Highmark to sell Davis Vision arm
Private investment firm in talks for deal
Pittsburgh Post-Gazette
Highmark Health is pulling back on its vision insurance business but staying in the retail side of selling glasses, following a deal announced Wednesday to sell a majority stake in the Davis Vision operation that insures an estimated 1.8 million members in Western Pennsylvania.
Top officials anticipate a smooth transition for those covered by Davis Vision when the managed vision care subsidiary deal closes with Centerbridge Partners, L.P., a private investment management firm with offices in New York and London.
“People will not see any change” in how they file claims, promised Dan Osnoss, managing director of Centerbridge during a telephone media briefing Wednesday.
“I think that will be very seamless,” added David Holmberg, president and CEO of Highmark Health.
Under the agreement, San Antonio-based Davis Vision — which Highmark acquired in 1996 — will be combined with Centerbridge’s Superior Vision managed vision care portfolio company. Highmark will have a minority ownership stake.
Separately, Centerbridge will acquire a minority stake in Highmark’s Visionworks retail optical chain, as Highmark retains controlling ownership. “We get to stay in the vision sector, which I’m excited about,” Mr. Holmberg said.
The two parties expect the transactions, which are subject to regulatory review and approval, to close in the fourth quarter. It is unclear whether the Davis Vision brand name ultimately will be retained, as both parties say they have been focused on the logistics of reaching an agreement.
Financial terms of the deal were not disclosed, although a year ago, the Reuters news service reported that Centerbridge, which Mr. Osnoss said has $29 billion in capital under management, was one of the principles in an unsuccessful $2 billion bid for Highmark’s vision unit.
On Wednesday, Mr. Holmberg would only allow that the pending sale represents “a significant
material investment” that will allow Highmark Health to bolster invest in its core businesses. Those include its Allegheny Health Network provider arm, which has been clawing its way to profitability since Highmark established it in 2013 to compete with Pittsburgh rival UPMC.
Part of the proceeds from the vision deal, Mr. Holmberg said, also will go toward strengthening Highmark Health’s partnerships with Geisinger Health System in northeast Pennsylvania and the Johns Hopkins Health System in Baltimore.
As to any notion that Highmark was under financial pressure to make the sale to Centerbridge, Mr. Holmberg quickly replied with a forceful “absolutely, unequivocally no.”
“We are more than comfortable with what we’re doing,” he said. “In fact, if you join us in a week or two, we’re going to have a material announcement that will reinforce and drive this point home.”
Davis Vision last year had operating revenues approaching $780 million, an 18 percent increase over 2015. Prior to taking over Highmark’s top executive position, Mr. Holmberg was CEO of HVHC, the holding company for Davis Vision and Visionworks.
The transaction, he said, will allow the Pittsburgh healthcare company to focus on its Visionworks retail business, which has about 750 stores in 41 states and the District of Columbia.
“It allows us to think differently than we have in the past and be more innovative on the retail side,” Mr. Holmberg said.
Visionworks opened 53 new stores last year and, according to Highmark Health’s 2016 annual report, the chain sold about 3.6 million pairs of glasses that year.
As part of Wednesday’s announcement, Highmark named Peter Bridgman as CEO for Visionworks. Mr. Bridgman comes to Visionworks after serving as the Cincinnati-based general manager for LensCrafters, a position he previously held with Pearle Vision.
Mr. Bridgman, already in San Antonio after having sold his home in Cincinnati, said Wednesday that it’s too soon to tell what changes, if any, may be in store for Visionworks. “Let’s talk in 90-