Bellevue Digital Health

The broad equity market performed positively in May and closed up 4.6%. Despite the ongoing conflict in the Middle East, investors continued to favour riskier assets, resulting in the US technology sector (Nasdaq 100) significantly outperforming with a gain of 10.6%. More defensive sectors such as healthcare (+1.9%) and medtech (-3.3%) underperformed. The broader healthcare sector benefited in particular from the strong share price performance of Eli Lilly (+18.4%), which contributed 1.8 percentage points to sector performance. The Bellevue Digital Health Fund (-0.8%) performed significantly better than the medtech sector, whose absolute and relative valuation currently remains at a historically low level.

During the reporting month, 16 of the fund’s 38 portfolio companies contributed positively to performance, including Illumina (+28.6%), 10X Genomics (+28.4%), Dexcom (+23.8%), LivaNova (+22.8%), Veeva Systems (+11.8%) and Procept BioRobotics (+9.5%). Illumina and 10X Genomics both advanced following strong first-quarter results. At Illumina, the focus was on robust growth (+20%) in consumables for clinical next-generation sequencing, particularly in oncology diagnostics, while at 10X Genomics, investor enthusiasm centred on the upcoming launch of Atera. Dexcom gained substantially following a well-received Investor Day. Positive drivers included compelling long-term growth and margin targets, the involvement of activist investor Elliott, and the expansion of the company’s share repurchase programme. LivaNova also delivered a strong performance. The company exceeded expectations with its first-quarter results and raised its full-year revenue and earnings guidance.

The IPO of Metis TechBio (+40.6%; AI-based drug development) performed particularly well, while the IPO of Mobia Medical (-12.7%; neurostimulation for stroke therapy) has so far fallen short of expectations. Performance was negatively impacted primarily by TransMedics (-33.3%), Glaukos (-28.1%), Insulet (-15.8%), Globus (-9.2%) and Intuitive Surgical (-7.2%).

TransMedics reported mixed first-quarter results, including an earnings-per-share miss, while delays in clinical studies and execution risks related to product development added further pressure. Glaukos underperformed after Medicare proposed reimbursement requirements for iDose that would require the prior failure of alternative treatment options. Insulet was forced to initiate another product recall affecting certain Omnipod 5 shipments. However, the underlying manufacturing issue has already been resolved after it had previously led to a voluntary recall in the prior month.

All figures are based on USD B share classes.

Our discussions with numerous management teams at the Bank of America Healthcare Investors Conference in May reinforce our positive outlook for the 2026 financial year. Equity market volatility is currently overshadowing the operational momentum within the digital health sector. From a fundamental perspective, digital health companies remain on a solid path towards above-average growth, which in our view should continue throughout the remainder of the year. The positive sector dynamics and the return of investor interest in healthcare make us confident about the outlook for healthcare equities in 2026. Continued inflows into the broader healthcare sector should also benefit the digital health segment.

The approval and commercial launch of important new products are expected to continue supporting strong revenue growth. In addition to innovation, which remains the sector’s most important value driver, attractive valuations and the expected acceleration in M&A activity and IPO markets support the investment case for the Bellevue Digital Health Fund.