The medical device industry had an interesting 2025. While challenges posed by trade wars, staff cuts at the Food and Drug Administration and new federal health agency leaders hung over the space, experts maintained that the fundamentals of the industry remained strong.
Procedure volumes were healthy; exciting new products like Intuitive Surgical’s da Vinci 5 robot and pulsed field ablation systems found success; multibillion-dollar deals were announced despite a slowdown in M&A at the beginning of the year; and companies largely reported strong sales performances during earnings seasons.
Despite the challenges, the industry managed through them.
“I feel like the fundamentals have been really intact for our sector. Obviously, the year has been a bit of a roller coaster ride, right, with the Trump administration, tariffs and some uncertainty,” RBC Capital Markets analyst Shagun Singh said. “I think the sector has done relatively well.”
There are still challenges ahead in 2026, such as the ongoing Section 232 investigation that could result in tariffs placed specifically on the industry, questions about whether the expiration of enhanced Affordable Care Act subsidies will affect medical device firms andt whether companies can, once again, navigate an unpredictable environment.
BTIG analyst Ryan Zimmerman agreed that the industry was stable — companies worked through the trade war dynamics pretty well, procedures were strong and hospital spending was healthy. However, he added that some of the lingering uncertainty from 2025 will spill into 2026, creating “fears of the unknown.”
With a busy year ahead, here are the top topics to watch in 2026:
1. Insurance coverage questions
Enhanced subsidies for ACA plans expired at the end of last year, forcing people to pay higher costs for coverage. The subsidies helped offset costs of insurance for people who get coverage through the ACA exchanges.
The expiration of the subsidies will result in higher costs for about 22 million ACA enrollees, and about 4 million people are expected to become uninsured, according to a report from Healthcare Dive. There still may be a chance for the enhanced subsidies to return, but that is not guaranteed.
It’s unclear what this means for the medical device industry.
“There’s not really a correlation that I can give you quantitatively to say, ‘Well, if you take away X amount of people on insurance, then devices goes down.’ I don’t think I’ve found anyone that can correlate that,” Zimmerman said. “But I think, logically, it makes sense. If you take away healthcare from people, there’s generally lower utilization of healthcare.”
UBS analyst Danielle Antalffy said that the effects could be company and procedure specific. For example, some companies may be dependent on procedures that are covered primarily by commercial insurance, while others are more dependent on procedures covered by Medicare.
Lower procedure volumes could in turn hamper capital spending. If hospitals see a meaningful drop in procedure volumes — or they are concerned about a decline — spending on medical equipment and devices could pause.
This situation is likely to be company specific as well. Antalffy explained that spending on surgical robots is likely to remain a high priority, meaning that Intuitive will not feel an impact; however, companies like Stryker and Baxter, which make medical equipment, could feel some pressure.
William Blair analyst Brandon Vazquez said increased seasonality of procedures is possible, if more people delay care. Vazquez also sees a potential delay in capital spending at the beginning of the year, until hospitals see whether the expired subsidies will actually affect their businesses.
2. M&A
The medtech space had an up-and-down year of M&A in 2025. After a relatively quiet first half, dealmaking picked back up in the second half, with a rush of M&A announced in the final weeks of the year.
Abbott’s $21 billion acquisition of Exact Sciences, one of the largest deals in the past several years, was announced in late November. Solventum, GE HealthCare and Teleflex also announced acquisitions in the final weeks of the year. The year-end rush of spending was preceded by deals from BD, Hologic and Boston Scientific — all announced in the second half.
M&A is always a topic to watch in the medtech space, and the boost in activity in the second half of last year could signal a strong year for M&A in 2026.
“I think we probably will see more M&A,” Needham analyst Mike Matson said. “I’m not sure it’s gonna be a boom, but I think it’ll definitely be more than [2025].”
