Explore our in-depth report on BrainsWay Ltd. (BWAY), which dissects the company's competitive moat, financial health, past results, growth potential, and fair value. Our analysis further contextualizes BWAY by comparing it to industry peers such as Neuronetics, Inc. (STIM) and Medtronic plc (MDT), offering insights aligned with the value investing framework of Buffett and Munger.
The outlook for BrainsWay is mixed, balancing its unique technology against significant operational risks. The company holds a strong competitive advantage with its patented Deep TMS technology. It has exclusive FDA approval for treating OCD, creating a unique market position. BrainsWay boasts a very strong balance sheet with substantial cash and minimal debt. However, its ability to generate consistent cash from operations remains a key concern. While the company recently turned profitable, its history shows performance inconsistency. High valuation multiples suggest this recent turnaround is already priced into the stock.
US: NASDAQ
BrainsWay Ltd. operates a business centered on the design, development, and marketing of a non-invasive neuromodulation platform called Deep Transcranial Magnetic Stimulation (Deep TMS). This technology is used to treat a variety of brain disorders. The company’s business model involves selling or leasing its Deep TMS systems to healthcare providers, such as psychiatrists, hospitals, and specialized mental health clinics. A significant and growing portion of its revenue comes from a recurring lease model, which includes the system, maintenance, and support for a regular fee, lowering the upfront financial barrier for customers. The core of their offering is the system itself, which is powered by their patented H-coil technology, designed to stimulate deeper and broader areas of the brain compared to traditional TMS devices. BrainsWay's key commercialized products are its Deep TMS systems tailored for three specific, FDA-cleared indications: Major Depressive Disorder (MDD), Obsessive-Compulsive Disorder (OCD), and Smoking Addiction, with the vast majority of its revenue generated in the United States.
The company's primary revenue driver is its Deep TMS system for the treatment of Major Depressive Disorder (MDD), specifically for patients who have not responded to antidepressant medications. This product line accounts for the largest portion of the company's revenue. The system uses a specific H1-coil to target brain structures associated with depression. The total addressable market is substantial, with millions of adults in the U.S. suffering from treatment-resistant depression. The market for TMS therapy is growing at a double-digit CAGR as it becomes a more accepted standard of care. Competition in the MDD space is notable, with Neuronetics and its NeuroStar Advanced Therapy system being the most prominent rival, alongside other players like MagVenture and Magstim. These competitors primarily use a different, older technology known as the figure-8 coil, which BrainsWay argues is less effective at reaching deeper brain structures. Customers, typically psychiatric clinics, invest significantly in the device (either through purchase or a multi-year lease) and in training their staff. This creates moderate switching costs, as changing systems would require new capital outlay and retraining, leading to good customer stickiness once a clinic adopts the BrainsWay platform. The moat for the MDD product is built on its established clinical data from numerous studies, broad insurance reimbursement coverage, and the proprietary nature of its H-coil technology, which the company markets as a key clinical differentiator.
A key pillar of BrainsWay's competitive moat is its Deep TMS system for Obsessive-Compulsive Disorder (OCD), which utilizes the specialized H7-coil. This product is a significant differentiator because BrainsWay holds the first and only FDA clearance for a non-invasive medical device to treat OCD. This regulatory exclusivity gives it a temporary monopoly in the TMS-for-OCD market. While OCD is less prevalent than MDD, the market for treatment-resistant OCD is still significant and underserved, representing a multi-billion dollar opportunity. The direct competition within the TMS space for this indication is non-existent due to the lack of other FDA-cleared devices, meaning alternative treatments are pharmaceuticals and psychotherapy, not other TMS systems. For clinics looking to offer an advanced, FDA-cleared OCD treatment, BrainsWay is the only option. Customer stickiness is extremely high for this indication. The moat here is exceptionally strong and clear-cut: it is a regulatory moat granted by the FDA. This exclusivity prevents direct competition and allows BrainsWay to be a price-setter, though commercial success is still dependent on convincing clinics of the ROI and securing consistent insurance reimbursement, which is gradually expanding.
The most recent addition to BrainsWay's commercial portfolio is its Deep TMS system for Smoking Addiction, cleared by the FDA in 2020. This treatment uses the H4-coil to target brain circuits associated with addiction. Currently, this product contributes a small fraction of total revenue but represents a potentially massive growth area. The market for smoking cessation is enormous, with tens of millions of smokers in the U.S. alone attempting to quit each year. Competition is vast and varied, including nicotine replacement therapies (patches, gum), prescription drugs (like Chantix), and behavioral therapies. BrainsWay's device enters this market as a novel, non-drug option for those who have failed other methods. The consumer is the smoker, but the customer is the clinic that offers the treatment program. The stickiness is still being established as the product is new to the market. The competitive moat is again regulatory in nature; having an FDA-cleared medical device for this specific indication is a high barrier to entry that competitors in the TMS space have not yet crossed. Its success will depend heavily on marketing efforts to raise awareness among both physicians and the public, as well as securing broad reimbursement from insurance payers, which is still in its early stages.
BrainsWay’s business model has strategically pivoted from primarily direct sales to a lease-based, recurring revenue model. As of early 2024, lease revenues accounted for over 58% of total revenue, a significant increase from prior years. This model is attractive for customers as it reduces the large upfront capital expenditure required to acquire a ~$100,000 medical device, thereby accelerating the adoption of Deep TMS systems. For BrainsWay, it creates a predictable and stable stream of recurring revenue, improves financial forecasting, and builds long-term relationships with customers. This structure inherently increases customer lifetime value through multi-year contracts and potential up-sells of new treatment coils as they are approved. This business model itself contributes to the company's moat by embedding its technology within a clinic's financial and operational framework, making it harder to displace.
The durability of BrainsWay’s competitive edge, or moat, is rooted in a combination of factors. The most powerful is its regulatory moat. Securing FDA clearances, especially the exclusive one for OCD, requires years of rigorous and expensive clinical trials that are difficult for competitors to replicate. This creates a significant time and cost barrier to entry. Secondly, its intellectual property, with over 100 patents protecting the core H-coil technology, prevents direct imitation of its technical differentiator—the ability to stimulate deep brain regions. Finally, as its installed base of over 1,100 systems grows, it benefits from emerging switching costs. Clinics that have invested time and money in purchasing a system, training staff, and building patient referral pathways are less likely to switch to a competing platform.
However, the business model is not without vulnerabilities. Its primary risk is a heavy reliance on reimbursement policies from third-party payers like Medicare and private insurers. Any adverse change in coverage or reimbursement rates for TMS procedures could significantly impact the financial viability for its customers and, in turn, its own revenue. Furthermore, while its technology is patented, the broader neuromodulation field is highly innovative. New, more effective, or cheaper treatment modalities could emerge, potentially disrupting the TMS market. The company is also still unprofitable, with high sales, general, and administrative (SG&A) expenses (~78% of revenue in 2023) reflecting the high cost of market education and sales force expansion. Sustaining its moat requires continued investment in R&D and clinical studies to expand indications and defend its clinical superiority.
In conclusion, BrainsWay's business model appears resilient, and its moat is substantial for a company of its size. The combination of regulatory exclusivity, patented technology, and a growing base of recurring revenue provides a solid foundation for long-term competitiveness. The company has successfully created defensible niches, particularly in OCD, where it faces no direct device competition. The key to its long-term success will be its ability to leverage this moat to drive wider adoption, expand reimbursement coverage for its newer indications, and ultimately achieve sustained profitability. The moat is not impenetrable, but it affords the company a significant and durable advantage in the specialized therapeutic device market.
From a quick health check, BrainsWay is currently profitable, posting a trailing twelve-month net income of $6.25 million and positive earnings in its last two quarters. However, its ability to generate real cash is inconsistent. After a very strong second quarter with $11.22 million in free cash flow, the third quarter saw a dramatic drop to just $0.59 million, indicating that its cash generation is not yet stable. The company’s balance sheet is very safe, boasting a cash pile of $70.46 million against a small total debt of $6.75 million. The main near-term stress is this cash flow volatility, coupled with ongoing shareholder dilution as the number of shares outstanding continues to rise.
The income statement reveals a company in a growth phase, with strengths and weaknesses. Revenue growth is robust, increasing by 28.66% year-over-year in the most recent quarter to $13.51 million. A key strength is the high and stable gross margin, consistently hovering around 75%. This indicates the company has strong pricing power for its specialized devices. However, profitability further down the income statement is thin. Operating margin improved to 9.27% in the latest quarter from 3.39% for the full last year, showing better cost control. For investors, this means that while the core product is profitable, the company's overall profitability is still sensitive to its high operating expenses for research and sales.
To determine if BrainsWay's reported earnings are 'real,' we look at how well they convert to cash. The picture here is mixed and shows some lumpiness. In the full fiscal year 2024, cash from operations (CFO) was a strong $10.3 million, well above the net income of $2.92 million. This trend continued in the second quarter of 2025, where CFO of $12.38 million dwarfed net income of $2.03 million. However, this reversed in the third quarter, with CFO of $1.39 million falling short of the $1.57 million net income. This volatility is mainly due to large swings in working capital, particularly unearned revenue, which can fluctuate based on the timing of customer payments. This inconsistency makes it hard to rely on any single quarter's cash flow as a true indicator of the company's underlying health.
