Corporate wellness programs are giving Fitbit stock a shot in the arm. Fitbit (FIT) shares shot up 12.3% to 37.10 after retailer Target (TGT) announced that it will offer Fitbit activity trackers for free to its 335,000 U.S. employees.
Target is the latest company to provide wearable activity trackers to its workers as a way to improve employee fitness and reduce health care costs.
The Target deal is one of Fitbit’s largest corporate accounts. While corporate services are less than 10% of Fitbit revenue today, it’s “one of the fastest-growing parts of the business,” CEO James Park told Bloomberg.
Target employees will get Fitbit’s most basic device, a clip-on tracker called a Zip that retails for $59.95. Alternatively, they can buy a more expensive band with Target subsidizing the cost, Bloomberg said.
Those who opt in to the program will be put into teams for a monthlong contest. The team that averages the most steps will get to give $1 million to a charity of their choice.
The retail giant also will give U.S. staff an extra 20% off fresh and frozen fruit and vegetables, Simply Balanced items and C9 activewear on top of their existing employee discount.
Target stock rose 0.9% to 78.50.
Fitbit’s Healthy Act
Fitbit also said Wednesday that its Fitbit Wellness program will be compliant with the U.S. Health Insurance Portability and Accountability Act (HIPAA), the primary U.S. law governing the security and privacy of personal health information used by health insurance plans and other covered entities.
“By allowing a greater level of integration with HIPAA-covered entities, Fitbit Wellness can better serve our clients and partners, and their members and employees,” Amy McDonough, vice president and general manager of Fitbit Wellness, said in a statement. “We are excited about this new initiative and believe it will allow Fitbit Wellness to serve a broader market, and is another step forward in achieving Fitbit’s goal of empowering users to lead healthier, more active lives.”
Over 50 of the Fortune 500 companies in a variety of industries are Fitbit Wellness customers, including Time Warner (TWX) and Bank of America (BAC).
Other makers of fitness trackers and smartwatches with fitness capabilities, such as the Apple (AAPL) Watch, are interested in tapping into corporate wellness programs as well.
It’s unclear whether giving fitness trackers to employees will have a big impact on their health or health costs. After the novelty of checking heart rates or distance traveled fades, the people who stick with the trackers may be those who were already inclined to work out.
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