Bellevue Medtech & Services

Labor market data for September, published in November, were mixed. Although more jobs were created than expected, the unemployment rate came in above expectations while wage growth fell short. At the same time, consumer sentiment deteriorated sharply. This increased the likelihood of another interest rate cut by the US Federal Reserve in December.

The broader equity market declined by -0.4% in the month under review. Healthcare performed significantly better, advancing +7.4%. The medtech sector (+4.4%) and the Bellevue Medtech & Services Fund (+3.8%) also posted solid gains.

Positive contributors included large-cap companies such as Idexx Laboratories (+18.8%), Medtronic (+15.3%), Intuitive Surgical (+6.6%), Abbott (+3.6%) and Stryker (+3.5%), as well as mid- and small-cap names including Inspire (+71.4%), Globus Medical (+49.7%) and Penumbra (+28.1%).

Idexx clearly exceeded high expectations with 12% organic revenue growth in Q3 and raised its revenue and margin guidance for 2025. Medtronic likewise delivered stronger-than-expected revenue growth, supported among other things by progress in its newest-generation pulsed-field ablation catheters for the treatment of cardiac arrhythmias.

Inspire reported good quarterly results, and the CMS (Centers for Medicare and Medicaid Services) announced higher reimbursement rates for its therapy. This will make the procedure more profitable for Inspire’s customers, which should lead to higher utilization and strong revenue growth for Inspire. Globus Medical materially exceeded expectations in Q3. Integration of the Nevro acquisition is progressing faster than anticipated, and full-year guidance was raised. Penumbra also reported better-than-expected Q3 results, increased guidance and provided a positive update on its Thunderbolt system.

Performance detractors included Veeva Systems (-18.0%), Ambu (-13.3%), Hoya (-8.4%) and Zimmer Biomet (-3.7%). Veeva beat quarterly expectations and raised guidance but sold fewer CRM systems to large pharmaceutical companies than anticipated. Ambu missed analyst expectations in Q3, mainly on margins. Its targets for the next financial year were also below expectations.
US health insurers delivered mostly positive returns. Cigna (+12.7%), Centene (+10.5%) and Elevance (+5.9%) contributed positively, while Humana (-12.3%), UnitedHealth (-4.1%) and Molina (-3.8%) detracted. Cigna and Centene recovered after being oversoldafter strong quarterly results. Humana beat Q3 earnings expectations and confirmed guidance for 2025 but still created uncertainty, as stronger growth in new Medicare Advantage members could pressure margins in 2026, given typically lower margins for new enrollees.

Life sciences tools companies Danaher (+4.6%) and Thermo Fisher (+3.4%) also contributed positively, supported by improved investor sentiment in the biopharma subsector.
All performance data in EUR / B shares.

Supported by the strong Q3 reports from medtech companies and our discussions with numerous management teams, we expect robust surgical procedure volume growth also in Q4. We likewise anticipate a very positive development in 2026. The currently record-high valuation discount versus the US equity market is another factor supporting an investment in the Bellevue Medtech & Services (Lux) Fund. There are clear signs that M&A activity is accelerating and that large-cap companies will use their strong balance sheets to drive additional external growth. The key long-term performance driver remains the approval and launch of relevant new products, which should continue to support strong revenue growth. Examples include Abbott’s Lingo, Libre Rio, Libre 3, TriClip and AVEIR systems, Boston Scientific’s Farapulse PFA and Watchman FLX Pro, and Intuitive Surgical’s new da Vinci 5 robotic system.