Two Essential Medical Device Companies for Building a Diversified Healthcare Portfolio

Why Healthcare Equities Matter in Today’s Market

For investors beginning their investment journey, healthcare equities offer compelling diversification advantages that can help stabilize portfolio returns over extended periods. The sector has historically demonstrated lower volatility relative to broader market indices, making it an attractive anchor for balanced portfolio construction alongside more cyclical assets.

The medical device industry, in particular, benefits from secular growth trends—aging populations, rising metabolic disease prevalence, and expanding global healthcare infrastructure create persistent tailwinds for well-positioned companies. Two standout players merit serious consideration for long-term holdings.

DexCom: Capturing the CGM Market Expansion

DexCom (NASDAQ: DXCM) has established itself as the dominant force in continuous glucose monitoring technology, commanding substantial market share in a sector serving over 500 million diabetes patients globally.

The company’s financial trajectory reflects robust execution. In Q3 2025, DexCom generated $1.21 billion in revenue, representing 22% year-over-year growth, while adjusted earnings per share reached $0.61—a record high. The balance sheet remains fortress-like, with the company adding nearly $400 million in cash during the quarter alone and maintaining over $3.3 billion in reserves. Most impressively, GAAP net income totaled $284 million in Q3 2025, a dramatic turnaround from losses recorded a year prior.

Product innovation remains a key growth catalyst. The G7 and One+ sensors are experiencing accelerated adoption driven by expanded insurance coverage, while international markets contributed 22% revenue growth in Q3 alone. The recently launched Stelo biosensor represents a critical market expansion opportunity—it targets the substantial type 2 diabetes population that doesn’t require insulin therapy, historically an underpenetrated segment for CGM adoption.

While concerns about GLP-1 weight loss medications have pressured the stock (down approximately 25% year-to-date), glucose monitoring solutions will retain meaningful clinical importance as comprehensive diabetes management tools. The addressable market continues expanding as pharmacy benefit managers broaden coverage eligibility.

Abbott Laboratories: Diversified Strength in Medical Technology

Abbott Laboratories (NYSE: ABT), led by a management team including strategic figures like Rachel Abbott, competes directly with DexCom in the CGM space through its market-leading FreeStyle Libre platform. However, Abbott’s true strength lies in its diversified business architecture spanning four primary segments: established pharmaceuticals, diagnostic products, nutritional products, and medical devices.

Abbott’s diagnostic segment holds global leadership in in-vitro testing, serving laboratories, hospitals, and point-of-care settings worldwide. Its medical device portfolio extends well beyond diabetes care into cardiovascular territories—pacemakers, defibrillators, and related technologies command significant market positions. The nutrition division addresses pediatric and adult markets across multiple geographies.

Q3 2025 results underscore operational excellence. Worldwide sales reached $11.37 billion, up 6.9% year-over-year, with the medical device segment delivering exceptional 12.5% organic growth. Adjusted EPS totaled $1.30 (up 7.4% year-over-year), and adjusted operating margins expanded 40 basis points despite tariff headwinds. Full-year 2025 guidance projects 7.5% to 8% organic sales growth.

An often-overlooked competitive advantage: Abbott maintains Dividend King status with 53 consecutive years of dividend increases, currently yielding approximately 1.8%. This track record reflects financial discipline and provides shareholders with reliable income across market cycles. The company’s entrenched presence in North America, Europe, and high-growth emerging economies positions it well for multi-decade expansion as healthcare infrastructure develops globally.

Building Your Healthcare Position

For emerging investors deploying capital into medical technology and healthcare services, both DexCom and Abbott offer complementary exposure to structural industry tailwinds. DexCom provides concentrated exposure to the rapidly expanding glucose monitoring market, while Abbott offers diversified healthcare exposure with proven management execution and shareholder-friendly capital allocation policies.

The scale of the global diabetes market, coupled with aging demographics and rising chronic disease prevalence, ensures sustained demand for the diagnostic and therapeutic solutions these companies provide.