Money Peak: Healthcare Sector Report

February 19 – 26, 2026

🔍 Market Overview

During the reporting week, the healthcare sector saw a moderate increase of +0.40% – a restrained performance compared to cyclical sectors such as technology (+1.08%) or consumer goods (+1.04%), but one that underscores the defensive strength of the sector in an uncertain market environment. While energy (-0.49%) and industrials (-0.18%) declined, healthcare benefited from its reputation as a stable anchor, particularly among investors seeking protection from technology volatility.

The weekly movement was anything but uniform: pharmaceutical companies benefited from FDA approvals and clinical data publications, while health insurers – led by UnitedHealth Group – remained under regulatory pressure. Medical technology and diagnostics proved more stable, supported by strategic acquisitions and consistently solid cash flows.

The overarching picture: The sector is navigating between a robust pharmaceutical pipeline and structural burdens in the insurance field – a tension that is likely to gain further relevance in the coming months.

📋 Regulation & Politics: Cost Pressure from Above

The political week was marked by far-reaching decisions with direct impact on the sector's margins. The most significant influence came from the announcement by the Centers for Medicare and Medicaid Services (CMS) that the Medicare Advantage reimbursement for 2027 will increase by only 0.09% – an increment of approximately $700 million that falls far short of market expectations. For insurers, this means that the already strained margins will find little relief.

Simultaneously, the Congressional Budget Office published revised estimates, indicating that changes in the reimbursement of so-called "skin substitutes" are expected to reduce federal spending by about $245 billion over ten years. This figure illustrates the government's determination for cost control – and the risks for providers relying on reimbursement-dependent revenues.

Additionally, the HRSA released a new inquiry regarding the design of the 340B rebate system, which obligates pharmaceutical companies to offer reduced medication prices for federally funded providers. The potential introduction of a rebate model would influence the cost structure of both hospitals and pharmaceutical companies alike.

💹 Company Snapshot: Week at a Glance

Price data: February 26, 2026. Source: Money Peak / FMP.

🏢 Company Updates in Detail

Johnson & Johnson remained a dominant topic this week despite a slight decline in stock price. The company submitted a supplemental Biologics License Application (sBLA) to the FDA for IMAAVY® (nipocalimab-aahu) as a potential first approved therapy for the rare autoimmune disease wAIHA, affecting an estimated one in 8,000 people in the U.S. Simultaneously, J&J faced a legal battle with Bayer, accusing the company of exaggerating the survival benefit of its prostate cancer drug Erleada by 51 percentage points. The weekly balance of −0.45% is relatively moderate considering strong fundamentals – ROE of 33.8% and gross margin of 72.8%.

Pfizer achieved significant approval success during the reporting week: The FDA granted full approval to the BRAFTOVI® combination regimen for first-line treatment of metastatic colorectal cancer with BRAF-V600E mutation. In parallel, Pfizer entered a licensing agreement with Sciwind Biosciences for a GLP-1-based weight management and diabetes drug – a deal with milestone potential of up to $495 million, highlighting Pfizer's entry into the competitive obesity segment. The dividend yield of 6.35% with a payout ratio of 94% reflects both the attractive income component and the limited scope for organic growth.

Merck & Co. presented late-breaking data at CROI 2026 from three Phase 3 studies on the Doravirine/Islatravir regimen (DOR/ISL) in HIV treatment. The two-drug regimen achieved comparable efficacy to Gilead’s Biktarvy – a critical catalyst in the race for HIV market share, while Merck’s Keytruda approaches the impending patent cliff. With a favorable PE ratio of 16.7x and an operating margin of 41.2%, Merck stands out as one of the most attractively valued companies in the large-cap pharma universe.

UnitedHealth Group had the most notable movement of the week: +3.74% at $284.20 following a −23% decline since January 23, 2026. The recent plunge was due to the disappointing annual forecast for 2026 and the proposed Medicare Advantage reimbursement growth of only 0.09%. While the core segment UnitedHealthcare reported 15.7% revenue growth in 2025 to $344.9 billion, operating profits fell by 41.1% to $9.6 billion. This week’s price increase indicates initial stabilization attempts – whether it is sustainable remains questionable given the structural weakness in margins.

Abbott Laboratories showed little movement but made strategically significant strides: Shareholders of Exact Sciences Corporation approved the acquisition by Abbott with over 99% of the votes cast. This acquisition significantly strengthens Abbott's position in cancer diagnostics and complements its existing portfolio in continuous glucose monitoring (CGM). Additionally, Abbott declared a quarterly dividend for the 409th consecutive time – an impressive testament to the company’s distribution stability spanning over a century.

👥 Labor Shortage: An Underestimated Cost Driver

Among the structural burdens is the ongoing labor shortage and wage pressure in the sector. Since the beginning of 2026, around a dozen labor actions have already been recorded in the healthcare sector, including the largest nursing strike in New York’s history and an open strike by 31,000 nurses at Kaiser Permanente facilities. These developments increase operational cost pressure for hospitals precisely when reimbursement growth is stalling – a structurally unfavorable constellation for margin development.

🔬 Pharma Pipeline and Digitalization: Bright Spots for Long-Term Investors

Despite the regulatory burdens, there are notable impulses in the sector from research and technology. The FDA continues to review Moderna's mRNA flu vaccine candidate, while the Cleveland Clinic is testing AI-driven seizure detection from 24-hour EEG recordings daily on 120 ICU patients – a technology that previously required about two hours of manual evaluation per patient. Such efficiency gains from digital health solutions could support hospital operators and specialized providers' margins in the medium term.

Novo Nordisk also announced it will reduce GLP-1 prices in 2027 – a sign of intensifying competition in this growth market, which presents opportunities for newcomers like Pfizer while widening the price differentials for the market leader.

💼 Three Actionable Insights for Investors

Note: The following points are for general information and educational purposes only. They do not constitute personalized investment advice. Any investment decision should be made based on one's own risk tolerance, investment strategy, and – if necessary – consultation with a qualified financial advisor.

1. Observe Medicare Reimbursement Pressure as a Structural Signal
The planned reimbursement increase of only 0.09% for 2027 makes it clear that healthcare insurers in the Medicare Advantage segment will not find relief anytime soon. Investors considering healthcare insurance companies should closely monitor cost developments in the medical cost area and the respective pricing power differences between market players.

2. Consider Pharma Pipeline Quality as a Valuation Catalyst
Companies with clinically validated catalysts – such as in the HIV, oncology, or GLP-1 areas – remain focuses for growth-oriented investors. The quality of the late-stage pipeline and the timing of patent expirations (keyword: Keytruda) are crucial parameters. The broad valuation spectrum in the sector (PE ratio of 16.7x to 30.7x) offers investors with different time horizons differentiated entry points in illustrative consideration.

3. Monitor Labor Costs as an Early Indicator of Operating Margins
The unusually high strike frequency in healthcare is not a short-term phenomenon but a structural cost driver. Investors should track the development of personnel and operating costs for hospital operators and integrated providers in quarterly results to identify margin deterioration early. Providers with high levels of automation or strong digital infrastructures are likely to have a long-term advantage here.

This report was prepared by Money Peak / finAgent based on publicly available market data and is for informational purposes only. It does not constitute individual investment advice. Investors should always carefully consider their personal risk tolerance and individual circumstances.