The medtech sector faced a challenging fourth quarter, underperforming compared to the broader market, according to the PitchBook Medtech Public Comp Sheet and Valuation Guide. While the S&P 500 and Nasdaq posted gains of 2.1% and 6.2%, respectively, most public medtech companies saw share price declines. Life sciences firms, in particular, struggled, with all major publicly traded companies—except Waters—experiencing losses exceeding 7%. Tempus AI, which had a strong post-IPO performance earlier in the year, saw its shares drop below the initial offering price. However, the diabetes segment was a bright spot, as Dexcom and Insulet achieved double-digit gains amid easing investor concerns about weight-loss drugs.

Looking ahead, analysts have set high expectations for medtech in 2025, projecting 19% sales growth for medical devices and supplies and 17% for consumer health. While past forecasts have been overly optimistic, there are reasons for cautious optimism. Increased M&A activity, fueled by relaxed antitrust scrutiny, could accelerate growth, particularly in high-potential subsectors like wearables and diagnostics. Additionally, increasing pressure on insurers to approve novel treatments and diagnostics may improve coverage, benefiting the industry.

Exit activity in medtech remained relatively quiet in Q4, with Ceribell’s IPO standing out as a rare public debut. However, the landscape is shifting in early 2025, with recent acquisitions of Bolt Medical and Inari Medical, alongside an IPO filing from diabetes tech startup Beta Bionics. Medline Industries’ reported $5 billion IPO ambitions suggest rising investor interest, and life sciences M&A is expected to accelerate as lower public valuations create attractive consolidation opportunities.

As the sector navigates macroeconomic uncertainties, the year ahead holds both challenges and opportunities, with innovation and strategic consolidation likely playing critical roles in shaping medtech’s trajectory.