Kinnevik AB (KINV-B.ST) Q3 2026 Earnings Call

0:00 Good morning, I'm Hanna Björk, Director of Corporate Communication. Welcome to the presentation of Sinevik's Q3 results. Let me introduce our CEO, Helen Saxon, and our interim CFO, Kasper Sjöstrand. Helena will start with the summer of the quarter, our net asset value development, and the key events in the portfolio. Kasper will then take you through portfolio performance and valuation. And Helena will close with our strategic priorities ahead. After the presentation, we will open up for questions. With that, I hand over to you, Helena.

0:39 Thank you, Hanna, and hello everyone, and very welcome to this Q3 call, my first as CEO of Kynnevik. I want to start by saying how grateful I am for the warm welcome from the team, our board, our portfolio companies, and too many of you that are on the line today. Let me kick off the presentation by making a few comments on my first two months here at Skeppsbron. I have started by getting to know the team, the companies and engaging with our stakeholders. I have been struck by the interest in our future and the strength of the team and the portfolio. I'm very proud to be part of this company and its next chapter.

1:26 Moving over to the headlines. Our net asset value landed at 29.8 billion at the end of the quarter, equivalent to 108 krona per share, up 1% since Q2. We invested 165 million krona and divested 183 million, ending the quarter at a net cash position of 7.4 billion. Our unlisted companies delivered a total return of 1% and the Kinnevik B-Share delivered a total shareholder return of 19% in the quarter. Turning over to valuation, this graph shows the development since Q2, broken down into its different drivers.

2:20 And as we can see, our net asset value development this quarter was stable, supported by growth and currency. Multiples impacted NAV negatively, and this is somewhat softer than public peer development would suggest. I will explain why. But first of all, I want to underline that there has been no change in the valuation process. We value each company against a broad peer group and its respective outlook, as we always have. In this quarterly valuation, we updated forward growth expectations in a few of our larger companies, and that held back multiples relative to listed peers.

3:11 Peer groups set the valuation range for each company, but how they are each positioned within that range depends on the specific company growth and profitability outlook. This quarter, it meant valuations for a few of the growth companies did not follow peers fully. Kaspar will add color to that later in the presentation. We also wrote down our climate tech holdings, mainly Stegra, which we now hold at zero value. Partly offsetting this, Enveda and Tannum Health's strong founding rounds of course lifted their value by approximately 30% in the quarter.

3:59 Let me move over to three key events in the quarter. Firstly, Kynnevik invested 12 million krona in Swedish health tech company Tandem, which raised 100 million dollars in the quarter. Tandem is a complete AI medical assistant integrated with 130 medical records in 14 European countries. The US biotech company Enveda, which is 9% of our portfolio, raised 311 million US dollars and is advancing three clinical programs for eczema, obesity and irritable bowel syndrome. Kinnevik invested 5 million dollars and now owns 11% of the company, which is valued at 1.8 billion US dollars.

4:47 and Veda will use the additional capital to scale its AI-enabled platform focused on identifying new chemistry for drug development. Citiblock, which is 6% of our portfolio and operates a value-based care model for especially vulnerable patients in the US, acquired Homeward Health in the quarter. This transaction was an all-stock transaction, diluting our ownership to 8%. The acquisition will bring growth, strategic benefits, and synergies going forward. Citiblock has announced that its annualized revenue will now reach some 2.2 billion US dollars, and they will be serving almost 200,000 patients in the US.

5:39 With that, I'm handing over to our interim CFO, Kasper Sjöstrand. Please, Kasper.

5:45 Thank you, Elena, and good morning, everyone. Let's turn to the valuation changes in the quarter for our 10 largest companies, which make up 75% of our portfolio. Our two largest holdings, Spring Health and PERC, both continued to grow strongly, while our fair values were broadly unchanged in the quarter. As we mentioned in the second quarter, pro forma for the Alma acquisition, Spring Health has forward revenues of around $1 billion at maintained profitability. In the quarter, earnings growth and currency contributed positively, offset by dilution. Our multiple was broadly unchanged as we did not follow the health tech re-rating in full. However, spring health continues to be valued at a premium to its health tech peer group and at a discount to its key listed peer as last quarter.

