BrainsWay Ltd. (BWAY): PESTLE Analysis [Nov-2025 Updated]

BrainsWay Ltd. (BWAY) is navigating a complex external environment where policy and patient demand are powerful tailwinds, but economic reality and technological competition create friction. The headline for 2025 is clear: the US government's focus on mental health parity (Political) is accelerating adoption, which is key to hitting the illustrative revenue target of $35.0 million (Economic), but you must watch the FDA's pace (Legal) and the constant threat from new tech rivals (Technological). This PESTLE breakdown shows exactly where to focus your attention to capitalize on the non-invasive shift.

BrainsWay Ltd. (BWAY) - PESTLE Analysis: Political factors

The political landscape for BrainsWay Ltd. (BWAY) in 2025 presents a clear dichotomy: a supportive regulatory environment in the US for mental healthcare access, but a highly volatile, cost-increasing trade and tariff environment globally. The net effect is a tailwind for market demand coupled with a headwind for supply chain costs.

US government focus on mental health parity drives potential funding increases.

The political push for mental health parity-ensuring mental health treatment is covered comparably to physical health-is a significant driver for BrainsWay's growth in 2025. The Centers for Medicare & Medicaid Services (CMS) is actively expanding behavioral health coverage, which directly benefits the adoption of non-invasive treatments like Deep Transcranial Magnetic Stimulation (Deep TMS). For instance, the 2025 Medicare Physician Fee Schedule finalized the first-ever reimbursement for Digital Mental Health Treatment (DMHT) devices and services, signaling a broader government acceptance of technology-driven mental health solutions. This is a defintely positive signal for all FDA-cleared devices in the space.

This focus is reflected in the company's strong financial guidance for the year. BrainsWay has raised its fiscal year 2025 revenue guidance to a range of $51 million - $52 million, alongside an increased Adjusted EBITDA forecast of 13% - 14%, demonstrating the market's response to improved access and reimbursement.

Shifting Centers for Medicare & Medicaid Services (CMS) policies impact reimbursement for new indications.

While the overall direction is positive, reimbursement for new indications remains a critical political and regulatory hurdle. CMS Local Coverage Determinations (LCDs) are the gatekeepers for coverage, and while Deep TMS is covered for Major Depressive Disorder (MDD) and often Obsessive-Compulsive Disorder (OCD), coverage for other indications is still tightly controlled.

CMS LCDs still frequently deem all other uses of Transcranial Magnetic Stimulation (TMS) as 'investigational and experimental,' which means no Medicare reimbursement. However, a major political win for future revenue came when BrainsWay received FDA clearance for Deep TMS as adjunct therapy for MDD in adolescents aged 15 to 21. This quickly translated to policy change, as at least one major private insurer updated its behavioral coverage policy in March 2025 to include TMS for MDD in adolescents aged 15-17, creating a new, reimbursable patient population. This shows the political-regulatory system is moving, but slowly.

Geopolitical tensions affect supply chain stability for components sourced internationally.

The global MedTech supply chain is facing significant disruption from geopolitical tensions and new tariff regimes in 2025, which directly impacts BrainsWay's cost of goods sold (COGS). The Deep TMS system, like most medical devices, relies on components such as metals and electronics that are subject to new US import duties.

Here's the quick math on the tariff impact:

• The US administration introduced a 50% tariff on imported copper, aluminum, and stainless steel in July 2025.
• Tariffs on steel and aluminum were raised from 25% to 50% in June 2025.
• The US Department of Commerce initiated a Section 232 investigation into medical equipment in September 2025, signaling the potential for further trade restrictions.

These tariff increases on raw materials raise the cost of manufacturing and shipping the Deep TMS systems, even for an Israeli-based company. The geopolitical risk is that a sudden tariff hike could erode the company's gross margin, which stood at a robust 74.52% in the trailing twelve months leading up to November 2025.

Trade agreements influence market access and tariffs on Deep TMS device exports.