The company’s balance sheet is a significant source of strength and resilience. As of the latest quarter, BrainsWay holds $70.46 million in cash and equivalents, which is more than ten times its total debt of $6.75 million. This gives it a strong net cash position of $63.71 million. Its liquidity is excellent, with a current ratio of 3.19, meaning it has more than three dollars of short-term assets for every dollar of short-term liabilities. With a debt-to-equity ratio of just 0.1, the company relies very little on borrowed money. For investors, this translates to a very low risk of financial distress. The balance sheet is unequivocally safe and provides a solid foundation to support growth and navigate any potential business challenges.
BrainsWay's cash flow engine, which funds its operations and investments, is currently uneven. Cash from operations has been highly variable, dropping from $12.38 million in Q2 to $1.39 million in Q3. Capital expenditures are modest and consistent, at around $1 million per quarter, suggesting the company is primarily focused on maintenance and incremental growth rather than large-scale expansion projects. With no dividends or share buybacks, the free cash flow generated is being used to build up the cash reserves on the balance sheet. In summary, the company's cash generation looks dependable over the long run but is subject to significant quarterly fluctuations, making it difficult to predict in the short term.
Regarding shareholder payouts and capital allocation, BrainsWay is firmly in a growth phase and does not pay a dividend. Instead of returning cash to shareholders, the company is reinvesting in the business. A critical point for investors to note is shareholder dilution. The number of shares outstanding has increased from 34 million at the end of fiscal 2024 to over 39 million in the latest quarter. This increase dilutes the ownership stake of existing shareholders and means that earnings must grow faster just to keep the earnings per share stable. Currently, cash is being allocated to fund operations—primarily R&D and SG&A—and to strengthen the balance sheet. The company is funding its growth sustainably from its operations and cash reserves, not by taking on debt.
In summary, BrainsWay's financial statements present several key strengths and risks. The biggest strengths are its rock-solid balance sheet, featuring $70.46 million in cash against minimal debt, and its consistently high gross margins of 75%. These are complemented by strong recent revenue growth of over 28%. However, there are significant red flags. The most serious is the volatile and unreliable operating cash flow, which makes the quality of earnings questionable. Another major risk is the ongoing shareholder dilution, with shares outstanding increasing by over 14% in less than a year. Overall, the company's financial foundation looks stable thanks to its balance sheet, but its operational performance is risky due to inconsistent cash generation and shareholder dilution.
When evaluating BrainsWay's historical performance, the most striking feature is the recent inflection from a struggling growth company to a profitable one. A comparison between its five-year and three-year trends highlights this acceleration. Over the five fiscal years from 2020 to 2024, the company's revenue grew at a compound annual growth rate (CAGR) of approximately 16.7%. However, looking at the more recent three-year period, the CAGR accelerated to 22.8%, driven by strong performance in FY2023 and FY2024. This indicates strengthening commercial momentum.
A similar, but even more dramatic, shift is visible in profitability. Across the five-year period, BrainsWay was consistently unprofitable, with operating margins ranging from -15.6% to a low of -46.67% in FY2022. The narrative changed completely in FY2024 when the operating margin turned positive to 3.39%. This pivot from burning cash to generating profits is the single most important development in the company's recent history. Likewise, free cash flow was negative in four of the last five years, but swung to a positive $6.5 million in FY2024, demonstrating that the newfound profitability is translating into tangible cash.
Analyzing the income statement reveals a company with strong underlying product economics but high operating costs. BrainsWay has consistently maintained high gross margins, typically between 73% and 78%, suggesting healthy pricing power for its therapeutic devices. The historical issue was that operating expenses, particularly selling, general & administrative costs, consumed all the gross profit and more. For years, this led to significant net losses, such as the -$13.35 million loss in FY2022. The breakthrough in FY2024, which saw revenue grow 29.04% to $41.02 million while operating expenses were controlled, allowed the company to finally achieve a net income of $2.92 million.
The balance sheet has historically been a source of stability amidst the income statement volatility. The company has operated with very little debt, with total debt at a manageable $5.62 million against total assets of $94.32 million at the end of FY2024. This low-leverage approach has reduced financial risk. Liquidity is robust and has improved significantly, with cash and equivalents growing from $16.96 million in FY2020 to $69.35 million in FY2024. This strong cash position, largely funded by share issuances, has provided the necessary runway to navigate its unprofitable years and fund growth initiatives.
BrainsWay's cash flow performance mirrors its profitability struggles. The company did not generate consistent positive cash from operations (CFO) until the most recent fiscal year. CFO was negative in FY2020 and FY2022, and only modestly positive in other years before jumping to $10.3 million in FY2024. Consequently, free cash flow (FCF) was also negative for four of the last five years. The recent positive FCF of $6.5 million is a significant milestone, suggesting the business model can be self-sustaining, but it lacks a track record of consistency. This history of cash burn is a critical risk factor for investors to consider.
BrainsWay has not paid any dividends to shareholders over the past five years. Instead, the company has focused on funding its operations and growth. To do this, it has heavily relied on raising capital by issuing new shares. The number of shares outstanding on the income statement increased from 22 million in FY2020 to 34 million in FY2024. This represents significant dilution for existing shareholders, as their ownership stake in the company was reduced over time.
From a shareholder's perspective, this capital strategy has been a double-edged sword. The dilution was substantial; the share count increased by approximately 55% over five years. For most of this period, per-share metrics were negative, with EPS at -$0.24 in FY2020 and FCF per share at -$0.17. However, the capital raised by issuing shares, such as the $42.26 million in stock issued in FY2021, was essential for the company's survival and has funded the growth that led to the recent turnaround. With EPS now positive at $0.09 and FCF per share at $0.19 in FY2024, one could argue the dilution is finally being justified by performance. The capital allocation strategy has been geared towards long-term viability rather than immediate shareholder returns.
In conclusion, BrainsWay's historical record does not yet support full confidence in its execution, as its performance has been choppy rather than steady. The company's biggest historical weakness was its inability to translate strong gross margins into net profit, leading to years of losses and reliance on equity financing. Its single biggest strength has been the recent, successful pivot to profitability and positive cash flow, which was enabled by a conservatively managed, low-debt balance sheet. The past performance is one of a high-risk turnaround, not a stable compounder.
The market for Transcranial Magnetic Stimulation (TMS) and other neuromodulation technologies is poised for significant growth over the next 3-5 years. The global TMS market is projected to grow at a CAGR of around 8-10%, driven by several powerful trends. First, there is a growing societal and clinical need for effective treatments for mental health conditions, particularly for patients who do not respond to traditional pharmaceuticals. Second, increasing awareness and acceptance of TMS among both physicians and patients as a safe and effective non-invasive option is lowering adoption barriers. Finally, expanding insurance reimbursement policies are making these relatively expensive treatments accessible to a larger patient population. Catalysts for increased demand include favorable demographic trends with an aging population and rising prevalence of neurological disorders, as well as ongoing clinical trials that could approve TMS for new conditions like Alzheimer's or PTSD.
Despite these tailwinds, the competitive landscape is becoming more defined. Entry into this market is difficult due to the high costs and long timelines associated with R&D, clinical trials, and securing FDA approval. This creates a high barrier to entry, favoring established players with approved technologies and existing sales channels. Companies like BrainsWay, Neuronetics, and MagVenture dominate the space. Competitive intensity will likely revolve around clinical differentiation (proving one technology is better for certain conditions), expanding indications to capture new patient populations, and innovating on the business model (e.g., leasing vs. selling) to ease the financial burden on clinics. The companies that succeed will be those that can demonstrate superior patient outcomes, secure broad insurance coverage, and effectively market their unique advantages to healthcare providers.
BrainsWay’s core product remains its Deep TMS system for Major Depressive Disorder (MDD). Current consumption is focused on patients with treatment-resistant depression, a large but competitive market. The primary factor limiting consumption is intense competition from Neuronetics' NeuroStar system, which has a larger installed base and longer market presence. Consumption is expected to increase steadily as TMS becomes a more standard line of therapy rather than a last resort. Growth will be driven by wider adoption in psychiatric clinics and hospitals, supported by robust insurance coverage covering over 350 million lives in the US. The market for MDD therapeutics is vast, with the TMS segment estimated to be worth over $1 billion. When choosing between systems, customers weigh BrainsWay's patented H-coil, which claims to stimulate deeper brain regions, against Neuronetics' extensive clinical data and marketing muscle. BrainsWay can outperform where clinics prioritize its unique technology for potentially harder-to-treat cases. A key future risk is pricing pressure from competitors or if Neuronetics develops a next-generation coil that challenges BrainsWay's technological claims. The probability of increased pricing competition is high.
Expansion into Obsessive-Compulsive Disorder (OCD) represents BrainsWay's most significant and defensible growth opportunity. Currently, consumption is relatively low and limited by physician awareness and, most critically, inconsistent insurance reimbursement. However, this is changing rapidly. The primary catalyst for a dramatic increase in consumption is the expansion of insurance coverage; a recent positive Local Coverage Determination (LCD) from a major Medicare contractor is a crucial step forward. The addressable market for treatment-resistant OCD is estimated to be over $3 billion annually in the U.S. As BrainsWay holds the only FDA clearance for a TMS device to treat OCD, it operates with a temporary monopoly. Competitors are non-existent in the TMS space for this indication; the alternatives are drugs and behavioral therapy. The number of companies in this specific vertical is one, and it will likely remain low for the next 3-5 years due to the difficulty of replicating the required clinical trials. The primary risk is a competitor, such as Neuronetics, eventually securing an FDA clearance for OCD, which would eliminate BrainsWay's monopoly. The probability of this happening within 5 years is medium, as competitors are undoubtedly pursuing this lucrative market.
