Kinnevik AB (KNEVF) Q3 2024 Earnings Call Highlights: Strategic Investments and Portfolio Challenges

GuruFocus News
3 min read

In This Article:

  • Net Asset Value (NAV): SEK37.4 billion or SEK132 per share at the end of the quarter.

  • Private Portfolio Valuation: Declined by 7% to SEK25.2 billion.

  • Core Companies' Revenue Growth: More than 60% on average over the last 12 months.

  • Core Companies' Expected EBITDA: Positive EBITDA as a group during 2025.

  • Net Cash Position: SEK12.2 billion at the end of the quarter.

  • Investment in Spring Health: $35 million in the quarter, with an additional $45 million in secondary acquisition.

  • Investment in Aira: EUR20 million in the quarter.

  • VillageMD Valuation: Written down to zero due to uncertainties.

  • Currency Impact on NAV: Negative SEK0.7 billion due to a weakening dollar.

  • Core Companies' Valuation Growth: 4% increase on a constant currency basis.

Release Date: October 16, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Kinnevik AB (KNEVF) has completed its transformation, focusing on a growth-oriented portfolio with a strong financial position.

  • Core companies, representing 52% of the portfolio, have shown strong revenue growth of over 60% on average in the past 12 months.

  • Spring Health, a key investment, has demonstrated significant growth and profitability improvements, with expectations to be cash flow positive in 2025.

  • The company maintains a robust net cash position of SEK12.2 billion, providing a solid runway for future investments and exits.

  • Kinnevik AB (KNEVF) continues to see promising developments in early-stage ventures, with potential for outsized returns, such as Aira's expansion in clean energy technology.

Negative Points

  • The non-core portfolio faced a significant write-down, particularly with VillageMD, which was written down to zero due to uncertainties with Walgreens.

  • The weakening US dollar negatively impacted the net asset value (NAV) by SEK0.7 billion.

  • There is a cautious outlook on Pleo due to broader market conditions, leading to lowered expectations for 2025.

  • The company has faced challenges with investments in e-commerce companies like Oda and Mathem, leading to restructuring and financial setbacks.

  • Kinnevik AB (KNEVF) has limited influence over the future of VillageMD, creating uncertainty and risk in the investment.

Q & A Highlights

Q: What has changed this quarter regarding VillageMD, and why did you decide to write down its value now? A: Samuel Sjostrom, CFO: The urgency from Walgreens to refocus on their retail footprint has increased, posing a substantial risk to our investment. We have limited influence over the process, and the situation with Walgreens' strategic priorities has led us to front-load the risk in our NAV by writing down VillageMD to zero.

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