BrainsWay Ltd.

Good morning, everyone. My name is Sachi, and I will be your conference operator today. At this time, I would like to welcome everyone to BrainsWay's second quarter 2026 financial results conference call. All lines have been placed on mute to prevent any background noise. With us today are BrainsWay'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 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 and six months ended June 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 pipelines, 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 factors section contained in BrainsWay's Form 20-F. Finally, please note that the company's SK will be filed tomorrow at approximately 6 a.m. Eastern Time in accordance with the SEC's operating schedule. I would now like to turn the call over to Hadar.

Thank you. Welcome, everyone, and thank you for joining us today. We entered the second half of 2026 from a position of strength with accelerating growth, expanding profitability, and increasing visibility into future revenues. But more importantly, we believe BrainSway is entering the next phase of its evolution, from a leading deep TMS company into a broader platform for interventional psychiatry. Our second quarter results provide further evidence that the foundation of this platform is getting stronger. Revenue grew 35% to $17.1 million for the second quarter. Thank you very much. 141% to $3.5 million compared with $1.5 million for the same period last year, with adjusted EBITDA margin expanding to 20% from 11%. This also marked our 12th consecutive quarter of profitability, underscoring the scalable nature of the business model. These results mirror not only because of the growth They represent today. But because every system we install, every reimbursement expansion we achieve, and every new clinical indication we develop, strengthen the platform and expand our long-term opportunity. Let me take a minute to walk you through a few key metrics that we monitor each quarter to measure our continued growth. During the second quarter of 2026, we shipped 125 deep TMS systems A 42% increase over the same period last year, bringing our install base to approximately 1,950 systems. Every system represents more than an initial price placement. It creates potential for multi-year recurring revenue, additional utilization, new indications and protocols, deeper provider relationship, and greater clinical data. And importantly, As we expand the capabilities of the platform, we increase the potential value of systems that are already in the field. Remaining performance obligations have increased to $80.4 million as of June 30, 2026, a 30% increase compared with the same period last year. We believe the continued growth in remaining performance obligations over the past several quarters Demonstrate the strong market demands for DeepTMS, as well as the success of our leasing strategy focused on servicing enterprise customers. This is an important evolution in our business model. At the install-based growth, we believe revenue visibility, recurring revenue, and operating leverage can increasingly compound. Our strategy is built around what we believe is a powerful growth flywheel. with a series of reinforcing growth, drivers that build on one another over time. We believe the expanding clinical evidence for DeepTMS drives broader reimbursement, which in turn supports greater physicians' confidence and adoption. As adoption grows, our install base expands, creating a large recurring revenue stream and increasing operating leverage. The resulting operating leverage cash flow enable us to reinvent in additional clinical studies, reimbursement initiatives, and strategic partnership. At the foundation of our strategy is the strength of the DeepTMS platform itself. Our systems are supported by one of the industry's most extensive bodies of peer-reviewed clinical evidence, demonstrating efficacy across a broad range of neuropsychiatric disorders, including major depressive disorder, anxious depression, late-life depression, obsessive-compulsive disorder, and smoking addiction. This growing body of evidence has resulted in multiple FDA clearances, increasing physicians' confidence, broader reimbursement support, and ultimately accelerated adoption of DIV-TMS. One of the clearest examples of our momentum is the continued expansion of reimbursement for TMS. Commercial pairs increasingly recognize the clinical value of this therapy, while prioritization requirements continue to become less burdensome. Perhaps, just as important for us, we have also seen reimbursement continue to expand to include accelerated treatment protocols, which we called SWIFT. We currently estimate there are approximately 57 million covered lives in the U.S., with access to our SWIFT Pro-Accelerated Deep TMS protocol. Every reimbursement expansion lowers barriers to treatment, increases provider confidence in investing in deep TMS systems, expands patient access, and supports higher utilization across our growing install base. We believe SWIFT represents an important long-term growth opportunity for BrainSway. By reducing treatment from several weeks to just a few days, SWIFT has the potential to improve convenience for patients, increase treatment capacity for providers, and further strengthen the value proposition for PERS. During the quarter, we presented the first prospective 12-month durability data for the SWIFT accelerated DFTMS protocol. The study demonstrated that patients maintain meaningful clinical improvement We believe these findings further strengthen the clinical evidence supporting SWIFT and the case for broader reimbursement adoption, an important driver behind broader adoption of DeepTMS. Beyond expanding adoption within our existing indication, we continue seeking to broaden the clinical utility of DeepTMS platform. During the quarter, we presented results from the largest real-world study to date evaluating DeepTMS in patients with comorbid PTSD and major depressive disorder. which is one of the most challenging psychiatric population to treat. Across 462 patients treated at 11 clinical sites, more than 83% experienced a meaningful response in PTSD symptoms while substantial improvements were also observed in depression symptoms. We believe these findings further strength the growing body of evidence supporting deep CMS across If cleared, this would represent another important opportunity to expand the clinical utility of DeepCMS platform, increasing the value proposition for every system already installed in the field without requiring providers to purchase additional capital equipment. Taking together these clinical regulatory advances are occurring against the backdrop of an interventional psychiatry market that we believe is entering to an important period of long-term growth. Pairs are steadily expanding reimbursement for neuromodulation therapies, demand for non-pharmacologic Non-pharmacologic treatment options continue to grow among both providers and patients, and awareness conditions such as treatment-resistant depression, OCD, and PTSD continue to expand. We believe BrainSway is well-positioned to benefit from these tailwinds, giving our clinical evidence-based pipeline strategy, reimbursement infrastructure, and installed base of deep TMS systems. Capturing this opportunity required more than innovative technology. It also required expanding patients' access in investing in providers as they scale their practices. That is one of the key objectives of our strategic priority investment program. This initiative is designed to do much more than efficacy deploy capital in promising investment targets. It allows us to partner with leading behavioral health providers and to align ourselves with organizations that have a plan to grow and succeed by accelerating patient access to care and building awareness of cutting-edge interventional psychiatry treatment approaches. During the quarter, we continue to execute against this strategy with a strategic investment in Hopemark Health, a growth-oriented behavioral health platform serving multiple clinics in the greater Chicago area. Following the close of the quarter, we continued with this strategy through investment in Radial Health, an innovative mental health service platform combining clinical infrastructure, reimbursement capabilities, and AI-guided decision support, as well as in Sound Mind Behavioral, a leading growth-oriented outpatient behavioral health platform with locations across the Mid-Atlantic and Northeast. This minority-stake investment reflects our strategy of partnering with leading providers' organizations and expanding our presence within the broader behavioral health ecosystem, while allowing BrainWay to remain focused on advancing our technology, clinical evidence, and commercial execution. Looking ahead, we continue to assess a pipeline of investment opportunities and remain disciplined in identifying partners that can generate both financial growth and meaningful strategic value. Another important part of our long-term platform strategy is extending neuromodulation beyond the clinic. Today, DeepTMS anchors treatment in the clinical setting. Over time, we see an opportunity to extend the patient's journey into the home and ultimately connect treatment with the data and digital monitoring. That is the strategic context behind our investment in New Orleans. Following the FDA approval for its ProLivarex system in March, the commercial launch has begun and progressing. While it remains early in the launch, we are encouraged by the progress being made by New Orleans and the execution discipline that they roll out. International expansion represents another important layer of our long-term opportunity. Across our current partner market, we estimate there are more than 170 million untreated patients. Importantly, we are not starting from zero. We are building on established commercial partnership and existing infrastructure. providing what we believe is an attractive and capital efficient path to scale. As intervention out of psychiatry expands globally, we believe our international footprint can become an increasingly important contributor to brain soil growth. In closing, we are pleased with our performance this quarter, but we believe we are still in the early stage of much larger opportunity. For many years, Braintree has been known as a deep TMS company. Today, we are building something broader, a global platform for interventional psychiatry. Every system we install, every reimbursement extension, every new indication, and every strategic partnership strengthens that platform. And we are building it from a position of increasing financial strength with a strong growth, expanding profitability, and Greater Revenue Visibility. One platform, million of patients, decades of growth. With that, I will now turn the call over to Ido for his review of our second quarter of 2026 financial results. Ido. Thank you, Hadar.