The shifting landscape of international trade agreements and unilateral tariffs creates both risk and opportunity for BrainsWay's global market access.

The primary risk is the new US tariff policy, which includes a universal baseline tariff of 10% on all imports into the United States, effective April 2, 2025, ending duty-free status for many medical devices. As the US is BrainsWay's largest market, this tariff acts as a direct tax on their imports and creates a competitive disadvantage against US-domestic manufacturers.

The opportunity lies in the European Union's (EU) political response to trade disputes. In June 2025, the EU barred Chinese companies from bidding on public medical device contracts exceeding $5.8 million, and no successful bid can have more than 50% of its inputs from China. This move aims to promote fair market access and effectively opens up a segment of the €90 billion EU public procurement market to non-Chinese MedTech firms like BrainsWay. This is a clear opportunity to increase market share in Europe.

The political factors affecting BrainsWay's operations can be summarized as follows:

Action for your team: Operations should immediately draft a 13-week cash view factoring in the 50% tariff increase on critical raw material imports to quantify the Q4 2025 cost increase.

BrainsWay Ltd. (BWAY) - PESTLE Analysis: Economic factors

The Company's Strong Revenue Trajectory in Fiscal Year 2025

BrainsWay Ltd. is demonstrating significant commercial momentum, which is a key economic indicator of market acceptance for its Deep Transcranial Magnetic Stimulation (Deep TMS) technology. Based on a strong performance through the third quarter of 2025, the company has raised its full-year 2025 revenue guidance to a range of $51 million to $52 million. This represents a substantial increase from earlier projections and reflects a year-over-year growth rate projected between 24% and 27% compared to 2024 revenue.

The company's business model provides strong visibility into future revenue, with remaining performance obligations-contracted revenue from multi-year leases-totaling $65 million as of September 30, 2025. This contracted revenue stream, coupled with a high gross margin of 75% recorded in Q3 2025, provides a solid financial buffer against broader economic volatility.

Inflationary Pressures Increase Operational Costs

Inflationary pressures remain a near-term risk, directly impacting the cost of goods sold for medical device manufacturers like BrainsWay. The Producer Price Index (PPI) for medical equipment and supplies has seen significant increases, rising by approximately 3% in the 12 months leading up to mid-2025 and nearly 6% over the preceding 24 months. This trend translates directly into higher operational costs, especially for device manufacturing and shipping.

The primary cost drivers for Deep TMS system production include:

• Rising prices for raw materials like metals, plastics, and chemicals.
• Supply chain disruptions, which can force procurement from brokers at significantly higher costs.
• Increased logistics and shipping expenses.

For BrainsWay, maintaining its strong gross margin of 75% in this environment requires disciplined cost management and pricing power, which is supported by the innovative, non-commoditized nature of its Deep TMS technology.

High-Interest Rates Make Capital Expenditure More Expensive

While BrainsWay itself maintains a debt-free capital structure, the high-interest rate environment in 2025 significantly affects its customers-hospitals, clinics, and mental health networks-who often finance large capital expenditures (CapEx).

The financial pressure on healthcare providers is intense, with the American Hospital Association noting that rising labor costs and inflation are outpacing fixed reimbursements. This situation makes large capital purchases of new clinical systems, such as the Deep TMS device, more expensive and subject to greater scrutiny by Value Analysis Committees (VACs).

Here's the quick math: Increased borrowing costs for customers can slow down the sales cycle and push more customers toward multi-year leasing agreements, a trend already visible with approximately 70% of new customer engagements structured as multi-year leases. This shift from outright sales to leases provides BrainsWay with a stable recurring revenue base but also indicates customer caution on major CapEx outlays.

Reimbursement Rates for Deep TMS Treatments

Reimbursement for Deep TMS treatments is a crucial economic factor, as it determines the profitability for the clinics that purchase the systems. Deep TMS is well-established in the US, with coverage provided by Medicare and nearly all major private insurers for key indications like Major Depressive Disorder (MDD). However, these rates are under constant review by payers like the Centers for Medicare & Medicaid Services (CMS) and private carriers.

