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, Financial) 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.
Q: Can you provide an update on the potential involvement of Cigna in VillageMD?
A: Georgi Ganev, CEO: While we can't disclose specifics, Cigna is a long-term owner that has shown interest. The process is fluid, and we are hopeful for a future where VillageMD can operate independently from Walgreens.
Q: Why are you restructuring Mathem so soon after your latest investment?
A: Georgi Ganev, CEO: The restructuring was necessary to cut costs and reset operations for profitability. We are not interested in further backing unless the company shows profitability. The new management is focused on making the company efficient using Oda's technology.
Q: How do you ensure that you are in the driver's seat with your current core holdings, unlike with VillageMD?
A: Georgi Ganev, CEO: Unlike VillageMD, our other companies do not have a controlling shareholder. We have shareholder agreements and rights that align our interests with the founders and other co-investors, ensuring we are better positioned in our core holdings.
Q: Why are you cautious about Pleo's future expectations despite its profitability improvements?
A: Samuel Sjostrom, CFO: We are adjusting expectations due to the broader market slowdown in public software companies. This is a precautionary measure to avoid surprises and ensure the company meets or exceeds expectations as we head into 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