During the second quarter of 2026, we continued to execute on our growth strategy, which drove a 35% increase in revenue to $17.1 million, compared with $12.6 million for the same period last year. During the quarter, we placed 125 D3MS systems, bringing our total install base to approximately 1,950 systems as of June 30th, 2026. Gross profit for the quarter was $12.8 million, up 34%, from $9.5 million in a prior year period, while gross margin remained stable at 75%. Turning to operating expenses. Sales and marketing expenses for the second quarter of 2026 totaled $4.9 million, steady with the second quarter of 2025. This reflects continued operating leverage and improved efficiency across our sales organization enabling us to support our commercial activities while maintaining a disciplined cost structure. Research and development expenses were $3.2 million compared with $2.3 million last year. The increase was primarily driven by investments in clinical development and research, including our ongoing PTSD and alcohol use disorder research initiatives. General and administrative expenses were $2.3 million compared with $1.6 million in the prior period, an increase of approximately $0.7 million driven by higher professional fees and administrative costs. Operating income was approximately $2.4 million compared with $0.6 million reported for the second quarter of 2025, with operating margin extending to 40% of revenue from 5%. This performance reflects the scaling of operations, the strength of our recurring revenue model, and disciplined cost management. For the second quarter, ended June 30th, 2026, we reported net income of $2.7 million, up 34%, compared with $2 million in the same period of 2025. Adjusted EBITDA. was $3.5 million, an increase of 141%, comparing with $1.5 million in the second quarter of 2025. Adjusted EBITDA margin extended to 20% from 11%. As Hadar mentioned earlier, this is the 12th consecutive quarter of positive adjusted EBITDA, and we are very excited by our progress in scaling our growth and profitability. Remaining performance obligations grew to $80.4 million as of June 30, 2026, a 30% year-over-year increase. We believe the steady increase of our RPOs reflect the strength of our business and execution against our long-term strategy. Cash flow from operation was $6.3 million in the second quarter of 2026, compared with $1.2 million in the third quarter. reflecting the strong payment term structure related to certain strategic deals. The capital structure of the company remained debt-free, giving us significant flexibility to pursue strategic growth initiatives, including our minority investment program. We reported cash and cash equivalents of $62.4 million as of June 30th, 2026. We believe our strong capital position will support the continued growth of our core scientific and technology operations, 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, based on our strong first-up performance and continuous momentum, we are raising our full year 2026 guidance from a range of 66 million to 68 million, to a range of $68 to $70 million for the full year 2026. This new guidance range, if achieved, will represent a year-over-year expected growth rate of 30 to 34%. In addition, we are narrowing our ranges for operating margin to 13.5% to 40% of revenue and adjusted EBITDA to $13 million to $40 million representing anticipated growth of approximately 90 to 100% over full year 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?

