Can Oura Become a Forever Company?

In ritzy suburbs and city neighbourhoods, it’s increasingly not silver or gold bands that are most frequently wrapped around locals’ fingers — it’s an Oura ring.

The Finnish healthtech firm’s hero product, from $349, pairs with a smartphone app and uses specialist sensors to monitor biomarkers like blood oxygen levels and skin temperature and in turn, track sleep patterns, heart health and exercise levels. Launched in 2015, the Oura’s minimalist aesthetic has helped it win famous fans like Kim Kardashian and Gwyneth Paltrow, and is projecting $1 billion in sales this year. Its latest fundraise valued the company at $11 billion after selling 3 million rings last year, according to Bloomberg. (The company declined to comment on the valuation.)

But notwithstanding these milestones, chief executive Tom Hale said they still have a long way to go to reach global appeal.

“It seems like everyone’s got an Oura ring, but really, no one has an Oura ring,” said Hale. “The value proposition of a ring is very differentiated. We have ample room to grow this business.”

Despite its growth, Hale said the company represents just 1 percent of the overall wearables market, and is ramping up its product offering with the intent of capturing more. In October, it launched the Ceramic Oura Ring 4, which costs $499 and comes in four colours, meant to give wearers a more fashion-forward way to track their vitals. (Customers need to pay $5.99 a month for access to the app’s full functionality.)

It also added a new feature that can track biomarkers in the blood, such as cardiovascular, metabolic and immune functions, amongst other elements. Hale said these can be explained and contextualised for users by the app’s built-in AI. This is in addition to the blood glucose monitoring function it added this year thanks to a partnership with healthcare firm Dexcom’s Stelo biosensor.

Scaling, however, won’t be easy. While some fitness consumer technology like the Apple Watch have become integrated in many consumers’ lives, more have flailed: the home exercise firm Peloton was valued as high as $49 billion at its pandemic-era peak; today its valuation is close to $3.5 billion. Wrist wearable Fitbit’s sales and revenue have declined since it was acquired by Google in 2021 and Nike shuttered its own offering, FuelBand, in 2014. Even options developed with rich data have failed: Apparel maker Under Armour acquired a handful of sports apps like MyFitnessPal in 2015 with a view to harvest their data to make new wearables. However, the acquisitions did not pay off: adoption was low, which TD Cowen analyst John Kernan chalked up to a lack of consumer interest, and issues furthering the offerings from the devices.

“The biggest issue is …do they work as promised, and do they make my life better, or do they make me more miserable?” said Matt Powell, founder of athletic brand consulting firm Spurwink River, adding that no one likes reminders of their own inactivity or poor health habits.

Obsolescence and attrition is one risk, but competition is also stiff. Hale said two-thirds of its customer base wear another tracker of some kind — Hale himself wears an Oura-branded blood glucose monitor and said he also has a smart watch.

In its quest to grow, Oura’s primary task is to convince customers its data offering is more actionable than what they can find anywhere else — including their doctors.

“Our competition, in many ways, is the traditional healthcare system,” said Hale, adding that while he wouldn’t position them as competitors, customers come to Oura “because they trust us and they want... a tool that both knows them intimately and has support for them,” he said.

Data, But Make it Fashion

For Oura to become a must-have for many, it needs to offer data insights that help users make better health decisions each day, as well as deliver aesthetic appeal in a trend-driven industry.

Its new launch, the Ring 4 Ceramic, aims to solve for the latter portion. Available in four suitably muted hues, the new material was chosen partially because it’s also often used in jewellery, according to Hale.

“We’ve seen people choose a complementary colour to their nail polish… people who like to wear jewellery accessorise," he said.

The company hopes that customers will want to own more than one Oura ring, and as such, has rolled out features allowing customers to track data seamlessly across multiple rings. While Hale is cautious that the product not skew too far into pure accessory territory — “I don’t want us to be just a fashion brand. I want us to be a health brand,” — he sees value in drilling down on the fashion credentials and visual appeal. Its fastest-growing user base is women aged 18-25.

Powell noted that thanks to its premium price and discreet look compared to a clunky watch wearable, the ring has obvious cachet and if-you-know-you-know appeal. Hale said a ring is optimal for both data collection and fashion appeal; its unique position on the finger, close to an artery, allows for far greater signal strength than a wrist wearable.

But Tawfik Jarjour, a senior manager in Accenture’s technology practice, said companies that will have lasting success will likely build an “ecosystem” around their products as a hedge against fashion and trend obsolescence, suggesting a trade-in system where customers can get a new model at a discounted price when upgrading from an old one.

And even a high-tech ring still has its limits: the new blood biomarker tracking, priced at $99, is a partnership with medical testing firm Quest Diagnostics, and requires users to get a blood panel at a participating location, while its blood glucose tracking requires the Stelo arm biosensor. (Fertility tracking in partnership with the app Natural Cycles is done via the standard ring.)

Health at Your Fingertips

To gain more ground, the company needs to continue to build out its insights offering. Hale said the app’s built-in AI is a key selling point, and that the more health data that users feed into the app, the better it can give them more personalised guidance.

“[It] can make predictions that are not generalised predictions, but predictions about you, because we have your data,” said Hale, saying it was not a “mathematically obscure number” nor a snarky tone that makes users feel bad about their diet and activity levels. “It’s very different from both traditional healthcare, but also other wearables,” he said.

Hale’s vision is that the breadth of data Oura can theoretically collect across its full suite of products, in partnership with its AI advisor, can help users gain a more holistic view of their health over time, rather than simply give opaque scores for sleep and fitness.

“We’re not making new doctors at a faster rate, we’re making them at a slower rate. The population is growing and ageing,” he said, saying Oura could have a role to play to provide clinical-grade data to users.

Still, the company will need to find ways to increase its distribution — no mean feat given the complex dance between its high price, niche customer base and complex sizing and high-touch sales approach pricey goods often need.

Currently, it is sold directly to consumers on its e-commerce site, as well as on Amazon and at retailers like Best Buy and Costco, the latter of which offers sizing kits in-store so customers can take the correct size home there and then. (A recent tie-up with American Express’ premier credit card, Platinum, gave cardholders a $200 benefit against Oura purchases; there are threads on the Reddit community for Platinum cardholders discussing how to price their just-purchased Oura rings on secondary marketplaces.)

Powell said he could see the ring being successful at retailers like Dick’s Sporting Goods or GNC, but that trained sales advisors would be needed to convert customers, while Jarjour noted that adding more community-based functions, like sharing activity levels and scores with friends, could help retention.

“Community is what makes it sticky,” he said, adding that shared purpose and accountability is a big part of the fitness craze. “A big part of what helped Peloton when everyone was working out remotely, was it gave you people to do your exercise with.”

Hale believes a combination of the right pricing, fashion appeal and detailed data can make Oura soar. Customers in the US can use FSA or HSA, tax-free healthcare spending accounts, to buy Oura products and spend around 40 percent more when they do. Hale also said on Amazon, the rings are sometimes below $200, and that he’s open to the idea that one day, the company might be at a scale where it can “slide down the price curve” or be subsidised by governments or employers.

But it will need to keep refining its offering to edge out the competition.

“They’ve got to continue to make the product better and more meaningful for the consumer,” said Powell. “Whenever you’re on top, people are coming after you.”

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