BrainsWay Ltd. (BWAY) Earnings

Management highlights

- Core Business Growth and Profitability * Achieved 11th consecutive quarter of profitability and positive adjusted EBITDA, driven by strong execution of the recurring revenue model, expanding margins, and operational discipline * Vast majority of new contracts signed in Q1 2026 were multiyear long-term agreements, demonstrating sustained traction for the company's revenue model and providing improved visibility into future revenue * Penetration of the addressable market remains low, leaving significant long-term growth runway for the core Deep TMS platform - Reimbursement and Market Adoption Expansion * Secured coverage for adolescent depression (15-21 age group) from over 10 U.S. payers following FDA label expansion; Evernorth Behavioral Health eliminated prior authorization requirements for TMS across Evernorth and Cigna plans * A growing number of commercial insurers, Medicare contractors, and government payers now permit trained nurse practitioners to administer Deep TMS; Optum updated its policy to cover this model for nearly 35 million covered lives, with the VA, TRICARE, and other major payers adopting similar policies, reducing provider constraints and expanding patient access * Deep TMS continues to gain market share from alternative treatments including Spravato, driven by strong clinical data, expanded reimbursement, and growing demand for non-invasive, non-pharmacologic therapies - SWIFT Protocol Update * Published landmark peer-reviewed data in Brain Stimulation confirming the 6-day acute phase SWIFT protocol reduces required clinic visits by ~70% without compromising efficacy, delivering 88% response rate and 78% remission rate * Two large U.S. payers have already issued final or draft coverage policies for SWIFT, with ongoing discussions with additional payers - Clinical Pipeline Updates * Patient recruitment is actively underway for the multicenter clinical trial of Deep TMS for alcohol use disorder, a large indication with significant unmet need * The company plans to submit an FDA clearance application for PTSD symptoms in MDD patients within several weeks, based on promising real-world data from VA system patients - Strategic Minority Investment Program * Completed minority investments in 5 mental health provider networks to date, with the portfolio performing well and driving growth for both the networks and BrainsWay via improved commercial and clinical collaboration channels * Signed a new strategic agreement for an initial $1.5 million investment (with up to $1.5 million in additional milestone-based investment) for a preferred minority stake in Hopemark, an Illinois-based mental health group with multiple Chicago-area locations * A new transaction with a large East Coast provider group is imminent, and over 200 additional qualified clinics have been identified as potential investment candidates for 2026 - Adjacent Product and Ecosystem Development * Made an additional $6 million milestone-based convertible loan to Neurolief, developer of the at-home wearable neuromodulation platform ProlivRx, bringing total convertible investment in Neurolief to $11 million; a potential third $5 million tranche is available upon achievement of specified commercial targets * ProlivRx secured a VA federal supply schedule contract with approved pricing of $11,800 per unit, clearing the way for broader VA adoption; ProlivRx is complementary to in-clinic Deep TMS, expanding the company's total addressable market to patients unable to attend clinic appointments * Developing BrainsWay 360, a fully integrated mental health ecosystem centered on the next-generation rotational field Deep TMS 360 platform, plus advanced digital tools, diagnostics, and an intelligent cloud platform; clinical research for Deep TMS 360 is already underway or planned for alcohol use disorder, dementia, and chronic pain - International Operations * Strong growth momentum continues, with accelerating Deep TMS adoption across distributor networks in Asia Pacific, Canada, and Europe

Guidance

- Management maintained full-year 2026 revenue guidance at a range of $66 million to $68 million, representing 27% to 30% year-over-year growth - Full-year 2026 operating income is expected to equal 13% to 14% of total revenue - Full-year 2026 adjusted EBITDA guidance is maintained at $12 million to $14 million, which represents 86% to 100% year-over-year growth compared to 2025

