BrainsWay (NASDAQ:BWAY) released first-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below.

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Summary

Brainsway Ltd reported a 35% increase in revenue for Q1 2026, reaching $15.5 million, driven by strong market penetration and execution.

The company achieved its 11th consecutive quarter of profitability with a net income increase of over 100% to $2.3 million and an adjusted EBITDA increase of 119% to $2.8 million.

A significant growth in remaining performance obligations to $75 million illustrates strong market demand and strategic focus on long-term contracts.

Brainsway Ltd is expanding its market presence through multi-pronged strategies, including minority equity investments in mental health providers and strategic partnerships.

The company continues to expand its clinical applications, including plans for FDA submission for PTSD treatment in MDD patients and ongoing studies for alcohol use disorder.

Expansion in reimbursement coverage is noted, particularly with the adoption of the SWIFT protocol, which significantly reduces treatment schedules.

Internationally, the company is experiencing strong demand across Asia Pacific, Canada, and Europe, enhancing its global footprint.

Looking ahead, Brainsway Ltd expects full-year 2026 revenue to range between $66 million and $68 million, with anticipated operating income growth and a focus on strategic investments.

Full Transcript

OPERATOR

Good day and welcome to Brainsway Ltd first quarter 2026 earnings conference call all participants will be in the listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star then one on a touchtone phone. To withdraw your question, please press Star then two. Please note that this event is being recorded. I now hand the conference over to Garth Russell. Please go ahead.

Garth Russell (Moderator)

Thank you and welcome to BrainsWay's first quarter 2026 earnings conference call. With us today are Brainsway Ltd's Chief Executive Officer Hadar Levy and Chief Financial Officer Ido Marom. The format for today's call will be a discussion of recent trends and business updates from Hadar followed by the detailed discussion of the financials. Then we will open up the call for your questions. Earlier today, Brainsway released its financial Results for the three month period ended March 31. March 31, 2026. A copy of the press release is available on the Company's investor relations website. Before I turn the call over to Hadar, I would like to remind you that this conference call, including both management's prepared remarks and the question and answer session, may contain projections or other forward looking statements regarding, among other topics, Brainsway's anticipated future operating and financial performance, business plans and prospects, and expectations for its products and pipeline, which are all subject to risks and uncertainties, including shifting market conditions resulting from geopolitical supply chain and other factors, as well as the use of non GAAP financial information. Additional information regarding these and other risks are available in the Company's earnings release and in its other filings with the SEC, including the Risk Factor section contained in Brainsway Ltd's Form 20-F. Finally, please note that the company's 6K will be filed tomorrow at approximately 6:00am Eastern Time in accordance with the SEC's operating schedule. With that, I would now like to turn the call over to Hadar.

Hadar Levy (Chief Executive Officer)

