Memorandum

Dexcom and Fitbit partner to develop products for diabetes, starting with CGM data on Fitbit Ionic smartwatch in 2018 – September 7, 2017

Executive Highlights

  • This morning, Dexcom and Fitbit announced a collaboration to develop and market products for diabetes management. The first joint initiative will display Dexcom CGM data on the just-announced Fitbit Ionic smartwatch for users with both Android and iOS devices. The data display will launch “as soon as possible in 2018.”
  • Initially, we assume Fitbit Ionic will display data relayed from the Dexcom G5 phone app, just as Apple Watch and Android Wear currently do. Over time, perhaps direct CGM transmitter-to-Ionic communication could be added, similar to Apple’s plans for Watch.
  • Fitbit and Dexcom may jointly develop additional products down the line.
  • For Dexcom, this news gives it the broadest CGM display device compatibility in diabetes (Apple, Android, Fitbit), and expands its already-impressive partnership base beyond consumer tech titans like Alphabet (Verily) and Apple. Viewing glucose data on a watch will undoubtedly be perceived as an awesome form factor by many, especially when combined with motivating activity data. Dexcom also gains access to Fitbit’s impressive social network and growing move into coaching, key avenues for impacting type 2 diabetes as it moves the Verily product forward. How might this partnership extend beyond data display into Dexcom+Fitbit diabetes management programs, bundled offerings, data insights, etc.?  
  • Ionic, Fitbit’s watch, is designed as a “health and fitness first platform,” and this partnership gives Fitbit another must-have feature for people with diabetes to buy the watch (and to keep up with Apple Watch). Fitbit is serious about a greater move into diabetes, something we’ve seen coming on recent calls and following the professional CGM partnership with Medtronic (December) and UnitedHealthcare Motion Program (January). Notably, CEO James Park is quoted in this morning’s release, a sign this collaboration is indeed high on the company’s radar.
  • Remarkably, Dexcom’s market cap of ~$6 billion is now four times larger than Fitbit’s ~$1.3 billion. Fitbit has had a string of rough quarters, but it’s impossible to argue with the incredible assets and community the company has built. We’re very excited to see Fitbit do well – it’s a classic example of companies primed to do well by making people healthier. Down the road, we believe there will be examples for people to see their glucose who have pre-diabetes as well as type 1 and type 2. 

Dexcom and Fitbit just announced an exciting collaboration to develop and market products for diabetes management. As step one, Dexcom CGM data will be viewable on Fitbit’s new Ionic smartwatch “as soon as possible in 2018” (Ionic will launch this October) – a huge win for people with diabetes who will be able to see CGM data on another discreet, highly glanceable, on-the-go form factor. Users of both Android and iOS devices will get G5 data on Ionic, expanding on current G5 availability on Apple Watch and Android Wear.

Fitbit Ionic adds third party apps and a host of notable features (notably, a 4+ day battery life, oxygen saturation sensor), and we assume it will display data relayed from the Dexcom G5 phone app, just as Apple Watch and Android Wear currently do. We assume this will require an FDA submission, but aren’t positive. Over time, we imagine direct Dexcom transmitter-to-watch communication could be added to Ionic, similar to Apple’s announced plans with WatchOS4 and Dexcom CGM (i.e., no nearby phone required to view Dexcom data on the Fitbit watch).

We see this partnership as a very big win for both companies near-term and beyond. Key wins:

