Fitbit is best known for its devices, but hardware is quickly becoming a means to an end to data as the company pivots to better embed itself into the healthcare food chain.
CEO James Park summed up Fitbit's approach well on the company's third quarter earnings report.
Devices enable data collection, provide a point of interaction, while software and data drives engagement and can be leveraged to provide personalized insight. Together, devices, data and software form a platform that gives users the tools to help reach our health and fitness goals, while also providing them with a more complete picture of their overall health.
To that end, Fitbit is one of 9 companies in an FDA program designed to fast track digital therapeutics and health apps. The company, almost a year from a big restructuring, is also expanding its role in health tracking to encompass mental health as well as sleep apnea. Park added:
We are beginning to focus on several specific conditions such as diabetes, heart health, sleep disorders and mental health. These conditions touch hundreds of millions of people, many of whom are unaware they contribute to more than $800 billion health care spend in the U.S. alone.
Fitbit also formed a partnership with Dexcom on continuous glucose monitoring on the Fitbit Ionic. Fitbit also counts Medtronic as a partner. See: #WeAreNotWaiting: Diabetics are hacking their health, because traditional systems have failed them
More: Fitbit tips data, services strategy with coaching, health program app | Fitbit teams with Dexcom for glucose monitoring on Ionic watch | Fitbit has just set up its largest European R&D center | UnitedHealthcare, Qualcomm Life, Fitbit aim to expand corporate wellness | Fitbit secures corporate wellness deals with several major customers | Fitbit combines corporate wellness offerings into new group health program
If you play this strategy out, Fitbit may be able to open non-device revenue streams and utilize its database more as a profit driver. Fitbit's data includes:
- 90 billion hours of heart rate data;
- 85 trillion steps;
- 5.4 billion nights of sleep;
- 167 billion minutes of exercise tracked.
And the enterprise business for Fitbit is promising more than 1,300 enterprise customers including 70 of the Fortune 500 companies. Indeed, 6.8 million Fitbit users have connected their data to employer health programs.
Here's the catch. Fitbit is likely to run into Apple in the enterprise and healthcare space. Apple obviously has a bit more in the bank and has resources Fitbit can only dream of. However, Fitbit is early to the healthcare and enterprise space and may be able to build a defensible business.
And then there's the reality of Fitbit's today. The company is dependent on devices. Fitbit has become more efficient, but the third quarter results compared to a year ago highlight the challenges. Matthew Miller: Fitbit Ionic: Excellent activity tracker, but it's not a very smart watch | CNET Fitbit reviews
Fitbit reported a third quarter net loss of $113 million, or 48 cents a share, on revenue of $393 million. The company reported a non-GAAP loss of a penny a share compared to estimates calling for a loss of 3 cents a share. Fitbit sold 3.6 million devices.
In the same quarter a year ago, Fitbit reported a profit of $26.1 million on revenue of $503.8 million and sold 5.3 million devices.
For the fiscal year, Fitbit is targeting a non-GAAP loss of 27 cents a share to 23 cents a share on revenue of $1.61 billion to $1.64 billion. Fitbit targeted fourth quarter revenue of $570 million to $600 million compared to estimates of $578.1 million.
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