Where Evidence Meets Opportunity | January 2026

Healthcare Investing in a More Discerning Market Environment

Written by: David Mandelbaum, Portfolio Manager

January reinforced several of the core themes we articulated entering 2026: a constructive but increasingly selective equity market, leadership broadening beyond the most crowded growth exposures, and a healthcare sector that is gradually transitioning from a policy-dominated narrative toward one driven more by fundamentals and earnings execution. At the same time, the month served as a reminder that policy risk has not disappeared, most notably within Managed Care, and that volatility remains a defining feature of the current regime.

Macro & Policy Backdrop

The macro environment during January remained broadly consistent with a higher for longer framework. Economic data continued to point to a resilient U.S. economy, with growth slowing but not stalling, and inflation moderating only gradually. At its latest meeting, the Fed left policy rates unchanged and further pushed back expectations for near-term rate cuts.

Renewed political and geopolitical uncertainty further contributed to episodic volatility across asset classes in January. The announcement late in the month of Kevin Warsh as the nominee for the next Fed Chair created an initial perception that the Fed may pursue a more inflation-sensitive approach. In reaction, real rates backed up, the dollar strengthened, and metals sold off, with silver hit especially hardon the day due to its cyclical industrial exposure and crowded positioning. Of course, one day doth not a trend make, but this bears watching.

Market Review – January Performance

U.S. equity markets finished January with modest and uneven performance, reflecting a push-pull between resilient fundamentals and valuation sensitivity under a higher-for-longer rate backdrop.

• The S&P 500 ended the month approximately flat to modestly higher on a total return basis.
• The NASDAQ underperformed modestly, reflecting consolidation in several large-cap growth and AI-adjacent names after strong prior-year gains.
• Market internals improved, with broader participation across sectors and styles, and early signs of rotation toward value, cyclicals, and defensives.

This pattern is consistent with a market transitioning away from narrow, multiple-driven leadership toward a regime where earnings durability, balance sheet strength, and valuation discipline matter more at the margin. That shift has been visible within the Mag Seven. While most reported results that were broadly solid, stock reactions were far more dispersed, reflecting divergent trends in key segments such as cloud and digital advertising, as well as a more discerning market response to capital spending plans. In contrast to prior periods, outsized capex commitments tied to AI infrastructure were not uniformly rewarded; instead, investors appeared increasingly focused on evidence of near- to medium-term monetization, efficiency, and returns on incremental investment rather than sheer scale of spending alone.

Healthcare Sector Developments

Healthcare followed its typical January pattern—volatile, headline-driven, and sensitive to both policy signals and early earnings data. Three factors tend to drive this:

1. Early-year positioning and rebalancing, which often exaggerate moves in both directions.
2. The JP Morgan Healthcare Conference, where company commentary can become amplified or distorted through iterative interpretation.
3. The progression of the Q4 earnings season and the issuance of initial 2026 guidance, which replaces narrative with data.

The unexpected Medicare Advantage turn of event, added another significant wrinkle to the mix. Together, these developments drove volatility and dispersion across the sector, while providing key insights for the outlook going forward.

Managed Care & Medicare Advantage: Policy Pressure Returns, but Eventual Outcomes Likely to Prove More Manageable

Managed Care faced renewed policy pressure late in the month following the release of the 2027 Medicare Advantage Advance Rate Notice. The proposal was disappointing and reintroduced a less predictable, more politically influenced dynamic for the industry, particularly for companies with significant exposure to the Medicare Advantage (MA) segment.

That said, several mitigating factors warrant consideration. Historically, negative or even neutral Medicare Advantage rate updates issued during election years have carried meaningful political risk for the party in power, particularly when they translate into visible benefit reductions, plan exits, or premium increases for seniors. While this historical pattern does not imply a specific policy outcome for the final rate expected in early April, it underscores the broader political sensitivity of Medicare-related decisions in election cycles and the potential for unintended consequences when pressure on beneficiary programs becomes more visible.

As additional data are incorporated, we do expect some modest improvement in the final rate. Certain elements of the proposal may also be phased in or prove less impactful for specific business models. Thus, though there-emergence of a less predictable policy environment could cap valuation multiples for the group until greater clarity is achieved, arguably stock prices now largely discount worst-case outcomes that assume no improvement or offset. It should also be noted that the first set of quarterly reports for the group provided early evidence of progress on the underlying margin recovery front.

Given these crosscurrents, and despite our view that the issues the industry is facing are more transitory than structural in nature, we have intentionally kept our exposure to the Managed Care segment modest and contained. We will reevaluate our positioning in the space as we continue to closely monitor policy developments ahead of the final MA rate expected in early April.

