Is Helping Diabetics Fitbit's Next Big Opportunity?

By Motley Fool Staff Markets Fool.com

Fitbit (NYSE: FIT) is the market-share leader of wearable technology used by consumers, and it's working with Medtronic (NYSE: MDT) to develop devices that can help diabetes patients live longer and healthier.

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In this clip from The Motley Fool's Industry Focus: Healthcare podcast, analyst Kristine Harjes is joined by contributor Todd Campbell to discuss whether this could be Fitbit's next big market opportunity, and what wearable technology more broadly could mean for patients with chronic diseases.

A full transcript follows the video.

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This video was recorded on May 10, 2017.

Todd Campbell: Fitbit has been around for 10 years, and they've sold 63 million devices. There's so many of these devices around, and maybe many of our listeners are wearing them right now. But what's intriguing to me is, as I was researching for today's show, only one in 10 are wearing them on a daily basis.

Kristine Harjes: Yeah, I believe it. I think Fitbit in general is struggling with not so much initial adoption, but actually sticking with their product. But if they want to really dive into being able to integrate their wearables tracker with something like a continuous glucose monitor, which is something they're working on with Medtronic regularly. You can just tell the people who were just sitting there shaking up and down all day long and counting that as steps. And that's fine if you're doing something like a step competition with your friends -- well, it's not fine, it's not great, but it doesn't have the consequences that it would if somebody is using it in a medical way. And that's not to say that people are trying to cheat their medical data. But even something as simple as brushing your teeth, people sometimes log that as steps, and that's problematic when your doctor is looking at that data.

Campbell: Yeah. I was reading one study, Kristine, where a care provider, a hospital system provided a bunch of older patients, I think they were in their 80s, with devices that could be used to measure how much activity they were doing and their heart rate and all of this stuff, and frankly, most of them forgot that they were even wearing them within a few days of wearing them, and forgot to put them on. We have to, obviously, be able to develop systems that are sensitive and give us new insights into, for example, blood sugar levels, so that people can stay within their desired range more frequently throughout the day. But we also have to make it so it becomes something like your watch, where you're actually looking at it every once in awhile. Again, I suppose watches aren't being worn as much as they used to be anyway, because now we have smartphones. How often are you checking your watch? It's going to be like a text message; you're going to have to actually pick up the phone and look at your texts and say, "I moved this many feet, and my heart rate is this, but what do I do with this information?" I think that's part of what Medtronic is trying to accomplish in its push here, is to take all the information it has, from being a huge player in medical devices, especially in diabetes, and be able to marry that with the information that's being collected by the user who's wearing the device, and then being able to take that one step further and actually provide actionable insight that either the caregiver, be it the primary physician or the patient, can use to actually improve their lifestyle, or something.

Harjes: Yeah, you're absolutely correct. Medtronic right now is staring down a mountain of data and looking at it and saying, "We have so much information; how do we derive useful conclusions out of it?" They have a partnership with IBMthat was announced in April of 2015 that will leverage the artificial-intelligence powers of Watson, which is the supercomputer that won Jeopardy!. With Watson, they're going to analyze all these electronic medical record data, I think it's 10,000 EMRs, and they're going to use this population information to develop a real-time personalized care. Todd, as you were saying, it's going to need to come from an app or your phone or something telling you, "You're showing abnormal patterns," or, "We've noticed this." That's exactly what they're trying to develop. They created something called Sugar IQ, which is a personalized assistant that can detect patterns of behavior, and it can protect diabetic events hours before they happen, which is really pretty incredible. And it seems to me like they're only getting started with this.

Campbell: You know what's interesting, too, is that Massachusetts General Hospital did something where they gave pedometers to patients, and they linked that up with a text-messaging system that would basically say, "Here's how you're doing; here's some tips." They actually look at the weather, all sorts of things that they put together to try to figure out the best way to make it relevant to the patients. Sure enough, the patients who are receiving these daily tips did better overall in achieving whatever their goal was for their blood-sugar levels. So yes, we have all of this information out there, all of this data. On the healthcare side of things, we have companies like Medtronic that have tons of experience in creating medical devices. Then we have the consumer-electronics companies, who have tons of experience generating devices that people want to use. Then, we have healthcare providers who are trying to figure out how can they take all of this, marry it together, and make it into something they can actually use to reduce these rates of obesity, to keep people who are pre-diabetic -- because there are over 80 million Americans who are pre-diabetic -- to keep those from becoming full-blown cases of diabetes and ultimately make it so that cardiovascular disease is no longer the No. 1 killer worldwide.

Kristine Harjes has no position in any stocks mentioned. Todd Campbell has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Fitbit. The Motley Fool owns shares of Medtronic. The Motley Fool has a disclosure policy.