VM Special Report: Leading Labs Measure Up

Big Players Post Gains in 2008

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 Photo: Lens clock courtesy of Western Optical Supply.


By Andrew Karp
Group Editor, Lenses and Technology

Most of the industry’s leading wholesale labs met or surpassed those basic requirements in 2008, as evidenced by newly released survey data from VM’s Top Labs 2008 Report. The report, which Vision Monday has published annually since 1991, offers a statistical snapshot of the Top 25 Independent U.S. Wholesale Labs and the Top 5 U.S. Supplier-Owned U.S. Wholesale Lab Networks. It ranks the labs by Rx sales (pairs of prescription lenses produced) and the number of Rx jobs produced per day. The report also measures the percent of uncut Rx jobs produced by the Top Labs, the number of employees at each lab and other key criteria.

Although not all the Top Labs grew in 2008, in general the largest independent and supplier-owned labs made impressive gains over the past year. Combined net sales for the Top 5 Supplier-Owned Lab Networks and the Top 25 Independent Labs rose to $1,976.4 million, up 5.0 percent from 2007.

 
Combined Rx sales for the Top 5 Supplier-Owned Lab Networks and Top 25 Independents reached a record $1,646.2 million, a 4.4 percent increase over 2007. The labs collectively produced a total of 123,735 Rx jobs per day, or approximately 30,933,750 Rx jobs annually. However, the growth was largely driven by the Top 5 and the upper tier of the Top 25 Independent labs.

Top 5 Supplier-Owned Networks
The Top 5 Supplier-Owned Wholesale Lab Networks turned in another solid performance in 2008. Collectively, the Top 5 will generate $1,409 million in total net sales, up 8.5 percent over 2007.

Total Rx sales, which is based on the labs’ core business of surfacing and finishing prescription lenses and is the basis of the primary ranking of the Top Labs, amounted to $1,229.2 million, up 7.8 percent from 2007. This averages 93.5 percent of total net sales, flat with 2007.

Among the Top 5, Essilor, Carl Zeiss Vision and VSP Optical Laboratories had significant growth in Rx sales in 2008, with 7.3 percent, 11.4 percent and 26.9 percent increases, respectively. Rx sales for Hoya Vision Care grew 1.5 percent; Nassau Vision Group/Nova Optical Lab remained flat.

The combined number of Rx jobs for the Top 5 totaled 91,800, up 9.3 percent over 2007. On an annualized basis, this amounts to roughly 22.9 million Rx jobs, up from 20.8 million last year. The average proportion of uncut lens jobs among the Top 5 was 36.4 percent compared with 35.4 percent in 2007, a 2.7 percent rise.

The Top 5 added 16 individual lab locations in the past 12 months—primarily through acquisitions—bringing the total number to 172, compared with 156 in 2007. The Top 5 work force consists of 8,910 employees in 2008 compared with 7,554 employees in 2007, a 15.2 percent increase.

As in recent years, a sizable portion of the Top 5’s growth was a result of acquisitions made by the three largest Supplier-Owned lab networks. Three labs that ranked among VM’s Top 25 Independent Wholesale Labs in 2007—Empire Optical of California, based in North Hollywood, Calif. (Number 4), Interstate Optical based in Mansfield, Ohio (Number 5) and Legends 4.0, based in Lewisville, Texas (Number 14)—were acquired by supplier-owned lab networks in the past 12 months.

   


The Top 25 Independents

Individually, most of the Top 25 Independent Labs experienced gains in 2008. Sixteen of the Top 25 increased their Rx sales in 2008, including the eight largest labs. Thirteen produced more Rx jobs per day in 2008 than in 2007.

Collectively, though, the Independents experienced a downturn in 2008 versus the previous year. This is largely the result of the continuing consolidation among the Top Labs. As the larger Independents migrate from the ranks of the Top 25 Independents to the ranks of the Top 5 Supplier-Owned Lab Networks, they are being replaced by smaller independents labs.

The total aggregate net sales for the Top 25 Independents was $567.4 million, a 3.7 percent decrease from 2007. Total Rx sales for the Top 25 fell to $417.0 million, the lowest level since 2005 and a 5.7 percent drop from 2007. Rx sales averaged 89 percent of revenue for the Top 25 in 2008, versus 91.7 percent in 2007.

Unit sales among the Top 25 dropped to 31,935 Rx jobs per day, a 4.1 percent drop from 2007. This amounts to approximately 8.0 million Rx jobs per year versus 8.3 million Rx jobs per year in 2007.

On average, uncut lenses accounted for 32.0 percent of Rx jobs produced by the Top 25, a 6.6 increase from 2007. The greater increase in the proportion of uncuts among Independents than among the Supplier-Owned Lab Networks contributed to the decrease in Rx sales among Independents.

Collectively, the Top 25 operate 73 individual lab locations, three fewer than in 2007. The Top 25 work force consists of 3,024 employees, down 9.3 percent from 2007.

The spread between the largest and smallest of the Top 25 continued to grow. This year, the Top 25 Independents ranged from $94.6 million in Rx sales for Walman Optical, the number one-ranked independent lab, down to $4.2 million for Hawkins Optical, the 25th ranked lab.


 


Top 10 U.S. Wholesale Labs

The Top 10 U.S. Wholesale Laboratories generated $1,746.2 million in total net sales in 2008, up from $1,584.9 million in 2007. Rx sales for this group, which consists of the largest independent and supplier-owned labs, totaled $1,435.1 million, up from $1,338.2 million in 2007.

The Top 10 collectively produced 106,000 Rx jobs per day, which amounts to about 24.3 million Rx jobs per year, compared with 97,300 Rx jobs per day in 2007.