The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
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Yes I think the Penn state contract would have the potential to more than double revenues in its own right.
It’s worth emphasising the fact that per Kooths research each $1 spent on their services in the US saves ~$12, whereas in the UK it’s around £1 spent saves £3.14…
Consequently a $20m per annum investment in Penn would result in theoretical savings of around $240m whilst a £20m investment in the UK would result in theoretical savings of £62.8m.
So there is clear logic to back up higher contract values in the US (plus the fact that councillor salaries are around 2.5x those in the UK). Overall they should also be able to command higher gross margins (as they alluded to in the results release).
On Cali it’s 1 of 15 workstreams, not providers. Kooth are primary vendor so aren’t handling under 12’s, however the 13-25 bracket is surely the largest segment as parental permission is required for younger ages.
Some sleuthing on Google is worthwhile however I’ve resisted the temptation to post anything on here until the contract is finalised ;)
Kooths California contract covers the 13-25 age range.
By my estimate there are 6.5m people within that age range in California. Obviously as we are 1 of 15 providers we don’t know how many of them we will be serving yet.
The $3m pilot project for 150,000 pupils worked out at $20 per head.
The 500 school districts have 1,566,855 pupils.
Just saying.
I’d speculate that the signing up of the NFL player as an ambassador suggests this is an expansion. We already know the pilot was very well received and kicking off a new campaign in May also points to this initiative being related to the 23/24 academic year given schools typically break up in late May / early June.
All very positive & as you point out the clues were most certainly there in the final results commentary.
“ Starting next month, the campaign will go live to hundreds of thousands of youth across Pennsylvania, letting them know that Kooth is there for them when it matters”
That’s another very interesting find. I’m not sure what to make of it though. Hundreds of thousands?
So far the market has only been told that Kooth is available to 150,000 youths in Pennsylvania.
So is that an overexcited marketing guy posting figures without much care for accuracy or has he let slip something not due to be announced until next month?
Remembering that this is what was said in results this month
“ Continuing to deliver on Pennsylvania pilot with a view to renewing and expanding our activities”
The clues are all there for what looks like could be coming.
Further positive news on the continuing Penn rollout on LinkedIn over the weekend;
https://www.linkedin.com/posts/cory-keslow-7390842b_mentalhealth-digitalhealth-sportsbiz-activity-7055335281914191872-asAR?utm_source=share&utm_medium=member_desktop
"Excited about this upcoming campaign with Lane Johnson of the Philadelphia Eagles and Kooth Digital Health (North America). Kooth, a leading digital mental health platform is on a mission to provide accessible and safe spaces for youth to achieve better mental health.
Starting next month, the campaign will go live to hundreds of thousands of youth across Pennsylvania, letting them know that Kooth is there for them when it matters, and that no issue is too big or too small."
Look forward to the next news item here, whether that's feedback on the impact of the Penn pilot, a full Penn contract, Cali contract details or something else entirely. The consolidation over the last week has brought the RSI back to more sensible levels & allowed market makers to accumulate a few shares, any moderate buying volume will see a resumption of the uptrend IMO
He has 371k followers on Twitter!
https://koothplc.com/article/philadelphia-football-star-lane-johnson-joins-kooth-as-mental-health
“We are delighted that Lane is joining us as our new ambassador," said Kevin Winters, General Manager at Kooth. “At Kooth, we believe it is essential that young people have access to quality, stigma-free mental health services, so they are able to receive help quickly and when they need it most. Lane is admired by so many in the area, and for him to share our mission will go a long way to spreading the word about the service."
The partnership between Kooth and Lane Johnson represents an important step forward in breaking down stigma around mental health and providing more resources for young people in Pennsylvania. With his involvement in this initiative, Johnson hopes he can make an impact on the lives of many children facing similar issues he experienced himself.
I find Paul Scott to be a very biased commentator, look at his long term ramping of Sosander, Boohoo, Beeks Financial Cloud etc. Meanwhile his sidekick is obsessed with value stocks and cynical of anything new, so no surprise they aren’t jumping in right now, but regardless it’s good to have the exposure.
I think it also illustrates the opportunity at these levels, the majority will wait for confirmation of contract values & proof of operational leverage before buying, however those who research & read between the lines of what the company is saying can get ahead of the game :)
Here is Paul Scott podcast in which he mentions Kooth. It’s mentioned in first 3 minutes. Doesn’t give any new info other than he probably has it on his watchlist but his colleague not keen.
https://qualitysmallcaps.co.uk/scvr-weekly-podcast/small-caps-podcast-with-paul-scott-episode-14-part-1-of-2-for-2023-company-results/
Further to last week's exciting news on how well the pilot study has gone, I thought it worth digging into the 2023/24 Penn budget draft which was released on 7th March.
https://www.shapirobudget.pa.gov/learn-more/#four
"The School-Based Mental Health Supports Block Grant will provide $100 million in targeted funding to connect students and staff to mental health services — and ensure a pipeline of trains school-based mental health professionals in the future."
