Bellevue Medtech & Services

In January, the broad equity market closed up 1.1%. The healthcare sector (-0.1%) and the medtech sector (-3.1%) were unable to keep pace. Contributing factors included a renewed sharp depreciation of the US dollar (US Dollar Index DXY -1.4%) and the weak performance of US health insurers (-11.6%). The Bellevue Medtech & Services Fund (-3.1%) performed in line with its medtech benchmark.

The year began with the most important investor event, the J.P. Morgan Healthcare Conference in San Francisco. Initial indications for business trends in Q4 2025 are often released during the conference, along with announcements of acquisitions – this time the acquisition of Penumbra by Boston Scientific. While medtech companies met expectations at the earnings level, there were isolated disappointments on the revenue side. Guidance for the 2026 financial year was deliberately set conservatively in order to reflect political uncertainties in the US.

In the month under review, positive performance contributions came from Penumbra (+13.9%) following the takeover announcement, Hoya (+9.5%), Dexcom (+8.8%), Medtronic (+6.0%) and Stryker (+3.9%). At Hoya, strong demand in semiconductor manufacturing and data centers points to solid quarterly results in the company’s IT supply segment. Dexcom’s preliminary Q4 2025 figures exceeded expectations, and the confirmed targets for 2026 now also appear achievable. Medtronic received European approval (CE mark) for its Sphere pulsed field ablation (PFA) product, while investor focus has also increasingly shifted toward the planned IPO of its diabetes business MiniMed.

Performance detractors included Abbott (-13.3%), Intuitive Surgical (-12.0%) and EssilorLuxottica (-4.4%). At Abbott, earnings per share (EPS) in Q4 2025 met market expectations; however, organic revenue growth (excluding COVID tests) of 4% disappointed investors compared with expectations of 7% due to weakness in the nutrition segment. Organic growth targets for 2026 (6.5–7.5%) were also below expectations (7–8%). While Intuitive Surgical exceeded expectations for procedure growth in Q4 2025, the upper end of its 2026 outlook for procedure growth (13–15%) was slightly below the usual range (13–16%), due to stronger competition in China. At EssilorLuxottica, key quarterly results are pending. While strong organic revenue growth is expected driven by smart glasses, uncertainty remains regarding margin development.

HCA Healthcare (+3.4%) made a positive contribution to performance, while Veeva Systems (-9.7%) detracted. HCA surprised with strong Q4 2025 results and guidance for 2026, which are only marginally affected by the expiration of tax subsidies related to the Affordable Care Act (ACA) and healthcare exchanges. The expansion of Anthropic’s AI solution “Claude for Life Sciences” into clinical and regulatory applications weighed on investor sentiment toward Veeva. Health insurers Centene (+4.1%) and Molina (+2.3%) delivered positive performance contributions, while providers with high exposure to the Medicare Advantage segment, such as Humana (-24.7%) and UnitedHealth (-14.1%), weighed on performance. UnitedHealth met earnings expectations for Q4 2025 and confirmed its earnings guidance for 2026. Sentiment was negatively affected by preliminary reimbursement rates for Medicare Advantage 2027 published by the US Centers for Medicare & Medicaid Services (CMS), which showed an increase of 0.1%, well below market expectations of 3–5%. As the consultation process has historically resulted in increases of around 1–3%, and as the current CMS Administrator Dr. Mehmet Oz has publicly spoken in favor of higher reimbursement, we expect higher final rates in early April 2026.

All performance data in EUR / B shares.

Our discussions with numerous management teams during the J.P. Morgan Healthcare Conference have left us positive on the 2026 financial year. In particular, large-cap medtech companies provided constructive guidance, reflecting a continuation of the strong momentum seen in 4Q 2025. We also expect very positive growth in surgical procedure volumes in 2026.

The sector’s currently record-high valuation discount relative to the US equity market is another factor supporting an investment in the Bellevue Medtech & Services (Lux) Fund. Improving sector dynamics and renewed investor interest in healthcare leave us confident regarding the equity market in 2026 and the medtech sector in particular. Inflows into the broader healthcare sector should also benefit medtech, which continues to offer additional catch-up and re-rating potential. In addition, there are already strong indications that M&A activity is accelerating again and that large-cap companies will use their strong balance sheets to drive additional external growth. The key long-term success factor remains the approval and launch of relevant new products, which should continue to support strong revenue growth.