developments, including the launch of next-generation OCS Heart and OCS Lung programs in 2025.
TMDX’s Zacks Rank & Stocks to Consider
TMDX carries a Zacks Rank #5 (Strong Sell) at present.
Some better-ranked stocks in the broader medical space are Masimo MASI, Accuray ARAY and Abbott Laboratories ABT.
Masimo, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 11.8% for 2025. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%. Its shares have risen 31.7% against the industry’s 1% decline in the past six months.
Accuray, carrying a Zacks Rank #2 at present, has an estimated growth rate of 1200% for 2025. Its earnings missed estimates in three of the trailing four quarters and met in one, delivering an average negative surprise of 141.97%.
ARAY’s shares have gained 8.8% against the industry’s 1% decline in the past six months.
Abbott, carrying a Zacks Rank of 2 at present, has an estimated earnings growth rate of 10% for 2025. It delivered a trailing four-quarter average earnings surprise of 1.64%.
ABT’s shares have risen 8.5% in the past six months compared with the industry’s 7.2% growth.
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