Good morning. I am Hannah Björk, Director of Corporate Communication. Welcome to the presentation of Kinnevik's Q3 results. Let me introduce our CEO, Helena Saxon, and our interim CFO, Caspar Sjöstrand. Helena will start with a summary of the quarter, our net asset value development, and the key events in the portfolio. Caspar 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.
Thank you, Hannah, and hello, everyone, and very welcome to this Q3 call, my first as CEO of Kinnevik. I want to start by saying how grateful I am for the warm welcome from the team, our board, our portfolio companies, and to 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 am very proud to be part of this company and its next chapter. Moving over to the headlines. Our net asset value landed at SEK 29.8 billion at the end of the quarter, equivalent to SEK 108 per share, up 1% since Q2.
We invested SEK 165 million and divested SEK 183 million, ending the quarter at a net cash position of SEK 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. 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. 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. Caspar 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 Tandem Health strong funding rounds, of course, lifted their value by approximately 30% in the quarter. Let me move over to three key events in the quarter. Firstly, Kinnevik invested SEK 12 million in Swedish health tech company Tandem, which raised $100 million in the quarter.
Tandem is a complete AI medical assistant integrated with 130 medical records in 14 European countries. The U.S. biotech company Enveda, which is 9% of our portfolio, raised $311 million and is advancing three clinical programs for eczema, obesity, and irritable bowel syndrome. Kinnevik invested $5 million and now owns 11% of the city company, which is valued at $1.8 billion. Enveda will use the additional capital to scale its AI-enabled platform focused on identifying new chemistry for drug development. Cityblock, which is 6% of our portfolio and operates a value-based care model for especially vulnerable patients in the U.S., 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.
Cityblock has announced that its annualized revenue will now reach some $2.2 billion, and they will be serving almost 200,000 patients in the U.S. With that, I am handing over to our Interim CFO, Caspar Sjöstrand. Please, Caspar.
Thank you, Helena, and good morning, everyone. Let us 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 Perk, 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. Perk 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. Perk 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. 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. Mews, Oviva, and Pleo decreased in value.
For Mews and Oviva, updated forward growth expectations held multiples back relative to peers, although both companies continue to grow at high rates with focus on profitability. For Pleo, the decline mainly reflected lower peer multiples. Finally, Betterment, Cityblock, and Instabee all continued to grow with little net change in fair value. For Betterment and Cityblock, growth was offset by lower multiples, while Instabee's growth and cash flow lifted its value, though multiples were flat. Across the private portfolio as a whole, value was up 1% in the quarter to SEK 22.5 billion . Health & Bio added SEK 400 million , mainly from Enveda's financing round, and emerging companies added another SEK 300 million, driven by Tandem Health.
Together, they offset declines of around SEK 200 million each in software, mainly Mews 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. That is two to three times as fast as their 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 their cost structures while their peers are larger and more mature. The gap is, however, narrowing with combined EBITDA margins up 7 percentage points 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. It was a mixed picture across subsectors. Health tech and vertical software peers re-rated by around 10% and 5% on a median basis, while transactional software and value-based care peers declined by around 12% and 16%. In subsectors where peers declined, our multiples followed, with Perk falling less than its peers and Pleo and Cityblock somewhat more. Where peers increased, updated forward growth expectations in a few companies, such as Mews and Oviva, meant we didn't follow in full. Finally, currency. With around three quarters of our private portfolio in U.S. 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.
Thank you, Caspar, 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 Kinnevik 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 cost down to SEK 200 million per year by 2027. Finally, we are fully aware that trust can only be built through consistent delivery. Therefore, our focus will be on results and transparency. Kinnevik 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, Caspar and I are happy to take your questions.
Thank you. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Once again, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. We are now going to proceed with our first question. Our first questions come from the line of Derek Laliberté from ABG Sundal Collier. Please ask your question.
Thank you, and good morning. 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 the conservatism of your current valuation, particularly for your three largest holdings? What would really need to happen for these valuations to start reflecting more of the operational progress that we are seeing?
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 sub-sectors, then you see more of a mixed picture. For example, if you look at Perk, then transactional software was actually down, and the key peer 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 Health and Mews, where the latest quarter for Spring Health, we're still valuing the company at a premium versus the large peer group, and you had a little bit of a softer development there.
I think all in all, we think of these as the fair value of our companies, and they continue to grow, they continue to perform. Yeah.
Okay. I appreciate the clarity. Then deeper on Spring Health, remaining your 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 over the year?
Yeah. 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. So 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 peer as covered in the Q2.
Okay, cool. On Mews there, it was marked down another 6% here in Q3 with the 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? How does that reconcile with the company's continued expansion and the recent product developments we've seen as well?
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+% . 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.
Okay. Just on Cityblock, just to understand clearly what's been going on there lately. What I can see, they completed this $160 million financing round alongside with the Homeward Health acquisition, but the valuation here is broadly unchanged. Just wondering if you could explain how this transaction affects Cityblock's financial position and the growth outlook too. Does this new financing round provide any new external validation of your current valuation?
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. 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%. I think when it comes to the acquisition, which was an all share, all stock acquisition, we took a bit of dilution. Rather than getting the synergy values from day one, we would like to see them grow into that. Therefore, we haven't re-rated it on day one, so to speak. I think in general, on the business, it continues to perform as expected. It's more of a challenging market backdrop that they grew into.
And actually, overall, being flat in the quarter, we see as a sign of good health.
