Modest improvement in performance fueled by multiple expansion; valuation premium for High-Growth MedTech expands in Q3
MedTech sector stock price performance improved in Q3 but is down nearly 18% over the first nine months of 2026. Expected revenue compound annual growth rates (CAGRs) for MedTech are largely unchanged vs. 6/30 but sentiment has improved and valuation multiples have moved higher, especially for the companies with the highest expected revenue CAGRs through 2028. This is our third installment of the ICR Healthcare MedTech Sector Update, which is a quarterly review of sector performance, growth and valuation trends with particular emphasis on the MedTech companies Wall Street expects to deliver the highest growth over the next three years.
We introduced ICR Healthcare’s (“ICR-HC”) High-Growth MedTech Group 2026 in our Q1’26 sector update blog here and provided a mid-year review in our Q2’26 sector update here.
By way of reminder, we track nearly 150 US-listed MedTech companies, which we call our ICR-HC MedTech Universe[1]. From this Universe, we have a filtered subset that we call the ICR-HC MedTech Class of 2026 (see footnotes for filter criteria). We filter the Class of 2026 to identify the fastest expected growers in MedTech which we call the ICR-HC High-Growth MedTech Group 2026. This group is comprised of the top two deciles of the Class of 2026 by expected revenue CAGR from 2025 to 2028.
All company fundamentals and market data are sourced from ICR-HC and FactSet as of September 30, 2026. Revenue and revenue CAGRs are based on 2025 actual reported results and Wall St. consensus estimates, both on a calendar year basis. Throughout this piece, “YTD’26” refers to the period from December 31, 2025, to September 30, 2026, and “Q3” refers to the period from June 30, 2026 to September 30, 2026.
Healthcare Sector Performance: Q3 2026 Update
The Healthcare sector continues to trail the broader equity market over the first nine months of 2026 with the S&P 500 Healthcare Index[2] returning 8.8% versus an 11.8% return for the S&P 500. However, the gap narrowed in Q3, as the S&P 500 Healthcare Index returned 6.0% versus 2.0% for the S&P 500.
At a sub-sector[3] level, the YTD’26 trends remain largely unchanged versus the first half of the year with Biotech, Pharma, and Providers/Services materially outperforming MedTech. Notably, MedTech returns were positive in Q3, outperforming Pharma and Providers/Services, but underperforming Biotech.
MedTech Sector Summary: Q3 2026
The ICR-HC MedTech Class of 2026[4] is made up of 114 companies with median 2025 revenue of $566 million. 60% of the Class of 2026 delivered positive EPS in 2025.
Street estimates continue to reflect a wide range of expected revenue growth for the Class of 2026 from 2025 to 2028, ranging from a (18.8%) CAGR to 57.4% CAGR. At the median, the Class of 2026 is expected to grow at an ~8% revenue CAGR over the next three years, unchanged versus the prior quarter (6/30). Only four companies are expected to deliver negative revenue CAGRs from 2025 to 2028 (two in the wound care sector) and more than half of the Class of 2026 is expected to grow at a single-digit CAGR over the next three years.
At the median, the Class of 2026 is trading at ~2.1x 2028E revenue, largely unchanged versus the prior quarter.
Indexed share price performance for the Class of 2026[5] reflects a (8.6%) decline for the YTD’26 period, compared to a (17.7%) decline for the MedTech sector benchmark, the iShares U.S. Medical Devices ETF (IHI)3. The delta in trading performance between the Class of 2026 and the IHI over any period is driven by the number of constituents in each group[6] and their respective representation in each of these market capitalization-weighted sector groups. For the YTD’26 period, the delta in trading performance is primarily a result of Johnson & Johnson’s (JNJ) ~28% return, representing ~7 percentage points of the Class of 2026’s outperformance vs. the IHI.
Both the Class of 2026 and the IHI posted ~3.5% returns in Q3.
“High-Growth MedTech” Summary: Q3 2026
The ICR-HC High-Growth MedTech Group 2026 (“HGMT”) represents the top two deciles of the Class of 2026 ranked by expected revenue CAGR from 2025 to 2028. Median 2025 revenue for HGMT was $98 million and 22% of this group delivered positive EPS in 2025.
Indexed share price performance for HGMT reflects a 12.2% increase in YTD’26 and a 13.1% increase in Q3[7]. HGMT significantly outperformed the Class of 2026 in both Q3 and YTD’26.
Street estimates continue to reflect a wide range of expected revenue growth for HGMT from 2025 to 2028, ranging from an ~18% CAGR to ~57% CAGR. At the median, HGMT is expected to grow at an ~26% revenue CAGR over the next three years, compared to ~8% for the Class of 2026. Notably, HGMT’s expected growth profile is heavily influenced by companies that have IPO’d in the last two years; these seven companies are expected to grow at a 38% CAGR, on average, through 2028.
Importantly, HGMT’s higher expected growth profile is reflected in a significant valuation premium vs. the Class of 2026. At the median, HGMT is trading at ~3.2x 2028E revenue, compared to ~2.1x for the Class of 2026, representing a premium of 55%, compared to a 30% premium at 6/30.
Looking Ahead
We are encouraged by the improvement in relative performance for the MedTech sector in Q3 and look for continued improving trends in Q4. We anticipate another eventful earnings season in the coming weeks and expect analysts and investors to be highly focused on growth and profitability expectations for 2027. If 2027 estimates are viewed as reasonable coming out of third quarter earnings season, the Street may have higher confidence in a positive risk/reward for the group heading into next year which would support continued valuation expansion in Q4. We look forward to providing an update on fourth quarter and full year 2026 trading performance, expected growth, and valuation for the sector in our next blog in early January. In the interim, we would like to reiterate that there are many ways to examine growth and valuation in the MedTech sector, including by market cap, revenue scale, or therapeutic area.
If you’d like to explore how your company’s growth and valuation profile stacks up, and how ICR Healthcare can help enhance your company’s story, positioning, or investor relations strategy, please contact [email protected], CFA, IRC, Partner and Co-Head of MedTech at ICR Healthcare.
[1] Source: ICR-HC and FactSet. FactSet data and calendarized actuals/estimates as of 9/30/26. “ICR-HC MedTech Universe” = 145 US-listed MedTech companies. 2025 revenue range:
[2] Price returns shown. Indexed returns are calculated using FactSet composite closing prices which aggregate pricing across all US exchanges and apply fill logic to ensure data continuity across securities with varying liquidity profiles.
[3] Sub-sector benchmark returns sourced from: iShares U.S. Pharmaceuticals ETF (ticker: IHE), iShares U.S. Healthcare Providers ETF (ticker: IHF), iShares Biotechnology ETF (ticker: IBB) and iShares U.S. Medical Devices ETF (IHI).
[4] ICR-HC MedTech Class of 2026 = 114 US-listed MedTech companies with consensus revenue estimates for each year from 2025 through 2028, enterprise value > $0, market capitalization > $0, and 2025 revenue > $25M. Excludes 1 pre-commercial company and 3 companies with pending M&A transactions. Net increase of 1 company vs. 6/30/26. Five added, four removed. Full list available upon request.
[5] The Class of 2026 index is market capitalization weighted and reflects the 114 current constituents for all periods shown.
[6] The IHI is comprised of 48 companies (excluding cash positions and derivatives) as of 9/30/26, with a market capitalization range of ~$380M to ~$171B.
[7] The HGMT index is market capitalization weighted and reflects the 23 constituents representing the top-2 deciles of expected revenue CAGRs from 2025 – 2028.
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