BrainsWay Ltd. — FY 2022 Form 20-F
Reporting period: Fiscal year ended December 31, 2022. The filing is an annual report, not a standalone quarterly filing; Q4 figures below are from unaudited quarterly data included in the 20-F. Financial statements are prepared under IFRS and presented in U.S. dollars.
Business context and key financial metrics
BrainsWay develops and commercializes Deep TMS systems for major depressive disorder (including anxious depression), obsessive-compulsive disorder and smoking addiction. Revenue comes from equipment sales and leases. The company reported 884 systems installed at year-end 2022, including 411 leased and 473 sold. Its ADSs trade on Nasdaq as BWAY; each ADS represents two ordinary shares.
| Metric | FY 2022 | FY 2021 |
|---|---|---|
| Revenue | $27.2 million | $29.7 million |
| Gross profit / gross margin | $20.0 million / 73.8% | $23.1 million / 77.8% |
| Operating loss | $12.7 million | $5.0 million |
| Net loss | $13.3 million | $6.5 million |
| Basic and diluted loss per share | $0.40 | $0.21 |
| Cash used in operating activities | $9.8 million | Cash provided: $0.9 million |
| Cash, cash equivalents and short-term deposits | $47.9 million | $57.3 million |
| Total assets / equity | $64.5 million / $45.4 million | $75.7 million / $57.3 million |
FY 2022 sales revenue was $16.2 million and lease revenue was $11.0 million, versus $16.2 million and $13.4 million, respectively, in 2021. Operating expenses were $32.7 million, up from $28.1 million. The company had an accumulated deficit of $97.1 million. It reported no outstanding conventional bank debt; liabilities include Israel Innovation Authority (IIA) grant obligations and lease liabilities.
Q4 2022: Revenue was $6.0 million, gross profit $4.3 million, operating loss $4.3 million and net loss $3.9 million. Q4 2021 revenue was $8.5 million and net loss was $1.3 million.
Material changes versus prior periods
- FY revenue declined 8.4%, primarily because lease revenue fell; sales revenue was essentially flat.
- Gross margin fell about 4 percentage points, as cost of revenue rose to $7.1 million from $6.6 million despite lower revenue.
- Operating loss widened to $12.7 million from $5.0 million, reflecting higher R&D, selling and marketing, and general and administrative expenses. R&D increased 20% to $7.7 million; selling and marketing rose 14.6% to $18.2 million; G&A increased 19% to $6.9 million, partly due to one-time professional and legal fees.
- Operating cash flow turned negative, at $9.8 million used versus $0.9 million provided in 2021. The filing attributes the decline to the larger loss and working-capital changes, including a $3.6 million inventory build.
- Cash and short-term deposits declined by about $9.5 million combined. The reported $42.2 million of investing cash inflow largely reflects withdrawals of short-term deposits, not operating performance; 2021 investing outflow primarily reflected investment in deposits.
Outlook, commentary, risks and unusual items
- Management expects revenue growth from broader commercialization of MDD, OCD and smoking-addiction systems and believes cost-reduction measures will narrow the gap between revenue and operating expenses. It expects selling, marketing, R&D and G&A expenses to decrease as resources are realigned, while also anticipating continued development and clinical-trial spending. No specific revenue or earnings guidance was provided.
- Management stated that cash and anticipated product revenues should fund operating expenses for 12 months and capital expenditures for 24 months; elsewhere it expressed confidence that existing capital would cover requirements for at least 24 months. This outlook depends on revenue growth, expense control and commercial execution.
- Commercial risks include reimbursement uncertainty—particularly for OCD and smoking addiction—competition, customer adoption, and physician training. MDD reimbursement is comparatively established; OCD coverage was emerging, while smoking-addiction treatment had no third-party coverage at the reporting date.
- Supply-chain delays, component and freight cost increases, reliance on third-party suppliers and distributors, and geopolitical or economic disruption could pressure delivery, margins and sales. The company also cited its Israeli operational concentration, currency exposure and regulatory, clinical, product-liability and intellectual-property risks.
- The company recorded $0.8 million of impairment and disposal expense in 2022. It reclassified $3.8 million of system components to inventory. IIA grants carry royalty obligations: the reported maximum future royalties for active projects were $11.6 million, including interest.
- In January 2023, BrainsWay settled a lawsuit brought by Neuronetics without admission of liability or wrongdoing. The filing states it was not then party to any significant legal proceedings. In February 2023, Hadar Levy became CEO and Ami Boehm became Board Chair, succeeding Christopher von Jako and David Zacut, respectively.
- The auditor gave an unqualified opinion on the IFRS financial statements. Management concluded internal control over financial reporting was effective; the auditor did not attest to that conclusion because of the emerging-growth-company exemption. The filing says the company will likely be a PFIC for U.S. tax purposes for 2022, a matter investors should assess with tax advisers.
Most important facts for investors to verify
- Reconcile U.S. revenue disclosures: the narrative reports $20.3 million and approximately 75% of 2022 revenue, while the audited geographic table reports $21.2 million and 79%.
- Review the complete audited statements and notes for cash runway, operating-cost reductions, inventory levels, receivable collectability and the assumptions behind management’s funding outlook.
- Track whether OCD reimbursement expands and whether smoking-addiction reimbursement is secured, and assess the revenue and economics of the lease versus sales mix.
- Confirm the amount, timing and terms of IIA royalties, including the effect of the LIBOR-linked provisions and any manufacturing or technology-transfer restrictions.
- Assess execution under the new CEO and Chair, clinical and regulatory progress, supply-chain resilience, and any material developments following the Neuronetics settlement.
- Confirm PFIC status and any related U.S. tax reporting consequences with qualified tax advisers.