Thank you. Welcome everyone and thank you for joining us today. I will keep today's comments brief as we just provided a comprehensive business overview during our year end call in mid March. We are off to an excellent start in 2026, reporting a 35% increase in revenue to $15.5 million for the first quarter compared with $11.5 million in the prior year period. This performance was driven by the strong execution of our core business and expanded market penetration during the quarter. We achieved our 11th consecutive quarter of profitability, supported by expanding margins and the implementation of our recurring model Let me take a minute to walk you through a few other key metrics that we monitor each quarter to measure our continuing pattern of growth. In the first quarter of 2026, we shipped 117 deep TMS systems, a 44% increase over the same period last year, bringing our total install base to approximately 1820 systems. Remaining performance obligations have increased to $75 million as of March 31, 2026. Notably, the vast majority of the new contracts signed during the quarter were multi year long term agreements and reflecting continued traction with our revenue model. We view the steady increase in RPO over the past three years as a clear indicator of strong market demand, a success of our strategy focused on servicing enterprise customers while also providing greater visibility into future revenue streams. We are proud to have achieved this level of growth while maintaining operational discipline and resulting in increased profitability. In the first quarter, net income increased by over 100% to $2.3 million compared to $1.1 million for the prior year period and adjusted EBITDA increased 119% to $2.8 million compared to $1.3 million for the same period last year. Let me take the next few minutes to offer some colors on our multi prolonged growth strategy and provide updates on our execution across each aspect. First, I would like to remind everyone that our Deep TMS platform is backed by an extensive peer reviewed published clinical evidence demonstrating efficacy and durability across a broad range of conditions including major Depressive Disorder or mdd, anxious depression, late life depression, OCD and smoking addiction. This robust set of clinical evidence has resulted in FDA clearances and broad attention across many of these indications and resulting in accelerated adoption of Deep TMS and in many cases exceeding our expectations. In addition to educating patients and physicians on the benefits of this treatment, we have actively worked with PEAR across the US to expand reimbursement coverage. For example, since the FDA label expansion for adolescents age 15 to 21, we have worked toward getting over 10 pears to add coverage for adolescents depression in. In addition, Evernorth Behavioral Health has eliminated prior authorization requirement for TMS across evernorth and CIGNA plans. We are also seeing expanded reimbursement for clinicians that can deliver tms. For example, a growing number of commercial insurer, Medicare contractors and government payers now allow trained nurse practitioners to to administer Deep TMS when practicing in accordance with applicable regulations and state scope of practice rules. Recently, Optum updated its policy to permit nurse practitioners to order, supervise and administer TMS across plans covering nearly 35 million lives, with several other major pairs, the VA and and tricare, adopting similar approaches. We view this as an important step towards reducing provider constraints and improving access, particularly in areas with psychiatrist shortage, helping more patients benefit from non pharmacologic treatment options we're seeing a meaningful shift in the market as deep tms continue to gain share from alternative treatment modalities including stovato. We believe this momentum is being driven by the strength of our clinical data, expanding reimbursement support and growing demand for non invasive, non pharmacologic therapies. In particular, our 6 days acute phase swift protocol is gaining strong interest from providers and patients because it offers a much shorter treatment schedule while still delivering strong clinical results. In the first quarter we published landmark data in the peer reviewed journal Brain Stimulation validating that Swift protocol reduces acute phase clinic visit by approximately 70% without compromising efficacy. We believe this represents a win for patients, providers and pair alike and expect Swift reimbursement to continue expanding. We recently announced two large pairs as being among the first have issued final or draft coverage policies applicable to swift. Moving to an update on Clinical activities for diptms we are pleased to report that patient recruitment is now actively underway for our multicenter study on deep TMS for alcohol use disorder. This is a major unmet need affecting approximately 29 million Americans with up to 60% of patients relapsing within three to six months despite available treatments. We have also planned to submit an application to the FDA for clearance to treat PTSD symptoms in MDD patients in the next several weeks based on promising data we have collected from US patients primarily treated with the VA system and our enterprise accounts. If cleared by the fda, diptms can offer several meaningful advantages compared with the other treatment options in light of the fact that it is an outpatient procedure that does not require hospitalization or anesthesia and is generally well tolerated. Let me move on. Provide an update around our strategic initiative focused on securing minority equity investment in high performing mental health providers. To date we have completed minority investment in five mental health networks. I'm happy to report that this portfolio of providers is performing well with our capital serving as a real growth catalyst to those networks. This growth also translates into successful brainsway behind having an equity stake in these growing businesses. This strategy also provide us with a clear channel for both commercial and clinical collaboration with the ability to have more direct impact on the field which is an obvious benefit to our business. And we believe the value of these agreements is a two way street as our clinics gain access to brains for important know how and enterprise which are second to none. I'm also very excited to report to you for the first time today that the company just signed another strategic equity agreement with an Illinois group known as HopeMark. The transaction which was made with the MSO servicing Hopemark multiple location is in Chicago area, include an initial $1.5 million investment and up to an additional $1.5 million in potential future milestone based investment, all in exchange for a preferred minority stake in hopemark. Additionally, we're on the gospel of signing another new minority stake transaction with an east coast provider with location in New York, New Jersey, Pennsylvania and Connecticut. We expect to announce more on this deal soon. Looking ahead, we have already identified more than 200 other qualified clinics as a potential candidate for participation in this program. These transactions further demonstrate our continuing confidence in this strategic initiative we firmly believe will further raise awareness and continue to expand patients access to care. We look forward to providing updates on additional investment throughout 2026. Importantly, we are still in the early stage of building awareness and adoption of Deep tms. We estimate that we have penetrated only fraction of our addressable market, highlighting the significant Runway for growth ahead. While DeepTMS remains our core strength, our long term vision is to become the only company in mental health offering database integration of multiple treatments modalities across multiple care settings. As part of this strategy, we executed the strategic investment in neurolef, a developer of Proliv Rx, the world's first wearable non invasive multichannel brain neuromodulation platform that is designed for use at home. Since then this relationship has advanced on multiple fronts. Following the FDA's premark approval of the ProlivaRx system for the treatment resistant MDD, we made an additional 6 million dollar milestone based convertible loan to NeuroLeaf which was completed in late. This bring our total convertible loan investment in New Orleaf to $11 million. As a reminder, our agreement provides for potential third tranche of up to $5 million upon New Orleaf achieving specified commercial targets. No LEAF has made additional meaningful commercial progress. The VA Federal Supply Schedule contracted commercial contract has been secured and Proliv Rx has received approved pricing of $11,800 per unit as an important step toward broader adoption with the VA system and beyond. We are excited to be working with the neuralift team on meaningful synergetic approaches that include the commercial and research infrastructure for both companies. We view Proliv Rx as a complementary offering to diptms where diptims serves patients in the clinical setting. Polyvarax is designed for home use, thereby expanding access to clinically validated neuromodulation for patients who cannot easily get to the clinic. Together, we believe these two platform expand our total addressable market and reinforce our broader mission of increasing patients access to effective non pharmacological mental health treatments. This can also potentially fit within our broader vision for BrainsWay360, a new fully integrated mental health ecosystem we are building around deep TMS next generation rotational field Deep TMS 360, advanced digital tools, diagnostic and an intelligent cloud based platform. Deep TMS 360 is our future platform. With rotational field technology we can stimulate more neurons more effectively and in much shorter time. Clinical research in either already underway or in planning stage in alcohol use disorder, dementia and chronic pain. On another front internationally we are likewise seeing very strong momentum. Demands continue to grow with distributors across Asia Pacific, Canada and Europe accelerating adoption of Deep TMS at an important pace. With that, I will now turn the call over to IDO for his review for our first quarter 2026 financial results.