6:40 PERC was also broadly unchanged. Growth and currency tailwinds were offset by lower multiples as both transactional software peers and its key listed peer declined in the quarter. PERC has communicated that it is approaching $400 million in annualized revenue after growing an impressive 48% in 2025. That is roughly double the level reported at the time of its January 2025 funding round. As Helena already mentioned, Enveda and Tandem Health both raised new rounds in September, which lifted their values by 30-35%. We have supported Enveda over several rounds since our first investment in 2023, and the company now has three drug candidates in clinical trials.

7:29 In Tandem Health, we invested our pro-rata share on a fully diluted basis. and we look forward to supporting the company as it builds an AI-native clinic operating system. Muse, Oviva and Pleo decreased in value. For Muse and Oviva, updated forward growth expectations held multiples back relative to peers, although both companies continued to grow at high rates with focus on profitability. For Pleo, the decline mainly reflected lower peer multiples. Finally, Betterment, Citiblock and InstaBee all continued to grow, with little net change in fair value. For Betterment and Citiblock, growth was offset by lower multiples, while InstaBee's growth and cash flow lifted its value, though multiples were flat.

8:24 Across the private portfolio as a whole, value was up 1% in the quarter to 22.5 billion SEK. Health and Bio added 400 million SEK, mainly from Enveda's financing round, and emerging companies added another 300 million, driven by Tandem Health. Together, they offset declines of around 200 million each in software, mainly MUSE and PLEO, and in other investments and partnership funds, which includes write-downs in our climate tech portfolio. Before getting into the quarter's peer developments, let me briefly cover how our companies compare with those peers. Over the last 12 months, our health and bio and software companies grew revenues by over 30%, including acquisitions.

9:14 That is two to three times as fast as the broader listed peer groups. However, profitability is lower. EBITDA margins are around break-even in health and bio, and still negative in software, against 20-25% for peers. That reflects where our companies are in their development. They are earlier on the growth curve and still growing into the cost structures, while their peers are larger and more mature. The gap is, however, narrowing, with combined EBITDA margins up 7% so far this year. These differences are also why our multiples don't simply mirror those of our peers. We anchor our valuations in broad peer groups, but adjust for growth, profitability, and scale, which is worth keeping in mind as we look at how peers moved in the quarter.

10:09 It was a mixed picture across subsectors. Health tech and vertical software pairs re-rated by around 10% and 5% on a median basis, while transactional software and value-based care pairs declined by around 12% and 16%. In subsectors where pairs declined, our multiples followed, with PERC falling less than its pairs, and PLEO and Citiblock somewhat more. Where pairs increased, updated forward growth expectations in a few companies, such as Muse and Oviva, meant we didn't follow in full. Finally, currency. With around three quarters of our private portfolio in US dollars and a quarter in euros, the weaker krona added 3% to portfolio value in the quarter. With that, I'll hand it back to Helena for some concluding remarks.

11:00 Thank you, Kasper. And to round off before Q&A, let me say a few words about our priorities ahead. We will build a more focused portfolio and concentrate on fewer, larger, profitable holdings in later growth stages, where Kynnevik can be the best owner. We will exert financial discipline, both with regards to capital allocation and management costs. Capital will be allocated to growth companies with a clear path to profitability, and we will bring our management costs down to 200 million krona per year by 2027. Finally, we are fully aware that trust can only be built through consistent delivery.

11:47 Therefore, our focus will be on results and transparency. Kinevik has a strong balance sheet, a committed board, a motivated team, and a portfolio of companies with significant potential. I am confident that we have what it takes to create shareholder value, and I look forward to keeping you updated on our progress. With that, Kasper and I are happy to take your questions. Thank you. To ask a question please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question please press star 1 1 again. Once again please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question please press star 1 1 again.

