Kooth Share Discussion Threads

[rimau1] 16/7/2023 10:45:07

Broker note from Liberum - consistent with my valuation assumptions posted last week.

Koo, a front-runner in the personalised digital mental health sector, could offer a significant value proposition for investors, according to a recent note by UK brokerage firm Liberum.

The company's shares, currently priced at 346p, are undervalued based on Liberum's price target of 457p.

But the growth potential doesn't stop there. Liberum points to the potential for more US contracts and licensing opportunities, which could add a further 400p over time, effectively more than doubling the company's share price.

The timing couldn't be better for Kooth, as it enters the fray in a world grappling with a mental health crisis. It's one of the few companies with a proven solution to address this, and it's already a market leader in the UK.

Recently, the company managed to secure transformational contracts in the US, worth $180 million and indicating its scalability and potential for international expansion. The California deal is a prime example of this, which could potentially triple Kooth's revenue.

As the company moves forward, key value drivers will include technology updates for the California contract, scaling up in Pennsylvania and California, and renewing the Pennsylvania contract. However, it should be noted that there is a high execution risk over the next twelve months.

Liberum emphasises what the market might be overlooking. The breadth and scalability of Kooth's offerings are difficult to replicate, making it a unique player in the sector. Licensing will also enable Kooth to scale rapidly and with less risk.

[acuere] 14/7/2023 12:38:05

Based on the feedback from the pilot study it’s hard not to assume that Pennsylvania contract is a near certainty. Why would you sign up Lane Johnson as an ambassador in May if not?
Pennsylvania have budgeted $100m to spend on child mental health for this year and that budget received approval from the House last week. It’s just waiting to be signed off now.
They announced pilot study win on 27 September last year, so hopefully not long to wait before official news. I think a Penn win would add $10m to next year’s revenues so we could be looking at £72.5m revenue 2024.

Worth noting that a WhiteHouse press release of 23rd May included this:

“President Biden has made tackling the mental health crisis a top priority, and he continues to call on Congress to pass legislation that would strengthen protections for children’s privacy, health and safety online.”

Kooth look to be in a strong position to help tackle this crisis.

[rimau1] 14/7/2023 08:22:51

Hi Nimbo, this stock is my largest holding so i have a very strong bull case! It was the placing that confirmed everything for me because they had previously indicated that they could self-fund Cali and wanted to execute Cali prior to considering further expansion to mitigate execution risk. This has all changed now and i suspect/guess they have been approached by other states so we are rapidly accelerating the growth plans. They have not rsn’d a scope widening of the Penn pilot but i posted an article here that confirmed it was happening to a degree. I am excited about New York which would be hugely significant and likely next. I am also excited on international expansion where we would licence our model out to local providers so the growth could be potentially exponential. I always value Koo on 3.5x ARR based on CFO comments as we are a hybrid SAAS. So with no new state wins we should really be currently valued on fwd/FY24 at £175m all IMO. Well below the radar however IC should help today.

[nimbo1] 14/7/2023 08:16:23

link to the article here which for some reason I am able to read.

[nimbo1] 14/7/2023 08:09:11

rimau have you increased your own personal expectations here post California contract?

My bull case is you have a £100 mil company but it could be worth much more if they win any more states.

Main risk is execution I think.

The California contact provides the platform for mental health they can then sell to other states is how I see it.

If this had a market cap of £250 to £350 mil I wouldn't think it crazy given what they've achieved to date... but I also don't like making outlandish bullish projections as if the last 2 years have taught me anything there is no point and things don't always go to plan!

[rimau1] 13/7/2023 21:12:57

Tip of the week in the IC, explains the late insiders rise and another kicker tomorrow hopefully

[acuere] 10/7/2023 10:25:04

A Midas Tip Update was the catalyst for todays flurry of buys.

[acuere] 04/7/2023 14:58:51

Correction. That California contract revenue is meant to be $4m per month. $12m is 3 months worth which I think they getting upfront.

[acuere] 04/7/2023 13:50:12

Not sure what planet timgaunt is living on. Today was only his 2nd and 3rd post since his first in 2021. It reminds me of the old adage. It is better to remain silent and have people think you maybe a fool than to speak and remove any doubt!