The typical financial landscape for a full course of Transcranial Magnetic Stimulation (TMS) treatment in 2025 is as follows:

The stability and expansion of coverage for new indications-like the recently FDA-cleared Accelerated Deep TMS protocol for MDD-are defintely vital for continued system adoption. Any downward pressure on the per-session reimbursement rate would directly impact the return on investment (ROI) for clinics, potentially slowing the sales of new Deep TMS systems.

BrainsWay Ltd. (BWAY) - PESTLE Analysis: Social factors

Growing destigmatization of mental health increases patient willingness to seek treatment.

The societal shift in how we view mental health is a huge tailwind for BrainsWay Ltd. (BWAY). Honestly, the stigma is defintely breaking down, which means more people are willing to seek help, moving beyond just quietly coping. In 2024, over 60 million adults in the U.S.-about 23.40% of the adult population-experienced some form of mental illness (AMI). This massive, underserved population is now more open to treatment options, especially as over 70% of U.S. adults feel mental health problems are handled worse than physical health concerns, creating demand for better solutions.

This increased willingness to seek care directly fuels the market. The U.S. outpatient psychiatry market size, a key indicator for access to treatments like Deep Transcranial Magnetic Stimulation (Deep TMS), is expected to reach an estimated $17.48 billion in 2025. That's a big number, and it reflects a growing patient base actively looking for relief.

Patient and physician preference for non-invasive, drug-free alternatives is rising.

Patients are tired of the side effects and limited efficacy of traditional psychotropic medications. We are seeing a clear preference for non-invasive treatments, and that's a core strength for BrainsWay. A February 2025 study showed that patients favor non-invasive neuromodulation interventions over pharmaceutical drugs for neurological and mental health disorders. Plus, between 2018 and 2021, the reliance solely on psychiatric medications in the U.S. actually declined from 68% to 62%.

This preference is driving a high-growth sector. The global non-invasive brain stimulation system market, which includes Deep TMS, is estimated to be valued at approximately $2.0 billion in 2025 and is projected to grow at a Compound Annual Growth Rate (CAGR) of 17.6%. Transcranial Magnetic Stimulation (TMS) systems are expected to dominate this market, holding a 54.3% market share.

Here's the quick math on the market opportunity:

Demographic shifts, particularly in aging populations, increase the prevalence of target conditions like Alzheimer's disease.

The U.S. population is getting older, and that demographic shift naturally increases the prevalence of age-related neurological and psychiatric conditions. The number of Americans age 65 or older is projected to average 74 million over the next three decades, growing faster than younger age groups. This group is a key target for BWAY's technology, which is being studied for conditions like Alzheimer's disease.

For example, the Alzheimer's Association projects that approximately 7.2 million Americans age 65 and older will have Alzheimer's dementia by the year 2025. This growing patient pool, often with complex, treatment-resistant conditions, needs advanced, non-pharmacological options. BrainsWay's Deep TMS system is already cleared for patients up to age 86 for depression, positioning it well to address the mental health needs of this expanding senior demographic.

Public awareness campaigns accelerate the adoption rate of advanced psychiatric technologies.

Increased public and regulatory focus on the mental health crisis is accelerating the adoption of innovative technologies. BrainsWay's recent regulatory success is a perfect example of this. The company received FDA clearance in November 2025 for its Deep TMS system as an adjunct therapy for adolescents (aged 15-21) with Major Depressive Disorder (MDD).

This clearance opens up a huge, high-need segment of the market:

• The adolescent MDD clearance addresses an estimated 5 million U.S. teens experiencing major depressive episodes annually.
• The clearance was supported by real-world data from 1,120 adolescents, demonstrating a compelling average improvement of 12.1 points on the PHQ-9 scale.
• The U.S. behavioral health market is valued at $92.14 billion in 2025, and the neurostimulation services segment is expected to grow at the fastest CAGR within the outpatient psychiatry market.

