Brainsway Ltd (BWAY) 2026 Q1 法說會逐字稿

Good day and welcome to BRAINSWAY first quarter 2026 morning conference call. (Operator instructions)

I now hand the conference over to God Tristan. Please go ahead.

Thank you and welcome to Brains way's first quarter 2026 earnings conference call. With us today are Brains way's executive, Chief Executive Officer, Hadar Levy, and Chief Financial Officer, Ido Maroni.

The format for 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 up the call for your questions.

Earlier today, Brains way released its financial results for the three-month period ended March 31st, 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 a 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. 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 the BRAINSWATES Form 20-F.

Finally, please note that the company's 6K will be filed tomorrow at approximately 6 a.m. Eastern Time in accordance with the SEC's operating schedule.

With that, I would now like to turn the call over to Hadar.

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.

1,820 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, 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, 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 SPAER across the U.S. To expand reimbursement coverage. For example, since the FDA label extension for adolescents age 15 to 21, we have worked toward getting over 10 pairs to add coverage for adolescents' depression.

In addition, Evernorth Behavioral Health has eliminated prior authorization requirements 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 insurers, Medicare contractors, and government payers now allow trained nurse practitioners to administer deep TMS when practicing in according 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 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 are seeing a meaningful shift in the market as deep TMS continues 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 six-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 payer-alike, and expect swift reimbursement to continue expanding.

We recently announced 2 large pills as being among the first of issued final or draft coverage policies applicable to SWIFT.

Moving to an update on clinical activities for deep TMS.

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 also plan 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, DeepTMS can offer several meaningful advantage 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 it's 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 aim 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.

Beyond having an equity stake in these growing businesses, this strategy also provides 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, but 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 in Chicago area, includes 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 Hope Mark.

Additionally, we are on the gulp 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 are firmly believe we'll 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 a fraction of our addressable market, highlighting the significant runway for growth ahead.

While Deep TMS 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 a strategic investment in Neurolif, a developer of Prolivarex, the world's first wearable, non-invasive, multi-channel brain neuromodulation platform that is designed for use at home.

Since then, this relationship has advanced on multiple fronts.

Following the FDA's pre-market approval of the Prolivarex system for the treatment-resistant MDD, we made an additional $6 million milestone-based convertible loan to NeuroLift, which was completed in late March. This brings our total convertible loan investment in NeuroLift to $11 million.

As a reminder, our agreement provides for potential third tranche of up to $5 million upon Neuroleaf achieving specified commercial targets.

Neuroleaf has made additional meaningful commercial progress. The VA Federal Supply Schedule contract has been secured, and Polyvarex 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 NeuroLift team on meaningful synergetic approaches that include the commercial and research infrastructure for both companies.

We view PolyVarX as a complementary offering to DeepTMS.

Where deep TMS serves patients in the clinical setting, Polyvarex 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 platforms 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 BrainSway 360, a new fully integrated mental health ecosystem we are building around DeepTMS, next-generation rotational field, DeepTMS 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 as 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?

Thank you, Hadar

During the first quarter of 2026.

We continued to execute on our growth policy, 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 big TMS systems, bringing our total installed 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 an ELSI gross margin.

This performance reflects our continued growth and increased market penetration, both in the U.S. 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 billion as of March 31, 2026, a 25% year-over-year increase.

We believe the steady increase in our RPOs 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 investments Hadar outlined earlier.

This is especially notable given additional investment of approximately $mad9 million during Q1 2026, in line with our strategic direction.

We reported cash and cash equivalence of $58.9 million on March 31, 2026.

We believe our strong capital position will support the continued 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 million to $68 million for the full year of 2026.

This guidance represents 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 million to $14 million.

Representing anticipated growth of 86% to 100% over 2035.

This concludes my prepared remarks, and I will now turn the call back to the operator to please open up the call for questions.

Thank you.