Ido Marom (Chief Financial Officer)

IDO thank you Adar during the first quarter of 2026, we continued to execute on our growth strategy, which drove a 35% increase in revenue to $15.5 million compared with $11.5 million for the same period last year. During the quarter, we placed 117 Deep TMS systems, bringing our total install base to approximately 1,820 systems as of March 31, 2026. Gross profit for the quarter was $11.6 million, up 35% from $8.6 million in the prior year period while also keeping a healthy gross margin. This performance reflects our continued growth and increased market penetration both in the US and the international markets. Turning to operating expenses, sales and marketing expenses for the first quarter of 2026 totaled $4.9 million compared to $4.2 million in the first quarter of 2025. The increase was primarily driven by targeted investment in commercial expansions and marketing programs. Research and development expenses were $2.8 million compared with $2.3 million last year. The increase was primarily driven by investments in clinical development and research, including our multicenter trial for alcohol use disorder. General and Administrative expenses were $1.8 million compared with $1.5 million in the prior year period, reflecting the organic growth of our business in addition to the investments we continue to make in strategic initiatives. Operating income was approximately $2 million, compared with $0.6 million reported for Q1 2025. This performance reflects the scaling of operations, strength of our recurring revenue model, and disciplined cost management for the first quarter ended March 31, 2026, we reported net income of $2.3 million compared with $1.1 million in the same period of 2025. Adjusted EBITDA was $2.8 million representing the 11th consecutive quarter of positive adjusted EBITDA compared with $1.3 million in Q1 2025. Remaining performance obligations grew to $75 million as of March 31, 2026, a 25% year over year increase. We believe the steady increase in our RPO's reflects the strength of our business and execution on our long term strategy. Cash flow from operation was positive in Q1 2026, further reinforcing the confidence we have in our recurring model and high collection efficiency. The capital structure for the company remained debt free, giving us significant flexibility to pursue strategic growth initiatives including the various investment Hadar outlined earlier. This is especially notable given additional investment of approximately $9 million made during Q1 2026. In line with our strategic direction, we reported cash and cash equivalents of $58.9 million on March 31, 2026. We believe our strong capital position will support the continuous growth of our core scientific and technology operation as well as our Strategic Investment Program which aims to increase patient access to innovative treatments while also building long term value for our shareholders. Looking ahead, we continue to expect revenue in the range of 66 to 68 million dollars for the full year of 2026. These guidance represent a year over year growth rate of 27 to 30%. In addition, we expect operating income in the range of 13 to 14% of revenue and adjusted EBITDA of 12 to $14 million, representing anticipated growth of 86 to 100% over 2025. This concludes my prepared remarks and I will now turn the call back to the operator to please open up the call for questions.

