Highmark Health Reports ‘Strong’ Financial Results

PITTSBURGH, Pa.—Highmark Health, an integrated health care company with holdings in vision care, reported Thursday that its financial performance in the first half of 2017 was its “strongest financial performance for [a] six-month period” since the formation of Highmark in 1996.

Highmark reported that it achieved an excess of revenue over expenses of $535 million and an operating gain of $505 million for the six-month period ended June 30. Both totals represented a “nearly $500 million improvement” compared with year-ago results. Highmark said its pre-tax result of $581 million was $496 million ahead of the prior-year total, and consolidated revenues “were essentially flat, declining by $100 million to $9.1 billion,” which it attributed to a “purposeful enrollment reductions as a result of efforts to manage growth.”

However, Highmark’s diversified business segment – which includes Davis Vision managed vision care and the optical retailer Visionworks – saw operating earnings decline “moderately year over year to $95 million, largely attributable to continued soft sales results experienced across the entire retail sector since mid-2016,” among other factors.

The overall vision business under the HVHC umbrella reported an operating gain of $41 million, which was a decrease of $24 million from the operating gain of $65 million in the first half of 2016. HVHC “continues to battle the retail trend and works to drive volume to its Visionworks stores,” Highmark said in its financial announcement.

As VMail reported, a unit of Highmark Inc. and the private equity firm Centerbridge Partners L.P. have reached a definitive agreement whereby Centerbridge will purchase Davis Vision and combine it with Centerbridge’s existing managed vision care business Superior Vision. Highmark will hold a minority ownership interest in the combined Davis Vision-Superior Vision company.

In a separate transaction, Centerbridge will acquire a minority equity stake in 750-store Visionworks, while Highmark will retain a controlling ownership interest in Visionworks, according to the companies’ joint announcement last week.

In a conference call with media following the announcement of first-half results, Highmark executives said the capital proceeds from Centerbridge transaction were earmarked for building the capabilities of the Allegheny Health Network business, creating and/or expanding partnerships with health care systems and investing in core capabilities.

“For Highmark, the [Centerbridge] agreement will secure a solid return on a valuable portfolio asset,” Highmark president and chief executive officer David Holmberg said on the conference call. “Once the deal closes, they will provide us with a significant amount of new capital that we will strategically allocate to accelerate the plans we have in place to deliver a better health care experience for our customers, members, patients and communities.”

Holmberg also noted that he believes the two-part deal with Centerbridge will “enable us to create better opportunities for both Davis Vision and Visionworks to realize their full-growth potential within the optical industry.”

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