BrainsWay's third indication, for Smoking Addiction, offers massive long-term potential but faces the highest near-term uncertainty. Current consumption is minimal, existing almost exclusively in a private-pay market. The single greatest constraint is the near-total lack of third-party reimbursement, which makes the treatment prohibitively expensive for most patients. The potential market is enormous, with tens of millions of smokers seeking to quit. However, competition includes a wide array of cheap and accessible options like patches, gums, and prescription drugs. For consumption to increase, BrainsWay must generate compelling clinical and economic data to convince insurers to cover the therapy. This is a long and expensive process. The key risk for this product is that it fails to ever achieve widespread reimbursement, relegating it to a niche, cash-pay service. The probability of this risk materializing is high, as payers are often reluctant to cover smoking cessation devices without overwhelming evidence of cost-effectiveness.
Beyond these specific indications, BrainsWay's growth is also being fueled by its strategic shift to a lease-based recurring revenue model. In the first quarter of 2024, lease revenue accounted for 58% of total revenue. This model accelerates adoption by lowering the upfront cost for clinics from ~$100,000 to a manageable monthly fee, while providing BrainsWay with predictable, long-term revenue streams. This shift helps embed BrainsWay's systems within a clinic's operations, increasing customer stickiness. Future growth will also depend on the company's ability to successfully commercialize recent FDA clearances, such as for Anxious Depression, and continue to innovate through its R&D pipeline. The company's high R&D spend (~22% of revenue) signals a strong commitment to expanding its technological lead and securing new, valuable indications.
In summary, BrainsWay’s future growth is a story of high potential balanced by significant execution risk. The company's success is not dependent on a single product but on a portfolio of indications at different stages of commercial maturity. The established MDD business provides a stable base, the monopolistic OCD indication offers the clearest path to high-margin growth, and the smoking addiction therapy represents a long-term, high-risk/high-reward opportunity. Investors should closely monitor the pace of insurance coverage expansion for OCD and the company's progress toward profitability, as these will be the ultimate determinants of shareholder value creation over the next 3-5 years. The company's ability to manage its high operating expenses, particularly its sales and marketing costs (~78% of revenue in 2023), will be critical to translating revenue growth into sustainable profit.
As of January 10, 2026, BrainsWay's market capitalization stands at approximately $288 million, with an enterprise value of around $226 million, reflecting a substantial net cash position. The stock's valuation is best understood through its sales multiples and cash flow, given its recent shift to profitability. Key metrics include a trailing P/E ratio of 54.5, an EV/Sales ratio of 4.6, and a robust Price-to-FCF ratio of 15.7. While the company boasts a strong balance sheet, its history of inconsistent cash flow generation adds a layer of risk to these otherwise attractive figures.
Analysts are cautiously optimistic, with a median 12-month price target of $22.00, implying a potential upside of approximately 45.6% from its current price. This consensus is likely driven by expectations of continued growth. From an intrinsic value perspective, using a conservative free cash flow model suggests a fair value between $12–$16 per share. A cross-check using the company's healthy 6.4% free cash flow yield implies a slightly higher valuation range of $13.75–$19.25, indicating that the current price is reasonable if cash generation remains stable.
Comparing BrainsWay's valuation to its history and peers provides further context. Its current EV/Sales ratio of 4.6x is justifiable now that it has achieved profitability and is neither at a historical peak nor a trough. Against its peers, BrainsWay is priced reasonably. It trades at a significant premium to struggling competitors like Neuronetics (STIM) but at a discount to high-growth companies like Axonics (AXNX), fitting within the typical 4.0x-6.0x range for profitable, growing medical device firms. This peer comparison suggests a fair value per share of around $16.27, reinforcing the view that the stock is not mispriced.
Triangulating these different methods—analyst targets, intrinsic cash flow models, and relative multiples—points to a final fair value range of $15.00 to $19.00. At its current price of $15.11, the stock is positioned at the low end of this range, suggesting it is fairly valued with some modest upside. The valuation is most sensitive to continued revenue growth and market sentiment toward its sales multiple. A cautious approach is warranted, with a price below $14.00 offering a better margin of safety against potential volatility in its financial performance.
Bill Ackman would view BrainsWay as an intellectually interesting but ultimately un-investable company in its current state. He would be drawn to its patented H-coil technology and FDA approvals for large, difficult markets like smoking cessation, seeing the potential for a high-quality, royalty-like revenue stream if commercialization succeeds. However, the company's micro-cap size, lack of profitability, and significant cash burn (negative free cash flow) create a profile that is far too speculative and lacks the predictability he demands. BrainsWay's gross margin of around 76% is strong, indicating potential pricing power, but this is irrelevant without a clear and funded path to scaling profitably. For retail investors, Ackman's takeaway would be that while the technology is promising, the business is a venture-stage bet, not a high-quality investment, and he would avoid it. Ackman's decision could change if the company demonstrates several quarters of rapid, high-margin revenue growth from its new indications and achieves positive operating cash flow.
Warren Buffett would view BrainsWay Ltd. as a purely speculative venture that falls far outside his circle of competence and investment principles. His strategy in medical devices is to invest in established giants with unshakeable moats, predictable earnings, and consistent cash flow, like Medtronic. BrainsWay, being unprofitable and burning cash to fund its growth, represents the exact opposite of what he seeks; its lack of a positive earnings history makes it impossible to calculate a reliable intrinsic value, a cornerstone of his approach. The company's reliance on the future success of its patented H-coil technology for conditions like OCD and smoking cessation is a bet on innovation, not a proven business, making its future cash flows highly unpredictable. For retail investors, the key takeaway is that this is a high-risk bet on technology adoption, not a value investment; Buffett would avoid it without a second thought. If forced to choose in this sector, Buffett would ignore BrainsWay and its direct peers entirely and instead select dominant, profitable leaders like Medtronic (MDT), with its ~$5 billion in annual net income, or Intuitive Surgical (ISRG), which boasts operating margins over 25%. A company like BrainsWay would only ever enter his radar after a decade of consistent profitability and market leadership, at which point it would be a fundamentally different business.
Charlie Munger would approach the specialized medical device industry by seeking a simple, understandable business with a powerful, durable moat and a long history of profitability, avoiding cash-burning speculative ventures. While BrainsWay's patented H-coil technology and unique FDA approvals for difficult conditions like OCD are intellectually interesting, its consistent lack of profits and negative operating cash flow of around -$15 million on ~$35 million in revenue would be immediate red flags. He would view the company as a high-risk, execution-dependent story facing a larger, more established competitor in Neuronetics, placing it firmly in his "too hard" pile. The key takeaway for retail investors is that promising technology is not a substitute for a proven, profitable business model, and Munger would decisively avoid this stock. Management currently uses all cash to fund operations and growth, which is a necessity for survival but provides no return to shareholders until profitability is achieved, unlike peers like Medtronic who return billions. If forced to choose top-tier medical device companies, Munger would select dominant, profitable leaders with wide moats like Medtronic (MDT), Intuitive Surgical (ISRG), and Edwards Lifesciences (EW) for their proven business models and high returns on capital. Munger would only reconsider BrainsWay if it demonstrated a multi-year track record of consistent profitability and free cash flow generation, proving its economic model is viable.
BrainsWay Ltd. operates in the specialized field of non-invasive neuromodulation, a market characterized by high barriers to entry due to stringent regulatory requirements and the need for extensive clinical data. The company's core strength lies in its proprietary Deep TMS H-Coil technology, which allows for deeper and broader stimulation of brain regions compared to the traditional figure-8 coils used by most competitors. This technological differentiation has enabled BrainsWay to secure unique FDA clearances, notably for smoking cessation, creating a first-mover advantage in a potentially large market. This positions the company as a clinical innovator with a distinct technological moat.
However, BrainsWay's primary challenge is commercial execution. While its technology is compelling, the company is significantly smaller than key competitors like Neuronetics in terms of installed base, sales infrastructure, and revenue. The medical device market, especially for capital equipment, heavily relies on strong sales and support networks and, crucially, widespread insurance reimbursement. BrainsWay has made progress on this front, but navigating the complex landscape of payors is a slow and capital-intensive process that puts it at a disadvantage against larger players who have already established these relationships. This gap between clinical potential and commercial reality is the central issue for the company.
Furthermore, the competitive landscape is not limited to other TMS companies. BrainsWay also competes with alternative treatments for depression and other psychiatric disorders, including pharmaceuticals, electroconvulsive therapy (ECT), and emerging therapies like psychedelic-assisted treatments. Companies like Axsome Therapeutics, with its oral depression medications, represent a different but significant competitive threat by offering a less burdensome treatment modality. Therefore, BrainsWay must not only prove its superiority over other devices but also demonstrate a compelling value proposition against a diverse range of therapeutic options to capture a meaningful share of the mental health treatment market.
Neuronetics' NeuroStar Advanced Therapy is a leading competitor in the TMS space for treating Major Depressive Disorder (MDD). As the market pioneer, Neuronetics has a significantly larger installed base and greater brand recognition among clinicians compared to BrainsWay. While BrainsWay's Deep TMS technology may offer deeper brain stimulation, Neuronetics' established commercial infrastructure, extensive clinical data from its long history, and strong focus on practice development give it a powerful market advantage. BrainsWay competes as a technology-focused challenger, while Neuronetics competes as the entrenched market leader focused on expanding its commercial footprint.
