MIDAS SHARE TIPS UPDATE: Boost for mental health firm Kooth

Not so long ago, mental health problems were often swept under the rug. Few spoke of them. And very few resources were allocated to them.

Today, mental health problems are among society’s biggest problems. According to independent research, 20 percent of British and American citizens are diagnosed with some sort of mental illness each year. The cost of tackling these problems is already over £350bn and is expected to get significantly worse by the end of this decade.

In America, conditions are even more extreme: More than 20 percent of college students aged 14 to 18 admit to seriously considering suicide in the past year.

Facing what appears to be an escalating crisis, health services on both sides of the Atlantic are searching for answers, preferably without costing the earth.

AI company Kooth has come up with a way forward: providing free online support to people in need of help. Founded in 2001, the group has spent more than 20 years refining its services, from general advice to face-to-face consultations with experienced advisors.

Chief executive Tim Barker launched the company in 2020 with a mission to expand both here and in the US.

When Midas recommended the shares for £3.19 last year, Kooth had already signed contracts with virtually every NHS Trust in the country to allow young people to receive free advice from Kooth.

Last October, Barker signed his first US contract, supporting 150,000 schoolchildren in Pennsylvania. Last week, Kooth went much further, with a four-year, £150 million deal in California that saw six million young people across the state receive digital mental health services.

Not only will the deal change Kooth’s fortunes, it will likely lead to growth across America. California looked at 450 possible suppliers before choosing Kooth, a resounding endorsement of Barker’s services. Other states should follow in time.

Analysts have already revised forecasts for this year and next, with sales rising 73 per cent to £34.8m this year, rising to at least £65m by 2024. The company will have to spend money up front on staff and technology, so a small loss is predicted for 2023. However, a profit of £3.6 million or more is expected the following year, with further increases thereafter.

Traditionally, anyone with mental health problems would be sent to a general practitioner, counselor or therapist of some sort. But the demand for these services far exceeds the supply, they are expensive and many young people, who are already glued to their phones for hours a day, would rather go digital.

Research shows that Kooth’s online services work and that more than 70 percent of users feel better afterwards.

The company also saves money. According to economists, every pound spent at Kooth saves the NHS about £3 and the benefits are even greater in America, with every dollar spent on local health services saving about $12.

Midas verdict: The effects of mental illness spread far and wide. Individuals are tormented, families are turned upside down and fortunes are spent on treatment. Kooth makes a tangible difference, especially for young people. Shares are up 5 per cent to £3.34 since Midas recommended them, but there’s plenty more good to come. Like Solid State, this is a British company that punches above its weight here and in America. A rewarding share for both existing shareholders and new investors.

Traded on: GOAL ticker: KOO Contact: koothplc.com or 020 3398 9048