Round-up: Digital health details from public companies' recent quarterly reports

By MobiHealthNews
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Over the years, more and more companies have gone public in the digital health space and existing public companies have gotten into the space, either on their own or thorugh acquisitions. Here's a roundup of digital health talk on the latest round of second quarter investor calls and quarterly finance reports.

Fitbit. San Francisco-based Fitbit, maker of a series of popular wearable activity trackers, reported second quarter earnings and revenue that exceeded expectations, sent stock prices up and left the heads of the company optimistic for the “rest of the year and beyond," especially since the company will also be introducing new products by the end of the year and hired Adam Pellegrini, formerly of Walgreens, to lead Fitbit's efforts to plunge deeper into digital health. During the second quarter, Fitbit sold 5.7 million devices, with US sales comprising 76 percent of the quarterly revenue. New products, the Fitbit Blaze smart fitness watch and Alta, plus their related accessories, comprised over 54 percent of Q2 revenue. Fitbit attributes this strong expected performance to moves including positive growth into an expanding international market, the network community of users and consumers' response to the new products. The company will release several new products by the end of the year in time for the holiday season.  More

Fossil. In an effort to turn around the consistent declining revenue and sales, watchmaker Fossil Group -- which acquired Misfit Wearables last year -- is shifting its focus to smartwatches and trackers, effectively trying to rebrand itself as the leader in the industry by embarking on what executives called an “unprecedented launch.” During a second quarter earnings call with investors and analysts, Fossil CEO Kosta Kartsotis said over the next three months, the company will have eight wearable brands across three product categories – hybrid, smartwatch and activity tracker – comprising 100 stock keeping units, available in 40 countries in 20 languages. While this has historically been a smaller segment of Fossil, it now appears to be the primary means by which Fossil aims to turn itself around, accounting for most of the growth in the company. More

WebMD. WebMD began testing a new app, WebMDRx, a tool for consumers and physicians to better understand the cost of medications, this past quarter. In the face of declining traffic in the form of Google-referrals, the company also increased its focus on driving internal traffic. While there was a slight decline in the number of users, page views were actually up, which WebMD attributed to efforts to engage users to spend more time on the site with increased programming and social media. The company ended up with a 33 percent year over year increase in profit, and a 13 percent increase in revenue. More

Garmin. Garmin's fitness wearable business is heating up, accounting for 26 percent of the company’s overall growth thanks to the launch of several new wearables and increasing downloads on the company’s Connect IQ app store. Garmin’s fitness segment grew 34 percent, with revenue for 2016’s second quarter at $213 million, compared with $159 million in Q2 2015. THe company's gross profit margin was consistent year-over-year at 56 percent, while operating margin improved to 25 percent, up four percent from the previous year. While the company reported growth in every sector, they consider wearable products to be the major contributor to growth. More

Teladoc. Teladoc’s push into chronic disease management, which CEO Jason Gorevic gamely said would land by the end of 2016 at the ATA conference this year, has been delayed, he said on the company’s Q2 call. Overall, Teladoc saw revenue below expectations this quarter, due to unexpected advertising costs associated with their direct to consumer behavioral health rollout, but still had a strong quarter with reduced losses compared to Q1. “Based on the strong positive feedback from … clients regarding our behavioral health product in particular, we have decided to further invest our resources in behavioral health and in the HealthiestYou product integration, rather than expanding into additional specialties such as diabetes, for the remainder of this year,” Gorevic said. “We think that this strategic allocation of resources will maximize the value for our customers and the return for our investors.” More
 
Under Armour. Under Armour’s Connected Fitness division, created two years ago when the sports apparel company acquired a spat of fitness apps, was largely pushed to the background on the company’s latest earnings call, with CEO Kevin Plank failing to note either the departure of former MapMyFitness CEO and UA Connected Fitness lead Robin Thurston, or the fact that the division lost $7.5 million this quarter. That’s half of what Connected Fitness lost the company in Q1, but that number could have been influenced by bookkeeping, since, according to CFO Chip Molloy, about $5 million in Connected Fitness costs were shifted into the North America segment. The segment’s revenue did grow — 73 percent, up to $23 million. More

Dexcom. Dexcom’s biggest triumph and its biggest let down in the second quarter both involved the FDA. On the positive side, a verdict from a special FDA panel means Dexcom may soon be able to change its CGM’s intended use to replace fingerstick glucometers. On the negative side, a voluntary device recall this quarter that potentially affected all of Dexcom’s receivers led to higher-than-expected Q2 losses. Ultimately, the company posted a net loss of $20 million, despite a 47 percent year-over-year increase in revenue, from $93.2 million in Q2 2015 to $137.3 million this past quarter. More

