BrainsWay Q3 2026 Earnings Call Transcript

BrainsWay (NASDAQ:BWAY) reported third-quarter financial results on Tuesday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

BrainsWay reported a strong financial performance with a 34% increase in revenue to $18.1 million for Q3 2026, driven by a 44% year-over-year growth in Deep TMS system shipments.

The company’s strategic initiatives include expanding clinical indications, enhancing reimbursement coverage, and developing international markets, with significant growth in SWIFT protocol and OCD treatment demand.

Management provided an optimistic future outlook, expecting full-year 2026 results to be at the upper end of the guidance range, with plans to continue improving margins and leveraging their growing recurring revenue model.

Full Transcript

OPERATOR

Quarter 2026 financial results conference call. All lines have been placed on mute to prevent any background noise. With us today are BrainsWay Chief Executive Officer Hadar Levy and Chief Financial Officer Ido Marom. The format of today’s call will be a discussion of recent trends and business updates from Hadar, followed by a detailed discussion of the financials. Then we will open the call for your questions. Earlier today, BrainsWay released its financial results for the three and nine months ended September 30, 2026. A copy of the press release is available on the Company’s Investor Relations website, www.brainsway.com.

Before I turn the call over to management, 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 certain risks and uncertainties, including shifting market conditions resulting from geopolitical, supply chain, and other risk factors, as well as the use of non-IFRS financial information.

Additional information regarding these and other risk factors is available in the Company’s earnings release and its other filings with the SEC, including the risk factors section contained in BrainsWay’s Form 20-F. I would now like to turn the call over to Hadar.

Hadar Levy (Chief Executive Officer)

Thank you, operator, and welcome, everyone. I am pleased to report another strong quarter for BrainsWay, reflecting continued execution of our growth strategy, expanding adoption of Deep TMS, and further progress toward building a scalable and profitable business. Our ambitions extend beyond selling medical devices. We are building a leading neurostimulation platform in mental health supported by differentiated technology, expanding clinical indications, broader reimbursement, strategic partnerships, and an increasingly predictable recurring revenue model.

During the third quarter, we shipped 130 Deep TMS systems, representing 44% year-over-year growth. Our global installed base now exceeds 2,000 systems, further expanding patient access to Deep TMS while creating additional opportunities for commercial leverage across our existing customers. Our financial results reflect this momentum, with revenue growing 34% year over year and remaining performance obligation reaching approximately $85 million, an increase of 31% compared with the prior year.

We believe the continued growth in RPO demonstrates both strong market demand and the success of our recurring revenue model. Our multi-year agreements, high customer retention, and growing enterprise relationships provide greater visibility into future revenue while allowing us to deliver comprehensive, high-quality support to our customers. Importantly, we continue to demonstrate our ability to combine strong growth with operational discipline and profitability.

Turning to clinical development, Deep TMS continues to build on one of the industry’s most extensive bodies of peer-reviewed evidence supported by multiple FDA clearances. During the quarter, we announced a peer-reviewed secondary analysis of our randomized clinical trial comparing SWIFT with standard once-daily Deep TMS. Among 89 patients with major depressive disorder, the number who experienced suicidal ideation declined from 20 at baseline to 6 after six weeks, representing a 70% relative reduction, with improvements observed across both protocols.

We also announced encouraging results from a pilot study involving 12 patients with depression and early-stage Alzheimer’s disease, reporting an 83% response rate and 50% remission rate in depressive symptoms. While preliminary, these findings support further investigation. Deep TMS is not FDA cleared for suicidal ideation or to treat Alzheimer’s disease. Regarding PTSD among patients with coexisting depression, we continue to work through the regulatory review process. We believe a potential clearance would represent an important development, potentially allowing providers to address another significant unmet medical need using their existing Deep TMS system.

Alongside this clinical advantage, we continue to make significant progress in reimbursement. Following the quarter, we announced that more than 70 million covered lives in the U.S. now have access to reimbursement policies covering our SWIFT accelerated protocol. We have also expanded the OCD reimbursement coverage to approximately 118 million lives. While our adolescent depression clearance creates another opportunity to broaden access, we believe SWIFT represents one of our most significant long-term growth opportunities.

