Bellevue Digital Health

In December, the broad equity market closed slightly positive for the second consecutive month at +0.8%. Following strong outperformance in the previous month, the broad healthcare sector (-0.8%) and the medtech sector (-4.6%) corrected. After a very strong prior month (+9.4%), the Bellevue Digital Health Fund (-5.4%) also saw a correction in December. December marked the conclusion of an eventful equity year for the healthcare sector. While the first nine months were dominated by political uncertainty surrounding US drug pricing, the Q4 marked the beginning of a recovery phase in equity performance. Over the full year, the Bellevue Digital Health Fund (+5.7%) outperformed the broad equity market (+3.1%), while the broad healthcare sector recorded a significantly stronger gain (+10.6%). The return of sector momentum underpins our positive outlook for the 2026 equity year and for the digital health segment. Inflows into the broader healthcare sector also support digital health equities, which in our view still offer additional catch-up and re-rating potential.

Positive contributors to performance in the month under review included Glaukos (+6.2%), Align (+6.1%), Penumbra (+6.1%) and Dexcom (+4.6%). Following a strong previous month (+19.9%), Glaukos continued its positive share price momentum after the Contract Advisory Committee (CAC) panel discussion at the end of October. During the panel, physicians expressed favorable views on Glaukos’ iDose glaucoma product, which could have positive implications for future reimbursement decisions by insurers. Align highlighted several financial drivers at conferences that should enable the company to meet analyst estimates for 2026 even without an improvement in the macroeconomic environment.

After strong performance in the prior month, Stryker (-5.1%) and Abbott (-2.8%) corrected, partly reflecting typical year-end profit taking in stocks with strong full-year performance. Abbott received FDA approval for its pulse-field ablation (PFA) catheter Volt earlier than expected. The announcement of an earlier-than-anticipated market launch of a Google smart glasses model weighed on EssilorLuxottica (-11.6%). We believe, however, that an expanding range of smart glasses offerings will significantly increase overall demand.
Insulet (-13.1%) declined following disclosures related to the planned IPO of Medtronic’s diabetes division, MiniMed. MiniMed intends to submit its patch insulin pump with a longer wear time than Insulet’s Omnipod 5 for US regulatory approval earlier than expected, already in 2026. Phreesia (-18.4%) reported weaker-than-expected organic growth in Q325 and issued guidance for its core business for the current and next fiscal year that fell short of analyst expectations, mainly due to a slowdown in the Network Solutions segment. After an exceptionally strong prior month (+117.0%) driven by its IPO, BillionToOne (-37.1%) corrected in December. Nevertheless, the stock ended 2025 significantly higher overall (+36.4%).
All figures in USD / B shares.

Based on our discussions with numerous management teams, we expect that many companies will provide initial positive indications for business development in Q425 at the J.P. Morgan Healthcare Conference in January, the most important healthcare investor conference of the year, alongside broadly optimistic outlooks for the 2026 financial year.

The positive sector momentum and renewed investor interest in healthcare leave us very confident for the 2026 equity year. Inflows into the broad healthcare sector are also supportive for digital health. From a fundamental perspective, digital health companies remain on a stable path toward above-average growth, which we expect to continue unchanged in 2026.

The approval and market launch of relevant new products should continue to support strong revenue growth. Examples include Intuitive Surgical’s da Vinci 5 robotic surgery system; Veeva’s Vault CRM suite for highly efficient pharmaceutical marketing; Dexcom’s Stelo and G8 continuous glucose monitors; Procept BioRobotics’ Hydros robotic system for prostate tissue removal; Insulet’s Omnipod 6 patch insulin pump; Penumbra’s Thunderbolt system for computer-assisted vacuum thrombectomy; and Globus Medical’s Excelsius Flex robotic navigation system.

We expect favorable tailwinds for our investment solution. In addition to innovation as the key driver of value creation, attractive valuation levels and the anticipated acceleration in M&A activity and IPOs support an investment in the Bellevue Digital Health Fund.