The current draft budget in full is here;
https://www.budget.pa.gov/Publications%20and%20Reports/CommonwealthBudget/Documents/2023-24%20Budget%20Documents/Budget%20Book%202023-24%20WEB.pdf
P359 confirms that the school based mental health supports grant is planned to be recurring for the next 5 budget years at $100m per annum.
It also makes slides 8 & 12 of a 15 slide presentation deck;
https://www.budget.pa.gov/Publications%20and%20Reports/CommonwealthBudget/Documents/2023-24%20Budget%20Documents/2023-24%20Executive%20Budget%20Presentation.pdf
So the major takeaways are that the budget funding once signed off will be substantial & more significantly the school based mental health support grant will be recurring, so any state wide contract that Kooth may get is likely to be long term in nature.
Notable commentary in this article regarding the pending New York state budget;
https://spectrumlocalnews.com/nys/central-ny/ny-state-of-politics/2023/04/13/mental-health-advocates-want-direct-support-for-kids-
"Advocates for kids struggling with mental health care needs are urging state lawmakers and Gov. Kathy Hochul to ensure nearly $900 million in proposed spending will go toward increasing care access for children."
Whilst we already know that New York state is on Kooth's radar, I spotted a very interesting comment on their 16th March twitter post when they announced the Cali contract; https://twitter.com/brown_weinraub/status/1636430509075988481
"We're thrilled to work with @kooth_plc for a similar announcement by NYS and better care for our young people!"
"Brown & Weinraub is a leading edge Government Relations & Strategic Consulting firm. We represent businesses established or seeking to expand in New York."
Given their success in Cali and the positive feedback from Penn you'd have the think we are in pole position for any contract awards that may be coming post budget sign off?
This was apparently mentioned in Scvr by Paul Scott yesterday. I imagine a lot of people who did a bit of research into it probably liked what they saw, hence the buys late yesterday and today.
Agreed. I’ve overindulged on stock here, also adding into my new ISA allowance.
Very content to leave these alone now and see how the Company expands across the USA.
Excellent to see the late break out, I added my last chunk this morning. Big big things on the way here.
Yep, it's terrific feedback & surely beyond their expectations to have such a positive impact only a few months in. The key commercial question is how the $3m pilot contract which covered 30 school districts will scale. If 30 districts can be covered at $100k PA each, can we assume that a full state wide rollout would scale at the same rate? Add in the fact that Cali has a population of 39m vs 13m in Penn and you can see where this could potentially go.
Further, as per P11 of this presentation; https://investors.kooth.com/wp-content/uploads/2023/03/Kooth-CA-160323b.pdf , already in 2023 both New York & North Carolina have announced similar schemes to Cali, how many other states will see the pilot results from Penn & want to emulate them with the same tech?
It's definitely under the radar but starting to get noticed. See 23 mins on from yesterday's VOX markets podcast; https://www.voxmarkets.co.uk/media/642eb53d7690fa0da508dde8/?context=/series/daily-podcast , both Justin & Paul very positive & talking up operational gearing etc.
Overall the company is transforming before our eyes. The fact it can still be bought for the same price as it opened on day 1 of the IPO in Sep 2020 is symptomatic of the AIM bear market and I believe a very unusual opportunity. Very excited to see what unfolds this year.
That’s a really good find Shearclass.
It certainly suggests they are very happy with the 30 school district pilot scheme and that they are keen to extend it to the 500 school districts.
Going by lack of reaction to results this looks very much off the radar atm. And yet the company is in a lot stronger position than 18 months ago when it was about 400p. If the numbers on the California win are as good as hoped and Pennsylvania extends, I expect SP to reach new all time highs within 6 months.
Great article released earlier today;
https://eu.goerie.com/story/opinion/columns/2023/04/06/web-based-program-students-mental-health-care-kaufer-bizzarro-representatives-pennsylvania-budget/70075596007/
“To address these problems, we created a pilot program in conjunction with the Department of Human Services to fund accessible, web-based options to deliver mental health services to students statewide. In its first year, over 100,000 students in Pennsylvania were able to take advantage of online interactive digital education and self-monitoring tools, peer-to-peer support in a safe anonymous forum, and access to on-demand, one-on-one counseling. Most importantly, in only a few months of operation, 20 incidents of self-harm were avoided, saving lives and preserving families.”
“We've heard from local districts and parents that this program is helping to meet students' needs, especially in schools where they don't have the resources to hire additional full-time staff or in families without the resources to see a private therapist. We know this model is working, and we will continue to fight for the services that get our children the help they need, where they need it, when they need it.”