Highmark, Blue Cross Blue Shield operator in Pennsylvania and West Virginia, just offloaded vision insurance carrier Davis Vision and retail glasses and eye exam chain Visionworks to Centerbridge Partners, a New York-based private equity firm focused on distressed assets.
Centerbridge plans to combine Davis with its existing portfolio company, Superior Vision. Highmark retains its stake in national dental carrier United Concordia as well as stop-loss carrier HM Insurance Group.
While Davis and Superior are both minor players in California’s vision insurance market today, the sale to Centerbridge from nonprofit Highmark should signal growth as well as changes in strategy in the coming few years.
A change in leadership has already been announced: the head of Visionworks will step down and be replaced by Peter Bridgman who has served in senior roles at vision insurer EyeMed and retail lens and eye exam chains LensCrafters and Pearle Vision.
One outcome we might expect is for greater competition against larger vision carrier rivals in the employee benefits space, VSP and Eyemed, as well as expansion of the Visionworks retail brand.
Growth on either the insurance carrier or the retail side would also help grow the other segment as Visionworks can give more favorable terms to Davis contracts, and additional employers signed up with Davis can drive more business to Visionworks locations with potential incentives to policyholders.
We should also be on the lookout for add-on acquisitions. A typical strategy in the private equity space after moving into a new industry, as is the case here for Centerbridge, is to follow up quickly with additional investments to fold into platform companies.
The bottom line is, with a new major player in the vision insurance game to potentially increase competition and drive innovation, this acquisition bodes well for insurance buyers.