BrainsWay (BWAY) Q3 2026 earnings review
BrainsWay doubles operating profit, but it keeps funding its customers
BrainsWay, the maker of magnetic-stimulation helmets for mental health, grew sales and doubled operating profit while pouring more cash into customer clinics. Third-quarter revenue rose 34% to $18 million as system shipments increased 44% and selling costs fell as a share of sales. Chief executive Hadar Levy pointed full-year targets to the top of the existing range, which by our math leaves fourth-quarter sales growth near 32%.
| Revenue | $18.1M +34% from a year ago |
|---|---|
| Operating margin | 14.3% 9.3% a year ago |
| Deep TMS systems shipped | 130 +44% from a year ago |
| Full-year outlook | Upper end $70M revenue (+34%), 14% operating margin |
⚖️ Verdict: 🟢 Bullish
The story got better because insurer coverage for its faster treatment protocol passed 70 million US lives and lifted operating margins above 14% a quarter early. One caution: BrainsWay put another $3.8 million into clinic networks this quarter, nearly doubling its balance-sheet investment holdings this year without saying how many machines those funded clinics bought.
The question now is whether clinic chains are ordering more helmets because faster insurance reimbursement boosts patient traffic or because BrainsWay is funding their expansion. If insurer coverage is the driver, backlog growth will stay near 30% without new equity checks; if balance-sheet funding drives demand, orders will slow when investments pause. The annual filing's related-party and lease disclosures will tell.
🐂 Bull Case
Sales Costs Shrank as a Share of Revenue
"Our third-quarter results demonstrate our ability to translate strong revenue growth into higher profitability and cash generation," chief executive Hadar Levy said. The numbers back him up because BrainsWay grew revenue 34% to $18.1 million while keeping a tight lid on its commercial overhead.
- Gross margin: 77.9%, up 2.7 percentage points from a year ago as cost of making the products fell to 22.1% of sales
- Selling and marketing expenses: 30.5% of revenue, down 4.5 percentage points from 35.0% a year ago
- Research and development expenses: 19.5% of revenue, up 1.7 percentage points as clinical trials expanded
- Operating margin: 14.3%, up 5.0 percentage points from 9.3% last year
The medical-device maker already sits above the 14% top end of its full-year operating margin plan in the third quarter alone. Because BrainsWay sells more headsets to multi-clinic networks, its sales team closes larger orders without adding staff at the same pace.
What to watch: fourth-quarter operating expenses when full-year results arrive. By our math, the top end of the annual plan points to a 14.6% operating margin next quarter, which will show whether clinical trial spending eats into those commercial savings.
Insurer Coverage for Fast Treatment Passed 70 Million
BrainsWay sells Deep TMS, a helmet system that uses magnetic pulses to treat depression and obsessive-compulsive disorder (OCD) without surgery. Its SWIFT protocol shortens treatment from several weeks of daily visits to a rapid multi-session schedule over a few days, and Levy wants health insurers to pay for it so clinics can treat more patients per machine.
The company reported that "favorable coverage for the SWIFT™ accelerated Deep TMS protocol now extends to more than 70 million covered lives in the U.S." That is up from about 57 million three months ago and well above the 40 million to 50 million target management set at the start of the year. Shipments of Deep TMS systems rose 44% from a year ago to 130 units, lifting the installed base to 2,080 machines, and BrainsWay also resumed reporting OCD coil shipments, which grew 17% to 54 units.
What to watch: whether expanded SWIFT insurance coverage lifts revenue per installed machine in the fourth-quarter report. Wider coverage only strengthens the business if clinics run more sessions and order extra systems.
Contracted Backlog Reached $85 Million on Clinic Deals
BrainsWay leases and sells its systems under multi-year contracts, tracking future billed and unbilled lease and service commitments as remaining performance obligations (RPO). Levy cited continuing momentum in recurring revenue as clinics lock in multi-year agreements.
That contracted backlog rose 31% from a year ago to about $85 million at the end of September. After the quarter closed, the Israeli neurostimulation group signed a multi-system order and research partnership with Inland Psychiatric Medical Group, "a clinical network in Southern California with over 30 locations".
The backlog is more than 1.3 times the last twelve months of revenue, giving the business clear visibility into next year. What to watch: fourth-quarter backlog additions when full-year results print, because additions exceeding $5 million would show that chain deals like Inland are speeding up contract signings.
🐻 Bear Case
BrainsWay Keeps Funding the Clinics That Buy Its Machines
BrainsWay buys minority equity stakes in mental-health clinic management groups to help them open new sites and install its Deep TMS headsets. Supporters view this program as a growth driver that locks in multi-system clinic networks, and Levy credited partnerships with healthcare providers for strengthening the company's market position.
This quarter the company put another $3 million into Radial Health and $0.8 million into Heading Health. Those checks pushed non-current financial assets on the balance sheet to $28.9 million, nearly double the $14.7 million it held at the end of last year, alongside its earlier convertible loan to device maker Neurolief.