12:36 We are now going to proceed with our first question. And our first questions come from the line of Derek Laliberte from ABG Centre Collier. Please ask your question.

12:49 Thank you and good morning. So my first question relates to you haven't taken quite significant valuation reductions across the portfolio this year despite pretty strong underlying growth. How do you assess sort of the conservatism of your current valuation, particularly for your three largest holdings, and what would really need to happen for these valuations to start reflecting more of the operational progress that we are in?

13:21 Thanks a lot for your question. I think it's important to reiterate what Helena already shared in that we haven't changed anything in the valuation process or methodology compared to previous quarters. I do also think that although the market in general has been constructive, if you double click on a few of the subsectors, Then you see more of a mixed picture. For example, if you look at PERC, then transactional software was actually down and the key pair was down double digits in the quarter. So it's really a calibration around those factors. I think the same would go for both Spring and Muse, where the latest quarter was Thank you very much.

14:32 Okay, I appreciate the clarity. And then a beeper on Spring Health. The remaining or largest holdings and its valuation has, as you mentioned, been broadly unchanged this year, despite what we understand as continued strong growth. I was wondering if you could elaborate a bit on the current growth trajectory, the margin development and outlook here, and to what extent is this unchanged valuation explained by multiple compression rather than changes to your operational expectations?

15:05 I think the themes are very similar to what we communicated in Q2. There's a strategic acquisition that closed in May this year. The company continues to do really well. It's scaling. It's been guided to over a billion of revenue on a run rate basis and is doing well in general. No major updates versus last quarter. As mentioned, we keep holding it at a premium to The broader health tech universe and in that same discount range to the key pair as covered in the Q2.

15:46 Okay, cool. And on Muse there is marked down another 6% here in Q3 with updated forward expectation you cite as one of the reasons. Could you elaborate here on what's changed in your expectation? Is it primarily moderation in the revenue growth or are there also some changes to the profitability outlook? And how does that sort of reconcile with the company's continued expansion and the recent product development?

16:17 Yeah, it's more the former. It keeps growing very strongly. And as you saw on one of the slides, our software companies are growing on average 30 plus percent. So it's more of a calibration than anything else. We continue to feel very good about the business and it's continued to deliver tremendously.

16:42 Okay, and then just on Citiblock, just to understand what's been going on there lately, what I can see they completed is $160 million financing round alongside with the Homeward Health acquisition, but the valuation here is broadly unchanged. So just wondering if you could explain how this transaction affects Citiblock's sort of financial position and the growth outlook there. and does this new financing round provide any new external validation of your current valuation?

17:18 Yeah, it's an excellent question. Thank you. First of all, we hold the current mark below the round. And in general, the company has continued to scale over 2 billion of annualized revenue, as we indicated. And I think here the market backdrop was a bit challenging, because as you can see from slide 11 in the presentation, the market was actually down 16%. and I think when it comes to the acquisition, which was an old share, old stock acquisition, we took a bit of dilution and rather than sort of getting the synergy values from day one, we would like to see them sort of grow into that and therefore we haven't re-rated it on day one, so to speak.

18:06 So I think in general on the business it continues to perform as expected. It's more of a challenging market backdrop that drove us that they grew into and actually overall being flat in the quarter we see as a sign of good health.

18:25 And just finally, on the broader strategy here, I think it's quite clear what you want to achieve long-term, broadly, but still how that will pan out is a bit uncertain. Should we expect some more details around this strategy over the coming months, or is this sort of set and we'll need to follow what you do, so to speak?

18:51 Hi Derek, Helena here. Thanks for the strategy question. As you know, I've spent two months here getting to know the team here at Skeppsbron, meeting the companies, the founders, some of the larger shareholders as well. There's a lot of interest in our strategy for sure, and that's very flattering in a way. And I can just confirm that the board and management are clearly aligned around the direction In the near term, we will focus on concentrating the portfolio, financial discipline, as I mentioned before, and we need to deliver shareholder value to rebuild credibility in the Kinnevik brand.