In terms of Business & Moat, Neuronetics has a strong brand built over a longer period, resulting in a market rank as the number one TMS provider by installed systems. BrainsWay's moat is its unique H-coil technology and broader FDA clearances for conditions like smoking cessation. Switching costs are high for both, as clinics invest heavily in capital equipment and training; however, Neuronetics' larger network of over 1,500 active systems creates a network effect through shared clinical protocols and patient referrals. Both companies benefit from high regulatory barriers, requiring extensive and costly FDA trials. Overall, Neuronetics wins on Business & Moat due to its superior scale and established market leadership, creating a more durable commercial advantage.
From a financial perspective, Neuronetics consistently generates higher revenue, reporting ~$75 million in TTM revenue compared to BrainsWay's ~$35 million. This highlights Neuronetics' better market penetration. Neither company is consistently profitable, which is common for growth-stage medical device firms, but Neuronetics has a clearer path to profitability due to its scale. BrainsWay has shown slightly better gross margins at times, around 76%, versus Neuronetics' 73%, reflecting its technology-driven model. However, Neuronetics has a stronger balance sheet with more cash on hand and a more manageable cash burn rate. In terms of financial health, liquidity and revenue scale make Neuronetics the better performer. Overall Financials winner is Neuronetics due to its superior revenue base and stronger balance sheet.
Looking at Past Performance, Neuronetics has a longer track record as a public company. Over the past five years, its revenue growth has been steady but not explosive, with a CAGR around 8-10%. BrainsWay has demonstrated more volatile but occasionally higher bursts of growth, with a 5-year revenue CAGR closer to 15%, albeit from a much smaller base. In terms of shareholder returns, both stocks have been highly volatile and have underperformed the broader market, with significant drawdowns. For example, both stocks have experienced drawdowns exceeding -70% from their peaks. Neuronetics' performance has been more stable recently, while BrainsWay's has been more event-driven (e.g., FDA approvals). Overall Past Performance winner is a draw, as Neuronetics offers more stability while BrainsWay has shown higher, though riskier, growth spurts.
For Future Growth, BrainsWay's key driver is the commercialization of its new indications, particularly smoking cessation, which opens up a substantial new Total Addressable Market (TAM). Its pipeline for other conditions like fatigue in Multiple Sclerosis also presents upside. Neuronetics' growth is more focused on increasing utilization within its existing installed base and expanding indications for MDD, such as for younger patients. BrainsWay arguably has more transformative growth potential if it can successfully launch its new therapies (potential for >$100M TAM in smoking). Neuronetics has a more predictable, incremental growth path. Given the larger untapped markets BrainsWay is targeting, it has the edge in potential future growth. Overall Growth outlook winner is BrainsWay, though this outlook carries significantly higher execution risk.
In terms of Fair Value, both companies trade on a Price-to-Sales (P/S) multiple since they are not profitable. Neuronetics typically trades at a P/S multiple of around 2.5x-3.5x, while BrainsWay often trades at a similar or slightly lower multiple of 2.0x-3.0x. Given BrainsWay's unique technology and larger potential growth markets, its slightly lower multiple could suggest it is a better value. However, the valuation reflects the higher risk associated with its commercialization strategy. From a quality vs. price perspective, Neuronetics' premium is justified by its market leadership and lower commercial risk. For an investor seeking value with higher risk tolerance, BrainsWay is the better value today based on its growth potential relative to its sales multiple.
Winner: Neuronetics, Inc. over BrainsWay Ltd. The verdict favors Neuronetics due to its commanding market leadership, superior commercial infrastructure, and more stable financial footing. While BrainsWay possesses potentially superior technology with its Deep TMS and has exciting growth avenues like smoking cessation, it has yet to translate this into sustained market share or a clear path to profitability. Neuronetics' key strength is its installed base of over 1,500 NeuroStar systems, which provides a recurring revenue stream and a significant barrier to entry. Its primary weakness is slower innovation compared to BrainsWay. BrainsWay's main risk is its ability to fund and execute a complex commercial launch for new indications against a much larger, entrenched competitor. Ultimately, Neuronetics' proven business model and lower execution risk make it the stronger company today.
Nexstim is a Finnish medical technology company that develops and markets navigated TMS systems for both therapeutic (NBT® system for depression) and diagnostic (NBS System for pre-surgical mapping) applications. This dual focus on therapy and diagnostics differentiates it from BrainsWay, which is purely therapeutic. Nexstim's navigation technology, which uses 3D brain imaging to precisely target TMS pulses, is a key technological feature. However, the company is significantly smaller than BrainsWay in terms of revenue and market presence, particularly in the crucial U.S. market, making it a smaller, more specialized competitor.
Comparing Business & Moat, Nexstim's key advantage is its navigated TMS (nTMS) technology, which provides a high degree of precision (accuracy of millimeters) and is a strong selling point for neurosurgeons using it for diagnostics. This creates a small but deep moat in the pre-surgical mapping niche. BrainsWay's moat is its H-coil, designed for depth and breadth of stimulation without navigation. Both face high regulatory barriers with FDA and CE mark approvals. However, Nexstim's brand recognition is lower than BrainsWay's in the U.S. therapy market, and its smaller scale limits its network effects. BrainsWay wins on Business & Moat due to its stronger focus on the larger therapy market and broader U.S. regulatory approvals for multiple conditions.
Financially, both are small, growth-stage companies that are not yet profitable. Nexstim's TTM revenue is approximately €8-€10 million (~$9-$11 million), which is considerably lower than BrainsWay's ~$35 million. BrainsWay's gross margins are also superior, typically in the mid-70s%, while Nexstim's are lower and more volatile, often around 50-60%, partly due to a different product mix. Both companies are reliant on periodic financing to fund operations. BrainsWay has a stronger balance sheet with a larger cash position and better access to U.S. capital markets. BrainsWay is the clear Financials winner due to its larger revenue scale, higher margins, and more robust financial position.
In terms of Past Performance, both companies have struggled to generate significant shareholder returns and have experienced high stock price volatility. Nexstim's revenue growth has been inconsistent, with a 5-year CAGR in the low single digits, reflecting challenges in commercializing its technology. BrainsWay has achieved a much higher 5-year revenue CAGR of around 15%. Neither company has a history of profitability. From a risk perspective, both are speculative investments, but BrainsWay's larger operational scale and more consistent growth trajectory give it a slight edge. The overall Past Performance winner is BrainsWay, based on its superior historical growth rate.
Looking at Future Growth, Nexstim's growth drivers include expanding the use of its diagnostic NBS system and attempting to gain more traction for its NBT therapy system. The company is exploring new indications, but its pipeline is less defined than BrainsWay's. BrainsWay's future growth is more clearly defined by the rollout of its FDA-cleared indications for OCD and smoking cessation, which target large, underserved patient populations. BrainsWay has a significant edge due to its more promising and regulatorily-validated pipeline. The overall Growth outlook winner is BrainsWay, as its path to significant revenue expansion is clearer and targets larger markets.
For Fair Value, both are valued based on their future potential rather than current earnings. Nexstim trades on European exchanges and has a much smaller market capitalization, often below $50 million. Its Price-to-Sales ratio can fluctuate wildly but is often in the 3.0x-5.0x range, reflecting the market's hope for its technology despite low sales. BrainsWay's P/S ratio is typically lower, around 2.0x-3.0x, on a much larger revenue base. BrainsWay appears to be the better value, offering higher revenue and clearer growth paths for a more reasonable valuation multiple. The quality vs. price assessment favors BrainsWay, as the premium for Nexstim's navigation technology does not seem justified by its commercial performance. BrainsWay is the better value today.
Winner: BrainsWay Ltd. over Nexstim Plc. BrainsWay is the clear winner due to its substantially larger commercial scale, stronger financial position, and more promising growth pipeline in the key U.S. market. While Nexstim's navigated TMS technology is impressive and holds a strong niche in pre-surgical mapping, the company has failed to translate this into significant therapeutic sales. BrainsWay's key strengths are its ~$35 million revenue base (more than 3x Nexstim's) and its unique FDA clearances for high-potential indications. Nexstim's primary weakness is its poor commercial execution and limited market presence outside of specialized centers. The main risk for both is cash burn, but BrainsWay is better capitalized to withstand it. BrainsWay's more advanced commercial stage and superior growth prospects make it the stronger investment.
Magstim is a private UK-based company and one of the original pioneers of TMS technology. It offers a broad range of TMS systems for both clinical and research applications, making it a direct and long-standing competitor to BrainsWay. Being one of the first movers, Magstim has a well-established brand and a global distribution network. It competes with BrainsWay by offering a portfolio of well-regarded TMS systems, including its Horizon performance system, and by leveraging its deep roots in the academic and research communities. BrainsWay differentiates itself with its unique Deep TMS technology, while Magstim offers more conventional, though highly respected, figure-8 coil systems.