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. The first question is from Sam Iber from U.S. Bancorp BCIG. Please go ahead.

Hi. Good morning. Thanks for taking the questions here. Maybe I want to start on the guidance raised. Thank you for the question. We have a very high confidence based on

What we have seen, you know, based on the growing remaining performance obligation, that gives us very good visibility toward the second half of the year and also into 2027. So there is definitely a very strong demand across the board for deep TMS product. for the MDD, OCD and specifically the SWIFT protocol that is today one of the main drivers for the demand. So we continue to see some very strong demands for new systems and new orders toward the end of the year and that's what's really increasing our confidence by raising the guidance.

Okay, very helpful. And then maybe if I could use my follow-up here on the SWIFT protocol. I guess generally, what are you hearing from providers that have adopted it so far? Are they generally aware that it exists? How much education do you need to do on the marketplace? And just generally, those that have adopted it, are they starting to see better throughput, better patient demand because of The feedback is very, very strong and very good. Luke, at the end of the day, it's just a matter of better convenience

for the patients, but also for the clinics. So, you know, a busy clinic can really increase their utilization by using this SWIFT protocol, and they can see much more patients on a daily basis and even complete the all 30 sessions protocol with a few days. So there is definitely lots of interest, both from providers and patients. but the main feedback is really about the convenience of those patients that are seeking to get a better treatment in such a short time. The economics works very good for the clinic and that's why I think what's really drive also some of the pairs to continue and extend reimbursement because of the demand is growing for this risk protocol.

Okay, very good. Thanks for taking the questions and congrats again on the good quarter.

Thank you so much.

The next question is from Jeffrey Cohen from Lattenburg-Bellman. Please go ahead.

Good morning, Hadar and Ido. A couple questions from our end. So firstly, I wanted to jump back into the SWIFT protocol. Could you give us a sense of the payer environment and give us a sense of percent of new cases that are falling under the protocol and then maybe give us a little bit of a sense of types of patients that are falling under that protocol, whether they be MDD or PTSD, OCD, etc.? ?

Yeah, so currently we're only speaking about MDD patients. Obviously once, you know, we are looking to get FDA approval for comorbidity patients with PTSD and MDD, but currently we're only focusing on MDD patients, which are all kind of drug resistant. They are the ones that are seeking for a better treatment. You know, they're not responding well for medications or maybe to some other treatment modalities. The percentage, as I said, we have today 57 million people that are eligible for this treatment. So I think reimbursement is a key initiative for the adoption of this treatment. But you know, if you're not... specifically for psychiatrists that are not submitting their cases to Paris. We definitely have a very high growth of Ido Marom, Colleen Hanlon Once you have reimbursement in your territory, I would say that you can see a significant increase in the usage of, in the adoption of the SWIFT protocol, getting close to 50% of the total population in the local area.

