Fitbit Set to Take on Competitors with IPO
Fitbit Inc., which sells a suite of wearable health and fitness tracking apps, has filed to conduct an initial public offering of stock and be traded on the New York Stock Exchange under the symbol FIT.
Fitbit Inc., which sells a suite of wearable health and fitness tracking apps, has filed to conduct an initial public offering of stock and be traded on the New York Stock Exchange under the symbol FIT.
The size of the IPO is not yet publicly known; for now, the Securities and Exchange registration statement has $100 million as a placeholder. The intentions to go public have been known for some time; Bloomberg reported in December that the company could raise $150 million.
My gut feeling tells me this will be oversubscribed, so $150-200 million is in the mix, says Gregg Malkary, managing director at Spyglass Consulting Group, which specializes in mobile computing and wireless technology.
Fitbit has sold nearly 21 million devices since being formed in 2007 and claims a 2014 U.S. market share in fitness activity tracking of 68 percent.
Also See: Why Wearables are Loudly Knocking on the Doctors Door
In the SEC filing, Fitbit identifies market trends that bode well for continued success: Individuals and employers are increasingly focused on health and fitness, technology advances enable the emergence of connected devices, mobile devices have become the preferred platform for accessing information, and more people are turning to technology solutions to improve health and fitness. The company also notes that International Data Corporation pegs consumer spending on the wearable devices market as the fastest growing segment in the global consumer electronic market.
Fitbit has seen incredible financial growth during the past three years. In 2012, it had revenue of $76.4 million and a net loss of $4.2 million. Revenue significantly increased in 2013 to $271.1 million with a net loss of $51.6 million. The business soared in 2014 with revenue of $745.4 million and net income of nearly $131.8 million.
Malkary says there is a lot of excitement over the IPO because of Fitbits unbelievable growth, and the timing is right with Apple, Google and Microsoft offering wearables. Fitbit and its advisors want to cash out via the IPO, which also will enable them to remain competitive with those companies and other competitors. Apples put a lot of vendors out of business. This will give Fitbit a bigger war chest to be more competitive.
Its early in the wearables market and Fitbit is doing well, but they need to innovate, get beyond fitness wearables and create tools such as disease management, that integrate into home and clinic settings, Malkary asserts. Right now, their data is not integrating into the healthcare environment.
Getting consumers to continue to use apps long-term will be a challenge for Fitbit and others, as will be getting clinicians to accept patient data, Malkary says. Most of the industry remains in a fee-for-service model and until that changes there is no incentive for physicians to look at patient data, he notes. However, as accountable care and value-based reimbursement expand, it is becoming imperative for physicians to track quality indicators outside of their walls, and smartphone apps integrated to electronic health records systemswhere Apple is the early leaderwill be the way.
The size of the IPO is not yet publicly known; for now, the Securities and Exchange registration statement has $100 million as a placeholder. The intentions to go public have been known for some time; Bloomberg reported in December that the company could raise $150 million.
My gut feeling tells me this will be oversubscribed, so $150-200 million is in the mix, says Gregg Malkary, managing director at Spyglass Consulting Group, which specializes in mobile computing and wireless technology.
Fitbit has sold nearly 21 million devices since being formed in 2007 and claims a 2014 U.S. market share in fitness activity tracking of 68 percent.
Also See: Why Wearables are Loudly Knocking on the Doctors Door
In the SEC filing, Fitbit identifies market trends that bode well for continued success: Individuals and employers are increasingly focused on health and fitness, technology advances enable the emergence of connected devices, mobile devices have become the preferred platform for accessing information, and more people are turning to technology solutions to improve health and fitness. The company also notes that International Data Corporation pegs consumer spending on the wearable devices market as the fastest growing segment in the global consumer electronic market.
Fitbit has seen incredible financial growth during the past three years. In 2012, it had revenue of $76.4 million and a net loss of $4.2 million. Revenue significantly increased in 2013 to $271.1 million with a net loss of $51.6 million. The business soared in 2014 with revenue of $745.4 million and net income of nearly $131.8 million.
Malkary says there is a lot of excitement over the IPO because of Fitbits unbelievable growth, and the timing is right with Apple, Google and Microsoft offering wearables. Fitbit and its advisors want to cash out via the IPO, which also will enable them to remain competitive with those companies and other competitors. Apples put a lot of vendors out of business. This will give Fitbit a bigger war chest to be more competitive.
Its early in the wearables market and Fitbit is doing well, but they need to innovate, get beyond fitness wearables and create tools such as disease management, that integrate into home and clinic settings, Malkary asserts. Right now, their data is not integrating into the healthcare environment.
Getting consumers to continue to use apps long-term will be a challenge for Fitbit and others, as will be getting clinicians to accept patient data, Malkary says. Most of the industry remains in a fee-for-service model and until that changes there is no incentive for physicians to look at patient data, he notes. However, as accountable care and value-based reimbursement expand, it is becoming imperative for physicians to track quality indicators outside of their walls, and smartphone apps integrated to electronic health records systemswhere Apple is the early leaderwill be the way.
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