On August 12, BrainsWay Ltd. (NASDAQ:BWAY) reported second-quarter 2026 results that make the neurostimulation company look less like a niche medtech story and more like a genuine growth compounder. Revenue climbed 35% year over year to a record $17.1 million, and adjusted EBITDA more than doubled to $3.5 million. The company shipped 125 Deep TMS systems during the quarter, a record, and raised its full-year guidance for the second time this year. The numbers point to a business scaling faster than its own cost base.
When Growth Feeds Its Own Margins
The headline number is revenue, but the shape of that growth is what stands out. BrainsWay’s $17.1 million in second quarter 2026 sales came in 35% ahead of the $12.6 million it reported a year earlier, marking its second straight quarter near that growth rate. Shipments of Deep TMS systems hit a record 125 units in the quarter, up 42% from a year ago, pushing the installed base to roughly 1,949 systems worldwide. Remaining performance obligations, the contracted revenue not yet recognized, rose 30% year over year to $80.4 million as of June 30, giving the company a clearer window into demand than the quarterly numbers alone.
That growth is increasingly falling to the bottom line. Operating income jumped more than 300% to $2.4 million, and operating margin expanded to 14% from 5% a year earlier. Adjusted EBITDA rose 141% to $3.5 million, with margin widening to 20% from 11%. The company generated $6.3 million in operating cash flow during the quarter and closed June with $62.4 million in cash and restricted cash, up about 6% from the end of March. Management responded by raising full-year revenue guidance to $68 million to $70 million and adjusted EBITDA guidance to $13 million to $14 million, the latter implying growth of roughly 90% to 100% over 2025.
The Bill For All This Expansion
Not every line moved at the same pace. Net income rose 34% to $2.7 million, a healthy number on its own but slower than the 141% jump in adjusted EBITDA, a reminder that the adjusted metric strips out costs that still show up on the actual bottom line. The updated guidance is also a fairly modest step up. Full-year revenue guidance moved by just $1 million to $2 million on either end of the range, to $68 million to $70 million, even after a quarter that beat expectations by a wide margin, and the adjusted EBITDA range widened mainly at the low end, from $12 million to $13 million.
Some of the growth story also depends on things outside BrainsWay’s direct control. The company points to continued expansion of insurer coverage for its SWIFT accelerated Deep TMS protocol as a driver, language that implies the reimbursement picture is still a work in progress rather than fully secured. BrainsWay has also been putting capital into minority stakes in outside companies, including Hopemark Health and Radial Health, describing them only in general terms as showing growth in patient access. That is capital directed away from the core Deep TMS business, with no financial detail yet on what those investments are actually returning.
What The Market Is Pricing In
Hedge fund interest in BrainsWay ticked up, with 16 funds holding a stake in the most recent quarter versus 15 in the prior one, a modest sign of accumulating conviction. Short interest sits at just 0.51% of float, which points to almost no organized skepticism around the stock. Shares trade at 19.08 times forward earnings as of September 10, a multiple that already assumes a good deal of the growth management is projecting. Between the light short interest, the slightly growing hedge fund base, and a premium multiple, the market looks more confident than cautious on BrainsWay right now.
A Question Still Left Open
BrainsWay’s second quarter makes a strong case that its growth is becoming more efficient, not just bigger, with margins expanding alongside the top line. The more cautious read is not that anything went wrong, but that the size of the guidance raise looks modest next to the size of the beat. For the bulls, that gap could simply reflect conservative management holding back until reimbursement coverage widens further. For the bears, it could suggest the easiest growth has already been booked, and the back half will be harder won. The next few quarters of RPO growth should start to answer which read is closer to right.
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