Okay, got it. And then as a follow-up, you spoke about the 80.4 million performance obligations. I'm assuming that's three systems, and I'm assuming that's The backlog is growing and we are very proud with this 30% increase

In the backlog, remember, these are all orders that we still didn't recognize the revenue. It's a backlog of orders, but the revenue will be recognized going forward. One of the main drivers for supporting this growth is definitely the minority investment that we are making. in those growing platforms. Each one of them are expanding their ability. They're not only buying some new locations, but they're also growing organically and expanding the utilization of TMS inside their business. So most of them, like you know, most likely going to have more than one system in each location. And based on that, and based on the demand and the growing demand of patients, they will continue to order a bulk of systems from us as utilization grows since the interventional psychiatry market continues to grow. So I do anticipate this number will continue to grow toward the end of the year and that's what really gives us good visibility when we're entering into 2027.

Perfect. Thanks for taking our questions. Congrats on the quarter.

Thank you, Jeff. As a reminder, to ask a question, please press star 1. The next question is from Ahmed Mahmoud from HC Wainwright. Please go ahead.

Thank you for taking our questions. This is Ahmed on for Rom. Could you give us some color on how Prolif RF sails on ramping and would you expect to decide whether to acquire new relief and what factors will determine that decision?

Yeah, thank you for taking this question. You know, I think as I said in my script, you know, new relief is a very important factor Thank you very much. Some of the first commercial stage within the VA channel, but also in some private clinics. The progress are going very well, but what we would like to monitor is kind of in the next 90 days, what we call the soft launch is just to see that, you know, What are the main KPIs that will help us to accelerate the growth when you're going to do a full launch of this? So today we still have only minority investment in New Relief. It's a convertible loan. We will decide whether we would like to continue and invest or acquire New Relief based on some commercial milestone which relates to growth and profitability. So there is still time for that. Right now we are very encouraged with the commercial progress and the soft launch that they are making in the U.S. More to come, and I believe that I will report and give much more details on some of those important metrics toward the end of the year.

Thank you. And if you could just follow up on the minority investments. Could you give us some color on the cadence and the number of minority investments you plan on making in the first half of this year, and when do you expect them to begin accelerating gains with revenue growth? And on a separate follow-up, might the optimized DTMS protocol be elevated earlier in the treatment continuum for major depression? Thank you.

Yeah, look, on the minority investment, We have done today six minority investments. I believe we are expecting, and we still have a pipeline of minority investments that we are reviewing very carefully in some very thorough due diligence process. There is definitely a good interest. Look, my expectation is to invest in Growing business with the right management team and a profitable business. I would like to make sure that I am investing in the right portfolio that has the ability to grow their business in interventional psychiatry. When they are growing, which means that there is a growing demand by patients, and when there is a growing demand by patients, you can assume that there will be also a growing demand for the DeepTMS platform. And again, my expectation is to have at least more than one system in each one of those locations, specifically due to the adoption of the SWIFT protocol. So as long as each one of them will continue to grow and based on their projections, you know, each one of them can expand to 10 to 15 locations every year. So if they will execute very well, and they are executing very well, I am expecting to continue and see a very nice demand on and use of the DPMS platform. What was the other question?

The other question? So I was asking how much the optimized EMS protocol be elevated early in the treatment continuum.

Yeah, you know, I think on the continuum of care, you know, once you failed in one or two medications, you have several good options. We believe that a very good option is the non-invasive treatment of the deep TMS, specifically with the SWIFT protocol. There are some other options, like psychedelic. that are very popular today. But, you know, where I'm seeing the continuum of care in terms of growing the business, we are growing with one of the most growing market which is interventional psychiatry. So I do believe that, you know, the future of this business will be offering options to patients. which will be a combination of few treatment modalities. It could be psychedelic, it could be deep TMS, and it could be also med management. So on the continuum of scale, deep TMS is definitely reaching to an inflection point where exactly it should be, and we're seeing some better results and better demands due to that.

Thank you.

There are no further questions at this time. I'd like to turn the floor back over to Hadar Levy for closing comments.

Thank you. So with that, we conclude our remarks for today. I want to thank again for all the investors and the analysts for following the company. Thank you, and that's it for today. Have a good one.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.