BrainsWay Ltd.

Good day and welcome to Brainsway First Quarter 2026 on e-conference call. All participants will bend the listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on a touchtone phone. To withdraw your question, please press star then 2. Please note that this event is being recorded. I now hand the conference over to Rajesh. Please go ahead.

Thank you. And welcome to BrainsWay's first quarter 2026 earnings conference call. With us today are BrainsWay's Chief Executive Officer, Hadar Levy, and Chief Financial Officer, Ido Moroni. 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, Brainsway 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 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 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 Branch Ways Form 20F. 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 to the governor.

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 obligation have increased to $75 million as of March 31st, 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 ADIP-CMS 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 brought 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 SPARE across the U.S. to expand reimbursement coverage. For example, since the FDA label extension for adolescents age 15 to 21, we have walked towards getting over 10 pairs to add coverage for adolescent depression. In addition, Evernote behavioral health has eliminated prior authorization requirements for TMS across Evernote and Cigna plans. We are also seeing extended reimbursements for clinicians that can deliver TMS. For example, a growing number of commercial insurers Medicare contractors and government pairs 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 psychiatry 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 Spravato. 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-day 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 visits by approximately 70% without compromising efficacy. We believe this represents a win for patients providers, and pair-like, and expect SWIFT reimbursement to continue expanding. We recently announced two large pairs as being among the first of issued final or draft coverage policies applicable to SWIFT. Moving to an update on clinical activities for DeepTMS. 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 are also planning 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 U.S. 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 translate into successful . Beyond 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 brain-free 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 locations 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 go 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 potential candidates for participation in this program. These transactions further demonstrate our continuing confidence in this strategic initiative. We 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 DeepTMS. We estimate that we have penetrated only a 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 treatment modalities across multiple care settings. As part of this strategy, we executed a strategic investment in NeurLIF, a developer of ProLiVarix, 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-mark approval of the ProLivarex system for the treatment-resistant MDD, we made an additional $6 million milestone-based convertible loan to NeuroLeaf, which... ...to $11 million. As a reminder, our agreement provides for potential third tranche of up to $5 million upon New Orleans. 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 Polyvarex as a complimentary offering to DeepTMS. Where DeepTMS 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 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 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 other fields, 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. Demand continues to grow with distributors across Asia Pacific, Canada, and Europe, accelerating adoption of DIP-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? Thank you, Adar. During the third 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 50 MS systems, bringing our total install base to approximately 1,820 systems as of March 31st, 2026. Growth profit for the quarter was $11.6 million, up 35% from $8.6 million in the prior year period, while also keeping an healthy growth 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 extensions 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 31st, 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 31st, 2026, a 25% year-over-year increase. We believe the steady increase in our RPOs reflect the strength of our business and execution on our long-term strategy. Cashflow 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 Adar outlined earlier. This is especially notable given additional investments 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 31st, 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 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 to $14 million representing anticipated growth of 86 to 100% over 2025. This concludes my preferred remarks and I will now turn the call back to the operator to please open up the call for questions. Operator?