Climate Tech Setbacks And Healthcare Uncertainty Will Eventually Reward Patient Capital

Catalysts

About Kinnevik

Kinnevik is an investment company focused on high growth private businesses, with core holdings in software, healthcare and climate focused assets.

What are the underlying business or industry changes driving this perspective?

• Although Kinnevik has backed companies benefiting from long term digitisation of enterprise workflows, such as vertical SaaS providers like Mews, public software peers face pressure from slower seat growth and AI driven competition. This can weigh on revenue growth resilience and constrain multiple expansion flowing through to Kinnevik’s earnings and NAV.
• Although exposure to digital health and value based care aligns with structurally rising healthcare spending and demand for cost efficient care delivery, pressure on US health plans and uncertainty in government sponsored healthcare create a risk that contracts at companies like Cityblock and Spring Health become lumpier. This may delay revenue recognition and push out margin improvement at the portfolio level.
• While Kinnevik has committed substantial capital to AI native businesses across its focus sectors, rapid shifts in AI tooling and falling barriers to entry for horizontal software could erode pricing power for some portfolio companies. This may compress net margins and limit the contribution of these assets to NAV accretion.
• Although the obesity and chronic care theme behind Enveda and Oviva targets very large addressable markets and growing policy attention in Europe and the US, reimbursement frameworks and adoption of new care models can evolve slowly. This may cap the pace at which these assets translate clinical momentum into portfolio revenue and earnings.
• While Kinnevik’s climate tech holdings address long term decarbonisation needs, recent write downs in Agreena, Aira and Stegra highlight how policy changes, funding delays and scaled installation challenges can restrain growth and profitability. This can keep group level net margins held back even as more mature software and healthcare assets advance.

Assumptions

This narrative explores a more pessimistic perspective on Kinnevik compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts. How have these above catalysts been quantified?

• Kinnevik currently has no revenue. The bearish analysts are forecasting revenue to reach SEK 3.7 billion by March 2029.
• As a pre-revenue company, The bearish analysts expect Kinnevik to achieve a profit margin of 94.2% in 3 years time.
• The bearish analysts expect earnings to reach SEK 3.5 billion (and earnings per share of SEK 12.48) by about March 2029, up from -SEK 3.3 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 6.8x on those 2029 earnings, up from -5.2x today. This future PE is lower than the current PE for the GB Diversified Financial industry at 9.5x.
• The bearish analysts expect the number of shares outstanding to decline by 0.2% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 5.62%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Persistent pressure on public software peers from slower seat growth and AI driven competition could keep valuation multiples muted for longer. This would limit how much value Kinnevik can crystallise when exiting holdings like Mews, Perk or Pleo and weigh on earnings and net asset value.
• US health plans have faced margin pressure and share price weakness. If reimbursement rates or policy settings in government sponsored healthcare remain uncertain, value based care assets such as Cityblock and parts of Spring Health could see slower contracting or tougher terms, which would soften revenue visibility and compress portfolio level margins and earnings.
• Climate tech holdings have already seen material write downs at Agreena, Aira and Stegra due to policy shifts, funding challenges and execution issues. If these headwinds persist or intensify, further value impairments could offset operational progress elsewhere and continue to drag on group net asset value and earnings.
• Large, lumpy contracts in businesses like Cityblock and long sales cycles across value based care create a risk that even a single delayed or lost deal materially changes the near term outlook. This could introduce volatility in reported revenue and delay the path to stronger margins and earnings.
• Currency movements and weaker comparable public market multiples reduced Kinnevik's net asset value by about SEK 6.5b in 2025. If similar external factors continue to work against the portfolio, they could outweigh company level progress and keep reported net asset value and earnings under pressure despite operational growth in core holdings.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bearish price target for Kinnevik is SEK72.0, which represents up to two standard deviations below the consensus price target of SEK96.17. This valuation is based on what can be assumed as the expectations of Kinnevik's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of SEK113.0, and the most bearish reporting a price target of just SEK72.0.
  
• In order for you to agree with the more bearish analyst cohort, you'd need to believe that by 2029, revenues will be SEK3.7 billion, earnings will come to SEK3.5 billion, and it would be trading on a PE ratio of 6.8x, assuming you use a discount rate of 5.6%.
  
• Given the current share price of SEK61.9, the analyst price target of SEK72.0 is 14.0% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.