Todays placing to fund massive growth in USA was at a premium. This is almost unheard of especially in the current climate. The directors supporting it is a good thing - remember the alternative is them not investing their cash. Private shareholders have not missed out. Kooth told us in March they had landed this contract. It was just a question how much it worth. Posters on this BB suggested could be anything between $166m - $200m. And yet the share price stagnated at sub 250p for 6 weeks. Plenty of opportunity for PIs to buy, though ironically the directors weren’t allowed to and hence they had to pay 300p today.
You never know on AIM what share price will do so I’m not going to shout Fill your boots today, but there are plenty of posts on here and from the excellent Shearclass elsewhere that flag up what’s going to happen before it’s announced.
Dyor

[acuere] 04/7/2023 13:30:36

Superb set of announcements today.
In January they said this:
“The question for us really is do we go full speed ahead and tackle all of those opportunities or are we a bit more sequential about it, demonstrate our efficacy in Pennsylvania first, expand that contract, move to the next state. The former would accelerate the investment required but of course we believe that would lead to greater revenues.”
Well that question was well and truly answered today. It’s Full Speed Ahead.
27 jobs advertised on Kooth USA including 4 jobs in a new Chicago office. The Penn pilot has clearly gone well and I would be very surprised if we don’t hear of contract win off the back of that in next 3/4 months. I would think we are in pole position for the other states looking to invest in this area.

This years revenue guidance is now £34m. Cali 4y contract, starting January, is minimum $188m suggesting revenue of $12m per month. So it looks like we’re getting about 3 months revenue upfront. So for 2024 it looks like revenues will be £65m and that’s without any further contract wins.

[nimbo1] 04/7/2023 12:01:35

Yes it's a great deal as a pi - who wants a load of retail punters investing £500 instead of instil's gobbling all the shares up as a long term hold. The fact they don't need the retail element speaks volumes.

I bought more this am - best opportunity I've seen in a while for a £100 mil market cap because the US market is so big. Just got to ride the ups and Downs as if they get it right it could be a special place to park some $.

[rimau1] 04/7/2023 11:53:14

Wrong tim, i’m cheering as a PI. 15% premium to last nights close and a 23% premium to the 4 week moving average. Masterstroke.

[timgaunt] 04/7/2023 11:30:40

Nope Spooky, they could have raised via Primary Bid too. Only institutional folk will cheer how this was done.

[babbler] 04/7/2023 10:56:29

Lol... You are funny. Ever thought of becoming a comedian? Placing was at premium. Not sure if you are serious or just winding people up.

[spooky] 04/7/2023 10:24:27

timgaunt, you are joking of course.

[1c3479z] 04/7/2023 09:45:51

hope they can manage the recruitment, integration within the team and with other agencies and the quality control required for such a large contract; seems a tough ask also hope they've raised sufficient working capital for the time being.

[timgaunt] 04/7/2023 09:02:56

Great that they have confirmed this contract, but disappointed with the fundraising. They are raising at 10% below the current share price diluting shareholders more than necessary and providing a 10% bump for the directors and institutions who have been invited to participate. The directors have made circa 40k today. No small shareholders as per usual. They should have said 'not less than 300p'. I hope the institutions are tied in for a lengthy period.

[hatfullofsky] 04/7/2023 08:25:03

Question is, when do you add ? on a 35% rise or wait for the inevitable profit taking.

Long term this definitely has unicorn possibilities, PENN to follow then further states, also looking at Medicaid managed care plan providers.

[nimbo1] 04/7/2023 08:04:38

I'll be adding here - could be a unicorn if it was valued like a US start up and market cap still tiny

[hatfullofsky] 04/7/2023 07:28:39

Wow Wow Wow $188m over 4 years, £10m raise at 15% premium, we could be up a lot more by COB.

[bigbigdave] 04/7/2023 07:22:20

!FOLLOWFEED

[rimau1] 04/7/2023 07:13:39

Wow, that is way, way beyond my expectations. Smart to raise funds as buffer given the significant upfront opex and capex. Even better news; Kooth have also identified further opportunities in the US for expansion. I am guessing New York state. In earlier investor calls they downplayed further state expansion wanting to concentrate on Cali and Penn. Hold til you’re old.