That spending cuts against management's story of purely organic clinical adoption because BrainsWay is putting its own cash into its customers. The company still does not disclose what share of its $85 million backlog or 130 quarterly shipments came from clinics it funded, so investors cannot tell how much growth is bought with balance-sheet cash.
What to watch: any breakdown of related-party or investee revenue in the annual report. A high share of orders coming from funded clinics would mean equipment demand depends on BrainsWay continuing to write investment checks.
System Shipments Grow Much Faster Than Revenue
BrainsWay shipped 130 Deep TMS systems this quarter, up 44% from 90 units a year ago, while revenue rose 34% to $18.1 million. By our math, revenue divided by shipped systems fell 7% from a year ago to about $140,000, down from $150,000 in the third quarter of last year.
A higher share of leased machines could explain why upfront revenue trails unit shipments, because leases spread payments over several years. However, the contracted backlog added $4.6 million this quarter by our math, down from $5.4 million in the second quarter, so backlog growth is not outrunning revenue either.
What to watch: the split between direct system sales and fixed-fee leases in the next filing. If direct sales still make up nearly three-quarters of revenue as they did in the first half, the drop in revenue per shipment points to lower unit prices on bulk clinic deals.
Risks this quarter didn't answer
Five standing risks and watch items received no update in the third-quarter press release, leaving several operational and regulatory questions open until the conference call or the year-end filing.
- PTSD and depression FDA clearance: management previously targeted clearance before year-end, and the release gave no regulatory timeline update.
- Neurolief ProlivRx launch metrics: BrainsWay holds an $11 million convertible loan in Neurolief, and early commercial figures are not due until year-end.
- Customer concentration: one buyer accounted for 31% of revenue in the first half of last year, with no updated concentration figure disclosed.
- Missing commercial ratios: the release brought back OCD coil counts but still omitted the book-to-bill ratio and the quarterly sale-versus-lease revenue split.
- Israel manufacturing and tariffs: gross margin rose to 77.9%, showing no hit so far from Israeli production risks or US import tariffs, though the release did not discuss supply-chain costs.
👓 Other Themes
Early Trials Test Suicide Risk and Alzheimer's Depression
BrainsWay published two peer-reviewed clinical studies expanding the evidence for its magnetic stimulation helmets. One study reported a 70% relative drop in patients experiencing suicidal thoughts after six weeks of treatment under both standard and SWIFT protocols, while a pilot study in patients with depression and early-stage Alzheimer's disease showed an 83.3% response rate and 50% remission. Deep TMS is not FDA cleared for either condition, so these studies support future trials rather than current sales.
💲 Other KPIs
Total deferred revenue — cash customers have paid upfront for leases and services not yet delivered — rose 15.3% from last quarter and 33.5% since December by our math. That $3.1 million quarterly jump rebuilt the prepaid balance after customers drew it down in the first half.
Cash from operations reached 34.1% of revenue, holding near the $6.3 million generated in the second quarter and up from $1.4 million a year ago. Total cash, short-term bank deposits and restricted cash edged up 1.7% from June to $63.4 million even after $4.3 million of clinic and financial investments.
Uncollected customer bills fell 5.8% from June by our math even though quarterly sales grew 6.1%. Faster customer collections added $0.4 million to operating cash flow in the third quarter, reversing the $2.5 million receivable buildup across the first nine months of the year.
🔮 Guidance
Raised. The neurostimulation group now expects results "at the upper end of its previously issued guidance ranges, with the potential to modestly exceed the guidance", which points to $70 million or 34% annual growth. By our math, $70 million leaves $19.2 million for the fourth quarter, or 32.1% growth from a year ago against 34.3% in the third quarter.
Raised. Management targets the 14.0% top end of its full-year operating profit margin range, up from 8.3% in 2025. Because the margin was 13.8% across the first nine months, hitting 14.0% on $70 million of revenue leaves a 14.6% operating margin for the fourth quarter by our math.
Raised. The plan points to $14 million, nearly double last year's $7.1 million. With $10.2 million already booked in the first nine months, the $14 million ceiling leaves $3.8 million for the fourth quarter by our math, a 19.9% margin compared with 21.3% in the third quarter.
❓ Key Questions
How much backlog comes from clinics BrainsWay funded?
Non-current financial assets nearly doubled this year to $28.9 million after another $3.8 million went to Radial Health and Heading Health. Investors need to know what share of the $85 million backlog and 130 shipped systems came from minority-investee clinics.
Why is revenue per shipped system down 7%?
System shipments grew 44% from a year ago while revenue rose 34%, dropping implied revenue per shipped machine from $150,000 to $140,000. Management has not explained whether that gap comes from more leases, smaller coil orders or volume discounts.
What is the quarterly split between sales and leases?
Direct sales jumped to 72% of revenue in the first half of 2026 from 64% a year earlier, even though management previously described roughly 70% of deals as multi-year leases. The third-quarter release did not report the split.
Is PTSD and depression FDA clearance still due in 2026?
Earlier this year management planned to file with the FDA for treating trauma symptoms in depression patients and targeted clearance before year-end. The third-quarter release did not mention the submission.