Bellevue Medtech & Services

The broad equity market (+1.7%) closed the reporting month of August in positive territory, as did the US technology sector (Nasdaq 100 +3.3%). The broader healthcare sector (+2.8%), the medtech sector (+3.0%) and the Bellevue Medtech & Services Fund (+2.4%) also performed within this range. The long-anticipated rotation back into the medtech sector appears to be materializing, supported by historically low valuation levels and the sector’s relative underperformance over the past 18 months. Since the beginning of the second half of the year, the Bellevue Medtech & Services Fund has outperformed the US technology sector by 10%. Investors are beginning to recognize the investment opportunities in the medtech sector.

Well-known industry heavyweights Becton Dickinson (+12.6%), Intuitive Surgical (+5.7%), Medtronic (+5.2%), Edwards (+4.5%), Abbott (+3.5%) and Boston Scientific (+2.5%), as well as smaller-cap companies such as Dexcom (+8.2%), ResMed (+13.1%) and Veeva (+39.0%), contributed positively to portfolio performance.

In general, large-cap medical technology companies benefited from renewed investor interest. Another supportive factor was that the recently concluded Q2 reporting season showed that treatment volumes remain consistently high. This noticeably eased concerns about a potentially emerging negative market trend. Becton Dickinson’s strong performance was supported by the publication of very strong quarterly results, which restored investor confidence in the growth acceleration targeted by management. Veeva reported results above expectations and raised its revenue and earnings guidance, supported by robust demand for its AI portfolio. Dexcom continues to benefit from the broad reimbursement coverage expected shortly in the US for continuous glucose monitoring sensors for type 2 diabetes patients who do not yet require insulin. In addition, the Q2 results showed that profit margins could increase significantly more than the company had indicated. A similar picture emerged for life science tools companies Danaher (+8.6%) and Thermo Fisher (+6.5%), whose end markets continue to recover and are now also showing positive growth rates in research instruments.

Insulet (-10.9%), Align (-6.4%), Cooper (-3.9%), EssilorLuxottica (-2.3%) and Stryker (-1.4%) weighed on portfolio performance. Insulet reported disappointing Q2 results, lowered its growth outlook for the current financial year and withdrew its outlook for subsequent years. Operational weaknesses in addressing the type 2 diabetes patient segment have led to high patient churn. These self-inflicted problems have already emerged before competing insulin pump providers launch their own tubeless patch pumps for the first time. This prompted us to divest our position in Insulet.

The performance of US health insurers was mixed during the reporting month: Humana (+4.4%) and Elevance (+3.5%) performed positively, while UnitedHealth (-6.1%) declined. Investors currently see a good chance that the quality rating (“Star Rating”) of Humana’s insurance plans will improve, while UnitedHealth’s rating has deteriorated. Overall, health insurer share prices continue to offer considerable upside potential and remain well below their previous highs. US hospital operators Tenet Healthcare (+3.5%) and HCA (+2.1%) also performed positively.

All performance data in EUR/B shares

Innovative medical technology companies are demonstrating that leading market positions and high-margin product pipelines can contribute to positive earnings surprises and guidance upgrades even in a more challenging market environment. This also applies amid shifts in the payer mix at hospitals and changing insurance conditions.

In addition, there are already strong indications that M&A activity is accelerating significantly again and that large-cap companies will use their strong balance sheets to generate an additional boost to external growth. The approval and market launch of relevant new products remain the most important factors for long-term success, supporting continued high revenue growth.

For US health insurers in particular, we expect a significant margin recovery in 2026 (and subsequent years), especially in the Medicare Advantage segment. Persistently high market interest rates could provide additional support for earnings growth.