Thank you. We will now begin the question-and-answer session. (operator instructions)

At this time, we will pause momentarily to assemble a roster.

Question comes from Jeffrey Cohen with Lederberg Hellman. Please go ahead.

Good morning, Hedorah Nito, and congratulations on the strong quarter in progress. So, a couple of questions from our end.

Firstly, could you talk about the upcoming PTSD filing, and can you talk to us a little more about the protocol you anticipate and if the trial is with or without medication in the case of patients?

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 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 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, the H1 coil.

Targeting same areas of anxiety and depression, but we do see some significant reduction in those symptoms for PTSD patients.

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 indication, some perhaps gives a sense of.

Percentage as far as patients using swift versus the regular protocol and then maybe also talk about the payer environment. Are the payers agnostic or the payers taking this on and accepting it as a similar protocol?

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 all 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, at the end of the day, the payers is asking themselves on actuary basis.

Am I saving costs 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 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 PRRs, but we're starting to see more and more PRRs 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.

Thank you.

Our next question comes from Ram Selvaraju from HC Wenright. Please go ahead.

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.

Option of the SWIS system from a reimbursement perspective, 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 was asking about -- I wanted to ask about the ProLivRX 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.

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 starts 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 a back and forth.

About that.

So if I need to put it in the right timeframe, we do expect to receive the FDA clearance 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 outpatient 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 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 U.S. 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 important indication.

As for the second question on the adoptions of pair of the Swift protocol. So, we are looking on this very closely. We're speaking today with more than 20 pairs, providing all the necessary data. I think that the feedback is very positive. I do expect to get.

Reimbursement by PERS for, I would say, $40 million to $50 million covered life before the end of the year. So overall, very good momentum.

Even faster than we thought, but we truly do believe that at the end of the day, what really matter 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 ProLiv RX. So just to remind again, we're still not owning New Orleaf. 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.

$7,800 per system. That's a really significant reimbursement 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 releasing, some leading enterprise, Brainsway Enterprise.

Accounts and they're looking also to define some contracts with some IDMs, big IDMs in the US.

I also mentioned it, there is additional $5 million investment in Orlif based on some significant commercial milestone, which I'll be more than happy to write the check if they're going to achieve it.

I think that Neuraleaf within Prolivarex have everything they need in order to execute and to deliver in this very important market. Remember, we are, the main reason that we invested in this company is to increase the target market for BrainSway. It's specifically aimed for the people that find difficulties to come to the clinic, they're far away.

And that also could be a bridge to neuromodulation. It could be a complementary treatment after they are doing the deep TMS sessions within the clinic. So all in all, I do expecting a very growth trajectory for NeuroLIF, specifically with the Paulive RX device.

And 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.

Yes, I'm going to let the door just to shine in on the remaining performance obligation, and I will take the second question.

Yes, 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 million that we had in the previous period, and this represents the. Grow, the growth of our remaining performance obligation backlog. And also, I believe Adar 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.

Yeah, great.

Thank you, Ido. And for your question.

Our main business today is the U.S. And international, 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 accounts and specifically with what we're seeing with shifting among providers toward deep TMS away from some other.

Psychologic and alternatives like Spavado, I think all of these can really deliver on the record number of units that we were able to deliver 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 proud and very glad to see the good momentum, not only in the U.S., but also in the international. I think that on the international, we continue to strengthen our distribution channels across the world. We see some very growing demand, not only in mental health, we have some of the additional.

Approved indication in those markets in recovery area and addiction. And I do anticipate that this momentum will continue to grow.

Thank you so much.

Thank you, Ram.

Thank you.

This concludes a question-and-answer session. I would like to turn the conference back over to Haden Levy for any closing remarks. Go to you, sir.

Yeah, I would like to thank all of the investors, analyst and other participants for their interest in Brainsway. Without, please enjoy the rest of your day.

Thank you.

Thank you.

The conference has now concluded.

Thank you for attending today's presentation. You may now disconnect.