Turnarounds in the healthcare sector do not all look the same. Some companies recover because management executes better, launches stronger products, and improves operations, while others do so because the industries they serve begin improving after prolonged downturns.
Medtronic (NYSE:MDT) and Thermo Fisher Scientific (NYSE:TMO) are two of healthcare’s most closely watched recovery stories, but they are being driven by very different forces. The question for investors is whether Medtronic’s (NYSE:MDT) internally driven turnaround or Thermo Fisher’s (NYSE:TMO) improving end markets offer the stronger long-term opportunity.
Bull Case
The latest results reinforce that Medtronic’s (NYSE:MDT) turnaround is beginning to translate into measurable financial performance. The company reported its highest annual revenue growth in a decade, suggesting that years of investment in new technologies are beginning to gain traction.
Furthermore, Medtronic’s (NYSE:MDT) cardiac segment is emerging as one of the most prominent growth drivers for the company, as the Cardiac Ablation Solutions revenue rose 78% globally, including 124% U.S. growth. Several of the company’s newer product launches are beginning to contribute meaningfully to growth, helping strengthen its competitive position in several high-growth markets. It is also heavily investing in innovation and M&A, along with targeted investments in high-growth segments such as ICE catheter technology.
While Medtronic’s (NYSE:MDT) recovery is being driven by internal execution and product innovation, Thermo Fisher’s (NYSE:TMO) outlook increasingly depends on improving customer spending across the life sciences industry. What stood out most from Thermo Fisher’s (NYSE:TMO) quarter was the breadth of the recovery across its life sciences businesses. Management highlighted improving customer activity across pharmaceutical and biotechnology markets, while multiple operating segments returned to healthy growth. That is an important distinction because broader participation across business segments suggests customer spending is becoming healthier rather than merely stabilizing in one niche.
Another encouraging development was the return to growth in Analytical Instruments, a business that had faced weak demand for nearly two years as biotechnology funding slowed. Its return to growth provides another indication that laboratory spending is beginning to normalize. While one quarter does not establish a trend, sustained improvement in this segment would strengthen the case that the industry’s post-pandemic downturn is easing.
Bear Case
Although Medtronic’s (NYSE:MDT) recovery is encouraging, much of its recent momentum remains concentrated in a handful of faster-growing businesses. This concern is further amplified as competition remains intense in cardiovascular devices and robotic surgery, especially from peers like Intuitive Surgical and Boston Scientific.
The biggest question for Thermo Fisher (NYSE:TMO) is whether one strong quarter marks the beginning of a sustained recovery or simply an improvement following an extended slowdown. Organic revenue increased 5%, representing meaningful progress but still remaining below the double-digit growth rates the company previously achieved. As a result, expectations for a rapid return to historic growth may prove optimistic. The company’s recovery also remains heavily dependent on pharmaceutical and biotechnology spending. If customers once again delay capital investment, today’s improving demand environment could prove less durable than the market currently expects.
What Do Hedge Funds Say?
Institutional positioning offers another perspective on the two companies. According to Insider Monkey’s database of 1,022 hedge funds, Medtronic (NYSE:MDT) saw the number of hedge funds holding its shares decline modestly from 63 in the fourth quarter of 2025 to 60 in the first quarter of 2026. Thermo Fisher (NYSE:TMO), meanwhile, experienced a slight increase, with hedge fund ownership rising from 113 funds to 115 over the same period. While the changes are relatively modest, institutional positioning was somewhat more constructive toward Thermo Fisher (NYSE:TMO) during the quarter.
Which Turnaround Looks More Durable?
Although both companies are recovering, the drivers behind those recoveries are fundamentally different. Medtronic’s (NYSE:MDT) recent progress reflects years of investment in innovation, operational improvements, and new product launches, making its turnaround largely company-specific. Thermo Fisher (NYSE:TMO), by contrast, depends more heavily on improving demand across the broader life sciences industry. If customer spending continues recovering, Thermo Fisher (NYSE:TMO) could enjoy meaningful operating leverage. However, if industry conditions weaken again, Medtronic’s (NYSE:MDT) internally driven growth initiatives may prove more resilient.
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Disclosure: None. This article is originally published at Insider Monkey.
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