Kooth ends year in line with market forecasts

Digital mental health platform operator Kooth said in a trading update on Thursday that its revenue for 2022 was expected to be within the range of market expectations, of £19.6m to £20.2m, driven by growth of more than 15% compared to prior year.

The AIM-traded firm reported ongoing high levels of recurring revenues, with annual recurring revenues of around 95%.

Unaudited net cash at year-end on 31 December totalled £8.5m, up from £7.1m a year earlier, as the group remained debt-free.

In the UK, Kooth said it was making “good progress” with its strategic priority to expand access to its services across the UK population, at a time when NHS England transitioned to its new ‘Integrated Care Systems’ (ICS) structure.

Kooth said it was meeting “increasing demand” from children and young people for “fast and effective access” to mental health support.

The addition of new commissions in Scotland brought the firm closer to its goal of establishing a UK-wide service.

Momentum for Kooth Adult, known as ‘Qwell’, was also continuing, with the addition of eight new regions for the service in 2022.

Additionally, Kooth said it was now being mobilised to help reduce the burden on acute-need NHS services, including being commissioned to ameliorate accident and emergency attendance by providing its service to adults in need of urgent mental health support.

In the US, meanwhile, Kooth said its ambition to expand its “leading” digital mental health platform to the market had “good momentum”.

As it announced on 13 October, it formalised a contract with the State of Pennsylvania, which was now in the early stages of roll-out and would cover 150,000 students across the state, with the aim of expanding access to mental health support across the state.

In addition, Kooth said it was seeing interest from a number of US states in its digital mental health care, driven by a will to address challenges within the youth community.

With its leadership team, live service, and more than 20 employees in place, the company said it had made “good progress” in 2022 to build the foundations for further growth.

“Kooth performed strongly in 2022, reflecting two key factors,” said chief executive officer Tim Barker.

“First, a clear mission to make effective, personalised digital mental health available to all; second, the talent and application of our people.

“We are proud of progress made to date with our strategic priority to expand access to Kooth across the UK population.”

Barker said he was “pleased” with momentum towards Kooth’s goal to expand its digital mental health platform to the US market, adding that in a short period, it had built a market-leading team and started work in the state of Pennsylvania.

“Our proven track record, excellent recurring revenue and net cash position give us an excellent platform as we enter 2023.

“The strength of our model, strategy and market position - allied to long-term demand for digital mental health services in the UK and US - support our confidence of further progress in the year ahead.”

Kooth said it would provide further details on its performance in its full-year results in April.

At 1509 GMT, shares in Kooth were up 14.38% at 179p.

Reporting by Josh White for Sharecast.com.