Analyzing Business & Moat, Magstim's strength comes from its long-standing brand, established in 1990, and its deep relationships within the neuroscience research community, which provides a steady sales channel. BrainsWay's moat is purely technological: its patented H-coil for Deep TMS. Both face the same high regulatory hurdles for clinical use. Magstim's scale is difficult to ascertain as a private company, but it is considered a top-tier player with a global installed base numbering in the thousands. Switching costs are high for both. BrainsWay has an edge with its unique FDA clearances for OCD and smoking cessation, which Magstim's systems lack. Despite Magstim's strong brand, BrainsWay wins on Business & Moat due to its patented technology and differentiated clinical applications, which provide a more defensible competitive advantage.
Financial statement analysis for Magstim is limited due to its private status. However, based on industry estimates and its market position, its annual revenue is likely in a similar range to Neuronetics, estimated at ~$50-$70 million, making it larger than BrainsWay. As a mature private company, it is also more likely to be managed for profitability or positive cash flow than the publicly-traded, growth-focused BrainsWay. BrainsWay's public financials show revenue of ~$35 million with negative profitability. Without access to Magstim's full financials, it's impossible to declare a definitive winner, but its larger estimated scale and likely focus on profitability give it a probable edge. The presumed Financials winner is Magstim, based on its larger scale and longer operating history.
Assessing Past Performance is also challenging for private Magstim. The company has operated for over three decades, indicating stability and a sustainable business model. Its growth has likely been steady and organic, driven by the expanding adoption of TMS. BrainsWay, as a public company, has shown higher but more erratic revenue growth (~15% CAGR over 5 years) and significant stock price volatility. Magstim's performance is characterized by longevity and stability, whereas BrainsWay's is defined by high-growth potential and high risk. For a risk-averse investor, Magstim's implied stability is preferable. The overall Past Performance winner is Magstim, for its proven sustainability and market endurance.
Regarding Future Growth, Magstim's growth will likely come from incremental improvements to its technology, geographic expansion, and the overall growth of the TMS market. BrainsWay's growth is more catalyst-driven, hinging on the successful commercialization of its newer indications like smoking cessation and OCD. This gives BrainsWay a much higher ceiling for growth if it can execute effectively. Magstim's path is more predictable and less explosive. BrainsWay has the edge in future growth potential due to its unique, FDA-cleared applications in large, untapped markets. Overall Growth outlook winner is BrainsWay, contingent on its ability to capitalize on these unique opportunities.
Valuation is not applicable in the same way, as Magstim is private. A comparable valuation would likely be based on a private equity transaction multiple, perhaps 3.0x-4.0x revenue, reflecting its stability. BrainsWay's public market valuation fluctuates, with a Price-to-Sales multiple often between 2.0x-3.0x. An investor in public BrainsWay gets liquidity and transparency that is not available with Magstim. From a public investor's standpoint, BrainsWay is the only option, but its valuation must be weighed against its unprofitability and execution risk. It's difficult to compare value, but BrainsWay's liquid stock at a ~2.5x sales multiple presents a clear, albeit risky, value proposition.
Winner: Magstim over BrainsWay Ltd. The verdict leans towards Magstim due to its proven longevity, larger scale, and established position as a foundational company in the TMS industry. While BrainsWay has a compelling technological edge with its Deep TMS, Magstim's long history, global reach, and reputation for quality provide a more durable and less risky business model. Magstim's key strengths are its brand equity and extensive distribution network. Its primary weakness is a lack of truly differentiated, patented technology like BrainsWay's H-coil for novel indications. BrainsWay's major risk remains its ability to convert its technological promise into a profitable, scalable business. Magstim's stability and market endurance make it the stronger overall company, even if BrainsWay holds more speculative upside.
Axsome Therapeutics is not a direct device competitor but a highly relevant pharmaceutical company developing novel therapies for central nervous system (CNS) disorders, including Major Depressive Disorder (MDD). Its product, Auvelity®, is a fast-acting oral antidepressant, and it also markets Sunosi® for narcolepsy. Axsome represents a major indirect competitor to BrainsWay because it offers a pharmacological solution to the same patient population, which is often a first-line treatment before considering device-based therapies like TMS. The comparison highlights the broader therapeutic landscape where BrainsWay must compete for patients and physician attention.
Regarding Business & Moat, Axsome's moat is built on patents for its novel drug formulations (e.g., DXM-bupropion combination in Auvelity) and the high regulatory barriers of FDA drug approval, which require massive investment in clinical trials. Its brand is growing rapidly post-launch. BrainsWay's moat is its patented H-coil device technology. Axsome's business model is more scalable; manufacturing and distributing pills is vastly more efficient than selling, installing, and servicing large capital equipment. Switching costs for patients on a successful drug are moderate, but the barrier to starting a drug is much lower than starting TMS. Axsome wins handily on Business & Moat due to its highly scalable model and traditional pharmaceutical intellectual property protection.
From a Financial Statement Analysis perspective, Axsome is in a hyper-growth phase following the launch of Auvelity. Its TTM revenue has surged to over ~$200 million from nearly zero two years prior, dwarfing BrainsWay's ~$35 million. While Axsome is also not yet profitable due to heavy R&D and SG&A spending (~$400 million in TTM operating expenses), its revenue trajectory is far steeper. It has a much stronger balance sheet, having raised significant capital (>$400 million in cash). BrainsWay's financials are those of a slow-growth device company, while Axsome's are typical of a successful biotech launch. Axsome is the decisive Financials winner due to its explosive revenue growth and superior access to capital.
Looking at Past Performance, Axsome's stock has delivered spectacular returns for investors, with a 5-year TSR that is multi-fold higher than BrainsWay's, which has been largely flat or negative over the same period. This reflects the market's enthusiasm for its drug pipeline and commercial success. Axsome's revenue growth is astronomical (>1,000% year-over-year post-launch), while BrainsWay's has been in the teens. Axsome's stock is also volatile but with a strong upward trend, whereas BWAY has been volatile without a clear trend. Axsome is the unambiguous winner on Past Performance across all metrics: growth, shareholder returns, and market validation.
For Future Growth, Axsome has a deep pipeline of CNS drug candidates for conditions like Alzheimer's agitation and fibromyalgia, each representing a multi-billion dollar market opportunity. Its growth is driven by the continued uptake of Auvelity and potential new drug approvals. BrainsWay's growth, tied to new device indications, is significant but targets smaller markets and faces a slower adoption cycle. Axsome's addressable markets are orders of magnitude larger, and its platform for developing new drugs gives it far greater growth potential. Axsome is the clear winner on Growth outlook.
In terms of Fair Value, Axsome trades at a high valuation reflective of its growth, with a market cap often exceeding $3 billion and a Price-to-Sales ratio that can be above 15x. BrainsWay's market cap is typically below $100 million, trading at a 2.0x-3.0x P/S multiple. Axsome is a high-growth, high-valuation stock, while BrainsWay is a low-growth, low-valuation stock. Axsome's premium is justified by its massive market opportunity and proven commercial success. While technically
Relivion MG, formerly known as Neurolief, is a private, venture-backed medical device company developing digital therapeutics for neurological and psychiatric disorders. Its flagship product is the Relivion®, a wearable neurostimulation device that the patient uses at home. It is designed to treat migraine and depression by stimulating six different nerve branches in the head. This positions Relivion as a next-generation competitor, moving treatment from the clinic (like BrainsWay's TMS) to the patient's home, and offering a potentially more convenient and accessible treatment model. It competes with BrainsWay by offering a non-invasive neuromodulation alternative that bypasses the need for capital equipment in a physician's office.
In the realm of Business & Moat, Relivion's moat is its proprietary wearable technology, protected by patents, and its unique approach of targeting multiple nerve pathways simultaneously. It has received FDA clearance for migraine and a CE Mark for depression. BrainsWay's moat is its Deep TMS technology (H-coil) and its broader set of FDA clearances for more severe conditions like OCD. Relivion's direct-to-patient model could create strong brand loyalty and high switching costs if effective, but it lacks the established reimbursement pathways that clinic-based systems like BrainsWay's are building. Regulatory barriers are high for both. BrainsWay wins on Business & Moat for now, due to its proven track record in securing reimbursement and treating more severe, entrenched conditions within the established clinical framework.
A Financial Statement Analysis is challenging as Relivion is a private startup. It does not generate significant revenue yet and is focused on clinical trials and initial commercialization. Its funding comes from venture capital rounds, having raised over ~$40 million to date. It is entirely pre-commercial or in very early revenue stages, meaning its financials would show minimal sales and significant cash burn from R&D and clinical trial expenses. BrainsWay, with its ~$35 million in TTM revenue, is a far more mature commercial entity. Despite being unprofitable, BrainsWay is a revenue-generating company with established sales channels. Therefore, BrainsWay is the decisive Financials winner.
Evaluating Past Performance, Relivion's performance is measured by clinical trial success and fundraising milestones, not revenue or shareholder returns. It has successfully achieved key regulatory milestones like FDA clearance for migraine. BrainsWay's past performance is mixed, with solid revenue growth (~15% CAGR) but poor stock performance. Comparing a public commercial company to a private R&D-stage company is difficult, but BrainsWay has a proven history of successfully navigating the full commercial lifecycle from R&D to sales. On the basis of commercial execution, BrainsWay is the Past Performance winner.
For Future Growth, Relivion's potential is immense if it can prove its wearable technology is effective for depression and secure broad reimbursement. The home-use model could disrupt the clinic-based TMS market by offering superior convenience and accessibility, potentially addressing a much larger patient population. BrainsWay's growth is tied to new indications and increasing clinic adoption. Relivion represents a potential paradigm shift, giving it a theoretically higher growth ceiling. The risk, however, is also substantially higher as its business model is unproven. The overall Growth outlook winner is Relivion, based on its disruptive potential, though it is a high-risk, venture-stage bet.
