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Sales to the health care plans helped the Fitbit wearable apparel maker to surprise Wall Street in the last quarter and take its shares out of the basement.
Revenues from health care customers, which the company has not yet reported in dollars, increased 26% in the third quarter compared to the same period last year. The activity includes the sale of Fitbit portable devices, as well as software and services, to health plan providers and directly to certain employers.
But global sales rose only 0.3%, as the company is still struggling to get back on track after the sale of its main product, mere fitness followers, losing momentum in recent years.
Nevertheless, investors were pleased that the company's sales were at least stable after falling in the first half. Fitbit shares, which hit a record low of $ 4.23 earlier this week, gained 7% in Wednesday's regular trading and 10% in long-term trading after earnings were reported at 5, $ 18.
James Park, CEO of Fitbit, tells Fortune that the company will provide more details about its health sector in the coming quarters. "We call it now because it shows a lot of traction and growth," he said. Many programs use fitness monitoring to help users with chronic conditions stay healthy and take medication, he said. "We are really capitalizing on this growing need."
About 1,600 health plans and other organizations are already purchasing Fitbit products. Last month, Humana (hum) expanded its partnership with Fitbit to include Fitbit Care, the company's new technology-based virtual coaching service acquired during the acquisition of Twine Health in February. Coaches can offer users health tips via an app, by phone or in person.
Sales of simple fitness trackers, the initial activity of Fitbit, peaked several years ago. The decline affected the company's revenues.
While additional growth from health care contributed to Fitbit's overall third-quarter sales, it remained essentially stable at $ 394 million. But that was enough to exceed the 381 million dollars expected by analysts, as well as adjusted earnings of 4 cents per share, slightly higher than the expected loss of 1 cent.
In terms of profits, based on generally accepted accounting principles, Fitbit lost 1 cent per share, or $ 2.1 million.
Fitbit's health effort comes as some studies have recognized that wearable devices and the "gamification" of well-being can inspire people to do more physical activity and lead healthier lives. In turn, some health plans and large employers have partnered with the company to purchase physical activity monitors for workers, as well as software and services to track their progress. Apple (aapl) is also targeting this segment with its Apple watch.
Parks' decision to integrate Fitbit into the smartwatch market last year has also paid off. The company's widely sold Versa smartwatch, as well as its less popular Ionic watch, generated revenue of $ 193 million, nearly half of the total for the quarter, compared to $ 165 million in the second quarter . Fitbit smartwatches outperformed all other suppliers, with the exception of Apple, in the US market this quarter, Park said.
This year, Apple has added several new health-related features to its smartwatch, including an ECG reader and a fall detection system. Park would not say exactly how Fitbit would fit Apple's decisions, but hinted that the company would soon have new health features.
"We are very focused on adding more advanced health capabilities to our products over time," he said. "We are conducting clinical studies and are in the process of validating some of the more serious health issues such as sleep apnea and atrial fibrillation. We work with the appropriate regulators so that consumers can see them. as soon as we can. "
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