By reducing the acute phase of treatment from several weeks to just a few days, SWIFT has the potential to improve patient convenience, increase treatment capacity for providers, and strengthen the overall economics of Deep TMS treatment. Together, these clinical and reimbursement advances reinforce our competitive position and support greater utilization across our expanding installed base. Turning to our commercial strategy, we are seeing growing interest from large behavioral health organizations seeking comprehensive technology partners to support expansion across multiple locations. Our differentiated clinical portfolio, accelerated treatment capabilities, and iTouch customer support position BrainsWay as an attractive long-term partner. We believe these enterprise relationships represent an important opportunity to broaden access to Deep TMS, accelerate system deployment, and ultimately expand recurring revenue.

Our Strategic Minority Investment Program complements this strategy. During the quarter, we invested $3 million in Radial Health’s Series A financing. Building on our existing relationship with other providers such as Hopemark Health, Radial is developing an integrated mental health services platform, and we believe this partnership creates meaningful opportunities for commercial and clinical collaboration. Following the quarter, we also announced a strategic commercial collaboration with Inland Psychiatric Medical Group, including a multi-system Deep TMS order and opportunities for future clinical and research initiatives.

We continue to see a strong pipeline of enterprise partnerships and potential investments while remaining disciplined in selecting opportunities that offer both strategic value and attractive financial returns. Beyond our core business, we continue to invest in next-generation Deep TMS technology and opportunities to expand access to neurostimulation. Through our strategic investment in Nuvoleaf, we are also participating in the emerging home-use-based neurostimulation market. While commercialization of its FDA-approved Pawlvrx system remains at an early stage, we believe this technology could complement our clinic-based platform over the longer term. Our broader vision is to connect advanced clinic-based treatments with innovative home-use solutions, creating a more comprehensive neurostimulation platform.

As we look toward 2027, we believe BrainsWay is entering its next phase of growth. We see multiple complementary opportunities: expanding our installed base, increasing utilization through SWIFT and potential additional indications, scaling enterprise partnerships, and strengthening our international presence. Importantly, our growing recurring revenue base and scalable operating model provide a strong foundation for sustained growth and expanding profitability.

In closing, I am pleased with our third quarter performance and even more encouraged by the opportunities ahead. We have built a differentiated technology platform, established a strong clinical foundation, expanded reimbursement, and developed a business model designed for sustainable growth. Our ambition is not simply to participate in the growth of interventional psychiatry. Our ambition is to help shape its future. We remain focused on expanding patient access, improving outcomes, and creating long-term value for our shareholders.

With that, I will turn the call over to Ido for a detailed review of our third quarter financial results.

Ido Marom (Chief Financial Officer)

Thank you, Hadar. During the third quarter of 2026, we continued to execute on our growth strategy, leading to a 34% increase in revenue to $18.1 million compared with $13.5 million in the same period last year. For the first nine months of 2026, revenue increased 35% to $50.8 million. Gross profit for the quarter increased 39% to $14.1 million compared with $10.2 million last year, while gross margin reached 78% compared with 75% both last year and in the second quarter of 2026.

Turning to operating expenses, sales and marketing expenses for the third quarter totaled $5.5 million compared with $4.7 million in the third quarter of 2025. Research and development expenses were $3.5 million compared with $2.4 million last year. General and administrative expenses were $2.5 million compared with $1.8 million last year. Total operating expenses were $11.5 million compared with $8.9 million in the third quarter of 2025. Operating expenses this quarter included approximately $1 million in additional one-time expenses related to share-based compensation and other non-recurring payments.

This increase also reflects the expanding scale of our business and continued investment in our commercial, clinical, and product development plans. Revenue growth continued to outpace operating expenses growth, enabling us to support these initiatives while improving operating leverage. Operating income increased 107% to approximately $2.6 million compared with $1.3 million in the third quarter of 2025. Operating margin expanded to 14% of revenue from 9%. For the first nine months of 2026, operating income increased 190% to approximately $7 million, with operating margin reaching 14% compared with 6% last year. These results demonstrate our continued ability to translate growth into higher profits and stronger margins.

Net income for the third quarter increased 42% to $2.2 million compared with $1.6 million in the same period of 2025. It’s important to highlight that during the quarter we incurred finance expenses related to the periodic valuation of our loans. These valuations reflect various market factors, including changes in adjusted interest rates. These accounting adjustments impacted our reported net income but do not reflect the underlying performance of our core operations.