Fair Value is not directly comparable. Relivion's valuation is determined by private funding rounds (its 'pre-money' valuation), reflecting investor belief in its future potential. BrainsWay has a publicly traded market capitalization based on its current revenue and growth prospects, trading at a ~2.0x-3.0x P/S multiple. Investing in BrainsWay offers liquidity and a stake in a proven, albeit struggling, commercial business. Investing in Relivion (if possible) is a venture bet on a new technology and business model. There is no clear winner on value; they represent entirely different stages of risk and reward. For a public market investor, BrainsWay is the only accessible option.
Winner: BrainsWay Ltd. over Relivion MG. The verdict goes to BrainsWay because it is an established commercial company with significant revenue and a proven ability to secure regulatory approvals and reimbursement for its products. While Relivion's wearable, home-use neurostimulation device is highly innovative and represents a potential future threat, it remains a largely unproven, pre-revenue venture. BrainsWay's key strengths are its ~$35 million in annual sales and its unique FDA clearances for difficult-to-treat conditions like OCD and smoking cessation. Its weakness is its slow path to profitability. Relivion's primary risk is existential: it must still prove its clinical efficacy, build a commercial infrastructure from scratch, and navigate the complex reimbursement landscape. BrainsWay's established position in the market makes it the stronger, more tangible entity today.
Medtronic is a global behemoth in the medical device industry, with a massive portfolio spanning cardiovascular, surgical, diabetes, and neuroscience products. Within its neuroscience division, Medtronic offers deep brain stimulation (DBS) systems for conditions like Parkinson's disease and epilepsy, and spinal cord stimulators for pain management. While it does not compete directly in the TMS market for depression, its Vagus Nerve Stimulation (VNS) therapy is FDA-approved for treatment-resistant depression. Medtronic represents the ultimate large-scale competitor, showcasing the vast resources, market power, and diversification that a small company like BrainsWay is up against in the broader neuro-device space.
Analyzing Business & Moat, Medtronic's moat is colossal, built on immense economies of scale, a global distribution network that is second to none, deeply entrenched relationships with hospitals and surgeons, and a vast portfolio of thousands of patents. Its brand is a symbol of quality and reliability in the medical community. BrainsWay's moat is its niche H-coil technology. Switching costs for Medtronic's implantable devices are effectively infinite for the patient. While BrainsWay's switching costs are high for the clinic, they do not compare. Medtronic wins on Business & Moat by an insurmountable margin due to its scale, diversification, and market power.
From a Financial Statement Analysis standpoint, the comparison is one of scale. Medtronic generates over ~$32 billion in annual revenue and ~$5 billion in net income. It has robust cash flows, a strong investment-grade balance sheet, and a long history of paying and increasing dividends. Its gross margins are around 65% and operating margins are in the 20% range. BrainsWay, with ~$35 million in revenue and negative profitability, is a micro-cap company in comparison. There is no contest here. Medtronic is the decisive Financials winner, representing a model of financial strength and stability.
In terms of Past Performance, Medtronic has a decades-long history of steady growth and shareholder returns, including consistent dividend increases, making it a blue-chip stock. Its 5-year revenue CAGR is in the low single digits (~2-4%), reflecting the law of large numbers, but it is highly consistent. Its stock provides stable, moderate returns with much lower volatility than BrainsWay. BrainsWay's revenue growth has been faster in percentage terms (~15%), but its stock has been extremely volatile and has delivered poor returns. For any metric of quality, stability, or risk-adjusted returns, Medtronic is the clear Past Performance winner.
Looking at Future Growth, Medtronic's growth is driven by innovation across its vast pipeline (e.g., robotic surgery, diabetes tech) and acquisitions. Its growth is incremental but highly diversified across dozens of product lines and geographies. BrainsWay's growth is entirely dependent on the success of a few TMS applications. While BrainsWay has a higher percentage growth ceiling, Medtronic's absolute dollar growth in a single year (e.g., 3% of $32B is ~$1B) can exceed BrainsWay's entire lifetime revenue potential. For predictable, diversified, and large-scale growth, Medtronic has the edge. The overall Growth outlook winner is Medtronic due to the quality and diversification of its growth drivers.
For Fair Value, Medtronic trades as a mature, blue-chip company. Its Price-to-Earnings (P/E) ratio is typically in the 20x-30x range, and it offers a dividend yield of ~3.0%. Its EV/EBITDA multiple is around 12x-15x. BrainsWay is unprofitable and pays no dividend, trading on a P/S multiple. Medtronic's valuation reflects its quality, profitability, and stability. BrainsWay is a speculative bet on future technology adoption. Medtronic is clearly the better value for any investor who is not a pure speculator, as its price is backed by substantial earnings and cash flow. The quality vs. price assessment overwhelmingly favors Medtronic.
Winner: Medtronic plc over BrainsWay Ltd. This is a David vs. Goliath comparison where Goliath is the unequivocal winner. Medtronic's dominance in the medical device industry through its massive scale, diversification, profitability, and market power makes it a vastly superior company to BrainsWay. While BrainsWay operates in a niche where Medtronic is not a direct player (TMS for depression), the comparison highlights the immense gap in every fundamental aspect of business. Medtronic's key strengths are its ~$32 billion in revenue, consistent profitability, and global reach. BrainsWay is a small, innovative company with a single technology platform, facing immense commercial and financial hurdles. The risk profile for Medtronic is low, focused on execution and market trends, while the risk for BrainsWay is existential. Medtronic represents stability and market leadership, making it the stronger entity.
Based on industry classification and performance score:
BrainsWay has built a defensible business around its proprietary Deep TMS technology for treating brain disorders. Its competitive moat is strong, primarily stemming from exclusive FDA approvals for conditions like OCD and a solid patent portfolio protecting its unique H-coil technology. The company's strategic shift towards a recurring lease model is improving revenue predictability. However, BrainsWay is not yet profitable and faces intense competition and reliance on continued insurance reimbursement. The investor takeaway is positive, as the company possesses a legitimate technological and regulatory moat, but it comes with the risks associated with a small, high-growth medical device firm.
The company's moat is strongly protected by a robust portfolio of over 100 patents on its core H-coil technology, which is fundamental to its clinical differentiation.
BrainsWay's competitive advantage is heavily reliant on its intellectual property, and its patent portfolio appears strong. The company holds over 100 granted or pending patents globally, with the most critical ones protecting its unique H-coil design. This technology is the cornerstone of its marketing and clinical claims, as it enables the stimulation of deeper and broader brain areas than traditional figure-8 coils used by competitors. This IP creates a significant barrier to entry, preventing rivals from directly replicating its device's core functionality. The company's consistent and high R&D spending as a percentage of sales (~22% in 2023) demonstrates an ongoing commitment to innovation and defending its technological edge. While patent litigation is always a risk in the medical device industry, the breadth of its portfolio provides a durable moat against direct competition for the foreseeable future.
BrainsWay has achieved broad insurance coverage for its primary depression therapy, but expanding reimbursement for newer indications like OCD remains an ongoing and critical challenge.
Favorable reimbursement is the lifeblood of BrainsWay's business, and its performance here is solid but still developing. The company has successfully secured widespread payer coverage for its MDD treatment, with policies covering over 350 million lives in the U.S. This has been essential for driving the adoption of its core product. However, the commercial success of its key differentiators, like the OCD and smoking addiction treatments, is highly dependent on achieving similarly broad coverage. While progress is being made—for instance, a positive local coverage determination for OCD was recently issued covering several states—the process is slow and uncertain. The company's revenue growth is directly tied to these reimbursement decisions. Gross margins have remained relatively stable in the 70-75% range, which is healthy and indicates good pricing power in reimbursed procedures. Nonetheless, the future growth trajectory heavily relies on continued success in convincing payers to cover its newer, high-value indications.
BrainsWay is successfully transitioning to a recurring revenue model, with over half its income now coming from predictable, multi-year leases, which enhances financial stability.
The company has made a successful and strategic shift towards a recurring revenue model, which strengthens its business and moat. In the first quarter of 2024, lease revenue constituted 58% of total revenue, amounting to $5.0 million. This is a significant improvement and demonstrates a clear trend away from reliance on one-time, volatile system sales. This lease model lowers the barrier to entry for clinics by removing the large upfront cost and locks customers into multi-year contracts, increasing stickiness and customer lifetime value. The growth in the total installed base, which rose by 12% year-over-year to 1,114 systems by Q1 2024, provides a growing foundation for this recurring revenue stream. This model is a distinct strength, providing more predictable cash flows than many competitors in the specialized device industry who rely more heavily on capital equipment sales.
BrainsWay has strong clinical backing with over 110 peer-reviewed publications, but high marketing costs are required to translate this evidence into wider physician adoption.
