VSP Ramps Up Growth With Acquisitions

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By Cathy Ciccolella
Senior Editor

RANCHO CORDOVA, Calif.--Having just completed its fourth optical-lab acquisition/investment since last September, Vision Service Plan (VSP) is taking an increasingly assertive stance toward additional growth, both across the U.S. and beyond its borders.

The company recently filed with state government agencies in both California and Connecticut for approval of a planned $700-million acquisition of “all of the outstanding stock of a vision care company,” unnamed in the filing.

In financial statements filed with both states for the period ended March 31, VSP said it had entered into a definitive agreement on April 30 to acquire the unnamed company, with financing for the purchase to be funded “through a combination of available cash and debt which is in the process of being arranged.”

VSP executives declined to comment on the filings, and would not identify the other firm involved.

But in an exclusive interview with VM during last month’s Optometry’s Meeting in Seattle, VSP president and chief executive officer Rob Lynch acknowledged that his company has further expansion in mind.

 
 Rob Lynch
On July 9, VSP officially announced its acquisition of the Ft. Lauderdale, Fla.-based Ultra Lens lab. What’s the next step for VSP’s lab network? Lynch told VM, “After this we’ll be looking at what we do in terms of acquisitions or partnerships to fill out our desired geographic representation.” (VSP does not now own a lab in the Northeast.)

Asked if other lab acquisitions are currently in the works, Lynch replied, “We have a strategy that’s geographically oriented. We are certainly looking at a lot of situations in different areas, many of them in terms of partnering.”

Lynch added, “I want to stress that we remain very committed to our existing lab network, including our relationship with the three major lab chains and our strong independent labs. We’re looking for strong diversification across all of our lab network.”

As for possible acquisitions in other areas of the eyecare/eyewear business, he said, “Part of our strategy is to enter deep relationships with suppliers that are supportive of independent eyecare practitioners.”

In addition to current and potential acquisitions, VSP is expanding its product offering to eyecare practitioners, this month moving into the ophthalmic-lens business with two private-label progressive-addition lenses--VSP Reveal and VSP Reveal Freeform--featuring optics by Zeiss. The company described the lenses as “a new link in VSP’s supply-chain excellence initiative, supporting VSP’s overall goal of optimizing cost, quality and delivery.”

Both lenses are initially available exclusively to affiliated ECPs in California, with only VSP members being eligible for a Reveal prescription. VSP plans to make the Reveal lenses available to the rest of its provider network as soon as early 2009.

Beyond the U.S., VSP plans to extend its initial venture into Canada--where it currently serves only Canadian-based employees of U.S. firms--with its first marketing campaign targeting Canadian companies, to launch by year-end. “For the future, we’re also looking closely at other areas including the U.K. and Europe, China, India and Australia, although nothing is underway at the moment,” Lynch told VM.

The company is also accelerating its efforts to serve both independent ECPs and consumers through a variety of programs. Last month Essilor joined the Vision Loans program, started by VSP and Vision One Credit Union in 2003. Essilor and VSP Vision Care have collectively committed up to $20 million to Vision Loans, which provides loans to private-practice ECPs to purchase their first practice, pay salaries for new associates or fund partnership buy-ins or down payments.

Vision Loans funding is now available to private-practice ECPs in all 50 states and Washington, D.C. Since its inception, the program has granted 74 loans totaling $22 million, funded by VSP.

On the consumer side, last month VSP added a second mobile eye clinic, which was quickly pressed into service to aid firefighters with eye washes and other services in the ongoing California wildfire crisis.

The company also continues to provide eyecare and eye-health information through consumer groups including the Georgia Project and its alliance with the American Diabetes Association. Said Lynch, “We are very focused on demonstrating the clinical value of getting an annual eye exam through our doctors--and we want to emphasize how eyecare contributes to overall health and wellness.”
--Andrew Karp contributed to this article.