With sales in decline Fitbit looks to partnerships, digital health for the future

By Laura Lovett
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Despite the expected declining sales numbers, Fitbit affirmed its focus on digital health, during its Q1 earnings call. In particular the company is now looking to its latest Google collaboration, where the two companies will work on refining EHRs to give clinicians a more comprehensive look into patient data, to speed up innovation in the digital health space. 

“First, Fitbit and Google are exploring the development of consumer and enterprise health solutions. We intend to use Google's new Healthcare API to help us integrate further into the healthcare system to just connecting user data with electronic medical records,” James Park, Fitbit CEO, said in the call. “Combining Fitbit data with EMRs can provide a more comprehensive view of the patient profile, leading to more personalized care. Both companies will also look to work together to help better manage chronic conditions like diabetes and hypertension by using services such as Fitbit's recently acquired Twine Health.”

This quarter the wearable giant reported selling 2.2 million devices and generating $247.9 million in revenue, meaning a 17 percent decline in revenue.

The decline came mainly from a decrease in devices sold, despite the fact the average price of a device increased by 16 percent to $112. 

While numbers are down the company reported success with the launch of its new Fitbit Versa, a smartwatch released in Q1. Smartwatches made up 30 percent of the company’s revenue this quarter, with Park citing the introduction of the Versa as a shift in revenue towards smartwatches. 

But it's still too early to tell what is in store for the Versa. According to Fitbit Chief Financial Officer William Zerella, the company just started shipping Versas within the last two weeks before the quarter ended so the revenues were not substantial. 

Park also noted that the increase in smartwatch revenue did not offset the decline in the number of trackers sold. 

This quarter the company also revealed its Fitbit Ace, which is a tracker aimed for kids. However, during the call Park said it was too early to say if the product was going to be on the shelf in Q2. 

“While sales and earnings were challenged as expected in the first quarter, we executed on our plan and exceeded our commitments while making progress towards these objectives,” James Park said in the call. “This included launching two new product offerings to expand our addressable market, Fitbit Versa and Fitbit Ace, closing the acquisition of Twine Health, and reducing operating expenses on a year-over-year basis.”

The company isn't only looking towards devices for reveue. Earlier this quarter the company acquired Twine Health, a healthcare coaching app for an undisclosed amount. The platform provides health-related coaching for employees in the employee wellness programs. 

“Twine is just one example of how we can expand and grow our non-device revenue and transform our business from an episodic-driven model centered around device sales to more software and services,” Park said. “In the future, we plan to leverage the Twine platform to provide wellness-focused programs to our large active user base.”

This along with the launch of a women's health tracking feature, are both examples of the shift Park discusses from devices to software and services. 

“We believe these types of offerings, along with our investment in a cross-platform experience that provides meaningful connections, rewarding experiences, and continuous motivation, will help improve engagement.”