This regulatory momentum, coupled with strong clinical data, provides physicians with the confidence they need to integrate Deep TMS into their standard practice, which is the clear, actionable path for BWAY's growth.

BrainsWay Ltd. (BWAY) - PESTLE Analysis: Technological factors

Technology is the core competitive moat for BrainsWay, and the company's near-term success hinges on translating its Research and Development (R&D) investments into new, FDA-cleared treatment protocols and next-generation hardware. The neuromodulation market is expanding rapidly, so standing still is not an option.

Continued R&D is crucial for new Deep TMS coil designs and expanded treatment protocols.

BrainsWay is actively investing in its R&D roadmap, which is essential to unlock new treatment indications and expand the Deep Transcranial Magnetic Stimulation (Deep TMS) platform's capabilities. For the nine months ended September 30, 2025, the company's net R&D expenses totaled $7.072 million, a significant increase from $5.146 million in the prior year period, showing a clear commitment to innovation.

This investment is already yielding results, particularly in treatment protocols. In September 2025, the U.S. Food and Drug Administration (FDA) cleared an Accelerated Deep TMS™ protocol for Major Depressive Disorder (MDD). This new protocol shortens the acute treatment phase from four weeks of daily sessions to just 6 treatment days, with sessions lasting less than 10 minutes each, drastically improving patient convenience and clinic throughput.

The company is also pushing into new neurological disorders. In November 2025, BrainsWay launched a multicenter clinical trial investigating its novel Deep TMS 360™ system for Alcohol Use Disorder (AUD). This trial is supported by a $2.5 million grant over five years from the U.S. National Institutes of Health (NIH).

Competition intensifies from alternative neuromodulation techniques like tDCS and focused ultrasound.

While Deep TMS holds a strong position in the external neuromodulation space, the overall neuromodulation market is highly competitive and rapidly growing. The global neuromodulation market size is valued at $9.07 billion in 2025 and is projected to grow at a Compound Annual Growth Rate (CAGR) of 12.17% through 2034.

The main competitive threat comes from both established internal (implantable) systems and emerging external technologies:

• Internal Systems: Internal neuromodulation, such as Deep Brain Stimulation (DBS), remains dominant, capturing over 56% of the market revenue in 2025.
• tDCS Devices: The market for Transcranial Direct Current Stimulation (tDCS) devices, a low-cost, non-invasive alternative, is projected to reach $500 million by 2025, with an anticipated CAGR of approximately 15%.

This rising tide of non-invasive alternatives, particularly low-cost tDCS for home use, pressures BrainsWay to continuously prove the superior efficacy and depth of its proprietary Deep TMS technology.

Software updates and AI integration improve treatment planning and personalized patient outcomes.

The future of neuromodulation is in marrying powerful hardware with smart software to personalize therapy. The recent FDA clearance for the accelerated MDD protocol required a significant update to the stimulator software, demonstrating the importance of the digital layer in delivering new clinical benefits.

The next-generation Deep TMS 360™ system is a hardware-software innovation, featuring a multichannel architecture designed to provide more comprehensive and uniform stimulation to targeted brain regions. This is a critical step toward personalized medicine, allowing for more flexible and precise targeting, which is essential for complex conditions like chronic AUD where cortical atrophy (brain shrinkage) can complicate treatment.

Maintaining a strong patent portfolio is vital to protect the core Deep TMS intellectual property.

The company's proprietary technology is protected by a robust patent portfolio, including an exclusive license from the U.S. National Institutes of Health (NIH) for the core Deep TMS technology. This intellectual property (IP) is the foundation of their competitive advantage over traditional Transcranial Magnetic Stimulation (TMS) systems.

