Baron Health Care Fund

Eli Lilly and Company (LLY) is a multinational pharmaceutical company developing drugs in diabetes, oncology, immunology, and neuroscience. Its top-selling drugs include Mounjaro/Zepbound, Trulicity, Humalog, Alimta, Taltz, Humulin, and Jardiance.
We are investors in Lilly given its focus on industry-leading growth categories like diabetes, obesity, and oncology. Leading GLP-1 drugs Mounjaro/Zepbound offer superb blood sugar control for diabetics, can drive 20%-plus weight loss in obese patients, and likely improve cardiovascular outcomes in both diabetic and non-diabetic obese patients. We think GLP-1 drugs will become the standard of care for both diabetes and obesity, representing a $150 billion-plus market. We believe Lilly could triple revenues and achieve double-digit EPS growth by 2030.

Argenx SE (ARGX) is a biotechnology company developing antibodies for the treatment of autoimmune disorders. The company is in the early years of the commercial launch of its drug Vyvgart (efgartigimod alfa) for a rare muscle weakness disorder.
Efgartigimod has potentially broad applicability in ameliorating overactive antibody-based diseases. Efgartigimod is a true "pipeline in a product," where the product itself is the platform, as it has the potential to be used against a diverse range of diseases—something that is rarely achieved in the biotechnology space. We expect the share price to increase as argenx proves its product’s effectiveness in multiple autoantibody disorders.

Intuitive Surgical, Inc. (ISRG) manufactures and markets the da Vinci Surgical System, a robotic surgical system used for minimally invasive surgical procedures.
We believe a large number of medical procedures that are currently performed using open surgery will eventually be performed using Intuitive’s da Vinci system. Robotic surgery is less invasive than open surgery, and patients experience less blood loss, less nerve damage, reduced pain, and faster recovery. Intuitive generates a large and expanding portion of its revenue from recurring procedures. We expect revenue and earnings to grow at attractive rates as procedure volumes increase.

Boston Scientific Corporation (BSX) is a global developer, manufacturer, and marketer of medical devices used in a broad range of interventional medical specialties.
We believe Boston Scientific can grow organically by at least high single digits, driven by new product launches, which, in turn, should generate 50+ basis points in margin growth and double-digits earnings growth annually. We think the combination of top-tier revenue growth and double-digit earnings growth will drive attractive returns in the years ahead.

Stryker Corporation (SYK) is one of the world's leading medical technology companies, known for its orthopedic implants and the Mako robotic system. It also offers a portfolio of medical, surgical, and neurovascular products.
We see Stryker as a high-quality compounder and anticipate long-term high single-digit revenue growth and double-digit EPS growth. It is a leading innovator, with new product launches including the 1788 camera for enhanced endoscopy imaging, System 9 power tools, and Insignia muscle-sparing implants. We believe Stryker is poised to benefit from the growing shift of orthopedic procedures from hospitals to ambulatory surgical centers, where it is well positioned to leverage its unique Mako robotic system.

Waters Corporation

Masimo Corporation (MASI) is a global medical device company that manufactures and sells a variety of non-invasive patient monitoring technologies, including devices measuring pulse oximetry.
Masimo has been gaining market share as clinical studies have demonstrated that its proprietary monitoring technology is superior to competitor products. Masimo's razor-razorblade business model generates a recurring revenue stream from the sale of disposable fingertip sensors. The company operates in a core market of $9 billion for hospital monitoring and automation. In October 2024, activist investor Politan Capital won a proxy vote and is looking to catalyze a clean separation from the consumer audio business, which has been a distraction from the core health care business.

Danaher Corporation (DHR) is a leading manufacturer in the life sciences and diagnostics markets.
The company's key advantage is the Danaher Business System, designed to continuously improve performance in the areas of quality, delivery, cost, growth, and innovation. Through acquisitions, Danaher has built the leading business in bioprocessing, with a broad and diverse portfolio spanning the entire workflow. On the diagnostics side, Cepheid has become a gold standard for molecular testing at the point of care. We think Danaher is well positioned for growth as a pure-play life sciences and diagnostics company following the 2023 spinoff of an unrelated segment.

McKesson Corporation (MCK) is a leading distributor of pharmaceuticals and medical supplies and also provides prescription technology solutions that connect pharmacies, providers, payers, and biopharmaceutical customers.
McKesson has taken steps to streamline the business and focus on high growth areas, oncology, and biopharma services. Management is targeting 12% to 14% long-term earnings growth, driven by 6% to 8% contribution from organic growth, plus operating leverage and 6% contribution from capital allocation. We believe the stock is inexpensive in light of the company's strong competitive position in growing end markets and earnings growth potential.

Penumbra, Inc.