Castlight Health. San Francisco-based Castlight Health, which offers a personalized health shopping platform aimed at equipping employees with transparency on both pricing and quality, added some big names to its subscription service and saw increase in both revenue and cash in the second quarter of 2016. Additionally, the company is focusing its sales model by leveraging the data sets provided by its health benefits platform, particularly Castlight Elevate, which identifies employees who are at-risk of behavioral health issues and gives them access to care. In an announcement of the quarterly results, cofounder and CEO of Castlight Health Dr. Giovanni Colella announced the company added nearly $7 million of signed annual recurring revenue and continued to “gain traction among large enterprises,” including Caterpillar, Genentech, and Anthem. More

DarioHealth. Three months after DarioHealth launched its smartphone-connected glucometer in the US, the company reports more than 100 percent increase in growth, bringing in $669,000 in revenue in the second quarter for 2016. The company reported 4,900 registered users, 2,300 monthly active users and $6.4 million cash balance as of the end of June. Following the soft launch in March, device sales ramped up, particularly in June when the company sold more than 3,000 devices, representing 200 percent growth over that period. Raphael said he believes the company has the right digital marketing strategy to efficiently reach consumers, plus strong preliminary results to convert users into subscribers. More

Senseonics. Senseonics, a Germantown, Maryland-based company working on a longterm implantable continuous glucose monitor, announced preliminary results from its US pivotal trial, a major step toward receiving premarket approval from the FDA, on the same day as the company's second quarter earnings call. On the Q2 call, Senesonics CEO Tim Goodnow talked about the recent FDA panel that greenlighted would-be competitor Dexcom's request for a new dosing claim allowing Dexcom's CGM to replace fingerstick glucometers. He said that Senseonics will follow Dexcom's lead and attempt to get that same dosing claim for their own product from the get-go. As is to be expected with a company that has, for the most part, not launched its products, Senseonics lost money this quarter. The company's net loss was $11.9 million, or $0.13 per share, in the second quarter of 2016, compared to $7.2 million, or $3.68 per share, in the second quarter of 2015. More

Apple. Apple CEO Tim Cook mentioned health in passing on his company's call, but it wasn’t a major focus. He highlighted updates to the health app coming with the next iOS update, and especially the new health and fitness features being added to the Apple Watch. “With WatchOS 3 coming this fall, customers will be able to update their Apple Watches with an enhanced user interface, significantly improved performance, and all-new fitness and health capabilities, including activity sharing,” Cook said. “We're just getting started with the Apple Watch, and we look forward to even more exciting announcements in this space.”

CVS and Walgreens.  CVS and Walgreens didn’t focus much on their mobile health business in their quarterly calls; instead the conversation was focused on their recent acquisitions: CVS’s acquisition of Target’s retail pharmacy business and Walgreen’s planned acquisition of Rite-Aid (still being evaluated by the FTC). But on the CVS call, there was quite a bit of discussion of the company’s strategy of using apps and personalization to increase the value of individual customers to the store. Foot traffic in general declined during the quarter, CEO Larry Merlo said on the call, but, "In contrast, we saw front store spend and margin increase with our most valuable customers. And through our personalization efforts, we continue to deliver a value-based offering derived from longitudinal shopping habits, while increasing engagement through app and email capabilities.”

“There is a tremendous amount of data out there, okay?” he added later in the call. “And it’s one thing to collect the data. It’s another thing in terms of how do you use the data to create an outcome or a behavioral change? And that’s where we’ve made significant investments in our business – whether it’s ExtraCare or whether it’s the capabilities back in the pharmacy – that is allowing us to do things in a very differentiated way that we think that is giving us an advantage in the marketplace.”

IBM. While IBM Watson has expanded beyond its original healthcare use case, the platform still sees plenty of use in the healthcare space, as IBM CEO Martin Shroeter pointed out a few times on the call. He mentioned that during the last quarter UK’s National Health Service, the US Department of Veterans Affairs, and the American Diabetes Association all announced they were leveraging Watson for patient care, and that IBM is also working with Teva Pharmaceuticals “to improve drug efficacy for millions of patients with complex and chronic diseases by leveraging the IBM Watson Health cloud solution.”

“We launched Watson Care Manager, which provides structured programs and tools to support care coordinators in delivering care to patients,” Shroeter said. “This offering enables patients to avoid re-hospitalization. In the second quarter, we extended partnerships with the American Cancer Society and the American Diabetes Association, which are examples of the strong support and momentum Watson Health has with leading clinical and research communities. And at the White House Cancer Moon Shot Summit, we made a commitment to utilize our cognitive solutions to help doctors offer personalized care to 10,000 veterans fighting cancer.”