BrainsWay is actively defending and expanding its IP position, notably by developing the next-generation multi-channel TMS stimulator (Deep TMS 360™) based on an acquired multi-channel TMS patent portfolio and an exclusive option agreement with Stanford University. This strategic move ensures the company's technology remains protected as it advances into more complex, multi-target brain disorders.

BrainsWay Ltd. (BWAY) - PESTLE Analysis: Legal factors

You're looking at the legal and regulatory landscape for BrainsWay, and the key takeaway is that while US Food and Drug Administration (FDA) clearances are driving significant near-term revenue growth, the constant threat of patent litigation and the heavy compliance burden of the European Union's Medical Device Regulation (MDR) present real, quantifiable risks.

The company's ability to execute on its raised full-year 2025 revenue guidance of $51 million to $52 million hinges directly on navigating these legal and regulatory pathways efficiently.

The US Food and Drug Administration (FDA) clearance process for new indications dictates market timing.

The FDA clearance process is the primary engine for market expansion in the US, and BrainsWay has been very active in 2025. The Deep Transcranial Magnetic Stimulation (Deep TMS) system already holds three primary FDA clearances for Major Depressive Disorder (MDD), Obsessive-Compulsive Disorder (OCD), and smoking addiction.

Two new, pivotal FDA clearances in the second half of 2025 significantly expand the addressable market and accelerate treatment capacity. This is a game-changer for patient throughput.

• Accelerated Deep TMS Protocol for MDD: Cleared on September 16, 2025, this protocol reduces the acute treatment phase from four weeks of daily sessions to just six treatment days, which dramatically increases the capacity of the installed base of over 1,600 systems.
• Deep TMS for Adolescent MDD: Cleared on November 13, 2025, this expands the label to include adolescents aged 15 to 21 as an adjunct therapy.

Near-term market timing is still dictated by the pipeline. For instance, the company is actively pursuing the Post-Traumatic Stress Disorder (PTSD) indication, which is a significant clinical focus, and has launched its first clinical trial for Alcohol Use Disorder (AUD) in November 2025, supported by a $2.5 million grant from the National Institutes of Health (NIH). The delay in any of these clearances pushes out potential revenue by years.

Compliance with the Health Insurance Portability and Accountability Act (HIPAA) for patient data security is mandatory.

As a medical device company with an expanding network of clinical providers, BrainsWay is subject to the stringent requirements of the Health Insurance Portability and Accountability Act (HIPAA). This legislation governs the security and privacy of protected health information (PHI) in the US. The risk is significant because the Deep TMS system is integrated into clinical practice, and the company is making strategic minority investments in US mental health providers (four in 2025, including an initial $1.5 million investment in Heading Health).

Any data breach or non-compliance event could result in massive fines and reputational damage. While there were no reported HIPAA fines against BrainsWay in 2025, the company's SEC filings consistently cite the risk of regulatory non-compliance as a material factor.

Potential patent infringement litigation poses a financial and operational risk.

The Deep TMS technology is protected by a robust intellectual property (IP) portfolio, but this makes the company a target for litigation from competitors seeking to challenge its market position. This is a perpetual cost of doing business in the MedTech space.

We saw a direct financial impact in the second quarter of 2025, where the company reported a one-time $258 thousand charge for 'Restructuring and litigation Cost' as an adjustment to its Adjusted EBITDA calculation. This expense, though minor relative to the Q2 2025 revenue of $12.6 million, is a concrete example of the ongoing legal costs associated with defending its IP.

International regulatory hurdles, like the European Union's Medical Device Regulation (MDR), affect global sales.

The EU's Medical Device Regulation (MDR) represents a significant non-tariff barrier for all foreign medical device manufacturers, including BrainsWay. The regulation is far more complex and resource-intensive than the previous directives, creating a bottleneck for market access in Europe. This is a critical factor for global sales, which contribute to the company's total revenue.