19:34 Okay, sounds good. That was all for me. Thank you. Okay, thank you, Derek. We are now going to proceed with our next question. And the questions come from the line of Linus Sigurdsson from DNB Carnegie. Please ask your question.

19:52 Thank you very much. Good morning. I wanted to start to build on Derek's question on valuation. I mean, you talk about broad-based growth, at the same time saying that forward expectations held multiples back in several instances. I mean, could you just help us understand what's driving the lowered expectations, I guess, in Plio and Oviva in particular?

20:13 Yes, thank you for your question. I think on players specifically, as we outlined in the presentation, that is more the fintech peers being weak in the quarter, which drove most of the change. When it comes to Muse and Oviva, which we also comment on, it's more, again, calibration. And I think with Some of our businesses, they're obviously treading on the balance between growth and profitability. We obviously value on mainly revenue and gross profit. So I think it's important to keep that in mind. We triangulate, but it's more calibration than anything else. and then equally during H1 we didn't necessarily follow the market one-to-one and then equally we will not do that if not warranted in ongoing quarters, so to speak.

21:09 I can add on Oviva, which is a rather recent acquisition on our part. Oviva addresses a large unmet need in Europe among obese patients that get medication but need to change their behaviour. They are developing well in terms of acquiring new patients and reaching new patients all over Europe, including the UK and Switzerland and Germany. In Germany, however, there has been some reimbursement changes that impacts the development for Aviva in the quarter.

21:50 Okay, thank you. That makes perfect sense. But just to be clear, there's no material downgrade to sort of your outlook in PLEO.

21:59 No material downgrade.

22:03 Okay, thank you very much. And then what do you see as the main bottlenecks when it comes to exits as well as new investments? I very much appreciate your comments around timing and not letting the transformation be impacted by time pressure. But I mean, beyond timing, what do you see as the main bottlenecks?

22:21 What was the question there? Timing will not put pressure on how we deploy capital, of course. That would not be smart in terms of trying to make good deals. But bottlenecks otherwise... No, I guess it's about finding the right situations where Kinnevik can be the best owner and where we can really make a difference and create value for shareholders. And we're working on building the pipeline for that, and we will revert to you when we have more details to share.

22:50 That's fair. Then finally, I mean, how would you put the overall financial health in the portfolio in relation to your expectations coming in as CEO?

23:02 I have spent some time getting to know the companies, also traveling to meet founders and CEOs. It's been a very interesting journey and I see significant potential in these companies. What's happened in the quarter is, of course, continued growth and improved margins. So I think that's a very positive sign.

23:27 Okay, thank you very much. We are now going to proceed with our next question. And the next questions come from the line of Jonathan Sherbury from Danske Bank. Please ask your question.

23:42 Good morning.

23:45 Yes.

23:46 Perfect. Thank you. It's Jonathan here at Danske. Just one question here from my end. And it's on your view on focusing the portfolio here. Just let me explain this. Values in the current portfolio against new investments. So correct me if I'm wrong here, but I think you are under 25 people working while you're now scoured across a long tail of companies. And given, I guess, that you're naturally fewer and that every holding company requires some time, what should we expect here? Are you going into a period where pruning the portfolio is the most important task compared to new investments, or should we see a bit of both?

24:23 That's a good question and it's true that we have a more focused team now with clear roles and responsibilities and I think that's very good. We can make decisions faster and it motivates the team that we're just a small concentrated team. We have, as you say, more than one task. One is of course to deploy the capital in a smart way to generate shareholder value. but it's also to concentrate the current portfolio and we have resources dedicated to just that. However, we will of course not rush into anything. We will optimize value also in the exit processes.

