Fitbit Acquiring Health Coaching Platform for Subscription Revenue Model

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If there is one gadget company that can use some help and get some added avenues of revenues, Fitbit Inc. (NYSE: FIT) comes to mind. The wearable health and fitness tracking company has announced that it will acquire a company called Twine Health. The goal is to match up the millions of Fitbit users up with Twine Health’s health coaching platform.

The effort is said to drive better health outcomes and to ultimately lower health care costs. Twine is listed as a HIPAA-compliant connected health platform that delivers an engaging and user-friendly experience to help people manage chronic conditions. These conditions were listed as diabetes and hypertension, and also to aid in lifestyle interventions such as weight loss and smoking cessation. The company said that care providers, coaches, friends and family can all collaborate on care plans.

The Twine Health platform brings a scalable approach to health coaching, allowing a single coach to work with a large number of patients to help more people reach their goals. Fitbit said that it will extend its reach into health care and that this move lays the foundation to expand its offerings to health plans, health systems and self-insured employers while also creating opportunities to increase subscription-based revenue.

In the longer term, Fitbit will have the opportunity to extend the benefits of the Twine platform to over 25 million users and will expand into new condition areas.

Financial terms of the deal were not disclosed in the press release. Fitbit’s market cap is currently about $1.2 billion, but its shares are way down from its former highs.

James Park, co-founder and CEO of Fitbit, said of the deal:

Twine Health has delivered powerful results for patients managing conditions like diabetes and hypertension – two key focus areas for Fitbit, which together affect approximately 105 million people in the U.S. alone. When combined with our decade-plus of experience empowering millions of consumers to take control of their health and wellness, we believe we can help build stronger connections between people and their care teams by removing some of the most difficult barriers to behavior change. Together, we can help healthcare providers better support patients beyond the walls of the clinical environment, which can lead to better health outcomes and ultimately, lower medical costs.

Twine Health was founded in 2013 and was based on years of behavior change and clinical research done at the MIT Media Lab, combining artificial intelligence-driven insights and human interaction for better health outcomes.

Fitbit shares were up 0.8% at $5.18 on Monday but were down 1% at $5.13 on Tuesday. Its 52-week trading range is $4.90 to $7.73, but Fitbit was a $30 stock at the start of 2016 and was very briefly a $50 stock in mid-2015.