Is Health Care Turning the Corner? Recent Results Suggest So

Investors in global health care stocks may be forgiven for their skepticism toward the sector’s recent resurgence. Health Care has spent several years trailing the broader equity market, making the current recovery all the more notable. After a prolonged period of muted returns, the S&P Global 1200 Health Care Index has begun to show signs of a meaningful turning point, accelerating in recent months and narrowing the gap with higher-performing sectors such as Communication Services, Information Technology, and Financials. Over the past three years, global equities have delivered strong gains, with the S&P Global 1200 Index—a proxy for developed markets—and the S&P 500 returning 19.6% and 20.6% annualized, respectively. Sector-level dispersion within the S&P Global 1200 has been considerable: Communication Services led with a 33.8% annualized return, followed by Information Technology at 33.6%, Financials at 20.9%, Industrials at 18.6%, Consumer Discretionary at 17.0%, and Utilities at 14.2%, as the sector caught the AI-buildout wave, particularly in the U.S. Meanwhile, more defensive sectors lagged meaningfully, with Materials gaining 8.0% per year, followed by Health Care at 6.9%, Energy at 6.0%, and Consumer Staples at 5.8%[1]. (Note: The S&P Global 1200 Index is heavily exposed to U.S. equities, with a 69% weight in the country as of November 28, 2025.)[2]

Health Care’s Comeback

More recently, however, the Health Care sector’s performance profile has shifted meaningfully. Over the last 3, 6, 9, and 12 months through November 30, 2025, the S&P Global 1200 Health Care Index returned 12.75%, 16.67%, 7.26%, and 8.95%, respectively, marking a clear departure from the muted results that characterized the prior several years. While the broader market has also remained strong, with the S&P Global 1200 Index gaining 6.28%, 15.43%, 18.08%, and 18.77% over the same periods, the gap between Health Care and the benchmark has narrowed considerably. The sector is no longer lagging global equities to the degree it once did, suggesting the improvement in returns reflects strengthening fundamentals rather than simply rising markets.

In a sector where investors appear to be rewarding improving fundamentals, it is unsurprising that our own MarketGrader Developed Markets (ex-Australia) Health Care Index has outperformed the benchmark across the same time horizons. Over the 3, 6, 9, and 12 months ended November 30, 2025, the index returned 13.37%, 13.68%, 15.47%, and 13.21%, respectively—consistently ahead of the S&P Global 1200 Health Care Index. The index is intentionally constructed to select the 50 highest-rated health care companies across all developed markets (except Australia) according to MarketGrader’s fundamentals-driven GARP + Quality framework. To put the Index’s selectivity into perspective, MarketGrader covers 814 health care companies across all developed markets with a market cap of at least USD $500 million, its effective investable universe. Only 6% of eligible companies are selected.

The Index is equally weighted and rebalanced semi-annually, a structural distinction from the market-cap-weighted S&P benchmark. This methodology gives the index greater exposure to mid- and small-cap innovators and reduces concentration in the largest names, an increasingly important consideration for asset allocators seeking diversified health care exposure. The “ex-Australia” design reflects the needs of our long-standing partner, VanEck Australia, which offers the strategy locally via the VanEck Global Healthcare Leaders ETF (ASX: HLTH).

A Fundamental Tailwind

We took a close look at the sector’s most recently reported earnings, through the lens of the MarketGrader DM (ex-Australia) Health Care Index, in search of evidence that the sector’s recent resurgence is grounded in fundamentals. Among the index’s 50 constituents, 44 companies (88%) reported growth in trailing-twelve-month earnings per share (EPS) compared with a year earlier, with a median year-over-year growth rate of 38%. And 39 companies (78%) delivered higher year-over-year quarterly EPS in their most recent reports. Importantly, this profit growth has been accompanied by solid top-line gains and meaningful margin expansion. Median quarterly revenue growth across the index was 13.2% versus the prior year, while median trailing-twelve-month revenue growth reached 13.5%. Median operating margins increased from 22.6% a year ago to 28.6%, and median net profit margins rose from 15.8% to 21.4% over the same period. Together, these results indicate broad-based operational improvement across the index’s constituents.

Several constituents that delivered exceptional earnings growth are worth highlighting, including 11 companies that posted triple-digit gains in trailing-twelve-month EPS. They appear in Figure 1.

