Target (NYSE: TGT) recently signed a deal with Fitbit (NYSE: FIT) to offer the company's fitness trackers to its 335,000 U.S. employees. The deal is intended to help Target promote employee fitness and reduce healthcare costs.

Target employees will receive Fitbit's cheapest device, the $60 Zip, for free. They can also purchase one of Fitbit's pricier devices, and Target will subsidize the cost. Teams of employees can participate in month-long fitness competitions, and the winners can pick a charity to receive a $1 million donation. Fitbit and Target will also develop additional wellness programs that utilize the devices.

The key facts
Target isn't the first company to partner with Fitbit to improve the overall health of its employees. Oil giant BPĀ challenges Fitbit-wearing employees to take a million steps within a year to be eligible for more generous health plans. Within the first year of giving out the Fitbit trackers, 23,000 of BP's employees took over 23 billion combined steps.

About 80% of all U.S. businesses with over 1,000 employees and 44% of companies with 50 to 999 employees already provide some type of employee wellness program, according to a 2012 survey by Automatic Data Processing. ABI Research estimates that by 2018, over 13 million activity-tracking devices will be integrated into those programs, up from just 200,000 in 2013.

Therefore, landing a deal with Target -- its biggest employee wellness partner to date -- indicates that Fitbit could sell a lot more wearable devices to even more enterprise customers in the future.

Why should investors care?
Fitbit's corporate services (which include those wellness programs) generate less than 10% of its revenue, but CEO James Park told Bloomberg that it's "one of the fastest growing parts of the business."

While that growth potential is encouraging, it probably won't be enough to stabilize Fitbit's stock, which has fallen 26% over the past month due to concerns about high valuations, contracting margins, and a gradual loss of market share to new competitors in the fitness tracking market.

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Leo Sun has no position in any stocks mentioned.

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