Companies like Stryker and Johnson & Johnson have stated that they are continually looking for deals. Boston Scientific, which has been one of the most acquisitive companies in the past several years, continues to announce tuck-in acquisitions. Analysts also said that Medtronic could be looking to do more M&A, particularly after it spins off its diabetes business, though that could come closer to the end of the year.
Medtech companies have healthy balance sheets and a lot of cash to deploy, RBC’s Singh said. In most cases, she added, M&A is the number one use of cash.
M&A largely slowed in the first half of last year due to unpredictable macroeconomic conditions, primarily the result of tariff policies from the Trump administration. While the environment may remain unpredictable, it’s not likely to prevent companies from spending.
“I think political uncertainty is the new norm,” Singh said. “So I would expect that in 2026 as well. But I feel like our companies know how to navigate within that environment.”
3. Tariff pressure
Tariffs were one of the biggest stories in the medtech sector last year. After policies stabilized, companies like Boston Scientific and J&J took charges of $100 million or greater, though those estimates were about half of what was originally expected.
Analysts said that companies were able to navigate the tariff environment fairly well; however, trade policies are still likely to be a topic to watch this year. Needham’s Matson said the majority of tariffs came in the second half of 2025, meaning the duties will apply for the full year in 2026.
The sector could also face industry-specific tariffs from the results of the Section 232 investigation launched by the federal government in September. The Trump administration has used Section 232 investigations to impose tariffs for the steel, automotive and pharmaceutical industries.
There are still questions about how the industry could respond to tariffs from the investigation. Matson explained that pharmaceutical companies lowered drug prices in response to the Section 232 tariffs on the industry, but medtech companies can’t do that and have the same effect because prices are baked into procedure reimbursement prices.
“[The government is] not buying devices. They buy a procedure, and the device is part of that cost,” said Matson. “So you can’t just say, ‘Well, I’m going to cut my knee replacement price by 20%’. … It’s not necessarily going to save the government money, right? Because they’re still paying the same amount for a knee replacement surgery.”
4. Hugo hits the market
Surgical robotics has been an exciting space over the past several years, particularly the soft tissue market. Longtime market leader Intuitive Surgical released a new version of its robot in 2024, called the da Vinci 5, and it has taken off since expanding into a full launch.
There are a host of smaller competitors that are attempting to challenge Intuitive in the soft tissue space with robots of their own. However, larger companies are now entering the market or getting close: Medtronic received clearance for its Hugo system in December with a urology indication, and J&J announced earlier this week that it has submitted its Ottava robot to the FDA.
Medtronic’s Hugo system has been anticipated for years. The company already has a large presence in surgery and has strong relationships with hospitals. Medtronic has plenty of resources — as will J&J when Ottava makes it to the market — but analysts do not see Hugo as a threat to Intuitive now that it’s finally here.
“Every teaching hospital [and] academic center is going to get a Hugo because they’re going to want to try it and have their fellows learn on them,” UBS’ Antalffy said. “But as far as actually getting share from Intuitive, I think it’s a stretch to think that Hugo is going to get much traction in the U.S.”
Currently, Hugo is only cleared for urology procedures. Medtronic may be able to find some success simply by being the new system on the scene and surgeons and hospitals wanting to try something that’s not da Vinci.
“I always tell people that there’s one thing that doctors hate, and it’s monopolies. Even if they love Intuitive Surgical, they hate being told, one, how to do a therapy — there’s only one da Vinci — and two, what price you have to pay for that da Vinci — that’s whatever Intuitive Surgical sets,” William Blair’s Vazquez said. “I think people will welcome Medtronic to a limited degree. They’re not going to replace all of their volume with it. But if Medtronic comes to them and says, ‘Hey, you guys have a mandate to buy 10 robots next year. Why don’t you make two or three of those Hugo, and we’ll be flexible on the pricing’. … I think they’re going to get placements.”
While analysts agreed that Intuitive will remain the clear market leader despite the growing number of competitors, they also think there is such a large appetite for robotic surgery that the space will continue to grow overall — and there is enough demand for multiple competitors to be successful.