BrainsWay has successfully built a strong foundation of clinical evidence, a critical factor for driving adoption in the medical community. With an extensive library of over 110 peer-reviewed articles supporting its Deep TMS technology, the company provides physicians with the necessary data to justify its use over competing therapies. This commitment is further evidenced by its significant R&D spending, which was approximately $7.2 million in 2023, or 22% of revenue—a figure that is substantially ABOVE the typical R&D budget for larger medical device companies. However, this clinical strength comes at a high cost. The company's Selling, General & Administrative (SG&A) expenses were $25.4 million (~78% of revenue) in 2023, indicating a massive investment is needed to educate the market and convince physicians to adopt the technology. While the growing installed base of 1,114 systems shows progress, the high SG&A signals that physician adoption is not yet self-sustaining and remains a costly endeavor.
BrainsWay's strongest competitive advantage is its regulatory moat, particularly its exclusive FDA clearance for treating OCD, which creates a market where it has no direct device competition.
The company's regulatory approvals form the most formidable part of its competitive moat. BrainsWay has secured multiple key FDA clearances, including for Major Depressive Disorder (MDD), Anxious Depression, and Smoking Addiction. Crucially, its clearance for Obsessive-Compulsive Disorder (OCD) is exclusive; no other TMS company has this indication, granting BrainsWay a monopoly in this treatment area. Gaining these approvals, especially via the stringent De Novo or premarket approval pathways, requires years of expensive and successful clinical trials, representing a massive barrier to entry for potential competitors. This advantage is reflected in its geographic sales mix, with the majority of revenue coming from the U.S. (~80%), where the FDA's high bar provides the strongest protection. This regulatory moat allows BrainsWay to market unique solutions that competitors cannot legally offer, directly supporting its pricing power and market position.
BrainsWay's financial health is a tale of two parts. On one hand, its balance sheet is exceptionally strong, with over $70 million in cash and minimal debt of less than $7 million. On the other hand, its profitability is thin and its ability to generate consistent cash from operations is unreliable, as seen by the recent sharp drop in free cash flow from $11.2 million to just $0.6 million in a single quarter. While high gross margins of 75% are a definite strength, investors should be cautious. The investor takeaway is mixed; the company is financially stable but its operational performance is still maturing and shows signs of volatility.
BrainsWay has an exceptionally strong and safe balance sheet, characterized by a large cash position that far outweighs its minimal debt.
The company's financial foundation is very secure. As of its latest quarterly report, BrainsWay held $70.46 million in cash and equivalents while carrying only $6.75 million in total debt. This results in a substantial net cash position of $63.71 million, providing significant operational flexibility and a buffer against economic uncertainty. Its liquidity is excellent, with a current ratio of 3.19, well above the healthy benchmark of 2.0. Furthermore, its debt-to-equity ratio is a very low 0.1, indicating minimal reliance on leverage. This conservative financial structure is a major strength for a company in the medical device industry.
The company dedicates a significant portion of its revenue to research and development, which appears to be fueling strong top-line growth.
BrainsWay consistently invests heavily in innovation, which is crucial in the specialized therapeutic device industry. R&D expenses were 17.8% of revenue in the last quarter ($2.4 million R&D on $13.51 million revenue), which is a substantial commitment. This spending appears productive, as it correlates with strong revenue growth, which was 28.66% in the same quarter. While the direct link between R&D dollars and specific new products is not visible in financial statements, the sustained top-line expansion suggests that its investment in developing new technologies and applications is successfully driving market adoption.
BrainsWay consistently maintains very high gross margins around `75%`, demonstrating strong pricing power and a profitable core product.
A key highlight of BrainsWay's financial profile is its impressive and stable gross margin. In its most recent quarters, the gross margin was 75.19% (Q3 2025) and 75.2% (Q2 2025), in line with the 74.56% achieved for the full fiscal year 2024. This level of profitability on its core device sales is a strong indicator of a competitive advantage, suggesting customers are willing to pay a premium for its technology. This high margin provides the company with a solid financial cushion to cover its significant operating expenses, such as R&D and marketing, and is fundamental to its path toward sustained profitability.
BrainsWay is showing early signs of gaining operating leverage, as its revenue is growing faster than its sales and administrative expenses, leading to better margins.
For a growing medical device company, controlling sales, general, and administrative (SG&A) costs is key to profitability. BrainsWay is demonstrating positive progress here. While its SG&A as a percentage of sales remains high at 48.2% in the latest quarter, this is an improvement from 53.6% for the full fiscal year 2024. More importantly, in Q3 2025, revenue grew 28.66% year-over-year while SG&A expenses were roughly flat compared to the prior quarter. This efficiency gain, where sales grow without a proportional increase in costs, directly contributed to the expansion of its operating margin to 9.27%, suggesting its business model is becoming more scalable.
The company's ability to generate cash is highly inconsistent, with dramatic swings between quarters that raise concerns about the reliability of its operational cash flow.
While BrainsWay is capable of generating positive cash flow, its performance has been extremely volatile. In Q2 2025, it produced a very strong operating cash flow (CFO) of $12.38 million and free cash flow (FCF) of $11.22 million. However, this was followed by a sharp decline in Q3 2025, with CFO dropping to $1.39 million and FCF to just $0.59 million. This volatility is primarily driven by large changes in working capital items like unearned revenue, not by stable earnings. An FCF margin of 4.34% in one quarter versus 88.8% in the prior one highlights this unpredictability, making it difficult for investors to confidently assess the business's underlying cash-generating power.
BrainsWay's past performance is a story of a dramatic turnaround. After years of significant losses and cash burn, the company achieved profitability in fiscal year 2024, reporting a net income of $2.92 million and positive free cash flow of $6.5 million. Revenue growth has also accelerated, reaching 29.04% in the latest year. However, this recent success is contrasted by a history of inconsistency and substantial shareholder dilution, with shares outstanding increasing by over 50% in five years. The investor takeaway is mixed; while the recent operational pivot is very positive, the company lacks a long-term track record of sustained profitability and stable growth.
The company has historically posted negative returns on capital, but a dramatic shift to profitability in FY2024 signals a potential turning point in its capital efficiency.
Historically, BrainsWay's use of capital has been ineffective at generating profits, reflected in consistently negative Return on Equity (ROE) from FY2020 to FY2023, hitting a low of -25.99% in FY2022. This was a direct result of persistent net losses. However, FY2024 marked a significant inflection with ROE turning positive to 5.62% and Return on Capital improving to 1.58%. The company has not paid dividends, instead funding its growth and covering losses by issuing new shares, which increased shares outstanding from 22 million to 34 million over five years. While this dilution was necessary for survival, the recent profitability suggests the capital raised is finally starting to generate positive returns for shareholders.
While specific guidance data isn't provided, the company's volatile financial history and a sharp revenue decline in FY2022 suggest that forecasting and execution have been inconsistent.
Data on management guidance and analyst surprises is not available. However, we can infer execution from the company's volatile results. The revenue dip in FY2022 (-8.36% growth) and significant operating losses (-46.67% margin) strongly suggest a period of poor execution that likely disappointed investors. Conversely, the sharp acceleration in revenue growth (29.04% in FY2024) and the swing to profitability ($2.92 million net income) likely surpassed expectations and helped build recent credibility. Nonetheless, the historical choppiness indicates a business that has been difficult to manage and predict consistently.
The stock has been extremely volatile with massive swings in market value, indicating a very high-risk profile for investors despite explosive recent gains.
Specific Total Shareholder Return (TSR) metrics are not provided, but changes in market capitalization illustrate the stock's performance. The ride for shareholders has been a rollercoaster. The company's market cap fell -73.89% in FY2022, wiping out significant value. This was followed by an explosive rebound, with growth of 216.04% in FY2023 and 70.88% in FY2024. This extreme volatility highlights the stock's high-risk nature. While recent returns have been spectacular, the massive drawdown in 2022 shows that the path has been far from smooth, indicating a poor risk-adjusted return history.
After years of significant losses, the company achieved a major milestone by reaching profitability in FY2024, with operating margins turning positive for the first time in this period.
BrainsWay's profitability has seen a dramatic and positive improvement. While its gross margins have been a consistent strength, remaining high in the 73-77% range over the last five years, its operating and net margins were deeply negative until FY2024. For instance, the operating margin cratered at -46.67% in FY2022 before improving to -15.6% in FY2023. In FY2024, it swung decisively to a positive 3.39%. This impressive turnaround drove EPS from a loss of -$0.40 in FY2022 to a profit of $0.09 in FY2024. Although this is only one year of profitability, the clear and strong positive trend justifies a passing grade.
Revenue growth has been strong overall but inconsistent, with a notable sales decline in FY2022 followed by a significant acceleration in the last two years.
BrainsWay's revenue growth has been marked by volatility rather than consistency. Over the past five years, revenue grew from $22.06 million to $41.02 million, a 5-year CAGR of approximately 16.7%. However, this period includes a significant setback in FY2022 when revenue declined by -8.36%. Performance has improved dramatically since, with growth rebounding to 16.96% in FY2023 and accelerating to an impressive 29.04% in FY2024. While the recent momentum is a major positive, the historical record is not one of smooth, predictable growth, failing the test for consistency.
BrainsWay's future growth outlook is positive but carries significant risk, hinging on its ability to expand insurance coverage for its newer treatments. The company's key growth driver is its unique, FDA-cleared device for Obsessive-Compulsive Disorder (OCD), a market where it currently faces no direct competition. However, it faces intense rivalry from larger players like Neuronetics in its primary depression market and significant hurdles in securing reimbursement for its smoking addiction therapy. The investor takeaway is mixed-to-positive; BrainsWay offers substantial growth potential through market expansion and new indications, but this is balanced by the financial risks of an unprofitable company dependent on slow-moving insurance decisions.
