Awaiting approval for its $2.1 billion merger with Google’s parent company, Fitbit saw its profits drop in 2019 as its customers turned to cheaper devices. The San Francisco-based wearables maker reported a net loss of $320.7 million in 2019, a more than 70% drop from its net loss of $185.8 million in 2018, according to earnings released on Thursday. Fitbit also saw declining revenues, bringing in $1.43 billion, down 5% from the prior year.
But the company’s strategy to introduce lower-cost smartwatches appears to have boosted its overall sales. Fitbit saw the number of active users increase by 7% to 29.6 million, with its smartwatch sales outpacing its fitness trackers.
Fitbit also began to gain traction in its new health segment, striking large partnerships with federal health programs last year. Fitbit Health Solutions signed a contract with Wellcare of Georgia, its first Medicaid plan, and also expanded its partnership with UnitedHealthcare Medicare Advantage program.
“Our community of active users increased to nearly 30 million, and Fitbit Health Solutions grew 17 percent, underscoring the strength of the Fitbit brand,” Fitbit CEO James Park said in a news release. “We also launched our new Premium membership, Fitbit’s most personalized experience yet and are seeing improving retention and engagement due to its actionable guidance and coaching.”
Fitbit didn’t provide any comment or guidance on its earnings, due to its pending acquisition by Alphabet. The two companies struck a merger agreement in November that would value Fitbit at $2.1 billion. Stockholders have already approved the sale, but it’s still awaiting regulatory approval, with the deal expected to close this year.
European regulators raised privacy concerns with the potential deal yesterday, “There are concerns that the possible further combination and accumulation of sensitive personal data regarding people in Europe by a major tech company could entail a high level of risk to the fundamental rights to privacy and to the protection of personal data,” the European Data Protection Board stated.
Meanwhile, Fitbit has maintained that Google won’t use data collected from wearable devices to sell ads.
Photo credit: Fitbit
