Highmark-Centerbridge Deal Will Create 33-Million Member Managed Vision Care Entity

SAN ANTONIO, Texas—A Highmark Health deal with Centerbridge Partners—announced earlier today and reported by VMail—will create a new managed vision care company that combines Davis Vision and Centerbridge’s Superior Vision to create a new entity with 33 million covered members, according to executives of the two companies.

Highmark and Centerbridge also will jointly control the 700-store Visionworks optical retail business under the terms of their agreement, which is expected to close in the fourth quarter. Executives characterized the multi-layered transaction as a “game-changer” for the optical industry and move that will accelerate integrated health care and coverage.

“Thirty-three million lives and 700 stores levels the playing field in the market space and we’re very, very excited about that,” Highmark Health president and chief executive officer David Holmberg said on a conference call following the announcement of the deal.

Under the terms of the agreement, HVHC Inc. (HVHC), a wholly-owned subsidiary of Highmark Inc., will sell a majority interest in Davis Vision to Centerbridge, which will combine Davis with Superior Vision to create a new company. Highmark will acquire a minority ownership interest in the new managed vision care company, according to the announcement.

Based in Baltimore, Superior Vision presently covers more than 11 million members.

In a separate transaction, Centerbridge will acquire a minority equity stake in 700-store Visionworks, HVHC’s optical retail subsidiary. Highmark will retain a controlling ownership interest in Visionworks, and industry veteran Peter Bridgman will become chief executive officer of the optical retailer, according to the announcement.

HVHC, which is based here in San Antonio, generated $1.6 billion in revenue in 2016, about two-thirds of which was attributable to the retail operations of Visionworks.

Financial terms of the deals were not announced.

Asked to elaborate on how he sees the integrative care model developing during a telephone interview today with VMail, Holmberg said the health care marketplace is moving from a fee-based, transactional system to a model that emphasizes overall accountability and keeping people healthy.

“More and more, you are going to see both payers and providers taking risks and sharing that risk with each other, and not just for positive outcomes but the overall cost of care,” he said. “As that evolves, we believe that there is a very important role for vision and dental to play in this, and that’s why we are still believers in the vision business … and also why we are aggressively working in the dental space to do more proactive things.”

He added, “Vision is a critical part of overall health … and we’re seeing more and more of the connections between oral health and vision health and the costs of an individual’s total care.”

In addition, Holmberg said the deal allows Highmark to stay in the vision business “with a partner who has strong financial resources and brings literally millions of lives from an insurance standpoint” that will enable the companies “to work together to grow the business in a very effective way.”

In the call with VMail, Bridgman noted that he has already moved to San Antonio and is taking an active role in managing the closing process of the Visionworks transaction. “The great thing about this deal is the continuity of the Highmark ownership,” he said. “And we also have the capital infusion from Centerbridge … Those two combined, along with a forward-looking [perspective] on how to run the business, is why we think there is significant opportunity for the retail space.”

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