Transmedics Group, Inc. (NASDAQ: TMDX) recently provided additional information on the impact of the release of the valuation allowance on deferred tax assets, shedding light on its fourth quarter financial results for the year ended December 31, 2025.
In the fourth quarter of 2025, Transmedics released a $103.3 million U.S. tax valuation allowance, resulting in a net income tax benefit of $83.8 million. As a result, the company's annual effective tax rate for 2025 stood at (77.0)%, significantly impacted by the valuation allowance release. Without the impact of the tax valuation allowance release, the annual effective tax rate would have been 19.1%, marking a substantial difference of 96.1 percentage points.
Applying an annual effective tax rate of 19.1% to the fourth quarter income before income taxes of $21.6 million, the adjusted quarterly tax expense amounted to $4.1 million. Consequently, the fourth quarter net income was reported at $105.4 million, with a net income per diluted share of $2.62. When adjusting for the annual effective tax rate, the fourth quarter adjusted net income is $17.5 million, leading to a net income per diluted share of $0.47.
Looking ahead, Transmedics anticipates recognizing a quarterly income tax provision more in line with U.S. statutory corporate income tax rates in future periods.
Transmedics, headquartered in Andover, Massachusetts, is a medical technology company focused on revolutionizing organ transplant therapy for patients with end-stage lung, heart, and liver failure. The company's innovations aim to address the critical need for improved organ preservation, viability assessment, and increased utilization of donor organs for transplantation.
While the press release mentions the use of non-GAAP financial measures, it emphasizes that the company uses these measures as key performance indicators for internal performance evaluation and believes they provide useful information for investors. However, it should be noted that these non-GAAP financial measures are not substitutes for GAAP-required financial measures and may not be directly comparable to similar measures of other companies. Today the company's shares have moved -0.22% to a price of $143.37. For the full picture, make sure to review TransMedics's 8-K report.