25:01 That's really interesting. I guess a follow-up on that. I think interim CEO Rubin, he would pause the action of new investments. Is that fully reignited now? Do you think we can see anything this year or is that too early?

25:17 I will not put a timetable on this for the reasons we talked about before. It's better we revert when we have more details to share. But of course, we are focusing on building a pipeline now to deploy the capital in the balance sheet.

25:34 OK, that's super clear. That's all for me. Thank you. Thank you. Thank you. We are now going to proceed with our next question. and the next questions come from the line of Frederik Lunde from DNB Carnegie. Please ask your question.

25:53 Hi, thanks for taking time and congratulations on a good start with the transactions in VEDA and Tandem. And I appreciate that you, and I agree that you should retain the flexibility on the balance sheet for the future. But I would like to just touch on capital allocation still. So it's good to see potential in the portfolio companies. But given this and that the NVEDA and Tandem transactions were at their premium to previous support NAV, I'm just curious how to reconcile the investment hurdle or potential see in new future investments that could exceed buybacks. Then you would effectively be buying back the portfolio at both 60% discount to NAV in the market today.

26:37 Hi, Helena here. It's a little bit hard to hear your question, but I think it's around buybacks related to deployment of the capital in new investments.

26:48 Yeah, just given the big discount in the share price and that you see big potential in the portfolio companies, you must have very high expectations on future investments outside of the current portfolio.

27:00 Yeah, okay, thank you.

27:01 Yeah, no... All form of distribution to shareholders is of course an owner question. But at this point in time for Kinnevik, transforming the portfolio, the balance sheet, having a strong balance sheet gives a lot of financial flexibility and it's strategic to remain, you know, to have that investment capacity going forward.

27:30 Thanks, but the question is not really returning cash, it's deploying cash, right? So investing in a new external company should be valued versus buying back your existing portfolio through the shares. I'm just curious if you value those one-to-one if that's a different investment proposition.

27:48 No, I hear what you're saying. And of course, buybacks should always be a tool to deploy when you think that's the best way, best use of capital. But for us in this transition period, we need the financial flexibility to transform the portfolio and make new investments.

28:08 Super. I look forward to following in the coming quarters.

28:11 Okay, thank you very much. As a reminder to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. We are now going to proceed with our next question. And our next questions come from the line of Bjorn Olsson from SEB. Please ask a question.

28:37 Good morning guys. First a question on semantics. You said earlier that when explaining the lower mall valuations of Muse and Aviva you said you had updated some of the forward growth estimates for some of your holdings. Was that just a miscommunication or will this mean that you haven't reviewed all forward growth estimates for all of your holdings and we will see more revisions to come?

29:06 Hi, thanks for the question. No, it's mainly around the direction, meaning, or the impact. So we obviously haven't changed anything in the methodology or process versus previous quarter. We go through all of the forecasts and do our calibration and so on. So that shouldn't be taken as an indication of anything. We go through every single company by company evaluation in each quarter. And this is a representation of the Thank you very much.

30:03 Example of the two of you and maybe more in your team being more conservative now when looking ahead or has this just been a mechanical effect? Because looking at the LTM revenues, I guess software has gone from a year-on-year growth rate of 34 to 32% Q over Q. So is this just a reflection of this or you're conservative?

30:28 No, thank you for the question. I just want to reiterate that we have not changed the methodology for how we value our portfolio.

30:40 Okay. And then just finally, you are investing your pro rata share of tandem, but not in Enveda. How come?

30:52 That's true, good catch. We have deliberately taken a smaller share of the Enveda financing round. We have already a stake in Enveda that we're very happy with. We also have other biotech investments, and we feel that the exposure to that sector is the right one. And we participated with $5 million, as I'm sure you saw, and we thought that was the right number.

31:23 Okay, thanks. That's all for me. Thank you. Thank you. There are no further questions showing, so I'll now hand back to the management team. Okay, thank you everyone, and we will see you in Q4.