Kooth plc (LON:KOO) Has Found A Path To Profitability

Kooth plc (LON:KOO) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Kooth plc, together with its subsidiaries, provides digital mental health services to children, young people, and adults in the United Kingdom. On 31 December 2023, the UK£109m market-cap company posted a loss of UK£169k for its most recent financial year. Many investors are wondering about the rate at which Kooth will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Kooth

Kooth is bordering on breakeven, according to the 6 British Healthcare analysts. They expect the company to post a final loss in 2023, before turning a profit of UK£2.3m in 2024. Therefore, the company is expected to breakeven roughly 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 26% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Kooth's growth isn’t the focus of this broad overview, however, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that Kooth has no debt on its balance sheet, which is rare for a loss-making growth company, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

This article is not intended to be a comprehensive analysis on Kooth, so if you are interested in understanding the company at a deeper level, take a look at Kooth's company page on Simply Wall St. We've also put together a list of relevant aspects you should look at:

1. Valuation: What is Kooth worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Kooth is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Kooth’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.