Bellevue AI Health

Despite an explosive mix of renewed escalation and stalled diplomacy in the Middle East, a weaker-than-expected labor market, and subdued consumer sentiment, core inflation was in line with expectations.

The MSCI World gained +2.6%, the S&P 500 rose +2.7%, and the Nasdaq 100 advanced +4.2%, with the technology sector recovering somewhat. The healthcare sector gained +3.7%, broadly supported by biopharma, medtech, and life science tools. The Bellevue AI Health Fund rose +3.9%, slightly outperforming its benchmark.

Biopharma (60.1% weighting at the end of the month) contributed +2.6% to absolute portfolio performance but detracted -0.1% from relative performance. Merck & Co (+13.9%), Amgen (+12.9%), and Pfizer (+11.8%) made positive contributions, while AstraZeneca (-4.1%), Novartis (-2.3%), and Novo Nordisk (-1.8%) detracted. Merck advanced strongly after the Phase III INTerpath-001 trial showed that intismeran autogene, the personalized mRNA cancer vaccine developed with Moderna, in combination with Keytruda significantly reduced the risk of recurrence in melanoma patients, providing the first positive Phase III evidence for an individualized cancer vaccine. AstraZeneca came under pressure after reports of a potential major merger with Bristol Myers Squibb raised doubts about its strategic rationale.

The medtech segment (24.2% weighting) contributed +1.2% to absolute performance and +0.1% to relative performance. Beta Bionics (+55.5%), Danaher (+9.5%), and Thermo Fisher (+7.5%) made positive contributions, while Medline (-10.8%), Insulet (-10.1%), and Align Technology (-5.5%) detracted. Beta Bionics benefited from better-than-expected sales, confirmed full-year guidance, rising patient numbers, and progress with applications for type 2 diabetes and fully automated insulin pumps. Insulet, by contrast, was weighed down by a guidance cut following weak new customer numbers and high attrition among type 2 diabetes patients. Given slowing growth, increasing competition, and potential reimbursement risks, we sold the position in full.

Healthcare services providers (11.5% weighting) detracted -0.3% from absolute performance and -0.1% from relative performance. Omada Health (+23.7%), Elevance (+4.4%), and McKesson (+3.4%) made positive contributions, while BillionToOne (-34.6%), Sonic Healthcare (-8.6%), and UnitedHealth (-6.0%) detracted. Omada Health benefited from better-than-expected quarterly results, rising margins, and closer distribution partnerships, which confirmed its growth potential. BillionToOne came under pressure despite good results as testing volumes disappointed, costs were higher, and a lower price target weighed on the stock.
The technology segment (3.8% weighting) comprises companies at the intersection of healthcare and information technology and contributed +0.6% to absolute performance and +0.5% to relative performance. The segment generated exclusively positive contributions during the month, including Veeva Systems (+40.2%), Waystar (+24.0%), Nvidia (+10.0%), and Microsoft (+9.4%). Veeva benefited from strong quarterly results, higher full-year guidance, and progress with AI applications and Vault CRM, which strengthened confidence in its sustainable growth prospects.

All performance data in USD/B shares.

The rapid development of generative artificial intelligence (GenAI) is ushering in an unprecedented technology-driven transformation that ranks alongside major milestones such as the Internet, cloud computing, and the smartphone. GenAI is creating tremendous opportunities for businesses and investors, particularly in the healthcare sector. A growing number of studies conclude that healthcare is among the sectors most likely to benefit from the adoption of GenAI. This is primarily due to the sector’s significant potential for efficiency
gains, the vast amount of available data, and the substantial financial resources dedicated to healthcare.

We are already seeing medications being developed more quickly and with higher probabilities of success, new diagnostic and treatment approaches delivering better clinical outcomes, and GenAI helping healthcare professionals make more informed and effective decisions. We focus on healthcare companies that have made GenAI a core element of their business strategy and are investing substantial resources in this technology, enabling them to gain a sustainable competitive advantage and achieve above-average value creation. The technology risk is more predictable in healthcare because it is a highly regulated sector.