Figure 1. Companies in the MarketGrader Developed Markets (ex-Australia)

with Triple-Digit EPS Growth Following Latest Earnings Report

A closer look at the five highest-rated constituents offers additional insight into the fundamentals rewarded by MarketGrader’s GARP + Quality system. Halozyme Therapeutics (HALO-US), the index’s highest-rated company with an overall grade of 85.4, reported trailing-twelve-month EPS growth of 57.4% and year-over-year quarterly EPS growth of 36.1%, along with quarterly revenue growth of 22.1% and trailing-twelve-month revenue growth of 31.2%. Over the same period, Halozyme’s net operating margin improved from 56.3% to 61.5%, while trailing-twelve-month operating margin rose from 50.4% to 59.3%.

Genmab (GMAB-DK) delivered similarly strong results, with trailing-twelve-month EPS growth of 126.4% and quarterly EPS growth of 121.8%. Revenue increased 25.3% year over year in the most recent quarter and 24.3% on a trailing-twelve-month basis. Profitability also improved, with quarterly operating margins expanding from 38.3% to 44.9%, and trailing-twelve-month operating margins rising from 32.4% to 36.6%.

Exelixis (EXEL-US) recorded trailing-twelve-month EPS growth of 51.4% and quarterly EPS growth of 71.7%, supported by quarterly revenue growth of 10.8% and trailing-twelve-month revenue growth of 9.9%. Its quarterly operating margin increased from 34.8% to 42.9%, and trailing-twelve-month operating margins rose from 29.2% to 35.9%.

SK Biopharmaceuticals (326030-KR) posted particularly strong earnings growth, with trailing-twelve-month EPS growth of 433.4% and quarterly EPS growth of 652.2%, alongside quarterly revenue growth of 37.4% and trailing-twelve-month revenue growth of 26.2%. Quarterly operating margin increased from 14.2% to 36.6%, and trailing-twelve-month operating margin rose from 13.7% to 29.4%.

Globus Medical (GMED-US) also reported strong results, with trailing-twelve-month EPS growth of 366.8%, quarterly EPS growth of 134.1%, quarterly revenue growth of 22.9%, and trailing-twelve-month revenue growth of 11.7%. Quarterly operating margin increased from 7.8% to 17.5%, and trailing-twelve-month operating margin rose from 7.3% to 16.2%.

The index’s largest constituents also reported meaningful improvements. Eli Lilly & Co. (LLY-US) recorded trailing-twelve-month EPS growth of 121.2% and quarterly EPS growth of 479.3%, alongside quarterly revenue growth of 53.9% and trailing-twelve-month revenue growth of 45.4%. Profitability strengthened materially, with quarterly operating margins rising from 38.8% to 47.7%, and trailing-twelve-month margins improving from 35.3% to 44.4%. For a company of its scale—$985 billion in market cap with quarterly sales of $17.6 billion—these figures are notable.

Johnson & Johnson (JNJ-US) reported trailing-twelve-month EPS growth of 71.3% and quarterly EPS growth of 91.2%. Quarterly revenue grew 6.8% year over year, while trailing-twelve-month revenue grew 5.1%. Quarterly operating margin increased from 22.8% to 29.6%, and trailing-twelve-month margins rose from 24.6% to 25.8%.

AstraZeneca PLC (AZN-GB) posted trailing-twelve-month EPS growth of 44.8% and quarterly EPS growth of 77.2%, supported by quarterly revenue growth of 12.0% and trailing-twelve-month revenue growth of 13.5%. Quarterly operating margins increased from 20.5% to 23.5%, and trailing-twelve-month margins rose from 19.8% to 21.8%.

Closing Thoughts

The sector’s recent performance, reinforced by broad-based earnings strength, comes at a moment when long-term demographic drivers remain firmly in place. With populations aging across both developed and emerging markets—and health care demand rising alongside greater prosperity—the backdrop for high-quality health care companies continues to strengthen. As investors reassess portfolio positioning heading into the new year, particularly after several years dominated by a narrow cohort of mega-cap technology names, a more deliberate allocation to Health Care may be warranted. For Australian investors, the MarketGrader Developed Markets (ex-Australia) Health Care Index, accessed through VanEck’s HLTH ETF, offers a differentiated, fundamentals-driven approach to this evolving opportunity.

[1] All figures are based on total returns in USD. Source: Morningstar Direct.

[2] Source: S&P Global