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Hi ShearClass. May I just pick your brain on costs for Kooth. Obviously, the company raised a good amount of cash a few month ago and there has since been a lot of expenditure, especially on recruitment in the U.S. However, with the size of the California contract and there being a good chance that Kooth will secure a potentially lucrative contract for the State of Pennsylvania, is there not a worry that Kooth is simply so small and it will need a lot more cash than has been raised recently because the last thing that the company will want is for problems to mount about roll-out etc, with potential fines or whatever might be written into the contracts if Kooth does not deliver what it has promised?
Hi Uh-oh, if you go onto investor meet company and listen / watch the last 2 presentations then you'll get a far better idea of where they sit. However, they confirmed in the October meeting that the California contract is self funding - they are receiving ~£12m up front this year to cover hiring, product R&D spend etc. Once the contract formally commences they'll almost certainly be paid in advance so cash should never be an issue.
FYI there was a CYBHI public webinar on Thursday evening which confirmed everything is on track, a recording is here; https://cybhi.chhs.ca.gov/event/public-webinar-december/
This is the portal at present; https://calhopeyouth.org/ , obviously we can't download the app as it's only available in those 2 counties pending full roll out in Jan. However, the fact it's been live since late August significantly de-risks things IMO. Kooth US headcount on Linkedin is now up to 114 from around 15 earlier this year, so hiring appears to be going very well indeed.
The £10m raised in July + the additional £6m they held prior is for supporting US growth ex. Cali & Penn. I.e. Medicaid system work, new research studies, lobbying etc. Mid teen EBITDA margins (no debt) and FCF by the end of next year and a hint at dividends beyond that (not sure that's necessary at this stage), tell you where this could head should things go as hoped.
Another bit of research that's worth mentioning is regarding Medicaid, as per this line of the placing proceeds RNS from July;
"piloting Kooth with Medicaid to support youth in low-income families;"
Linking back to this post from October; https://www.linkedin.com/posts/janesbrown_such-a-pleasure-to-offer-novel-digital-solutions-activity-7118186301169831936-IKVg?
Jane Brown works for Aetna Better Health, which is part of $100b market cap CVS Health, listed on NYSE
They work across 17 US states proving Medicaid services; https://www.aetnabetterhealth.com
Each health insurance plan provides access to certain services, which are listed here; https://www.aetnabetterhealth.com/illinois-medicaid/whats-covered.html
Piloting Kooth with Medicaid via what I believe is Aetna / CVS provides the first step towards potential integration of digital mental health support across some or all of those 17 states.
They already have offices in Chicago, Kansas & Pennsylvania, so it certainly looks like they are setting up for big things...
Hi ShearClass
Thanks for posting the links , very helpful.
The big frustration for the company will be the inevitable delays that occur when dealing with public bodies and funding. Nevertheless , patience will be rewarded here as i believe the risks associated with public funding being pulled or kicked into the long grass are less relevant here.
Hopefully the next couple of months will see significant updates on their progress.
Thank you, ShearClass, for your customary well-informed and interesting comments in your last 2 messages. They are very helpful and reassuring. I am in for the long term (usually when I say that, it is case of a short term (problematic) holding becoming a long term holding, but not this time!) and I am so impressed with what this company is both aiming to do, to help those with mental health problems, as well as has achieved to date.
Watch from 5hr 27 mins onwards of this Kansas legislative research department meeting on 6th October;
https://www.youtube.com/watch?v=mP5hZSgppCo
Verbal confirmation that Kooth have partnered with Aetna in Kansas and are working through app implementation for a state wide rollout...
Also, may have been a slip of the tongue but Erin Davis (Kooth VP Government Relations) refers to 'Kooth Therapeutics', which I've never heard mentioned before.
'Kooth is the gold standard model of care for personalised, proactive and accessible digital support'
@Nortel, agree on public bodies being frustrating, however once you are integrated the competitive moat is huge so it will be worth it!
Kansas appears to be the perfect setup; Kooth are working with a huge Medicaid company which will provider many advantages, one of the most important being credibility in front of government. The questions asked by legislature were very positive, there appears to be a genuine desire to find solutions.
As I posted a few days ago, Aetna are present in 17 US states so a rollout beyond Kansas would seem inevitable post a successful implementation (and may already be happening).