GCIKooth officially inks $188 million US deal, raises £10m to fund expansion
Under the contract, 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 platform is one of 15 workstreams within the CYBHI. Kooth was selected as the primary vendor after the state vetted 450 providers with existing digital behavioral health platforms and content.
As part of the contract, Kooth will be working with the DHCS and the youth of California to extend Kooth's existing platform with a mobile app and additional capabilities. The service is expected to launch in January 2024.
The contract has a minimum total value of $188m through to June 2027. This win is expected to lead to a substantial upgrade in 2023 revenue guidance, with projections of at least £34 million compared to £20.1 million in FY2022. The contract's impact on revenues and ARR from 2024 onward will be influenced by usage, promotional activities, and product development, with potential for additional revenue growth.
In a separate announcement, Kooth said it aims to raise £10m for it’s expansion strategy, with £5m being allocated for platform development, £4.5m for US growth (including a unified US platform), new UK capabilities, and international expansion). In the US, Kooth intends to build teams and proof points to extend support to other States, pilot Kooth with Medicaid managed care plan providers, and explore opportunities to support the 0-12 year old age group.
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This is another major milestone for Kooth on its path to US expansion, building on its previous contract win with the State of Pennsylvania in October last year. The US market is set to welcome Kooth with open arms, with the company’s digitalised and free services helping to alleviate strain on healthcare systems, while also helping patients avoid costly medical bills.
The contract comes as part of California Governor Gavin Newsom's $4.7 billion investment in youth behavioral health under the Master Plan for Kids' Mental Health, and the Children and Youth Behavioral Health Initiative. Kooth’s contract as part of the government’s investment is timely, given that a staggering two-thirds of young people coping with major depression in California currently do not, or are unable to, receive treatment.
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 mental health support for young people across California.
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 tackle the issue.
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. The news of Kooth’s US contract win was welcomed by investors, with its shares rising as much as 36%.
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