OPERATOR

Operator Thank you. We will now Thank you. We will now begin the question and answer session. To ask a question, you may press Star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star then two. At this time we will pause momentarily to assemble a roster. Question comes from Jeffrey Cohen with Ledenburg Hellman.

Jeffrey Cohen (Equity Analyst)

Please go ahead. Good morning Hadar and Ido and congratulations on the strong quarter in progress. So couple questions from Erin. Firstly, could you talk about the upcoming PTSD filing and could you talk to us a little more about the the protocol you anticipate and if the Trial is with or without medication in the case of patients.

Hadar Levy (Chief Executive Officer)

Yeah. Hey Jeff, thank you and good morning. We're very excited about the submission of the PTSD data. Just to remind everyone this is a comorbidity PTSD treatment for people are also suffering from depression. It's with medication. So we're not washing out patients from medications. but what we have seen based on the data that we are able to see some really, really good results on reducing the symptoms of PTSD for people suffering from depression as well. The protocol is very similar to the depression protocol. It's the exact same coil, it's the H1 coil targeting same areas of anxiety and depression. but we do see some significant reduction in those symptoms for PTSD patients.

Jeffrey Cohen (Equity Analyst)

Perfect. Okay. And then as a follow up, could you talk about the SWIFT protocol a little bit and talk about what you're finding in the field as far as it being utilized and for one indications and perhaps give us a sense of percentage as far as patients using SWIFT versus the regular protocol. And then maybe also talk about the payer environment or the payers agnostic or the payers taking this on and accepting it as a similar protocol.

Hadar Levy (Chief Executive Officer)

Yeah, look, I believe the Swift protocol is a game changer in this field. We're talking about a six days acute phase protocol as compared to the standard protocol that is talking about 20 to 30 days. So being able to shorten the number of days that patients need to commit to come daily to the clinic to only six days, obviously make it really accessible for patients. Now when you compare it also to the alternative treatments today in the market like esketamine or some other psychedelic treatment, it's even more compelling because being able to complete the whole course of treatment within six days and see a very strong result, just to remind everyone, and we announced those results, we have seen 88% response rate for the Swift protocol within only six days of treatment and 78% remission rate with only six days. Which means that both the provider and the patients are really now pushing or demanding this treatment modality. You mentioned also the payers. So you know, at the end of the day the peers is asking themselves on actuality basis, am I saving cost for those patients suffering from depression and if they see good results within six days or within 30 days, but they still see some very good results response and remission rates. So the answer will be that they will start to adopt it. So we have seen, we were very happy to see some very early adoption with some of the payers, but we're starting to See more and more PERS now also adopting this Swift protocol. I believe we're going to see some more serious momentum toward the end of the year and I believe the industry is looking for shorter treatment and effective treatment that are saving and improving patient life. Perfect. Thanks for taking our questions. Thank you, Jeff.

OPERATOR

Thank you. Our next question come from Ram Selvaraju from HC Venride. Please go ahead.

Ram Selvaraju (Equity Analyst)

Thanks so much for taking our questions and congratulations on excellent operational performance this quarter. Firstly, I wanted to ask about when you submit the application for use of deep TMS in connection with treating PTSD associated with mdd. Maybe give us some additional granularity on what you anticipate the review timeline to be once the application has been submitted and if you can give us some sense of what you anticipate to be any new emergent promotional strategy that you might utilize, assuming that approval for this indication is granted. Secondly, I wanted to ask if you could provide some additional color on what you were just saying hadar about the additional adoption of the Swift system from a reimbursement payerspective, potentially how many more covered lives might have access to the system? How many more reimbursement providers might ultimately ink agreements with you? Thirdly, I wanted to ask about the Proliv RX system and what the sales and marketing strategy is underlying this and if you have any sense of when it might be possible to share with us what the total addressable market looks like and what peak sales might be for this product. Thank you.

Hadar Levy (Chief Executive Officer)

