Kooth plc

("Kooth or the "Company" or the "Group")

21 September 2021

Half year results

Momentum and growth; comfortably in line with FY expectations

Kooth (AIM: KOO), a leading digital mental health platform provider, announces unaudited half year results for the six months ended 30 June 2021.

Strategic Highlights

●    Children and Young People: we are contracted by more than 90% of NHS England CCGs (2020: 85%).

●    Kooth Adult (early intervention for adults, via NHS) 'whole population' total contracts doubled in H1 vs 2020. Kooth Adult now represents £1.5m ARR.

●    Kooth Work (employee wellbeing) growth into membership-based businesses included, for example, the Chartered Management Institute.  

●    Ongoing investment in talent, technology, and outcome measures to deliver personalised, effective care.

Financial Highlights

●    Revenues up 35% to £8.0m (H1 2020: £5.9m).

●    Robust balance sheet with net cash of £8.8m provides capacity for investment.

●    Annual Recurring Revenue (ARR) up 23% to £16.6m.

●    Adjusted EBITDA up 135% to £1.1m.

●    High quality of earnings:

o  More than 90% revenues from contracts of 12 months or longer.

o  More than 95% customer retention by revenue.

Tim Barker, Chief Executive of Kooth said:

"With NHS waiting lists for mental health now totalling 1.8m people, the imperative and opportunity to provide high quality support via digital has never been clearer. Kooth's growth and performance reflects good progress on our mission to make effective, personalised digital mental health care available to all. In the last six months, Kooth has further strengthened its position as the leading digital platform supporting children and young people via the NHS, and we are delivering on our objectives to expand support to Adults via the NHS and Corporates.

"Our robust balance sheet enables us to invest to meet long-term, increasing demand for Kooth's services. We will continue this investment in our talent and technology to enable us to scale up to tackle what is one of the world's biggest challenges. Looking to the full year outturn, we expect Group revenue to be comfortably in line with expectations."

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Notes to Editors:

About Kooth

Kooth (AIM:KOO) is the UK's leading digital mental health platform, established to provide accessible and safe spaces for everyone to achieve better mental health. The Company's online platform is clinically robust and accredited to provide a range of therapeutic support and interventions. All services are predicated on easy access to make early intervention and prevention a reality.

Kooth offers three services:

•    Kooth is commissioned in over 90% of the NHS's clinical commissioning group areas across the country. It is a fully safeguarded and pre-moderated community with a library of peer and professional created content, alongside access to experienced online counsellors. There are no thresholds for support and no waiting lists. Currently, Kooth sees over 3,000 logins a day.

•   Kooth Adult operates across distinct locations and serves specific cohorts, including parents, teachers, victims of crime and those who have suffered from or continue to experience domestic violence.

•  Kooth Work is a corporate service, aimed specifically at employers to support the wellbeing of their employees, providing confidential and anonymous access to a wellbeing community, counselling, content and self-help tools. Kooth Work provides valuable, anonymous insights into the wellbeing of the workforce so that employers can identify specific areas of improvement for their wellbeing strategy.

Chief Executive's Review

Momentum and progress

The Group continues to make good progress against its strategic priorities: growing its leadership position in supporting children and young people via the NHS, and expanding to support Adults via the NHS and Corporate market.

This was reflected in revenue growth of 35% and adjusted EBITDA growth of 135%.

We've seen further contract expansion and high customer retention across the business, retaining 95% of our customers and delivering net revenue retention of 116%. In the Children and Young Persons market we now cover more than 90% of Clinical Commissioning Groups (CCGs) in England, Our Adult platform via the NHS has seen good momentum, doubling the total number of 'whole populations' contracts we operate to 16. In the corporate market, new customer partnerships with the Chartered Management Institute and Capita demonstrate the opportunity for innovators to embed employee mental wellbeing into their business model.

In addition, the London School of Economics published an independent study which found that Kooth's self-help activities are beneficial to 96% of users. Kooth's peer support community helps reduce stigma, with 77% of users more likely to seek support for their mental health after engaging.

Strategy

Kooth has a clear four-pillar growth strategy to support the increasing demand for mental health services in the public and private sector, all underpinned by investments in our technology platform and clinical operating model:

1. Continue to scale Kooth to support young people

2. Replicate our success into the adult public sector market

3. Bring the benefits of Kooth to every workplace

4. Expand into international markets.

Children and Young People

Kooth is the Group's service for the provision of free at the point of use services for children and young people (CYP)

Kooth is now contracted by more than 90% of NHS England CCGs to support the mental health needs of children and young people (FY20: 85%). This includes full coverage across all 32 London boroughs, seven Welsh Health Boards, and our first two contracts in Scotland.

Kooth Adult

Kooth Adult provides early intervention support to adults via the NHS.
The Group's focus on 'whole population' contracts is building momentum, adding eight commissions in the first half of 2021 to the five that were contracted in 2020. In addition, we have seen an increase in average contract size. Adult ARR is now £1.5m.

