Insurer offers free Apple Watches in program that had focused on Fitbit

UnitedHealth will pay customers to track fitness with Apple wearables, which are now ahead of Fitbit in market share

UnitedHealthcare is expanding its program that pays enrollees to track their fitness.

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An insurance program that pays users to track their fitness will now include Apple Inc. wearables, which could be a blow for Fitbit Inc. and its health-focused push.

UnitedHealthcare, one of Fitbit’s FIT, +1.37%  most important partners in the health-care industry, announced at a Wednesday afternoon health-care information conference that enrollees in its Motion plan could now get paid for completing daily fitness goals and tracking those activities via an Apple AAPL, +1.72%  Watch. UnitedHealthcare, the benefits division of UnitedHealth Group Inc. UNH, +0.31%  , began the incentive program a year ago using a Fitbit tracker as its pilot device, and the wearables pioneer remains a partner.

Participants in UnitedHealthcare’s Apple Watch program can now get up to $1,000 annually for meeting regular fitness objectives, the same as what they can earn by wearing devices made by other manufacturers. The one key difference with the Apple Watch is that enrollees can apply their rewards to the cost of the device, meaning that they’ll only pay shipping and taxes on the Apple Watch and then use the money they accumulate from meeting their goals to essentially cover the cost of the smartwatch.

Enrollees could previously get “baseline” fitness trackers free, but if they wanted fancier devices, such as smartwatches from Fitbit, Garmin Inc. GRMN, +1.84%  , or Samsung Electronics Co. Ltd. 005930, +0.72%  , they had to pay the difference out of pocket.

Fitbit has struggled greatly in the past two years, as Apple has challenged its dominance in the fitness-tracker arena with its more-capable (and more expensive) smartwatch. Apple had the top market share in wearables for the first time at the end of 2017, according to IDC tabulations, thanks to strong sales of its new cellular-connected Apple Watches.

Fitbit’s new Ionic smartwatch did not fare as well in the holiday shopping season, which damaged its already beleaguered stock in the wake of its fourth-quarter earnings report. The company has moved to a strong focus on health care, though Apple also wants to push the health aspects of its wearables.

Fitbit Inc.May 17Jul 17Sep 17Nov 17Jan 18Mar 18Source: Dow Jones Market Data

Fitbit shares ended Wednesday up 0.4% at $5.26, but fell about 1% in after-hours trading; the stock has declined 10.7% in the past year, as the S&P 500 indexSPX, +1.74%  has added 15.2%. Apple shares closed with a 0.9% decline at $175.03, and were stable in late trading; they have gained 25.5% in the past year as the Dow Jones Industrial Average DJI%  , which counts Apple as a component, has increased 18.1%. UnitedHealth, which made the announcement late in Wednesday’s trading session, closed up 0.5% at $227.27.