Institutional interest in medical device makers is holding up—and, in some corners, building—on the back of solid operating updates from industry bellwethers. Hedge fund Armistice Capital has been adding to small- and mid-cap device names, while BlackRock and State Street continue to channel sizable client assets into the space through sector funds and broad index vehicles that leave them among the largest shareholders of blue-chip manufacturers. Recent quarterly results from device leaders have reinforced that stance.
Armistice Adds to Smaller-Cap Devices
Armistice Capital increased its position in NeuroPace, a maker of implantable neurostimulation systems for drug-resistant epilepsy, by roughly 95% in the first quarter of 2025, according to its most recent Form 13F. The fund reported 1.15 million shares as of March 31, up from about 0.59 million the prior quarter. The filing underscores a willingness to lean into a device story that sits outside the mega-cap mainstream.
Separately, Armistice disclosed a near-10% passive stake in Nevro, a spinal cord stimulation company, in a Schedule 13G/A filed on February 14, 2025. The update showed ownership of 3.736 million shares, modestly higher than the previous disclosure and keeping the fund among Nevro’s largest shareholders.
Passive Giants Sit on Large Device Stakes
BlackRock’s iShares U.S. Medical Devices ETF (ticker: IHI) remains one of the largest dedicated vehicles in the category, with about $4.6 billion in net assets at mid-year 2025. The fund’s top weights include Abbott Laboratories, Intuitive Surgical, Boston Scientific, Dexcom, and Insulet, concentrating exposure in companies that dominate key end-markets such as cardiovascular interventions and diabetes technology. IHI returned about 5.5% year to date through August 12, 2025, outpacing the broader health-care category on ETF Database’s metrics.
State Street Global Advisors offers an equal-weighted alternative through the SPDRÂ S&P Health Care Equipment ETF (XHE). As of August 12, 2025, XHE managed roughly $155 million in assets with a net asset value of $79.48, giving investors more balanced exposure across the equipment and supplies segment rather than the large-cap tilt of market-cap-weighted funds.
Beyond the sector funds, both management complexes routinely appear as top shareholders in individual device makers through their index and active products. For example, BlackRock filed an amended Schedule 13G on April 17, 2025 disclosing a stake in Boston Scientific; separate filings during the year similarly reflect large positions in other medical-technology issuers, consistent with its scale across passive and active strategies.
Why the Renewed Attention?
The case for medical devices has been aided by better-than-expected mid-year updates from category leaders. Boston Scientific reported second-quarter sales of $5.06 billion, up 23% from the prior year on a reported basis, driven by cardiovascular products; the company raised its full-year outlook after the beat.
Intuitive Surgical logged second-quarter revenue of $2.44 billion, a 21% increase, with growth propelled by higher procedure volumes and system placements across its surgical robotics platforms.
In diabetes technology, Insulet’s second-quarter revenue rose 32.9% year over year to $649.1 million, helped by continued adoption of its Omnipod insulin-delivery system. Dexcom, a major supplier of continuous glucose monitoring systems, posted 15% revenue growth to $1.157 billion for the quarter and updated full-year guidance, while announcing a CEO succession plan.
Those updates matter to portfolio allocators because they validate secular demand drivers—more procedures, more connected care, and broader adoption of diabetes technologies—that feed directly into the largest weights held by sector funds and core health-care allocations. IHI’s holdings list reflects that concentration: Abbott, Intuitive Surgical, Boston Scientific, Dexcom and Insulet sit near the top.
Caveats Remain
The sector isn’t free of risk. The U.S. Food and Drug Administration recently flagged safety issues tied to two Boston Scientific cardiac products, including older Endotak Reliance defibrillator leads and certain Watchman implantation practices, reminding investors that product events can interrupt otherwise strong equity narratives.
Flows into device-focused ETFs can also be uneven. IHI’s one-year fund-flow data through August 12 show net outflows despite positive returns, suggesting some investors have been rotating even as fundamentals improve, another sign to scrutinize entry points rather than assuming straight-line exposure growth.
What to Watch Next
For Armistice Capital, upcoming catalysts include clinical milestones and commercial execution at smaller names such as NeuroPace and operational choices at Nevro, where a near-double-digit ownership stake keeps the fund economically tied to management’s turnaround efforts. Disclosures through future 13F and 13G/As will show whether the fund keeps building or trims into strength.
For BlackRock and State Street, the near-term watch list centers on whether device momentum sustains through year-end reporting cycles and whether that strength translates into renewed inflows for sector funds or simply higher dollar exposure via price appreciation in core index products. Second-half updates from Boston Scientific, Intuitive Surgical, Insulet and Dexcom will be key markers.
The Takeaway
Armistice Capital is clearly leaning into medical technology at the small- and mid-cap end, adding to holdings like NeuroPace and maintaining a sizable stake in Nevro. BlackRock and State Street continue to anchor exposure to the space for a broad base of investors through IHI and XHE, alongside their sizable positions held through index complexes. With multiple industry leaders posting stronger second-quarter updates and raising guidance, the medical-devices trade remains firmly in institutional view, albeit with the usual product and regulatory risks that come with the territory.
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