This AIM newcomer could be one to keep a close eye on for long-term growth and a profitable future:
KOOTH, is an online provider of digital mental healthcare solutions that raised £26m from its IPO. The company formerly known as XenZone will look to utilise the money in order to further grow the business and expand its reach beyond the UK.
Founded back in 2001 by healthcare therapist Elaine Bousfield the business subsequently became the UK's first online counselling and mental health support system for children and younger people, enjoying a significant take-up.
Anxiety related issues phobias and other mental healthcare issues, are not confined to adults and children can often suffer in silence which led the business into filling a much needed void. This has subsequently resulted in an increasingly widespread take up of its technology and services with offerings expanding across the whole spectrum of mental healthcare and positioning the business in a prime spot for significant growth.
To learn more about the business and plans for the future I have been fortunate enough to catch up with CEO Tim Barker for a few words, who has already experienced notable success in the past at both Datasift and Salesforce.
Kooth has already established itself firmly across the NHS where it provides a broad range of therapeutic tools and interventions from self-help to cognitive therapy.
But, in a field that is seeing demand for services outstripping solutions, Kooth is no longer confined to assisting children and younger people, as it has now successfully migrated to provide extensive services to students, adults and even employers, the latter of which are keen to assist their employees in difficult times.
Already operating with a headcount of some 300 people that includes more than 150 clinical staff, Kooth is now generating impressive recurring revenue of £13m plus, with a demonstration of strong and impressive organic growth to boot.
Barker comes across as being very passionate about the business, navigating the area in which it operates sympathetically and marrying that with a goal of driving both revenue and profits.
Eyeing up the growth prospects, it is worth looking at respected commentators on the area Kooth serves, such The WHO, which now cites that by 2030 mental health problems will be the lead cause of mortality and morbidity globally. Equally, right now the cost to business through sickness across this spectrum in the UK is estimated to be in the region of a staggering £35bn.
That alone further highlights the need for such an offering, which provides for a supportive cognitive and self help approach, as opposed to more historical and often outdated solutions to mental healthcare.
Kooth already works with 77% of NHS commissioning groups across the UK and as a SaaS business it not surprisingly proves very sticky, where it provides a whole raft of support and tools in what is an increasingly underserved sector.
Barker says that the business is operating in a very fast growing market which has seen the company delivering on average 38% growth per year in what is an addressable UK market of a significant £500m.
Going on, he adds that they are now targeting all age groups and that the more its services are promoted, the higher the uptake has been and which also sees community hubs established to support others.
Barker sees Kooth as effectively being in the personal health care market and that the business is very well placed to expand both in the UK and further afield.
That growth will be organic by nature as whilst not shutting the door completely on acquisitions, he doesn't see it as featuring, or as being a driver of the business going forward.
The corporate market is another area that he does see as providing for significant opportunity, where Kooth typically sells its support offering at circa £20.00 per employee.
That may not sound much in isolation, but when large companies with a hefty headcount are multiplied, the numbers can become cumulatively attractive.
Although there is plenty for the business to focus on here in the UK, the CEO says that some of the money raised from the IPO will be deployed to assist a drive into the US and Europe, which could provide for a substantial revenue stream.
The US in particular offers a major growth opportunity in a digital format, which could well prove popular with healthcare insurance providers alongside Medicare too.
Looking at the website (https://www.koothplc.com/) the services look very impressive with free access open to all via a smart phone or other wireless device, the important monetisation element coming in the form of the previously mentioned commercial fees, the cemented contractual relationship with NHS bodies, or Educational establishments.
At present there are no forecasts out in the market from nominated Broker Panmure Gordon, but that will change in due course, whilst on the list of new Institutional investors post the IPO, there are some significant names such as Gervais Williams Miton and Gresham House which is highly encouraging.
The shares which came to the market at £2 immediately registered a premium of 20% and now stand at £2.40 valuing the business at £79m.
With little to go on in terms of financial expectations at the present time though it is difficult to gauge a fair valuation in terms of any potential investment, although that will change as the Broker should have a note out in the next month or two says Barker.
Despite that absence, the recurring revenue numbers look impressive, as with the organic growth, where with seemingly little if any competition in its chosen market form Kooth could be one to keep close tabs on. The area looks extremely fragmented with independent councillors or therapists providing limited services and GP's no longer being able to find an NHS referral at hand.
Barker says that Covid has really highlighted the issues Kooth addresses and most reports that have emerged of late signal alarming increases in anxiety related problems.
With the local GP now difficult to visit let alone access to therapists proving challenging, Kooth has been on hand to assist and now looks very well placed to become an integral part of the support structure across mental health.