Please ensure Javascript is enabled for purposes of website accessibility

Could Fitbit's Wearables Transform Healthcare?

By Cheryl Swanson - Jun 23, 2015 at 9:24AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Fitbit sprinted through its IPO on the backs of personal fitness tracking success, but a bigger market awaits... Could medicine be the ultimate compelling use for fitness trackers?

Remember when wearing a fitness tracker labeled you a geek or a nerd?

Well, don't tell anyone, but we're now living in the age of the nerd. According to a report from PricewaterhouseCoopers, over 20% percent of Americans own a fitness tracker. And another 80 percent are familiar with at least one wearable health device on the market.

There's something for everyone in fitness trackers now, covering every sport from running, skiing, and surfing, to swimming, moto cross, and snow boarding. There are even social features that allow you to form groups and "cheer" or "taunt" your friends. Mordor Intelligence projects the market could reach $8.3 billion by 2018. A recent report from Business Insider projects a blistering compound annual growth rate of 35% for the global wearables market, with over 148 million units shipped each year by 2019.

Fitbit hits the ground running
Since a large portion of today's $2.6 trillion healthcare bill is driven by what is considered "bad health" behavior, including lack of exercise, it's no wonder so many Americans are tracking their activity levels, heart-rates, and even sleep patterns. But with a market growing this fast, you'd expect it to be crowded.

Courtesy of Flickr, Creative Commons

That's an understatement. In fact, the exploding competition in fitness tracking, especially from Apple's (AAPL -0.54%) all-purpose wearable, the Apple Watch, was expected by some Wall Street pundits to cool investor enthusiasm for Fitbit's (FIT) IPO last Thursday. Forbes reported that Vox's Matt Yglesias tweeted the provocative question, "Fitbit filing a sucker IPO before Apple Watch puts it out of business?"

Clearly, that wasn't the case. Fitbit's shares quickly soared 52% above their IPO price, putting it on track to be one of the top 10 stock debuts of the year. The company's galloping sales growth no doubt had something to do with that. Fitbit's sales rose 174% to $745 million last year. In contrast to many IPO's, the company was also well out of the red, with a profit of $130 million in 2015.

Fitbit claims to currently own up to 68% of the market in fitness trackers. But Jawbone, Under Armour, Garmin, Google, Samsung, Microsoft Corporation and others are all jostling for a slice of the pie. While the amount of competition seems daunting, it's also a major validation that the market opportunity is huge.

But where's the compelling use?
The big question for fitness trackers is whether these products have staying power. While the category may be white-hot right now, a third of the people who buy wearable health devices stop using them within six months, according to the market researchers at Endeavour Partners.

Fitbit holds the title as the "stickiest" wearable, meaning its users are more likely to stick with it for the longest. Still, 15% of Fitbit users disconnect within the first 30 days.

In fact, the dirty secret of wearable fitness trackers, according to Endeavor, is that long-term sustained engagement just doesn't happen for a majority of users. Why? Human behavior isn't that easy to change. And since most users of fitness trackers tend to be healthy to begin with, many of these devices end up tossed in a desk drawer and forgotten.

But what about the genuinely ill? When will wearable device manufacturers go beyond fitness and apply the technology to healthcare in earnest?

Is medicine the next big platform for trackers?
Pundits have described a future in which the chronically ill have their bodies minutely and continuously monitored by wearable devices. And, in fact, that's not the future. That's today.

Courtesy of Flickr, Creative Commons

Figures projected for wearable technologies speak volumes about where the sector is headed. According to IMS Research, the market for wearable medical devices is projected to account for at least half of all wearable technology sales by 2016.

Dr. David Cook, an anesthesiologist at the Mayo Clinic College of Medicine, is one of a number of physicians who believe that the data from trackers like Fitbit could transform medical care. The Wall Street Journal reported recently that Dr. Cook, along with his colleagues, uses Fitbit's wristband with his cardiac-surgery patients. By tracking activity levels, researchers found that patients who moved more the day after surgery were more likely to be sent home from the hospital sooner.

The hospital used the results to started sending physical therapists to the patients who weren't moving sufficiently, said Dr. Cook. He pointed out that doctors are "largely blind to what happens to patients when they are not directly under our care. We have no idea how much a 70-year-old moves."

Dr. Amy Wheeler, a primary care physician, uses a device from Fitbit to help patients with Type 2 diabetes. Last year, she gave FitLinxx pedometers to 126 patients to track whether they reached their exercise goals. Patients would also receive motivational messages based on the data.

Dr. Wheeler was part of a team of doctors whose patients tested these devices. Those who received feedback from their trackers did a better job at controlling their blood-sugar levels than those who didn't, according to the nonprofit Partners Healthcare, which oversaw the study.

Still, these are preliminary studies. And for all their promise, consumer wearables face daunting challenges in the medical market. Privacy advocates worry that as more health information is uploaded, there aren't sufficient protections to keep the data from being misused.

When wearables are connected to apps for medical use they sometimes fall under FDA scrutiny. Currently, any mobile app that poses a risk to the patient's safety -- assuming the app does not function as intended -- is subject to FDA regulation.

While there is plenty of uncertainty surrounding the future of wearables, if the enthusiasm surrounding the Fitbit IPO tells us anything, it's that healthcare industry watchers will want to keep a close eye on this trend.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Fitbit, Inc. Stock Quote
Fitbit, Inc.
FIT
Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$262.15 (-1.03%) $-2.74
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$2,288.85 (-1.20%) $-27.82
Apple Inc. Stock Quote
Apple Inc.
AAPL
$140.90 (-0.54%) $0.76
Under Armour, Inc. Stock Quote
Under Armour, Inc.
UAA
$9.43 (1.02%) $0.10
Garmin Ltd. Stock Quote
Garmin Ltd.
GRMN
$100.81 (0.66%) $0.66

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
332%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.