Kooth PLC’s shares jumped on Monday after it announced that it had signed a four-year contract worth $188 million in California, and proposed a placing worth an estimated £10 million.
Shares in the London-based digital mental health platform were up 31% at 341.05 pence in London on Tuesday morning.
Kooth said that the contract signing followed the March 16 announcement that it had been selected as the primary vender partner to California to serve all six million 13 to 25-year-olds through a digital mental health platform.
Kooth will provide services to the Behavioural Health Virtual Services Platform, a technology-enabled services solution for all children and young people in California. The company said the service is expected to launch in January 2024.
The company will work with the Department of Health Care Services and young people in California to extend its existing platform, with a mobile app and capabilities that can develop behavioural health support.
As a result, Kooth said the company expects a material update to 2023 revenue guidance to not less than £34 million, up 69% from £20.1 million in 2022.
The contract is expected to have a highly material impact on revenues and annual recurring revenues from 2024.
Chief Executive Officer Tim Barker said: ‘As a pioneer and innovator in digital mental health care, being awarded this contract in a highly competitive process is a huge testament to the world-class technology and clinical expertise that we have developed over the decades.’
Kooth said it intended to hire over 200 staff in the next twelve months to support its Californian and broader US infrastructure.
To fund this expansion, the company announced a proposed placing to raise gross proceeds of an estimated £10 million through the issue of new shares at a price of 5.0p each.
The company will use £5.0 million of the net proceeds of the placing to ‘accelerate its international expansion strategy’, and £4.5 million in investing in US growth in preparation of 2024.
‘Kooth has identified additional opportunities in the US, a key market for future growth, underlining the scale of opportunity in the world’s largest health care market and the group’s ability to localise its services internationally,’ the company said.
Kooth’s strategy over the next 18 months is to develop and launch a digital mental health platform for all existing and new US customers, and it plans to roll out its platform to the UK.
‘The group’s long-term strategy involves extending the platform to other international markets, such as localisation and licensing to health care operators to run Kooth in their country,’ the company said.
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