Kooth surges on California contract win

The contract is part of California Governor Gavin Newsom's $4.7bn investment in youth behavioural health, the Master Plan for Kids' Mental Health, and the Children and Youth Behavioural Health Initiative.

Kooth will provide services integral to the Behavioral Health Virtual Services Platform, a new technology-enabled services solution, for all children, youth, and families in California.

The company noted that in awarding a primary vendor, the DHCS vetted more than 450 different providers with existing digital behavioural health platforms and content.

As part of the Contract, Kooth will be working with the DHCS and the youth of California to extend its existing platform with a mobile app and additional capabilities that provide "a welcoming, safe, and stigma-free space for behavioural health support, in multiple languages, with no waiting lists, qualifying criteria, or cost to end users".

The service is expected to launch in January 2024. Kooth said it was unable to disclose the value or length of the contract as specific terms are yet to be finalised.

Chief executive Tim Barker said: "Kooth was founded on the vision that to address the growing demand and cost of mental health care, systems would need to move upstream from a treatment-based approach to a clear focus on early intervention. In addition, as 75% of lifelong mental health issues start by the age of 25, there needs to be a greater emphasis on supporting children and young people.

"We are delighted that California's Department of Health Care Services shares this vision with us. We're excited to bring our service to the youth of California to help deliver free, statewide, behavioural health care for all 13-25 year olds.

"This contract has the opportunity to be a step change in both our work in the US and indeed more broadly as we continue to grow and scale our user base to help ever more people."

At 1120 GMT, the shares were up 37% at 235p.

Stifel, which rates Kooth at ‘buy’, said in a note that this was a "game-changing" contract.

Analyst Peter McNally said: "We believe this greatly broadens the market opportunity for the company. For context, Kooth is currently contracted to offer its services to circa 8 million people in the UK. Adding another c.6 million in California is a significant addition and also firmly establishes its presence in the US market where we believe there is greater potential for the company given most states are still in need of an appropriate solution of mental healthcare.

"California is viewed as a leader for many other states in the US also. Therefore, the State of California should provide as a sound reference customer."