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Highmark selling managed care vision subsidiary to private equity firm

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Highmark Inc. is selling Davis Vision Inc., its profitable managed care vision business, to international private equity firm Centerbridge Partners LP later this year.

Highmark officials say the Davis sale and a second vision-related transaction will generate cash to invest in their core businesses, although neither party would disclose the terms.

The move comes as the Pittsburgh-based insurer is working to rebound from millions of dollars in losses it suffered in 2015 and 2016 under the Affordable Care Act.

Under the agreement, Davis will be combined with Centerbridge's existing managed vision care company, Superior Vision. Highmark will retain a minority interest in the combined firm, officials said.

"This unlocks capital for Highmark that can be redeployed in our continued transformation of health care," said David Holmberg, president and CEO of parent company Highmark Health.

"This allows us to stay in the vision business with a partner that has strong financial resources," Holmberg added, "… and allows us both to work together to grow the business in a very effective way."

Who's who

Centerbridge, with offices in New York and London, has approximately $29 billion in assets under management.

Davis is a subsidiary of Texas-based HVHC Inc., a wholly owned Highmark subsidiary.

HVHC also operates an optical retail subsidiary, Visionworks.

In a separate move, Centerbridge will acquire a minority equity stake in Visionworks, with Highmark retaining a controlling ownership interest in Visionworks.

The transactions are expected to close in the fourth quarter, subject to regulatory approvals.

Together, the HVHC companies generated $1.6 billion in revenue in 2016, Highmark officials said.

Combined, the two companies make more than 3.5 million pairs of glasses a year, Reuters reported, while Visionworks has more than 700 retail stores across the U.S.

Davis employs employs nearly 1,000 people, of whom about 50 are in Pennsylvania, a spokesperson said.

The company has a "small number" of employees in the Harrisburg area, officials said during a Wednesday conference call, and a manufacturing facility in Philadelphia that supports both Davis and Visionworks.

Vision industry veteran Peter Bridgman will join Visionworks as CEO. Jim Eisen, who has been with Visionworks/HVHC for the last nine years and served a three-year tenure as CEO of HVHC, will step down in connection with the transaction.

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Roger DuPuis

Roger DuPuis

Roger DuPuis covers Cumberland County, health care, transportation, distribution, energy and environment. Have a tip or question for him? Email him at Follow him on Twitter, @rogerdupuis2.

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