Adjusted EBITDA was $3.9 million, an increase of 92% compared with $2 million in the third quarter of 2025. Adjusted EBITDA margin expanded to 21% from 15%. Adjusted EBITDA also increased 11% compared with the second quarter of 2026. Remaining performance obligation grew to approximately $85 million as of September 30, 2026, a 31% year-over-year increase. This growth supports our visibility into future revenue and reflects continued execution against our long-term strategy.

Cash flow from operations was approximately $6.2 million in the third quarter compared with approximately $1.4 million in the prior year period. Collections more than doubled year over year, reflecting $21.3 million, and increased approximately 8% compared with the second quarter, reflecting our continued focus on cash generation. Our cash balance increased to $63.4 million as of September 30, 2026. While we continue to invest for future growth, our strong capital position supports the continued development of our core business and the disciplined execution of our Strategic Investment Program.

Looking ahead, based on our strong performance and increased visibility into the remainder of the year, we now expect full-year 2026 results to be at the upper end of our previously issued guidance range, with the potential to modestly exceed those ranges. 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

Thank you. The floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad at this time. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys again. That’s star one to register a question at this time.

Today’s first question is coming from Jeff Cohen of Ladenburg Thalmann. Please go ahead.

Destiny (Analyst at Ladenburg Thalmann)

Hi there. Thank you. This is Destiny on for Jeff. I was just wondering if maybe we could start with the Proleverx product. I’m curious if you guys have established any kind of specific adoption or revenue thresholds, you know, that would support moving forward. And then if there’s anything else you can call out in terms of what you’re seeing with initial commercialization.

Hadar Levy (Chief Executive Officer)

Hi, Destiny, thank you for the question. With regard to Prolif. Just to remind everyone, we initiated a convertible loan in the amount of $11 million to Norolith. It’s a private company, so we’re not yet combining it into our financial results, but we do see very good progress across the distribution and the commercial phase of new orleaf either with the VA channels, also with some of our clinic chain. They are working according to our expectations, and we’re expecting them to push forward some of their commercial strategy going forward for sure.

The demand is definitely there. There is a real understanding and good demand for a complementary treatment with the home use after the clinical use and vice versa. So we do see this opportunity as one of our future growth factors in the upcoming years.

Destiny (Analyst at Ladenburg Thalmann)

Okay, thank you, I appreciate that. And then I was just curious, do you have any sense of how many of the SWIFT protocol treatments have been done to date? And how do you see that picking up as you get more coverage?

Hadar Levy (Chief Executive Officer)

Yeah, I think you said it right. It’s based on coverage today. And we announced that we have an approximate, even more than 70 million covered lives for the SWIFT Protocol. It’s much more than we expected to be at this time of the year, and that’s what’s really pushing the demand. I believe that close to 50% from all new demands are coming from the customer demands and requests for the SWIFT Protocol. I do believe that, you know, once we’re going across 50% of the total population in the United States, I think that will push even harder the demand for this very unique treatment modality because that’s what really makes a difference between us and the competition.

Destiny (Analyst at Ladenburg Thalmann)

Right, got it. Thank you. That’s very helpful. And then just one last one for me. Your margins were great this quarter and I’m just wondering how we should think about those as we exit 2026 and move into 2027, understanding no formal guidance for 2027. Thank you for taking our questions.

Ido Marom (Chief Financial Officer)

Yes, so we are already showing better gross margin percentages in Q3, and as we expect the year to end, we are planning to continue this momentum with the gross margin improvement. Same goes for the operating income, which we believe, as I mentioned before, will be at the upper end of our guidance.

Destiny (Analyst at Ladenburg Thalmann)

Got it. Thanks again.

Hadar Levy (Chief Executive Officer)

Yes, Destiny, I just want to add one more thing. We are very happy and we also just strengthened our guidance for the year that we’re going to land on both the revenue side, but most important on the profitability. We continue to see, and increase our ability to increase, margins also for the upcoming future. Obviously we will provide guidance on our next financial statement, but it looks very good. I think we have a very good, predictable business model with good visibility both on the growth and profitability.

