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Fitbit Care and Humana +3
Fitbit has launched
Fitbit Care, which will be preferred
as a health
coaching solution with long-time partner Humana for its
employer group segment. Of course, no financial terms are
disclosed, but I see this as evidence of the Twine acquistion
helping Fitbit, if only by allowing it to get bolder in its
integration into health insurance plans. FIT shares were
initially up over 5%, but have already retreated just below
the $6 level that I have cited all along.
expect Fitbit will get at least minimal up-front income
out of this, since it is developing Humana watch faces and
the like for its products, as well a channel for dumping
its old hardware. However, the real money would be in
getting a cut of health insurance savings. Fitbit's health
solutions website touts $2.3M in savings on $15.5M
of health care costs for the Dayton Regional Transit
Authority over two years. That would be significant if it
were extended across the industry, but I see compressing
margins and declining market share as problematic.
There have already been complaints about evolving platform towards real health care, and the inevitable comparisons to the latest Apple Watches. I still see that as less of a problem than the upcoming Android Wear models, and the ability of Alphabet to outspend and out-develop it, especially in light of my view that Fitbit's vaunted hoard of legacy data is not very insightful or even accurate.
while this is positive for Fitbit, and worth mentioning, I
think the limited stock gains are appropriate. The main
effect to should be to increase the importance of and
scrutiny on non-device income over the next few quarters.
There is potential for a bounce there, but it's still not
something I would bet on for the long-term.