Dexcom Gets…

Fitbit Gets…
  • Another consumer device platform to display CGM data on, beyond Apple and Android.
  • Remains ahead of Abbott and Medtronic on device compatibility.
  • Early entrant on Fitbit’s app platform, which is the #1 downloaded health/fitness app on iOS and Android in the US.
  • Better Dexcom CGM integration of activity data – key for diabetes! – along with new data streams not captured by other devices (sleep, oxygen saturation).
  • Fitbit’s impressive social network “Dexcom CGM users will now be able to connect with millions of people, where they can ask questions, seek support and share successes.”
  • Clear software/coaching pathway as Dexcom moves into type 2 diabetes with the Verily partnership and expands into novel business models.
  • Incredibly well-respected Fitbit consumer brand globally.
  • More motivational “Bright Spot” health data with Fitbit: “Great job – you’ve reached 10,000 steps!” (To date, CGM is more about pointing out mistakes with alarms, rather than successes – though of course the alarms are successes as well since they are associated with greater safety.)
  • More mainstream marketing and retail distribution.
  • Bigger move into diabetes and healthcare with extremely well-respected, very entrepreneurial glucose sensor partner.
  • A reason for people with diabetes to get Ionic, which will be critical for Fitbit’s success following a string of tough quarters.
  • Stays competitive with Apple Watch and Android Wear, which also display Dexcom CGM data.
  • Another data set (glucose) to improve Fitbit users’ health and generate useful insights.
  • Clear potential to move into sleep apnea with glucose data + Ionic’s new Sp02 sensor.
  • Large diabetes population with strong potential for coaching offerings; potential pre-diabetes population down the road.
  • Potential for cross sales with new Fitbit weight scale.
  • Expands on Medtronic Diabetes professional (blinded) CGM partnership and into real-time CGM, where Fitbit is better suited to improve health in diabetes.
  • A well-respected healthcare partner to reassure investors – remarkably, Dexcom’s market cap of ~$6 billion is now four times larger than Fitbit’s ~$1.3 billion.
  • The announcement indicates Fitbit and Dexcom may jointly develop additional products down the line. The Fitbit Ionic collects data on activity, heart rate, sleep, blood oxygen saturation, and geolocation – could these data streams be cross-analyzed with glucose data to generate insights? Could Fitbit’s new subscription coaching offering be tailored to diabetes? Could the watch hold a closed loop algorithm and communicate with both a pump and a CGM? What can software developers do with Fitbit’s software developer kit and Dexcom’s upcoming APIs (retrospective data initially)? The latter was supposed to launch in early 2017 but still hasn’t.
  • We expect to see more functionality move into smartwatches over time, a very positive trend for a disease state far-too-often paired with stigma and perceived embarrassment. The possibility of viewing glucose data on the wrist may boost the convenience and discretion factors enough to entice people to try/go back on CGM, which would be a major win for them and the health system at large. In addition, it will give people a more glanceable way to view glucose data, rather than pulling out a receiver or smartphone. Given the data that more CGM glances = better outcomes, we wonder if smartwatch integration would actually drive better outcomes with CGM.
  • The announcement notes that Dexcom customers will be able to connect with millions of people within Fitbit’s in-app community, where they can ask questions, seek support, and share successes. Fitbit recently launched this “Feed” feature and has seen impressive adoption and engagement – as of 2Q17, users have grown to 11.2 million, generating 648 million page views, up 88% since 1Q17. The Feed feature (similar to the Newsfeed on Facebook) is part of the Fitbit app, which provides a community of users aimed at increasing motivation. One Drop and Livongo have both incorporated this into their diabetes apps, and we believe we’ll see more of this in our field going forward. We love this idea of a community built within a medical device, which has been absent to this point in CGM. Peer support and crowdsourced information about diabetes management can be just as important as the device itself – probably more important to some!
  • We are delighted to see Fitbit’s expanding investment in diabetes – the company already has a partnership with Medtronic on professional retrospective CGM, but not much has been shared on that front. Medtronic and Fitbit announced this partnership in December 2016 to integrate Fitbit activity data into the iPro2 professional CGM (blinded, retrospective) with the goal of bringing more behavioral context to retrospective CGM data. We haven’t heard any more on this agreement in the past 10 months, but the inclusion of Dexcom real-time CGM on the Ionic interface makes us wonder if Medtronic data viewing capability will be coming in the future.

Close Concerns Questions

Q: When in 2018 will this integration actually launch? Will this require an FDA submission? Will it have any other features not included in Dexcom G5 on Android and iOS? Will this be the G5 mobile app relaying data to Ionic or will Fitbit and Dexcom co-develop an app?

Q: How will people with diabetes view the Ionic smartwatch with G5 CGM integration vs. Apple Watch and Android Wear integrations? Will Ionic’s four-day battery life and other features outweigh the direct transmitter-to-watch communication promised in Apple Watch OS4? (To be clear, this “Native Core Bluetooth” feature will launch this fall in WatchOS4, though Dexcom has never commented on when G5 will be updated with this functionality.)

Q: Is direct CGM transmitter-to-Ionic watch communication in the roadmap?

Q: Will Fitbit market Dexcom CGM and vice versa? Might Ionic and Dexcom CGM be sold as a bundle?

Q: Could this significantly expand uptake of Ionic and make it more of a must-have device? Or will this be more incremental for Fitbit?

Q: Will Medtronic and Abbott soon follow and display data on the Ionic watch?

Q: Will Dexcom start doing weekly progress reports, just as Fitbit does for its users? These are very popular – they show steps over the course of the week, most and least active day, and friends’ steps. We’d love to see this for CGM, including glucose stats, key patterns, best day, etc.

Q: What future Fitbit+Dexcom coaching offerings are possible? What else could emerge from this partnership? What possibilities are there on the prediabetes front?

Q: What does this mean for Fitbit’s Medtronic partnership? Will Medtronic also display real-time data on Ionic once Guardian Connect is approved in the US (still under FDA review)?

Q: Will this impact Dexcom’s Verily and Apple partnerships? How will Dexcom dedicate internal bandwidth to app development on these different platforms?

Q: How many people in the Fitbit community have diabetes and use CGM currently? How many would this appeal to in the future?

-- by Brian Levine, Adam Brown, and Kelly Close