The long game: Fitbit positioning to be key digital health partner

SAN FRANCISCO - Forget the sales forecasts, Fitbit is setting the stage to become one of the premier players in healthcare diagnostics. It's the long play looking well beyond next quarter's performance, but it has the potential to really establish Fitbit as a key healthcare partner. 

 

"While Fitbit is known as a consumer brand, the real potential of our brand and technology is to become a digital health platform that improves people's health and integrates into the healthcare ecosystem," James Park, Fitbit chairman and CEO, told analysts Monday. "Digital health refers to the emergence of powerful technologies that combined can help people lead healthier lives, reduce healthcare costs and broaden the reach of our healthcare system. These technologies include what Fitbit is already pioneering, more powerful sensors that continuously monitor useful biometrics; mass access of health data in the cloud where analytics enable insights; and guidance and coaching to help consumers make important changes to their lifestyles and daily behaviors."

 

Because for Fitbit the future is all about the health metrics, which means Wall Street may be focusing on the wrong data points as the company's stock continued its freefall Tuesday morning to about $13.35 from a high of $16.62 on Monday. 

 

Fitbit projected next quarter sales would fall between $420 million and $440 million, about $50 million short of consensus estimates. Hence the stock price drop. 

 

But positioning the company as the go-to partner seeking to elevate the activity trackers market to a wearables diagnostics market that's embraced by both consumers and health plans alike may pay dividends well beyond today's sales stats. 

 

"We also believe that preventative care will be a much more visible and important part of the entire healthcare system and that one significant outcome of digital health will be to make health data more actionable and meaningful when it comes to maintaining people's health," Park said. "Fitbit can play a key role. Our platform consisting of devices, apps, social motivational features, advice and personalized coaching is aimed at helping people make key behavioral changes to be more active, exercise more, eat smarter, eat better and manage their weight. These are exactly the kinds of behavioral changes that experts in diabetes, hypertension, asthma, obesity, and sleep apnea, as well as mental health conditions such as depression and anxiety, believe can change the course of those diseases."

 

Currenty, Fitbit is working with two of the largest U.S. health insurers, Park said. One program is focused on diabetes management and has been offering Fitbit trackers to its members as a component of the overall program since 2013. 

 

The other program is focused on weight management and supplements the Fitbit tracker with personal coaching to improve nutrition activity, blood pressure, cholesterol levels and overall health. "Over a six month period, 73% of participants lost weight with an average weight loss of 5% of total body weight," Park said. 

 

Park outlined several other positive examples positioning the Fitbit wearable as a key component behind improved health outcomes. For example, in a study of postmenopausal women in their 50s and 60s who were overweight and generally not very active, researchers found that the women who used the Fitbit tracker increased the amount of time they spent for exercise by about an hour per week while those who used speedometers did not have significant improvements.

 

"While it's still early in Fitbit's integration into the larger healthcare world, we believe the connected health and fitness market has great potential to help people to take ownership of their health, and deliver better health outcomes," Park said. "We believe we have an important role to play that will allow us to become a broader digital health company."