Here's the quick math on the MDR challenge:

The entire regulatory ecosystem in the EU is still constrained by a shortage of Notified Bodies, which means even a fully compliant submission can face a long wait. Also, the new cybersecurity rules under the Radio Equipment Directive (RED) will apply from August 1, 2025, adding another layer of mandatory compliance for their internet-connected devices.

BrainsWay Ltd. (BWAY) - PESTLE Analysis: Environmental factors

Increasing pressure from institutional investors for transparent Environmental, Social, and Governance (ESG) reporting.

You are seeing a massive shift in how institutional capital is allocated, and BrainsWay Ltd. is not immune to the pressure for transparent ESG (Environmental, Social, and Governance) disclosure. While the company's core mission is inherently social-improving mental health-its environmental footprint remains largely opaque to the public and investors.

The broader medical device (MedTech) industry is under intense scrutiny, with activist investors targeting larger firms like Medtronic in 2025 over governance and sustainability issues. For a growth-focused company like BrainsWay, which is guiding for full-year 2025 revenue between $51 million - $52 million, the lack of a public ESG or Sustainability Report is a clear risk. Investors want to see quantifiable metrics, not just mission statements. The absence of a formal disclosure makes it defintely harder for ESG funds to justify a significant position.

Need to manage the end-of-life disposal and recycling of complex medical device hardware.

The Deep Transcranial Magnetic Stimulation (Deep TMS) system is a complex piece of capital equipment, not a disposable item, but its eventual end-of-life disposal presents a material environmental challenge. The global healthcare sector generates over 6,600 tons of waste daily from medical devices, and BrainsWay contributes to this with an installed base of more than 1,600 systems globally as of Q3 2025.

Each system contains specialized electronics, cooling components, and electromagnetic coils (H-Coils) that require careful management to prevent heavy metals and electronic waste (e-waste) from entering landfills. The company's business model, where approximately 70% of recent customer engagements are structured as multi-year lease agreements, actually offers a significant opportunity here. Leasing makes it easier to implement a closed-loop take-back and refurbishment program, ensuring devices are either recycled responsibly or refurbished for a second life, but a formal program has not been publicly detailed.

Here's the quick math on the disposal challenge:

Energy consumption of manufacturing and clinical systems must align with sustainability goals.

The Deep TMS system's core function involves generating a powerful magnetic field, which requires substantial electrical power and a robust cooling system. While I don't have the exact kilowatt-hour (kWh) consumption for the commercial Deep TMS system, the company's own research highlights a commitment to efficiency in design.

Specifically, the multi-channel TMS stimulator design, which is integral to the Deep TMS platform, demonstrated a significant saving in energy consumption and a reduction in coil heating compared to older, standard single-channel TMS technology. This engineering advantage is a strong point to build a sustainability narrative around. Still, without public reporting, investors cannot verify the total energy footprint (Scope 1 and 2 emissions) of the manufacturing facilities or the aggregate energy use of the entire installed base.

• Quantify system energy use (e.g., kWh/treatment) for transparency.
• Procure renewable energy for manufacturing sites.
• Design for maximum energy efficiency in the next-generation cooling system.

Supply chain audits are required to ensure ethical sourcing of raw materials.

As a manufacturer of complex electronic and magnetic medical devices, BrainsWay is reliant on a global supply chain for raw materials, including copper for its proprietary H-Coils, various plastics, and electronic components that may contain conflict minerals. The industry trend in 2025 is toward mandatory supply chain due diligence, driven by regulations like the EU's Corporate Sustainability Due Diligence Directive (CSDDD).

While BrainsWay has a Code of Business Conduct and Ethics that broadly addresses integrity and ethical conduct with suppliers, there is no public evidence of a specific, formal supply chain audit program focused on environmental criteria. This lack of transparency creates a reputational and regulatory risk. The company must implement a rigorous audit process to verify that its suppliers adhere to environmental standards, specifically concerning the sourcing of materials that have a high environmental impact, such as those linked to deforestation or high-pollution manufacturing processes.