Health IT, Top Story

Fitbit share flurry from “offer” calls attention to Chinese digital health investment scene

Fitbit issued a media statement today denying it was for sale after ABM Capital posted a regulatory finding supposedly making a bid for the company.

Fitbit Alta

It’s been a restless week in the financial markets to be sure but today’s so called offer for Fitbit at $12.50 a share by Shanghai-based ABM Capital prompted a flurry of activity driving up Fitbit’s share price and even prompted the New York Stock Exchange to get involved.

Fitbit moved to quell the chatter in a media statement, claiming the activity tracking business had received no such offer from ABM or any other firm for that matter. The statement raised doubts about the legitimacy of the bid.

The news called attention to the deepening interest in Fitbit’s efforts to grow the brand in Asian markets. It also drew attention to the company’s share price which has fallen 69 percent in the past year before it filed disappointing third quarter earnings results, The Wall Street Journal noted.

Fitbit said in April it had inked a deal with online retailer Alibaba Group business Tmall to make its fitness trackers available to Chinese consumers. Still, the company is finding it challenging to maintain consistent revenue growth in Asia in general. The company’s third quarter earnings report showed Fitbit’s revenues have declined 45 percent in Asia from the previous year.

In China, there’ s a stronger interest in direct to consumer digital health applications than in the U.S., Mercom Capital Group CEO Raj Prabhu told MedCity News earlier this year:

“Health IT investments in China are exclusively B2C as they do not have a healthcare system and policy mandates akin to the U.S. model. However, Chinese government agencies are active investors (China Venture Capital, China Development Bank, China International Capital Corporation) along with Chinese internet conglomerates like Tencent, Baidu, and Alibaba. Goldman Sachs is also an active investor in Chinese deals. Chinese Health IT deals also tend to be large compared to what we see in the U.S.”