Bellevue Digital Health

In February, the broad equity market closed up +0.7%, while the broad healthcare sector (+2.9%) developed clearly positively and the medtech sector (-0.2%) slightly negatively. The Bellevue Digital Health Fund (-3.2%) underperformed.

During the month under review, 11 of the 37 portfolio companies made a positive contribution to performance, most notably: Align (+16.6%), 10X Genomics (+14.1%), TransMedics (+8.4%), Abbott (+6.5%), Globus (+5.3%), Stryker (+4.8%), Glaukos (+0.9%) and Masimo (+27.7%). Align exceeded 4Q 2025 expectations in terms of the number of Clear Aligner treatments and profitability and set realistic targets for 2026. TransMedics reported very strong results and received final approval from the US regulatory authority FDA to initiate clinical trials for its Organ Care System (OCS) product for both lung and heart patients. The company also announced its intention to develop a solution for kidney transplants. Abbott partially recovered from the previous month’s weakness, also supported by strong 4Q 2025 results from Exact Sciences – the acquisition is expected to close in 2Q 2026. Globus had already published preliminary 4Q 2025 results in January, which exceeded expectations. The company has now raised the EPS targets for 2026 that were set only one month ago, as profitability in 4Q 2025 exceeded internal expectations and momentum in the US spine business remains strong. Stryker exceeded expectations in 4Q 2025 and set 2026 targets that are in line with market expectations. The share price performance also reflects positive expectations regarding Stryker’s presence at the annual meeting of the American Association of Orthopaedic Surgeons (AAOS) in March. M&A activity is accelerating: following Penumbra in January, Masimo also received a takeover offer of USD 9.7 bn from Danaher.

Performance was negatively impacted by Procept BioRobotics (-21.7%), GN Store Nord (-16.1%), EssilorLuxottica (-13.1%), Veeva (-10.7%), Natera (-10.0%) and Insulet (-3.6%). Procept BioRobotics’ 4Q 2025 results were disappointing. While robot placements and treatment volumes met investor expectations, sales of disposable surgical instruments were significantly weaker. Over the past two years, inventory had evidently built up in the market, which was neutralized in 4Q 2025 under the new CEO Larry Wood. The subsequent Capital Markets Day helped to somewhat limit the downside. GN Store Nord reported negative revenue growth in 4Q 2025 and generally failed to meet expectations, particularly in the Enterprise and Gaming segments. Against this backdrop, the 2026 targets appear ambitious, especially in headsets (Enterprise) and Gaming. EssilorLuxottica significantly exceeded expectations for organic revenue growth in 4Q 2025 (+18% vs. 12%) driven by AI-enabled glasses. However, margins were diluted due to continued investment in production and market expansion. In addition, investors remain concerned about a potential market entry by Apple. We assume that the market is sufficiently large and that EssilorLuxottica is well positioned, with a lead of three years (first-mover advantage). Veeva continued to suffer from concerns about AI competition. We consider the risk to Veeva to be limited and therefore view the share price reaction as exaggerated, as the company operates in highly regulated areas that require intensive customer service and where workflows allow no tolerance for errors. Insulet exceeded expectations with solid 4Q 2025 results; however, competitor Tandem announced plans to expand its activities in Insulet’s primary sales channel (pharmacies). This could theoretically increase competitive pressure on Insulet, although we continue to view Insulet’s product as stronger.

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.