Bellevue Digital Health

World stocks (MSCI World Net Index +0.9%) ended April with a slightly positive return. Donald Trump's tariff announcements were the dominant market-moving factor. They created uncertainty for investors because it was hard to determine the impact of these tariffs on business activity and global economic growth. High volatility was therefore the distinguishing feature of the month under review. Early in the month, after Trump announced his new tariff policy, stock markets plunged more than 10% but then recovered as the month went on. The US bellwether index (S&P 500 -0.7%) ended the month with an only slightly negative return.

The Bellevue Digital Health Fund (+2.9%) outperformed US tech giants (Nasdaq 100 +0.9%) as well as the broader healthcare sector (-1.9%). Its good performance is attributed to solid earnings announcements from digital health companies and the high percentage of value added they generate in the US as well as their low regulatory exposure.

17 of the 33 stocks in the fund's portfolio made a positive contribution to performance in the month under review, led by TransMedics (+36.8%), Penumbra (+9.5%), Align (+9.1%), Dexcom (+4.5%) and Intuitive Surgical (+4.1%). TransMedics presented details of its upcoming clinical programs at the ISHLT meeting. It also provided positive preclinical data for the novel organ care systems it has developed for heart and lung transplants that will be at the focus of these studies. Penumbra reported significantly better-than-expected sales and said that it had submitted clinical trial data on its Thunderbolt aspiration tubing for its computer-assisted vacuum thrombectomy system in the removal of blood clots in the brain to the FDA much earlier than expected. Intuitive Surgical's reported results also beat investor expectations, but the greater impact on its share price came from the news that its significant manufacturing presence in Mexico, where it makes instruments and accessories for its robotic systems (= 80%+ of consolidated sales), is exempt from the new US tariffs thanks to the USMCA agreement.

Procept BioRobotics (-7.3%), Insulet (-3.9%), Phreesia (-2.3%) and Globus Medical (-2.0%) were performance detractors. Procept BioRobotics’ first-quarter results came in above expectations, but the reported number of installed robotic systems did not top investors' high expectations. Insulet unexpectedly announced a change of CEO. That came as a surprise because the company has prospered. Insulet also stated that its first-quarter sales would exceed street expectations and that it intended to raise its guidance for the full year. We assume the company’s decision reflects the need for professional organizational development to master its next phase of growth. The new CEO Ashley McEvoy is a highly qualified executive who has worked for large medtech companies for many years.

All performance data is in USD / B shares.

Looking at the fundamentals, digital health companies are on a stable, above-average growth trajectory which is expected to be sustained throughout 2025. This scenario is supported by above-average growth in surgical procedure volumes and in hospital capital expenditure.

The approval and subsequent launch of relevant new products will continue to bolster sales growth, too. Examples here are the new da Vinci 5 robotic surgical system from Intuitive Surgical; Veeva's Vault CRM Suite for highly efficient marketing of medicines; Dexcom’s two continuous blood glucose sensors Stelo and G7; Procept BioRobotics' Hydros robotic system for removal of prostate tissue in males with prostate cancer; Insulet's Omnipod 5 automated insulin delivery system; Penumbra's computer-assisted vacuum thrombectomy system Thunderbolt; and Globus Medical's Excelsius Flex, a surgical robotic navigation system.

We expect some tailwind for our investment solution in 2025: In addition to innovation as the key driver of value, other factors such as attractive valuation levels (price/sales multiples are close to historical lows), an anticipated increase in M&A and IPO activity, and a general repositioning of investor assets out of stocks that have made big gains and into top-quality stocks also speak in favor of an investment in the Bellevue Digital Health (Lux) Fund.