Kooth (KOO) , a UK digital mental health platform, has released its H1 2023 results, detailing a year of "transformational strategic progress" as the platform provider saw a major US contract win and revenues growing 29%.
H1 revenue came in at £11.7m and annual recurring revenue increased 16% to £21.4m, with increases led by US revenue of £1.8m in H1. Overall, Kooth secured ten new contracts in the first half of 2023.
Gross margin was slightly down from the previous period, 66.8%, compared to last year’s 68.4%.
Kooth did see adjusted EBITDA fall to £0.01m, compared to £0.5m in H1 2022, reflecting investment in US setup and business development. The company also cited some challenges in the UK, “We are not immune to the broader healthcare and economic environment, which sees commissioning across the NHS structure under stress as Integrated Care Systems prioritise a reduction in costs and tackling an acute mental healthcare backlog.”
Kooth has good revenue visibility, with recurring revenue from contracts 12 months or longer at 94% and maintains a robust balance sheet with stable net assets of £10.6m, unchanged from June 2022. Additionally, a successful gross fundraise of £10m after the mid-year point, coupled with substantial recurring revenue, positions Kooth well to advance its US business development and platform investment.
In the US, Kooth demonstrated its continued momentum, signing a contract in California worth at least $188m through to June 2027. The contract follows Kooth’s first US agreement, a pilot contract signed with Pennsylvania State in late 2022, which has subsequently provided access to 100,000 students in the period.
In the UK, Kooth is the number one provider of mental health access for children and young people to NHS England. The platform provider has also diversified away from its usual offering by developing new services that tackle NHS waiting lists.
The company said it remains confident of delivering revenue for the full year in line with revised guidance of no less than £34 million.
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Kooth provides a variety of services that aim to achieve early risk recognition, connect users with the most suitable practitioners, and minimise waiting periods for support, all of which will help to address the unmet need for timely access to mental health support.
As part of Kooth’s growth strategy in the US, it aims to partner with other US States that are investing in transforming youth mental health care. This is already evident in North Carolina, where in February this year, its governor said that the state would spend $7.7 million to provide suicide prevention training for university and community college personnel, create a mental health hotline for students, and develop resiliency training for faculty staff and students.
A month earlier in January, New Jersey’s governor unveiled a $14 million mental health grant program that targets schools with the greatest need. Young adults’ mental health is a growing focus in the US following the toll that the Covid-19 pandemic took on mental well-being, and Kooth is well-aligned to assist state governors in tackling the issue.
In the UK, Kooth’s focus is on continuing to demonstrate the impact and savings that result when Kooth is commissioned in a region. For example, its platform adopts a proactive approach to mental health support, emphasising preventive care and early interventions as key components of its product, which in turn leads to immense cost savings for the NHS.
Overall, the healthcare industry is expected to witness a rising trend in delivering efficient mental health care through digital platforms, with Kooth at the forefront of this movement. With its strong balance sheet and increasing demand for Kooth’s services, the mental health platform provider is set up well for long-term growth across the US and UK.
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