The company's primary growth engine is its expansion into new clinical indications like OCD and Anxious Depression, which significantly increases its total addressable market.
BrainsWay's strategy for market expansion is a core pillar of its growth story. While geographic expansion offers some opportunity, the most impactful driver is the expansion of approved uses for its technology. The company's exclusive FDA clearance for OCD effectively created a new market where it has a monopoly. Furthermore, the recent FDA clearance for treating Anxious Depression opens up another large patient population. These new indications allow BrainsWay to sell additional treatment coils to its existing installed base of over 1,100 systems and attract new customers looking to offer a broader range of mental health treatments. This strategy of indication expansion is a highly effective way to grow the total addressable market far more rapidly than by simply selling more systems for a single use.
Management has provided positive revenue guidance for 2024, forecasting solid double-digit growth driven by the continued adoption of its Deep TMS systems.
BrainsWay's management has offered a confident outlook for the near term. For the full year 2024, the company has guided for total revenue in the range of $36 million to $38 million. The midpoint of this guidance ($37 million) represents an approximate 13% increase over 2023's revenue of $32.6 million. This forecast reflects management's expectation of continued momentum in system placements, particularly under its recurring lease model, and growing utilization for its commercialized indications. While the company is not yet guiding for profitability, this positive top-line growth projection serves as a key benchmark and indicates that the underlying business trends remain strong.
With a strong commitment to R&D and a pipeline targeting large neurological markets, BrainsWay is well-positioned to deliver future growth through innovation.
BrainsWay's future growth is heavily dependent on its product pipeline, which appears robust for a company of its size. Its high R&D spend as a percentage of sales (~22%) directly funds the development and clinical validation of new applications for its Deep TMS technology. The company has a history of successfully moving products from trials to commercialization, with recent examples including FDA clearances for Smoking Addiction and Anxious Depression. The pipeline continues to explore other high-potential areas, which could provide significant upside in the long term. This demonstrated ability to innovate and secure regulatory approvals for new products is a critical driver of future revenue streams and market expansion.
This factor is not relevant as BrainsWay's growth strategy is focused on organic R&D and innovation rather than acquiring other companies.
BrainsWay's growth model is not built on mergers and acquisitions. As a small, innovation-focused company, its capital is prioritized for internal R&D, clinical trials, and expanding its commercial sales force. There is no public record of significant 'tuck-in' acquisitions, and it is not part of their stated strategy. The company is more likely to be an acquisition target for a larger medical device firm than an acquirer itself. Because its growth is driven organically by a strong pipeline and market expansion for its proprietary technology, the absence of an M&A strategy is not a weakness. Therefore, we assess this factor based on the strength of its alternative growth drivers.
While traditional capital spending is low, the company's substantial and consistent investment in R&D serves as a strong proxy for its commitment to funding future growth capacity.
For an asset-light medical device company like BrainsWay, traditional Capital Expenditures (CapEx) are not the primary indicator of investment in future growth. Instead, its Research & Development (R&D) spending is a more relevant measure. In 2023, BrainsWay invested approximately $7.2 million in R&D, representing a very high 22% of its total revenue. This level of investment is significantly above industry norms and demonstrates a clear strategic focus on developing new technologies and expanding clinical indications, which are the direct drivers of future sales. This spending fuels the clinical trials necessary to secure new FDA approvals and expand the company's total addressable market. Therefore, despite low physical CapEx, the aggressive R&D budget signals management's strong belief in and commitment to its long-term growth pipeline.
BrainsWay Ltd. (BWAY) appears to be fairly valued with potential for modest upside. The company's valuation is supported by strong revenue growth, a reasonable Enterprise Value-to-Sales ratio of 4.6x, and an attractive free cash flow yield of 6.4%. However, weaknesses include historically volatile cash flows and high earnings multiples, with a trailing P/E ratio over 54. Analyst price targets suggest significant upside, but this optimism is tempered by the stock's elevated earnings metrics. The investor takeaway is cautiously optimistic; while the current price seems fair, the inconsistency in cash generation warrants a 'watch and monitor' approach.
The stock's EV/Sales ratio of 4.6x is reasonable when compared to its high-growth peers in the specialized therapeutic device industry.
With an Enterprise Value of $226 million and TTM sales of $49.09 million, BrainsWay's EV/Sales ratio is 4.6x. This is a critical metric for a company that has only recently achieved profitability. When compared to peers, this ratio appears fairly valued. It is significantly lower than high-growth peer Axonics (7.7x) but higher than struggling competitor Neuronetics (0.8x). The valuation is consistent with the 3.0x-6.0x revenue multiple range typical for growing medical device firms. Given BrainsWay's strong revenue growth (+28.66% in the last quarter), high gross margins (~75%), and unique FDA approvals, this multiple seems justified and does not signal overvaluation. Therefore, this factor passes.
The company's trailing twelve-month free cash flow yield is an attractive 6.4%, indicating strong cash generation relative to its market price.
BrainsWay generated $18.34 million in free cash flow (FCF) over the last twelve months against a market capitalization of $288 million, resulting in an FCF yield of 6.4%. This is a strong figure for any company, but especially for one in a growth phase. It suggests that the company's recent profitability is translating directly into cash. While the prior FinancialStatementAnalysis correctly flagged that this cash flow has been volatile and "lumpy" on a quarterly basis, the TTM figure is robust. A yield above 5% provides a cushion for investors and indicates that the stock may be undervalued based on its ability to generate cash. This strong yield merits a "Pass", with the caveat of monitoring for consistency.
With a TTM EBITDA of $4.25 million, the EV/EBITDA ratio is very high at over 53x, suggesting the stock is expensive on this particular earnings metric.
BrainsWay's Enterprise Value (EV) is approximately $226 million. Its trailing twelve-month (TTM) EBITDA is $4.25 million. This results in an EV/EBITDA ratio of 53.2x ($226M / $4.25M). This multiple is extremely high compared to the broader medical device industry, where a range of 10x-20x is more typical for mature companies. While BrainsWay is in a high-growth phase, this ratio indicates that its current valuation is not well-supported by its immediate earnings power before interest, taxes, depreciation, and amortization. The prior financial analysis highlighted thin operating margins, which explains this high multiple. Because the valuation appears stretched on this metric, the factor is marked as "Fail".
The median analyst price target of $22.00 suggests a meaningful upside of over 45% from the current price, indicating positive professional sentiment.
Based on forecasts from 3 Wall Street analysts, the average 12-month price target for BrainsWay is $22.00, with a high estimate of $24.00 and a low of $19.00. All analyst targets are significantly above the current stock price. This consensus reflects an expectation that the company will continue its strong growth trajectory and successfully execute its commercial strategy for its approved treatments. While these targets are not a guarantee of future performance and can be subject to revision, the strong "Buy" ratings and the magnitude of the implied upside provide a clear positive signal on valuation from the analyst community. This justifies a "Pass" for this factor.
The TTM P/E ratio of over 54 and a forward P/E of 64 are high, suggesting the stock is expensive relative to its current and near-term projected earnings.
BrainsWay's TTM P/E ratio is 54.5 based on TTM EPS of $0.30. Its forward P/E ratio is even higher at approximately 63.8. While high P/E ratios are expected for companies transitioning from losses to profits and exhibiting high growth, these levels are elevated and price in significant future earnings growth. A PEG ratio (P/E relative to growth) of 2.32 also suggests the price may have run ahead of earnings growth expectations. Compared to the broader healthcare equipment industry, these multiples are on the high end. Because the stock appears expensive on an earnings basis alone, this factor is marked as "Fail", reflecting the high expectations embedded in the current share price.
The primary risk for BrainsWay stems from the highly competitive and rapidly evolving medical device industry. The company competes directly with established players like Neuronetics and its NeuroStar system, as well as a host of other companies offering alternative treatments for depression and OCD, including new drugs and other therapeutic devices. There is a constant threat that a competitor could develop a more effective, less expensive, or easier-to-use technology, which could render BrainsWay's Deep TMS systems obsolete. The company's future growth is contingent on staying at the forefront of innovation, a process that requires significant and sustained investment in research and development, without any guarantee of success.
BrainsWay's business model is critically dependent on favorable reimbursement from third-party payers, such as Medicare and private insurance companies. These organizations hold the power to approve, deny, or reduce coverage levels for Deep TMS treatments, which directly impacts the financial incentive for clinics and hospitals to purchase or lease BrainsWay's equipment. Any negative change in reimbursement policies, or increased scrutiny on the cost-effectiveness of TMS therapy, could severely hamper demand. Furthermore, in a challenging macroeconomic environment with high inflation or an economic downturn, healthcare providers may delay large capital expenditures on new equipment, and insurers may tighten their budgets, creating strong headwinds for BrainsWay's sales growth.
From a financial perspective, BrainsWay is a growth-stage company that has not yet achieved consistent profitability. The company has a history of net losses as it invests heavily in sales, marketing, and R&D to drive market adoption and expand its approved treatment applications. This ongoing cash burn presents a significant risk; if revenue growth does not accelerate enough to outpace expenses, the company may need to raise additional capital by issuing more stock, which would dilute the value for existing shareholders. The company's success hinges on its operational execution—specifically, its ability to scale its sales force effectively and convince the medical community of its technology's value proposition to finally translate revenue growth into sustainable profits.
Click a section to jump