Brainsway(US:BWAY)2022-08-10 18:55Financial Data and Key Metrics Changes - The company reported second quarter revenue of $8 million, a 14% increase compared to $7 million in the same period of 2021, marking the eighth consecutive quarter of year-over-year growth [6][24] - Gross profit for the second quarter was $5.8 million, resulting in a gross margin of 73%, down from 81% in the prior year due to inventory obsolescence charges and increased shipping costs [24][25] - For the first half of 2022, revenues totaled $16 million, representing a 22% increase from $13.1 million in the first half of 2021 [24] Business Line Data and Key Metrics Changes - The company shipped 39 Deep TMS systems in the second quarter, bringing the total install base to 829 systems, a 22% increase from 682 systems a year ago [24] - International sales were strong, although this sales mix slightly impacted pricing and gross margins [8][24] - The company shipped 31 add-on helmets for OCD treatments, with 45% of the total install base now including OCD treatment capability [18] Market Data and Key Metrics Changes - The Israeli Ministry of Health approved coverage for the Deep TMS system for depression, which will require health funds to provide the treatment free of charge to qualifying patients [8][9] - Recent policy updates from Medicare contractors proposed reducing the number of prior medication failures for Deep TMS eligibility from four to one, which could enhance access to treatment [9][10] Company Strategy and Development Direction - The company is focused on increasing market awareness of its technology and enhancing its online presence, with organic website traffic growing by 50% year-over-year [12] - Strategic initiatives are in place to support customers with reimbursement processes, particularly for OCD treatments [20] - The company is also pursuing commercialization for Deep TMS in smoking addiction, with ongoing data collection to support future reimbursement efforts [21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic challenges, including inflation and recession concerns, which have impacted customer decision-making and sales [22][32] - Despite these challenges, the company remains optimistic about long-term commercial success, supported by a strong balance sheet [22][28] - Management indicated that the current economic environment may lead to a more cautious approach in the second half of 2022 regarding investments in commercial and research activities [27][29] Other Important Information - The company participated in seven medical meetings during the second quarter and plans to continue its presence at medical conferences [14] - The company is actively working on expanding reimbursement for OCD treatments, with recent positive coverage policies from major health plans [19] Q&A Session Summary Question: Impact of macro headwinds on customers and sales - Management noted that decision-making has been delayed due to macroeconomic factors, affecting the conversion of new customers [32] Question: Shift towards leasing versus outright purchases - There has been a slight shift towards leasing, but overall decision-making has been delayed [33][34] Question: Updates on coverage policies - The proposed updates to Medicare policies apply to all TMS treatments, not just Deep TMS [35][36] Question: Gross margin guidance for the year - Management indicated that gross margin pressure is expected to continue due to increased shipping costs and inventory issues [37][38] Question: International sales performance - Approximately a quarter of the systems shipped were for international markets, indicating stronger international sales [42] Question: Update on sales force size - The company currently has 17 regional territory managers and aims to increase this number [45] Question: Commentary on international market opportunities - Israel's recent approval for reimbursement positions it as a significant opportunity, although it remains a small market [63][64]