Executive Summary / Key Takeaways

• BrainsWay Ltd. ($BRSYF) is transforming from a pioneering technology firm into a scalable, profitable growth platform, leveraging its proprietary Deep Transcranial Magnetic Stimulation (Deep TMS) technology to address a broad spectrum of mental health and neurological disorders.
• The company reported record quarterly revenue of $12.6 million in Q2 2025, contributing to a 27% year-over-year increase in revenue for the first six months of 2025, driven by a strategic shift towards multiyear lease agreements and strong demand for its systems.
• BrainsWay's technological edge, particularly its H-Coil design and FDA clearances for multiple indications (MDD, OCD, smoking addiction, anxious depression, late-life depression), provides a significant competitive moat, with ongoing R&D into accelerated protocols and next-generation Deep TMS 360 systems promising further innovation.
• Strategic minority investments in mental health networks like Stella MSO, LLC, Neurolief Ltd., and Axis Management Company, Inc. are designed to expand market awareness, R&D capabilities, and patient access, with a goal of at least five new partnerships by year-end 2025.
• Management has raised its full-year 2025 revenue guidance to $50 million to $52 million, representing 22% to 27% growth, alongside anticipated operating profit of 4% to 5% and adjusted EBITDA of 12% to 13%, reflecting confidence in its recurring revenue model and operational efficiency.

The Deep Dive: BrainsWay's Ascent in Neurostimulation

BrainsWay Ltd. is establishing itself as a leader in advanced non-invasive neurostimulation treatments, utilizing its proprietary Deep Transcranial Magnetic Stimulation (Deep TMS) platform to address a growing array of mental health disorders. Founded in 2003, the company's journey has been marked by a series of significant FDA clearances, beginning with Major Depressive Disorder (MDD) in 2013, and expanding to Obsessive-Compulsive Disorder (OCD) in 2018 and smoking addiction in 2020. This foundational regulatory success has positioned BrainsWay as the first and only TMS company cleared by the FDA for three distinct mental health conditions based on pivotal randomized placebo-controlled studies.

The company's core strategy revolves around three pillars: elevating market awareness of Deep TMS, advancing its R&D roadmap for new indications, and broadening patient access through global expansion and health system integration. This approach is critical as BrainsWay works to cement its role in shaping the future of mental health treatment. The broader industry is experiencing a growing demand for non-pharmacological and less invasive mental health solutions, with increasing interest from large enterprise mental health networks and even psychedelic clinics looking to integrate advanced neuromodulation technologies. This trend provides a significant tailwind for BrainsWay's growth trajectory.

Technological Edge and Innovation Pipeline

BrainsWay's competitive advantage is rooted in its proprietary Deep TMS technology, specifically its unique H-Coil helmets. Unlike traditional TMS devices that often use figure-8 coils, the H-Coils are designed to safely stimulate deeper and broader brain regions. This capability is crucial for effectively treating complex conditions and is a key differentiator in the market. For instance, Deep TMS is the first TMS therapy approved for OCD, demonstrating over 60% patient response rates, and the first TMS device cleared for anxious depression, a condition affecting 10 to 16 million U.S. adults annually. The FDA's expanded clearance in May 2024 to treat late-life depression (patients aged 22 to 86) further underscores its unique position, making it the only TMS device approved for this elderly population.

The company's commitment to innovation extends to its robust R&D pipeline. BrainsWay is developing its next-generation Deep TMS 360 system, which is envisioned as a revolutionary platform offering shorter treatments with potentially enhanced efficacy. This system is slated for its first multi-center trial in the U.S. for Alcohol Use Disorder (AUD) in the second half of 2025, with feasibility studies for neurological indications like cognitive behavior and Parkinson's also planned. Furthermore, BrainsWay has submitted data to the FDA for an accelerated MDD treatment protocol, which aims to reduce the acute treatment phase from the traditional six weeks to a significantly shorter period, potentially as brief as six days. This could substantially improve patient convenience and appeal, with FDA clearance anticipated in Q4 2025. The company is also exploring a clinical trial for combining Deep TMS with psychedelic therapies, planned for Q3 2025, and is collecting data for potential FDA clearance for adolescent depression and PTSD.

Financial Performance and Operational Strength

BrainsWay's financial performance reflects its strategic execution and the growing adoption of its technology. For the second quarter of 2025, the company reported record revenue of $12.6 million, a 26% increase compared to the same period last year. Total revenues for the six months ended June 30, 2025, reached $24.2 million, up 27% from $19.1 million in the prior-year period. This growth was primarily driven by an increase in system sales, which accounted for 64% of total revenues in the first half of 2025, a notable shift from 42% in the same period of 2024. Lease revenues, while decreasing in absolute terms for the six-month period, remain a critical component of the company's recurring revenue strategy, with multiyear lease agreements now comprising approximately 70% of recent customer engagements.

