Bellevue Digital Health

The broad stock market ended July slightly higher (+0.5%), while the US technology sector (Nasdaq 100) suffered a sharp decline (-6.6%). The technology sector lost considerable momentum and unsettled investors, leading to profit taking in AI stocks. Sectors with significant catch-up potential benefited, including medtech (+5.1%) and the defensive broad healthcare sector (+1.4%). The Bellevue Digital Health fund (+6.2%) performed very well and benefited from good corporate results. The long-awaited rotation back into medtech and digital health appears to be taking hold, supported by historically low valuation levels and the sector’s relative underperformance over the past 18 months. As expected, good corporate results were enough to trigger strongly positive share price reactions. Investors are beginning to recognize the investment opportunities again. Second-quarter reporting, which showed stable patient volumes and a healthy investment environment in healthcare, helped attract further investor inflows.

21 of the 35 companies in the fund’s portfolio made a positive contribution to performance in the month under review, including Dexcom (+23.9%), 10x Genomics (+23.3%), Glaukos (+19.3%), Abbott (+17.3%), Illumina (+16.6%) and Veeva (+14.8%). Dexcom beat investor expectations for both sales and earnings and also raised its full-year 2026 guidance. Record numbers of new patients and higher profitability improved investor sentiment. 10x Genomics benefited from positive customer feedback on test installations of its new flagship product Atera, which will be officially launched at the end of Q3 2026. Glaukos’ Q2 2026 sales came in 23% above investor expectations, and its full-year 2026 guidance was raised by 10%. Abbott delivered good Q2 2026 results, while the strong outlook for H2 2026 and 2027, supported by accelerating sales growth thanks to numerous new product launches, boosted its share price. Illumina beat investor expectations and placed more than 95 high-end gene sequencers in Q2 2026. Reagent sales benefited from strong clinical demand.

Procept BioRobotics (-17.5%), Intuitive Surgical (-11.2%), Kestra (-10.3%) and the fund’s lower-weighted holdings Beta Bionics (-18.1%), Mobia (-16.6%) and Privia (-8.0%) were the main performance detractors. Investors remain concerned that utilization of Procept BioRobotics’ Hydros/Aquablation robotic systems could suffer from competition from PAE (prostatic artery embolization) and that the restructuring of the sales organization under new CEO Larry Wood could weigh on sales growth. Intuitive Surgical’s Q2 2026 results beat investor expectations. However, the company was marked down for slowing procedure growth in the US and for not raising its full-year procedure growth guidance, as the market had priced in an upgrade. Kestra also delivered good results but suffered from profit taking after its share price had already risen sharply ahead of the results announcement.

All performance data in USD/B shares.

From a fundamental perspective, digital health companies remain on a stable path toward above-average growth, which we expect to continue throughout the remainder of the year. The positive sector dynamics and renewed investor interest in healthcare leave us very confident about the outlook for the sector in 2026. Continued inflows into the broader healthcare sector should also benefit the digital health segment.

The approval and commercial launch of important new products should continue to support strong revenue growth. Besides innovation, which remains the key value driver, attractive valuation levels and the expected acceleration of M&A activity and IPOs provide compelling reasons to invest in the Bellevue Digital Health fund.