Total Brain: Signs Direct-To-Consumer Licence with Hamptons Life

Business model
Total Brain operates a subscription as a service (SaaS) model for its mental health and fitness platform. The science behind the platform has been developed over almost two decades with input from the leading academic institutions in the field. This has generated a proprietary neuroscientific database of scale which underpins the scientific validation that differentiates Total Brain from other brain training and wellness applications. The app, promoted by affinity partners, assesses the four core brain capacities (emotion, feeling, cognition, self-control), pre-screens seven common mental health conditions and delivers personalised brain and mind/body training.

Opportunity to scale TTB’s mental health platform with consumers
The agreement with Hamptons Life delivers Total Brain an opportunity to accelerate its D2C strategy at low-risk with an aligned partner with deep roots in the health and wellness category. Sydney-headquartered, and with an expanding US presence, Hamptons Life is a fast-growing health and wellness organisation focused on disease prevention through lifestyle changes, with an emphasis on nutrition, physical fitness and mental health. The partnership delivers Total Brain an opportunity to extend its platform to consumers without taxing its focus on its B2B, Affinity or Clinical opportunities. We view this as a smart strategy for the company, enabling it to focus on the sales pipeline it has outlined to the market, which includes its partnership with IBM, while still participating in the creation of a consumer led business. The company will conduct a conference call on 4 May at 10am AEDT (Australia 1800 896 323/USA 1 855 731 0983 – passcode: 12352182).

Valuation of A$138m or $1.27/share
We use the discounted cashflow methodology to value Total Brain, arriving at a base case valuation of $138m or $1.27/share and generated from a WACC of 14.7%, terminal value 2.2% and a CAGR of free positive cashflows from 2023 of 35.0%. In our view, continued validation of the company’s technology should underpin Total Brain’s share price performance in the near term. Based on the current share price, TTB is trading at a significant discount to Australian and global SaaS peers.