If the "black hole" sells a few tens of millions gold plated and rose gold plated watches, then I suppose it will be covered. In the mean time they wrote off a large R&D expense.
That's not going to happen, ever. You're tens of millions off in your hypothetical estimation.
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The story reads that it doesn't do heart rate monitoring. They can't mean all monitoring like heart rate. On Apple's site they still mention it doing heart rate monitoring.
"Heart Rate Sensor. The custom heart rate sensor in Apple Watch detects your heart rate during workouts. When youre not in a workout, Apple Watch uses an accelerometer, along with the GPS and Wi‑Fi in your iPhone, to measure all kinds of physical movement, from simply standing up to running to catch the bus."