Segment performance

BrainsWay reports consolidated financial results for the first quarter of 2026, with segment-level detail only provided for the core Deep TMS product line. Total company revenue was $15.5 million, a 35% increase from $11.5 million in the prior-year quarter. For the core Deep TMS segment, 117 systems were shipped in Q1 2026, a 44% year-over-year increase, bringing the total installed base to approximately 1,820 systems. Deep TMS accounts for 100% of the company's current recognized revenue, with additional product initiatives still in early commercial or clinical stages. Gross profit for the consolidated company was $11.6 million, up 35% year-over-year, with a healthy maintained gross margin. Operating income was $2 million, up from $0.6 million in Q1 2025. Net income increased 100%+ to $2.3 million from $1.1 million year-over-year, and adjusted EBITDA increased 119% to $2.8 million from $1.3 million in the prior-year quarter. Remaining performance obligations (RPO) totaled $75 million as of March 31, 2026, a 25% year-over-year increase, up from approximately $60 million in the previous quarter. Cash and cash equivalents were $58.9 million as of quarter-end, with the company remaining fully debt-free.

Risks & headwinds

- Forward-looking statements, including guidance and pipeline expectations, are subject to inherent risks and uncertainties including shifting market conditions, geopolitical developments, and supply chain disruptions - Additional information on all identified risk factors is available in the company's SEC filings, including the Risk Factors section of its most recent Form 20-F - Management confirmed that as of Q1 2026, no operational disruptions or international sales impacts have resulted from the ongoing conflict in the Middle East, and sufficient inventory is on hand to meet current demand

Analyst Q&A

• Q: What are the key details of the upcoming FDA clearance submission for Deep TMS to treat PTSD comorbid with MDD? What is the expected FDA review timeline and planned promotional strategy if approved?

  A: The submission covers PTSD symptom treatment for patients already living with major depressive disorder, and the trial included patients who remained on their existing psychiatric medications (no medication washout was required). The submission uses the same H1 coil and treatment protocol already cleared for depression, with preliminary data showing significant symptom reduction. Management expects FDA clearance before the end of 2026, with a standard 510(k) review timeline of up to 90 days for the initial response. Post-approval, marketing will focus on existing outpatient clinic customers, with a targeted push to clinics that treat police officers, active military personnel, and other veteran populations that have high PTSD prevalence, planned for the fourth quarter of 2026.

• Q: What is the current adoption outlook for the SWIFT protocol, including provider utilization, payer coverage, and expected covered lives by year-end?

  A: SWIFT is a transformative advancement because it cuts acute phase treatment from 20-30 days to just 6 days, making it far more accessible for patients and more cost-efficient for providers and payers. Preliminary clinical data shows very strong 88% response and 78% remission rates, driving strong provider and patient demand for the protocol. The company is currently in discussions with more than 20 payers, and feedback has been very positive. Management expects SWIFT will be covered by payers for 40 million to 50 million total covered lives before the end of 2026, with meaningful adoption momentum accelerating by the end of the year.

• Q: What is the commercialization strategy for Neurolief's ProlivRx wearable device, and what is BrainsWay's role in its go-to-market?

  A: ProlivRx's immediate primary focus is penetration of the VA system, where it has already secured a federal supply schedule contract and approved $11,800 per unit reimbursement. In parallel, Neurolief is conducting a limited market release through BrainsWay's enterprise clinic accounts and is negotiating contracts with large U.S. integrated delivery networks. BrainsWay's investment milestone for an additional $5 million tranche is tied to commercial targets, and ProlivRx is complementary to BrainsWay's core Deep TMS business, expanding the overall addressable market by serving patients who cannot attend in-clinic treatment.

• Q: Has the ongoing conflict in the Middle East caused any operational or supply chain disruptions for BrainsWay or impacted international sales?

  A: Management confirmed the company has not experienced any operational disruptions or negative impacts on international sales from the ongoing Middle East situation. BrainsWay holds sufficient inventory to meet current global demand, and the company continues to see strong growth in both U.S. and international revenue and orders in the first quarter of 2026, despite typical Q1 seasonality that usually results in slower ordering activity.