The company maintains a strong gross margin, holding steady at 75% for both Q2 2025 and Q2 2024, demonstrating disciplined cost management. Operating expenses saw increases in the first half of 2025, with research and development rising 42% to $4.7 million due to increased headcount and clinical trial investments, and selling and marketing expenses growing 20% to $9.1 million to support commercial expansion. General and administrative expenses increased 19% to $3.2 million, largely attributed to new business development initiatives. Despite these investments, BrainsWay achieved a net profit of $2 million in Q2 2025, marking its sixth consecutive quarter of positive net profit. The company's installed base expanded to 1,522 Deep TMS systems as of June 30, 2025, with 169 new systems placed in the first half of the year. A robust backlog of $62 million in remaining performance obligations provides strong revenue visibility.

Liquidity and Strategic Investments

BrainsWay boasts a strong balance sheet, ending Q2 2025 with $78.3 million in cash, cash equivalents, restricted cash, and short-term deposits. This represents an $8.7 million increase from year-end 2024 and a $30.2 million increase year-over-year, primarily driven by strong collections and the equity financing completed in Q4 2024. The company's capital structure remains debt-free, providing significant flexibility for strategic growth initiatives.

A key strategic initiative involves making minority interest investments in mental health providers and complementary enterprises. This strategy, supported by a $20 million equity financing from Valor Equity Partners in November 2024, allows BrainsWay to expand market awareness and patient access without directly entering operational roles outside its core technology focus. The company has already made several such investments in 2025: a $5 million equity financing in Stella MSO, LLC, which has seen over a 50% increase in TMS patient utilization; an initial $2.3 million investment in Axis Management Company, Inc.; and a $5 million convertible loan to Neurolief Ltd., a developer of a non-invasive brain neuromodulation platform. BrainsWay aims to complete at least five such strategic contracts by the end of 2025, with individual investments ranging from $2 million to $5 million.

Competitive Landscape and Positioning

BrainsWay operates in a competitive neurostimulation market, primarily against direct rivals like Neuronetics (STIM), electroCore (ECOR), and Helius Medical Technologies (HSDT), as well as indirect competitors such as pharmaceutical companies and digital therapeutics providers. BrainsWay's Deep TMS technology offers a distinct advantage due to its ability to stimulate deeper and broader brain regions, which is critical for treating a wider range of complex mental health disorders. This technological differentiation allows BrainsWay to offer more comprehensive solutions compared to Neuronetics' NeuroStar, which is well-established for depression but may not offer the same depth of penetration.

Against electroCore's vagus nerve stimulation devices, BrainsWay's targeted brain stimulation for psychiatric disorders provides a different approach, while Helius Medical Technologies focuses more on neurorehabilitation. BrainsWay's strategy of expanding indications and securing multiple FDA clearances further solidifies its market leadership. While precise market share figures for all niche competitors are not publicly detailed, BrainsWay's strong performance in system placements and its focus on enterprise accounts suggest a robust competitive standing. The company's recurring revenue model, driven by lease agreements, also provides a more stable financial foundation compared to some competitors. However, potential vulnerabilities include reliance on a specialized supply chain and brand recognition in nascent international markets.

Outlook and Risks

BrainsWay's management has expressed strong confidence in its future, raising its full-year 2025 revenue guidance to a range of $50 million to $52 million, representing 22% to 27% growth over 2024 revenue. The company anticipates generating an operating profit in the range of 4% to 5% of revenue and adjusted EBITDA of 12% to 13% for the year. This positive outlook is underpinned by its healthy backlog, continued momentum in the U.S. and international markets, and the increasing adoption of its Deep TMS platform. Management expects gross margins to remain around 75% for 2025, with continued investments in R&D and clinical trials to drive future growth.

Despite the positive outlook, investors should consider certain risks. In April 2025, the U.S. President Trump Administration announced a 17% tariff on goods imported from Israel to the U.S. While BrainsWay does not believe its H1 2025 financial results were materially affected, the company is actively evaluating options to mitigate potential future reductions in U.S. sales and revenues if substantial tariffs remain. The company also acknowledges that its quarterly operating results can vary due to factors like the sales-to-lease mix and fixed expenses, making period-to-period comparisons not always meaningful. Geopolitical risks related to its Israeli operations are being managed with a continuity plan and exploration of moving some operations outside Israel, with no current disruptions reported.

Conclusion

BrainsWay Ltd. is demonstrating a compelling investment narrative, characterized by its innovative Deep TMS technology, expanding clinical indications, and a strategic shift towards a scalable, recurring revenue model. The company's strong financial performance in the first half of 2025, coupled with a robust balance sheet and strategic minority investments, positions it for sustained growth. BrainsWay's technological leadership, particularly its unique H-Coil design and multiple FDA clearances, provides a significant competitive advantage in the burgeoning neurostimulation market. As the company continues to advance its R&D pipeline with next-generation systems and accelerated treatment protocols, while strategically expanding its global footprint and partnerships, it is well-positioned to capitalize on the increasing demand for effective mental health solutions. The revised 2025 guidance reflects management's confidence in its ability to execute its growth strategy and deliver shareholder value, even as it monitors and addresses potential macroeconomic and geopolitical challenges.