The Kooth PLC (LON: KOO) share price surged 37.9% after winning a contract worth $188 million to be the primary vendor partner to California for digital mental health to 13-25 year olds to whom it shall provide digital mental well-being services.
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The company has already signed the definitive contract documentation to provide mental health services to the 6 million youths in California over 4 years up to June 2027. The contract shall kick off in early 2024, and preparations are ongoing to launch the platform for the services.
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The contract win is a crucial milestone for Kooth after the company signed a pilot contract with Pennsylvania State in 2022. The new contract shows that the firm is gaining momentum in the United States.
Kooth also unveiled plans to raise £10 million to fund its expansion strategy. Details of the fundraising will be revealed later, but it was nice to see that investors did not react badly to the news, which will dilute existing shareholders.
The company updated its revenue guidance for 2023, saying it now expects to generate a minimum of £34 million this year, marking a significant improvement from the £20.1 million the company made last year. The contract will continue to impact the company's revenues up to 2027 positively.
Kooth was selected as the primary vendor partner to deliver its digital mental health platform to all 13-25 year olds in California. Kooth is responsible for digital platforms, workforce and service delivery, marketing, and promotion across California.
The contract award is part of California Governor Newsom's $4.7 billion investment in youth behavioural health, the Master Plan for Kids' Mental Health, and the Children and Youth Behavioral Health Initiative (CYBHI).
Tim Barker, Chief Executive Officer of Kooth, said: “We're incredibly proud to partner with California's Department of Health Care Services to help tackle the growing crisis in youth mental health. As a pioneer and innovator in digital mental health care, being awarded this contract in a highly competitive process is a huge testament to the world-class technology and clinical expertise that we have developed over decades.”
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Kooth share price.
The Kooth share price surged 37.94% to trade at 360.02p, from Monday’s closing price of 261.00p.
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