OPERATOR

Thank you. Our next question is coming from Sam Eibner of BTIG. Please go ahead.

Sam Eibner (Analyst at BTIG)

Hi, good morning. Thanks for taking the questions here. Maybe just following up on those last couple of comments there. Curious, you know, obviously a lot of healthy underlying demand. How should I think about the durability heading into next year? You know, you’re not giving guidance at this time, but is there any reason why this momentum shouldn’t continue?

Hadar Levy (Chief Executive Officer)

Yeah, you know, I believe that in terms of the revenue, since we switched the business model for a more reoccurring business model, we do have good visibility, and since we continue to see the book-to-bill remain around 1.3, 1.4x, we do have good visibility on the growth months ahead into 2027. On the profitability, we are putting lots of discipline. We’re trying to prioritize what is really important, what is less important. We do expect to continue and increase the margin. As you saw, we were able to increase the gross margin from 75% to 78%. It’s due to twofold. One is an improvement in the BOM, based on number of units that we are manufacturing; it’s helping us to reduce some of the cost. We also were able to reduce some of the royalty payments that we needed to pay and we don’t need to continue and pay that.

So only by that we had some immediate wins that will be sustainable also toward 2027. On top of it, again, we don’t really need to increase our OPEX dramatically for next year. I believe, again, OPEX will increase between 15% to 20% next year while we continue to sustain the growth as well. So that will lead to the bottom line, with the hope that almost every dollar that is going to hit the top-line revenue will go down to the EBITDA and even more into the net income.

Sam Eibner (Analyst at BTIG)

Okay, very helpful there. Maybe I can follow up on the OCD coils. I think I saw 17% growth there. Is there anything driving that? And then can you maybe remind me where coverage stands today for that indication?

Hadar Levy (Chief Executive Officer)

Yeah, I would say that what’s really driving demand today for system deployment is twofold. One is the SWIFT Protocol; the second one is OCD. It’s not only 17% increase in new systems, but take a look at the overall install base. I think we crossed the 1,000 OCD systems deployed. It’s a lot. I think that’s a huge differentiation. Just to remind everyone, BrainsWay was the only company that has conducted the multicenter trial in the United States for an approval of OCD with great results.

We know that it’s one of the best treatment modalities for severe OCD patients, and we do see a continuous demand for the OCD—call it the OCD, call it the H7. It’s also a good use for depression. But I do foresee a continuous demand for this very, very important indication going forward. There is no other treatment modality like OCD treatment by Deep TMS.

Sam Eibner (Analyst at BTIG)

Okay, great. Thanks for taking the questions.

OPERATOR

Thank you. Once again, ladies and gentlemen, that is star one if you would like to register a question at this time. Our next question is coming from Ram Selvaraju of HC Wainwright. Please go ahead.

Ram Selvaraju (Analyst at HC Wainwright)

Thanks very much for taking our questions and congratulations on all the progress this quarter. I was wondering if you could give us maybe some granularity, some indication of when you might be able to provide us with more details on the specific revenue contributions or impact to the overall growth of the install base of the minority investments that you have been making and the strategic collaborations that you’ve established, and what kinds of metrics, if any, we should expect going forward on this aspect of your overall business strategy.

Hadar Levy (Chief Executive Officer)

Yeah, Aaron, thank you for the question. You know, we are very happy. I think that we’ve made close to 10 minority investments or follow-up investments or partnerships, similar to what we announced with Mindful Health Solution or with Inland Psychiatrist. The expectation from each one of those partnerships is to increase market awareness and expand access and grow with one of the most portfolio companies today in the United States. The expectation is that each one of those portfolios is going to open up between, I would say, 50, sometimes even more, locations in the next three years.

Which means that obviously, if they’re going to expand and open up some new locations, they will order Deep TMS technology or additional treatment modalities like neuralift or some other technology options that we can offer them. So my expectation is to continue and grow with them. Just to remind everyone, the orders of the machines from all those partnerships are not linear. Usually the first year might take a little bit more time just to find a new location, do the necessary credentials with some of the payers, hiring staff. But I do intend to see much better demand and orders on the second year, which means for yearam it’s going to be 2027. So I do believe that in 2027 we’re going to share much more information on the increase and the process of all those minority investments and partnerships.