Pharma: Improving Policy Clarity and Constructive Setup

Unlike Managed Care, Pharma has entered 2026 with a noticeably improved policy backdrop. With most major companies having completed MFN agreements and drug pricing now less central to policymakers’ near-term agenda, headline risk for the group has diminished meaningfully. As a result, sentiment toward Pharma continues to improve, even as the bulk of earnings for the group lie ahead.

Those upcoming reports will obviously be critical for idiosyncratic stock opportunities within the space. Among the most closely watched set of results and guidance points will be those relating to the enormous GLP-1 class. The recent launch of the first oral GLP-1 with a potentially superior competitor poised for approval and launch this spring, and what that means for volume-price dynamics across the entire GLP-1 obesity category, will be particularly scrutinized.

More broadly, the improved policy clarity following a prolonged period of acute policy risk, combined with attractive valuations in many cases, resilient cash flows and defensive attributes, compelling innovation-driven growth opportunities, and increasingly aggressive capital deployment to supplement pipelines and address LOE gaps, creates a compelling setup for the space. These dynamics underpin why Biopharma represent the largest area of exposure within the Benestar Strategy.

MedTech: Durable Procedure Trends and Share Gains Continue

MedTech results reported thus far have been broadly encouraging. Earnings and guidance continue to point to healthy procedure volumes, with market leaders sustaining durable volume-driven organic growth supported by strong execution and differentiated product offerings. With the group trading in the lowest quartile relative to the broader market, and due to inherently low policy risk, these fundamental proof points reinforce our sizable exposure to several best-in-class companies across the Medical Technology space.

Life Science Tools: Improvement Without a Clear Inflection Yet

Initial Life Science Tools earnings and company commentary were more mixed. While early reports came in in-line to modestly better than expectations and/or preannounced results, guidance failed to signal an imminent approach of a true cycle inflection point, which led to pullbacks on the prints.

Management teams highlighted stabilization and incremental improvement in end market demand trends, with the expectation that growth will accelerate as we progress through the year. Nonetheless, investors appeared disappointed that clearer signs of acceleration have yet to emerge. We continue to view the group as structurally attractive and directionally improving but recognize that confirmation of a durable upcycle will require further evidence over coming quarters.

In Conclusion

January reinforced our view that 2026 will be a year in which selectivity, discipline, and risk management matter as much as top-line growth. Policy clarity has improved meaningfully for various parts of healthcare, most notably Pharma and those industries that serve it, while renewed uncertainty in Managed Care underscores the importance of thoughtful exposure sizing and ever vigilant evaluation.

We continue to closely monitor the evolving fundamental and policy landscape, with a particularly busy few weeks of earnings ahead across multiple subsectors. As always, our process emphasizes careful assessment of new information as it becomes available, with adjustments made deliberately and selectively in response to developing dynamics.

We look forward to again sharing our perspectives next month of the additional clarity that upcoming earnings reports and policy updates should bring.

If you’d like to discuss how a more selective, evidence-driven approach may fit within your broader portfolio, we invite a confidential conversation with our investment team.

Disclaimers

David Mandelbaum is solely an investment advisor representative and a lead portfolio manager of OnePoint BFG Wealth Partners, a registered investment adviser. Investment advisory and financial planning services offered through Bleakley Financial Group LLC, an SEC registered investment adviser, doing business as OnePoint BFG Wealth Partners. 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The market and economic data is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The information in this report has been prepared from data believed to be reliable, but no representation is being made as to its accuracy and completeness.

Nothing in this material should be construed as investment advice offered by OnePoint BFG Wealth Partners or David Mandelbaum. This market commentary is for informational purposes only and is not meant to constitute a recommendation of any particular investment, security, portfolio of securities, transaction or investment strategy. No chart, graph, or other figure provided should be used to determine which securities to buy, sell, or hold. No representation is made concerning the appropriateness of any particular investment, security, portfolio of securities, transaction or investment strategy. You should speak with your own financial professional before making any investment decisions.

Past performance is not indicative of future results. Neither OnePoint BFG Wealth Partners nor David Mandelbaum guarantees any specific outcome or profit. These disclosures cannot and do not list every conceivable factor that may affect the results of any investment or investment strategy. Risks will arise, and an investor must be willing and able to accept those risks, including the loss of principal.

Certain statements contained herein are statements of future expectations and other forward-looking statements that are based on opinions and assumptions that involve known and unknown risks and uncertainties that would cause actual results, performance or events to differ materially from those expressed or implied in such statements.

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