Health IT

Fitbit sees success with Versa but looks toward additional revenue streams

During an August 1 earnings call, Fitbit co-founder and CEO James Park highlighted additional ways the company plans to make money, such as through the selling of services like diagnostics and coaching.

clinical wearables

Earlier this week, Fitbit reported its second quarter financial results. The San Francisco, California-based wearables maker revealed revenue of $299.3 million in Q2, compared to $353.3 million during Q2 2017.

Overall, smartwatch sales made up 55 percent of the company’s total revenue. In particular, Fitbit saw success with its Versa device, which outsold Samsung, Garmin and Fossil smartwatches combined in North America in the second quarter, the company said in a news release.

During an August 1 earnings call with analysts, CFO Ron Kisling said he expects smartwatches to make up a decent portion of revenue in the last six months of this year and in 2019. They will “be probably in that 50 percent range, maybe increasing a little bit as part of the mix going foward,” he said, according to the Seeking Alpha transcript of the call.

Still, Fitbit wants to generate revenue in ways other than just selling devices.

From the consumer perspective, the company is considering developing a membership model for devices and having certain services users can buy. From the healthcare side, the company will be “selling [its] services, includ[ing] diagnostics and coaching on a per member per month basis, or possibly even sharing in some of the cost savings that our products and services deliver,” co-founder and CEO James Park said on the call.

The San Francisco organization is also turning its eye toward partnerships with other players in the healthcare ecosystem such as employers and health plans. Park noted that Fitbit now works with more than 100 insurers, including Humana and Blue Cross Blue Shield.

“And one of the things that we’re trying to work with all these partners is adding revenue streams beyond the initial device sale,” he said.

The call also provided an opportunity for the company to give an update on its acquisition of workplace wellness health coaching business Twine Health.

In February, Fitbit announced it had bought the MIT Media Lab spinout. Park spoke positively of the deal, noting Fitbit’s employer and health plan customers were pleased. He also pointed out that including the Twine acquisition, Fitbit’s paid premium services increased 34 percent year-over-year.

Kisling said the company anticipates M&A will be an important part of the San Francisco company’s strategy, and that it is “targeting businesses that will help transform our business toward digital health and recurring revenue.”

Photo: exdez, Getty Images