Bellevue Digital Health

In March, the Iran conflict shaped equity markets, with the broad equity market closing down 6.4%. The sharp increase in oil prices fueled inflation concerns and pushed interest rates higher. The yield on the 10-year US Treasury rose by 0.4% to 4.3%, weighing on markets alongside recession fears. The healthcare sector (-8.3%) and the medtech sector (-11.9%) also corrected significantly. The more interest-rate-sensitive, high-growth medtech sector was particularly affected by the broad market sell-off. Our analysis shows that the relative valuation of the medtech sector has reached a historical low due to weak sector sentiment. The Bellevue Digital Health Fund (-10.2%) performed slightly better than the medtech sector in this challenging market environment.

During the reporting month, 5 out of 36 portfolio holdings contributed positively to performance: Procept BioRobotics (+10.2%), GN Store Nord (+5.2%), BillionToOne (+3.4%), Omada Health (+2.4%) and Masimo (+1.4%). The positions Natera (-3.9%), Penumbra (-4.7%), Veeva (-3.5%) and Waystar (-6.0%) performed better relative to the equity market.

The share price of Procept BioRobotics recovered after a sharp decline in the previous month of March. The Q4 2025 results released in February disappointed and the company simultaneously lowered its 2026 guidance. However, the investor day at month-end surprised positively, with 2027 targets coming in above expectations. Management outlined a clear growth trajectory with revenue exceeding USD 500 mn by 2027, expanding margins and achieving operating profitability by the end of 2026. GN Store Nord announced the sale of its hearing aid business to Amplifon, which will significantly reduce the company’s leverage. As only the Headsets/Enterprise and Gaming businesses will remain after the transaction, there will no longer be any medtech exposure and we exited the position. BillionToOne and Omada Health both reported solid quarterly results and provided 2026 guidance above expectations. Veeva stabilized following AI-related concerns in the previous month, supported by strong Q4 2025 results. Masimo and Penumbra are trading independently of the broader market following respective takeover offers.

Performance was significantly negatively impacted by TransMedics (-31.6%), Insulet (-14.9%), Dexcom (-14.5%), EssilorLuxottica (-14.0%), Glaukos (-10.6%), Align (-9.8%) and Intuitive Surgical (-8.4%).

TransMedics announced that it is seeking certification as an Organ Management Organization (OMO) in the US. This would make TransMedics a formal part of the US transplant infrastructure and increase competition with its customers (Organ Procurement Organizations). Investors are concerned that «countermeasures» could potentially slow the company’s growth. In March, Insulet voluntarily recalled certain batches of its Omnipod 5 insulin pump after production issues were identified during a routine inspection. However, only 1.5% of product volume was affected and the company left its 2026 guidance unchanged. Both Insulet and Dexcom were particularly affected by weak medtech market sentiment in March. Dexcom is well positioned for 2026. We expect that in the US, the large population of type 2 diabetes patients who do not yet require insulin will, for the first time, receive full insurance reimbursement for glucose sensors during H1 2026. For EssilorLuxottica and Align, concerns emerged in the context of the Iran conflict that a weakening consumer environment could negatively impact their businesses.

All figures in USD / B shares.

Our discussions with numerous management teams during the J.P. Morgan Healthcare Conference have left us positive on the 2026 financial year. Equity market volatility is currently overshadowing the underlying operating momentum in the digital health sector. From a fundamental perspective, digital health companies remain on a stable path toward above-average growth, which is expected to continue unchanged in 2026. Positive sector dynamics and renewed investor interest in the healthcare sector leave us confident regarding the equity market outlook for 2026. Inflows into the broader healthcare sector should also support the digital health segment.

The approval and launch of relevant new products should continue to drive strong revenue growth. In addition to innovation as the key value driver, factors such as attractive valuation levels and the expected acceleration in M&A activity as well as IPOs support an investment in the Bellevue Digital Health Fund.