Kooth Work

Kooth Work supports corporates with employee wellbeing

Kooth Work continues to expand to help employees reach their full potential at work. As announced in April 2021, the Chartered Management Institute has partnered with Kooth to provide free mental health support to their UK members. In addition, Kooth has been commissioned by Capita to provide mental health support to job-seekers as part of Capita's programme to help those made unemployed as a result of COVID find work. This demonstrates the potential to integrate mental health support alongside other services to reduce stigma, and increase reach and impact.

Investing for long-term growth

Kooth is investing in its talent and technology platforms to drive its growth strategy and meet increasing demand for digital mental health support and tools. This is intended to capture the long-term market opportunity available both in the UK and internationally.

Key progress in H1 includes:

Evidencing the therapeutic outcomes for Kooth is key in advancing the business case for digital mental health care. However, digital isn't just about mirroring traditional face-to-face support, it enables entirely new care models, such as a drop-in chat session. To prove the impact of this, Kooth collaborated with the CORC (Child Outcomes Research Consortium) to independently validate a new therapeutic measure called SWAN-0M (Session Wants and Needs Outcome Measure) which shows that 72% of users achieve a good outcome from a single chat session on Kooth.

As a first step into supporting international markets, Kooth and the Department of International Trade have developed and are delivering a pilot project in South Africa, with support from the Western Cape Education Department and British Council South Africa to demonstrate the impact of the Kooth service in supporting Young People and strengthening educational professionals' confidence in managing mental health at school.

Current trading and outlook

Kooth will continue to invest in its technology platform, systems and talent in the second half of 2021. This is part of Kooth's strategy to meet long-term demand for digital mental health services.

With closing annual recurring revenue at 30 June 2021 of £16.6m the Board expects Kooth to be comfortably in line with revenue expectations for the full year. This reflects Kooth's good progress against its priorities for the first half which included maintaining its leadership position in supporting children and young people via the NHS as well as doubling the number of Kooth Adult 'whole population' contracts.

Tim Barker

Chief Executive

21 September 2021

Chief Financial Officer's review

The Group has had a positive first half of the year and as reported we expect revenue to be comfortably in line with market expectations for the full year.

The Group has seen an increase across revenue, annual recurring revenue, gross margin, EBITDA and operating profit for the half year ended 30 June 2021 in comparison to the six months ended 30 June 2020.

Revenue

Revenue increased by 35% to £8.0 million (2020 H1: £5.9 million), Annual Recurring Revenue grew by 23% to £16.6 million (2020 H1: £13.5 million), with 22 new contracts obtained in the first half of 2021 across all service types in addition to a number of contract uplifts. Churn for the period was less than 5%.

Gross Profit

Gross Profit as a percentage of turnover increased during the period by 3.6 percentage points from 59.7% to 63.3%. This was primarily an accounting change (2.5 percentage points) reclassifying certain clinical costs from direct to indirect costs. This is an ongoing change. To a lesser extent we continued to see some lower direct costs as a result of lockdown as most engagement meetings continued to be conducted virtually. This led to a reduction in travel and subsistence costs as well as allowing the team to reach more users.

Adjusted EBITDA

Adjusted EBITDA in the period increased from £0.5m to £1.1m with increased gross profit offset by higher administrative expenses including the costs of being a public company and the receipt in 2020 of £0.5m of other operating income relating to a government research grant. The total charge for share based payments in the period was £0.3m (2020 H1: £0.1m). This increase reflects the awards made under the senior and all staff 2020 Long Term Incentive Plan following our IPO.

Exceptional items

No exceptional costs were incurred during the period (2020 H1: £0.4m). Prior year costs in the period to 30 June related to pre IPO related expenses.

Taxation

There has been no corporation tax charge recognised in the six months to 30 June 2021 due to accumulated losses combined with the overall current year position (2020 H1: £nil). The tax credit for the six months ended 30 June 2021 and 2020 relate to Research and Development expenditure credits in addition to the movement in the deferred tax asset.

Profit after tax

The Group achieved a profit after tax for the period of £0.04 million (2020 H1: £0.8 million loss).

Headcount

Headcount has increased from the year end by 46 staff members across the Group to 352, with an investment drive to build out our Service Delivery and Product and Technology teams as well as clinical and commercial staff across the wider business to drive our growth strategies.

Balance Sheet

Kooth has maintained a robust balance sheet following the successful IPO in September 2020 which raised £16m prior to expenses and repayment of debt, with net cash at 30 June 2021 of £8.8m (2020 H1: £0.6m), demonstrating good underlying cash generation and ensuring capacity to invest in the Group's long-term growth.

Cash flow and financing

Cash generation during the six months was £1.0 million (2020 H1: £0.4 million), driven by increased revenues and gross profit including an increased number of customers paying in advance.

After repaying all debts in the second half of 2020, the Group is debt free (2020 H1: £6.4 million).

The Group is committed to investment following the IPO listing and as a result capital expenditure increased 96% to £1.5 million (2020 H1: £0.8 million), with increases to our Product and Technology teams and project costs.

Sanjay Jawa

Chief Financial Officer

21 September 2021

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2021

Condensed Consolidated Balance Sheet

As at 30 June 2021

Condensed Consolidated Statement of Cash Flows

For the six months ended 30 June 2021