All right. That makes sense. Just finally on the broader strategy here, I think it's quite clear what you want to achieve long term, broadly written, 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?
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 is a lot of interest in our strategy for sure, and that's very flattering in a way. I can just confirm that the board and management are clearly aligned around the direction. 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.
Okay, sounds good. That was all for me. Thank you.
Okay. Thank you, Derek.
We are now going to proceed with our next question. The questions come from the line of Linus Sigurdson from DNB Carnegie. Please ask your question.
Thank you very much. Good morning. Wanted to start to build on Derek's question on valuation. You talk about broad-based growth, at the same time saying that forward expectations held multiples back in several instances. Could you just help us understand what's driving the lowered expectations, I guess, in Pleo and Oviva in particular?
Yes. Thank you for your question. I think on Pleo specifically, as we outlined in presentation, that is more their fintech peers being weak in the quarter, which drove most of the change. When it comes to Mews and Oviva, which we also comment on, it is more, again, calibration, and I think with some of our businesses, they are obviously treading on the balance between growth and profitability. We obviously value on mainly revenue and gross profit. So I think it is important to keep that in mind. We triangulate, but it is more calibration than anything else. Then equally, during H1, we did not necessarily follow the market one to one, and then equally, we will not do that if not warranted in ongoing quarters, so to speak.
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 behavior. They are developing well in terms of acquiring new patients and reaching new patients all over Europe, including the U.K. and Switzerland and Germany. In Germany, however, there has been some reimbursement changes that impacts the development for Oviva in the quarter.
Okay, thank you. That makes perfect sense. But just to be clear, there is no material downgrades to your outlook in Pleo?
No material downgrades.
No material downgrades.
Okay. Thank you very much. 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, say, time pressure. But beyond timing, what do you view as the main bottlenecks?
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. We're working on building the pipeline for that, and we will revert to you when we have more details to share.
That's fair. Then finally, how would you put the overall financial health in the portfolio in relation to your expectations coming in as CEO?
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.
Okay. Thank you very much.
We are now going to proceed with our next question. The next questions come from the line of [Jonathan Sjöberg] from Danske Bank. Please ask your question.
Good morning. Can you hear me?
Yes.
Perfect. Thank you. It is Jonathan here at Danske. Just one question here from my end, and it is on your view on focusing the portfolio here. Just let me explain this. Balancing the current portfolio against new investments. Correct me if I am wrong here, but I think you are under 25 people working while your NAV is scattered across a long tail of companies. Given, I guess, that you are 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?
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.
That's really interesting. I guess a follow-up on that, I think interim CEO Rubin, he paused the action of new investments. Is that fully reignited now? Do you think we can see anything this year, or is that too early?
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.
Okay. That is super clear. That is all for me. Thank you.
Thank you.
Thank you. We are now going to proceed with our next question. The next questions come from the line of Frederik Lunde from DNB Carnegie. Please ask your question.
Hi there. Thanks for taking the time, and congratulations on a good start with the transactions in Enveda and Tandem Health. I appreciate that you, and agree that you should retain the flexibility on the balance sheet for the future. I would like to just touch on capital allocation still. It is good to see potential in the portfolio companies. Given this and that the Enveda and Tandem Health transactions were at a premium to previous reported NAV, I am just curious how to reconcile the investment hurdle or potential see in new future investments that could exceed buybacks when you were effectively buying back your portfolio at 60% discount to NAV in the market today. Thank you.
Hi, Helena here. It is a little bit hard to hear your question, but I think it is around buybacks related to deployment of the capital in new investments.
Yeah, just given the big discount in the share price.
Yeah
And that you see big potential in the portfolio companies.
Yeah
You must have very high expectations on future investments outside of the current portfolio.
Yeah, okay. Thank you. 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 is strategic to have that investment capacity going forward.
Thanks. But the question is not really returning cash, it is deploying cash, right? So investing in a new external company should be valued versus buying back your existing portfolio through the shares.
Yeah, no, I—
Just curious if you value those one to one, if that is a different investment proposition.
—No, I hear what you are saying, and of course, buybacks should always be a tool to deploy when you think that is the best use of capital. But for us, in this transition period, we need the financial flexibility to transform the portfolio and make new investments.
Super. I look forward to following in the coming quarters.
Okay.
Thanks.
Thank you very much.
As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. We are now going to proceed with our next question. And our next questions come from the line of Björn Olsson from SEB. Please ask your question.
Good morning, guys. First, a question on semantics. You said earlier that when explaining the lower valuations of Mews and Oviva, you said you had updated some of the forward growth estimates for some of your holdings, I think. 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?
Hi, thanks for the question. No, it's mainly around the direction or the impact. We obviously haven't changed anything in the methodology or process versus the 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 valuation in each quarter, and this is a representation of the fair value that we see today.
Maybe it could have been clearer. I agree with that. We, of course, review all the forward-looking estimates.
Okay. That's good to know. Just to follow up still, that given this, you go for new here, so should we still view the slightly downward revised forward look as an 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?
No, thank you for the question. I just want to reiterate that we have not changed the methodology for how we value our portfolio.
Okay. Then just finally, you are investing your pro-rata share of Tandem Health, but not in Enveda. How come?
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.
Okay, thanks. That's all for me.
Thank you.
Thank you. There are no further questions showing, so I will now hand back to the management team.
Okay, thank you, everyone, and we will see you in Q4.