Yeah, great. Thank you for all this question. Let's start with the ptsd. Usually once we submit the data to the FDA, the clock start ticking. Usually take up to 90 days for us to get the first response and then if everything goes well we can expect to get the FDA approval. Usually there is some back and forth about that. So if I need to put it in the right time frame, we do expect to receive the FDA clearance before the end of this, before the end of the year. So that's about the ptsd. And you also ask about marketing, how are we going to market this? So obviously this is the exact same market that we're playing today, right? For all those outpatients, clinic and specifically the one that are working with the police department or with active military folks. They got the volume of patient that most of them suffering from depression, anxiety and also ptsd. So what will be very, very unique for us is that we have treated hundreds of patients suffering from PTSD in Israel and similar numbers or even greater number also in the US So we are planning to do some meaningful marketing push toward the last quarter of the year to make sure that we're optimizing the revenue from this very, very, very important indication. As for the second question on the adoptions of pair of the SWIFT protocol, so you know, we are looking on this very, very closely. We're speaking today with more than 20 pairs providing all the necessary data. I think that the feedback is very, very positive. I do expect to get reimbursement by PRRS for I would say 40 to 50 million covered life before, before the end of the year. So overall, very good momentum, even faster than we thought. But we truly do believe that, you know, at the end of the day, what really matter is how is the efficacy of the treatment. And if you can deliver great efficacy and great durability in such a short time, I see no reason why the parents will not adopt it if they already fully adopt the standard protocol as well. With regards to your last question about the Prolif rx, so just to remind again, we're still not owning neuraleaf. However, we are watching very carefully on some of their strategic and commercial approach. The main focus right now is penetration in the va. The main reason is because they got listed in the VA contract and they got reimbursement over there. I mentioned on my call that they got a pricing of $11,800 per system. That's a really, really significant reimbursement for this, for this treatment. So the main focus right now is to focus in all VA accounts and start generating some significant revenue. In parallel, the company also doing some limited market release in some leading enterprise Brain Sway enterprise accounts and they're looking also to define some contracts with some IDNs, big IDMs in the US I also mention it, there is additional $5 million investment in Neuralith based on some significant commercial milestone which I'll be more than happy to write the check if they're going to achieve it. But I think that new Olif with the Prolifarex have everything they need in order to execute and to deliver in this very, very important market. Remember, we are the main reason that we invested in this company is to increase the target market for Brain Sway. It's specifically aimed for the people that find difficulties to come to the clinic. They are far away. That also could be a bridge to neuromodulation. It could be a complementary treatment after they are doing the DiPTMS sessions within the clinic. So all in all I do expecting a very, very growth trajectory for Neuraleaf. Specifically with the Proliv Rx device and

Ram Selvaraju (Equity Analyst)

then two other very quick ones you mentioned in the press release, the versus year ago period growth in remaining performance obligations. Can you just provide us with the quarter over quarter change in remaining performance obligations and then maybe if you could just comment on if you are seeing any disruption at all to operations international sales stemming from the ongoing evolving situation in the Middle East. Thank you.

Hadar Levy (Chief Executive Officer)

Yeah, I'm going to let it do just to shine in on the remaining performance obligation. And I will take the second. Yes.

Ido Marom (Chief Financial Officer)

So we mentioned also on the call that our remaining performance obligation grew 25% year over year. So we have a backlog right now which this is our remaining performance obligation of $75 million comparing to approximately 60 that we had in the previous period. And this represents the growth of our remaining performance obligation backlog. And also I believe Hadar will mention we'll add more about the international, but we also see a growth in the revenue mainly in Q1 for the international market as well. So we actually even saw a growth in our revenue and orders this quarter compared to the previous one.

Hadar Levy (Chief Executive Officer)

Yeah, great. Thank you Ido and for your question. You know our main business today is the US and international markets. So we didn't see any disruptive from any disruption from the current situation. We have enough inventory just to support the demand. I think the TMS market is growing and experiencing a significant amount of consolidation. And with us focusing on those enterprise account and specifically with what we're seeing with shifting among providers toward deep tms away from some other pharmacologic and alternatives like esketamine, I think all of this can really deliver on the record number of units that we were able to deliver in the in the first quarter. And remember, usually there is seasonality in our space. Usually Q1 is a light quarter. People are still sitting on the fence about their budget decisions for the year. So overall I'm very, very proud and very glad to see the good momentum not only in the US but but also in the international markets. I think that on the international markets we continue to strengthen our distribution channels across the world. We see some very, very growing demand not only in mental health. We have some additional approved indication in those markets in recovery area and addiction. And I do anticipate that this momentum will continue to grow.

Ram Selvaraju (Equity Analyst)

Thank you so much.

Hadar Levy (Chief Executive Officer)

Thank you Ram.

OPERATOR

Thank you. Thank you. Okay, this concludes our question and answer session. I would like to turn the conference back over to Hadar and Levy for any closing remarks. Over to you, sir.

Hadar Levy (Chief Executive Officer)

Yeah, I would like to thank all of the investors, analysts and other participants for their interest in Brainsway Ltd. Please enjoy the rest of your day. Thank you.

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