Patients and physicians are more receptive to wearables than ever, but the industry's old guard have continued to see their share of the market slide.
Way back in 2015, wearables maker Fitbit was trading over $45 per share. This morning, that number was down in the $5.50 range. When it reported 4th quarter 2017 earnings this afternoon, it again wavered downward, losing 10% of its value before bouncing back slightly.
The earnings report is widely considered to be underwhelming: The company’s revenues, device sales, and outlook all trailed projections. Its precipitous drop in stock value over the last 3 years, however, reflect a wearables industry that may have changed for good.
It’s not that the public and the healthcare industry aren’t hungry for wearables: Recent research conducted exclusively for Healthcare Analytics News™ suggested that patients are more familiar and receptive to the technology, and physicians are becoming more inclined to recommend the devices.
But the playing field has gotten more complicated. The industry’s first king, Bluetooth giant Jawbone, left the wearables game and liquefied its assets in 2017. It had long alleged that Fitbit had stolen its trade secrets and infringed on its patents, though a pending lawsuit is in limbo after the firm representing Jawbone stepped aside a year ago.
Fitbit has actively tried to shift fortunes over the past 3 years. In 2016, it bought the intellectual property remnants of then-insolvent upstart smartwatch company Pebble (itself only founded in 2012). It also paired with the nation’s largest insurer, UnitedHealthcare, to provide devices in a massive initiative to get more patients tracking their health metrics. It has also announced collaborations with companies like OneDrop, the growing diabetes tracking company, and just this month it moved to buy medical insights firm Twine Health.
The rise of the smartwatch, namely Apple Watch, is at least partly to blame. Introduced in 2015, its launch immediately preceded the long slide in Fitbit’s share prices. Although sales of Apple Watch were initially considered slow, they have since taken off: In Q4 2017, the company moved more units than the entire Swiss watchmaking industry.
Although smartwatches have numerous conveniences beyond fitness tracking, biometric insights have continued to be a major selling point for the devices. Apple Watch’s capabilities have drifted from simple fitness tracker to medical alert system with its inclusion of heart rate push alerts and the FDA approval of a compatible EKG wristband. Apple’s recent advertising has not shied away from emphasizing the device’s medical appeal, and the company is reportedly working with regulators on a pilot program for health tech approvals.
Fitbit has tried to move past the simple fitness trackers it made its name with and into the smartwatch space, releasing its Ionic model in late 2017. Sales of that device “didn’t turn out the way we expected,” company CEO James Park reportedly said today, adding that it would look to release a “mass-appeal” device later this year.
Still, today’s news is just another indicator of a changing wearables market, of which Fitbit has seen its slice drop from over a third to less than a sixth since 2014.