AI Adoption And Digital Health Expansion Will Drive Long-Term Upside Potential

Catalysts

About Kinnevik

Kinnevik is an investment company focused on building and scaling high growth, tech enabled businesses across software, health care, fintech and climate transition.

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

• Accelerating adoption of AI powered software across hospitality, travel, health care and fintech is driving step changes in automation, personalization and decision quality in portfolio companies like Mews, TravelPerk and Spring Health, which should support sustained high revenue growth and structurally higher gross margins over time.
• Growing demand for digital health and value based care models in the U.S. is expanding the addressable market for Spring Health and Cityblock, where signed contracts and strong payer pipelines already provide visibility on 2026 volumes, underpinning multi year revenue growth and eventual operating leverage in earnings.
• The shift toward scalable, asset light, subscription and transaction based platforms in core holdings, evidenced by high gross margins at TravelPerk and rapidly scaling SaaS revenues at Mews, is improving the portfolio mix toward businesses that can expand net margins materially as customer acquisition costs normalize.
• Capital efficient scaling and a growing share of portfolio companies that are profitable or funded to breakeven are reducing future funding needs, allowing more NAV accretion to be driven by compounding earnings rather than dilution and improving the potential for cash return or reinvestment at attractive returns.
• Improving exit conditions for high growth technology and health care assets, reflected in rising transaction valuations across half of the private portfolio and renewed IPO appetite in relevant sectors, creates a path for Kinnevik to crystallize gains in mature assets, recycle capital into high conviction winners and translate embedded value into realized earnings and NAV growth.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Kinnevik's revenue will grow by 149.4% annually over the next 3 years.
• Analysts assume that profit margins will increase from 73.4% today to 97.6% in 3 years time.
• Analysts expect earnings to reach SEK 2.6 billion (and earnings per share of SEK 9.08) by about December 2028, up from SEK 124.0 million today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 13.1x on those 2028 earnings, down from 187.6x today. This future PE is lower than the current PE for the GB Diversified Financial industry at 13.9x.
• Analysts expect the number of shares outstanding to decline by 0.17% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 5.56%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Persistent currency headwinds, with SEK 3.4 billion of negative FX impact year to date and continued exposure to U.S. dollar and euro, could erode reported net asset value growth and create a disconnect between underlying portfolio performance and Kinnevik’s share price. This may weigh on reported earnings and perceived capital efficiency over time.
• Ongoing multiple contraction in software and growth comparables, already reducing private portfolio valuation multiples by around 3% in the quarter and more than halving multiples over three years, could continue to offset operational progress in core holdings and cap future valuation uplifts. This may limit net margin expansion at the portfolio level and constrain earnings growth.
• Slower growth at key health and care assets such as Spring Health and Cityblock, driven by U.S. health care cost inflation, regulatory uncertainty and the need to dial back growth to manage risk, may result in lower than expected revenue compounding and delayed scalability. This could pressure long term portfolio revenue growth and postpone the inflection to sustainably positive EBITDA.
• Execution risk in scaling AI enabled and capital intensive platforms like Mews, TravelPerk, Enveda and Aira, where rapid product rollouts, acquisitions and large funding rounds must translate into profitable customer economics, could lead to missed milestones, weaker unit economics or write downs. This would directly reduce portfolio revenue growth, compress gross margins and affect fair value based earnings.

Valuation

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

• The analysts have a consensus price target of SEK101.33 for Kinnevik based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of SEK122.0, and the most bearish reporting a price target of just SEK90.0.
  
• In order for you to agree with the analysts, you'd need to believe that by 2028, revenues will be SEK2.6 billion, earnings will come to SEK2.6 billion, and it would be trading on a PE ratio of 13.1x, assuming you use a discount rate of 5.6%.
  
• Given the current share price of SEK82.56, the analyst price target of SEK101.33 is 18.5% 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.