I think in our last call or some of my presentations I did present that in terms of utilization, we do see a significant growth with all our partners in those minority investments. We do see an increase of close to 50%, sometimes 100%, in utilization in just a few months. In some aspects we even see like 4 or 5x in increasing utilization using our system after 6 months. That’s exactly what we want to see, which means that our customers, our partners, love our technologies, implement this technology, train their team, and increase market awareness with their patients.

Ram Selvaraju (Analyst at HC Wainwright)

And then with respect to the international business, maybe you can give us some sense of where you’re seeing the principal growth drivers, if you’re seeing any noteworthy operational disruption as you look at the ex-U.S. markets and which ones you think are likely to be the most significant drivers of growth going forward. And if there is any additional information you can provide to us at this time regarding your development plan, specifically for Deep TMS in Alzheimer’s disease, what the anticipated timeline would be to the next inflection point, and what the magnitude of capital investment you expect to make would be in that specific potential future aspect of Deep TMS growth. Thank you.

Hadar Levy (Chief Executive Officer)

Sure. So on the international expansion, we continue to see a geographic expansion in some new territories. Some of them relate to Latin America, including Mexico, Argentina, Uruguay, and we’re also looking for some strong distributor in Brazil. The leading countries outside of the United States will continue to be Asia Pacific, specifically Korea, Taiwan, China, and India. And on top of it also Europe. We continue to see some very strong demand from some of the leading countries in Europe, including Italy, Spain, England, Germany, and some of the Scandinavian countries, and also Israel.

Israel is still a small country, but the demand in Israel continues to grow. I forgot to mention also Japan. Japan received also reimbursement in their country and they’re going to be one of the leading countries to really push some of the main drivers for growth in the international market. But we do see a consistent growth with each one of those countries. We do see between 50% or even 100% growth in revenue in the international market. And it’s not surprising.

I believe that once reimbursement will fall in those countries, I believe we’re going to see similar demands to what we’re seeing in the United States. Technology is the same technology, so the same differentiation that we’re enjoying today in the United States also remains outside of the United States. And the big advantage is in Europe we have 12 cleared indications, some of them relate to neurology indications like pain management, stroke rehabilitation, PTSD, and some others, which we believe that we can find the right partner that can really take and distribute this product going forward.

For the second question on Alzheimer’s, we are advancing some research that relates to Alzheimer’s and depression today with three medical centers. We do want to see if we can slow down the deterioration of Alzheimer patients. We do have some very promising and preliminary results with that, but it’s on a very small number of patients that we still need to prove down the road. Once we complete this feasibility study, which I believe is going to be end of 2027, we intend to, one, find a potential strategic partner that potentially together we can go and start investing in a multicenter clinical trial in the United States.

If we are intent to do it by ourselves, similar to other clinical trials, each clinical trial, unlike pharma, does not cost a lot of money. Usually it’s between three to four million dollars over two and a half or three years. Most important for us is the indication. We do see some very, very promising results, which I believe could be something very promising and interesting for BrainsWay as a leading TMS company. Thank you very much. Thank you, Ron.

OPERATOR

Thank you, ladies and gentlemen. This concludes today’s question-and-answer session. I would now like to turn the floor back over to Mr. Levy for closing comments.

Hadar Levy (Chief Executive Officer)

Yeah. So, thank you all. Just to highlight some things that we discussed during the call: our commercial momentum is strong—strong—supported by an expanding installed base, growing pipeline, and strategic healthcare partnership. Second, profitability: we are providing… we are proving that our business model can generate significant operating leverage as we scale. Third, opportunity with SWIFT protocol, expanding clinical indications, international growth, and next-generation technologies. We believe we are still in the early stage of our long-term opportunity. BrainsWay is no longer simply a deep TMS technology company. We are evolving into a scalable, profitable, global neurostimulation platform with multiple growth engines and a clear mission to transform mental health care.

With that, I would like to thank you all, the investors, analysts, and other participants, for their interest in BrainsWay. With that, please enjoy the rest of your day. Thank you very much.

OPERATOR

Ladies and gentlemen, this concludes today’s event. You may disconnect your lines or log off the webcast at this time and enjoy the rest of your day.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.