Fitbit moves full steam ahead with health initiatives despite lackluster earnings

By Laura Lovett

Fitbit reported its fourth quarter and full year earnings yesterday. Fourth quarter earnings continues to post a loss, with a reported $571 million in revenues and a net loss of $46 million, as did its full year report, in which the company reported a total revenue of $1.6 billion and a net loss of $277 million, down 1 percent year over year. 

Last year the company launched the Fitbit Ionic, a smartwatch that allowed users to load on additional apps. But, the company found that their sales slants towards trackers, despite the marketwide popularity of smartwatches. 

However, during the call executives made it clear that health remained a top priority for the company. 

“In 2017 we made important strides as we looked to deepen our reach into healthcare,” James Park, president, cofounder, and CEO of Fitbit said on the call. “Healthcare is the largest sector of the economy and continues to grow at a robust pace. While the pace of growth is strong, we are not yet seeing this translate into better health outcomes at scale due to the focus on episodic care rather than prevention. We believe that the healthcare system is broken and a shift towards outcomes and prevention is required to reach its full potential and bring real benefits to patients.”

In the future the company indicated that users’ data could be leveraged for healthcare research and non-device revenue. It has the largest activity database and said it would like to give users the option of sharing their data—potentially with financial incentives for consumers. The data could potentially be anonymized and used for research at institutions and platforms. 

The call also gave some clues as to where the company could be heading next in terms of healthcare. Fitbit is part of the FDA’s pilot pre-certification pilot, which fast-tracks companies to gaining per-certification for launching their devices without going through the lengthy FDA process for each. 

In the earnings call Park said that the pre-cert program will enable the company to launch more advanced detection features such as the new apnea and atrial fibrillation detector and could commercialize it earlier than expected. 

“On the healthcare side, I think some of the milestones you can look for is we will be gradually expanding the scope of the diabetes program that we have with UnitedHealthcare and Dexcom so there will be more and more users being added to that,” Park said in the call. “Twine is going to be integrated and sold immediately to our existing employer base and then we'll see some milestones on the FDA side as well as we start to work through more details of the Pre-Cert program. And that's going to enable us to launch more advanced detection features such as apnea and afib detection earlier and hopefully commercialize it.”

The recent acquisition of Twine Health also came up several times throughout the call. Earlier this month Fitbit announced it was acquiring the healthcare coaching app for an undisclosed amount. The platform provides health-related coaching for employees in employee wellness programs.

As for the future, in the first quarter of 2018 the company said they expect limited revenue from new product introductions. The company expects a decline in revenue by 15 to 20 percent year over year. In part this is due to their tracker's popularity, which will limit the growth of other products like Ionic. 

Recently, Wearable got ahold of some leaked images of Fitbit’s not-yet-released smartwatch, which could be the Fitbit Blaze 2, and reported that the design has more mass appeal. The report said the watch is smaller and water resistant. Whether or not this will be the key to turning around a profit for the company is still yet to be determined. 

Other bits of news released from the filings:

The company sold a total of 5.4 million wearable devices—noting that the price was increased by an average of 20 percent up to $102 due to the launch of the Fitbit Ionic in the fourth quarter. 

The company reports that operating costs are down by 7 percent in 2017 and it is looking to reduce those costs by an additional 7 percent and spend a total of $740 million on operating costs in 2018.