David Holmberg, president and CEO of Highmark Health.
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PITTSBURGH—In his first report on the consolidated financial performance of Highmark Health since being named president and CEO 10 months ago, David Holmberg announced that the company’s revenue grew by $1 billion in 2014, in part due to its strong performance in the vision sector. “It was a record year for Visionworks,” he said, announcing plans to open more of the national chain’s optical retail locations in Michigan for the first time in 2015 and extend its presence in New York City to all five boroughs by the end of this year.

Highmark Health’s overall operating revenue of $16.8 billion increased more than 6 percent over 2013 revenues for the year ended Dec. 31, 2014. “The breadth of our diversified businesses is what sets us apart from our competitors, and it’s important to underscore that one-third of our revenue came from businesses other than our health plan,” Holmberg said in a financial performance conference call on April 1, 2015. He specifically cited strong performance by HVHC, Inc., the company’s vision business, which consists of Visionworks eyecare retail stores, a manufacturing and distribution network of five facilities, and Davis Vision, which provides managed vision care benefits.

HVHC is a part of the company’s diversified businesses that also include United Concordia Companies, HM Insurance Group and HM Health Solutions. “The diversified businesses continued to provide strong operating margins, realizing a gain of $243 million, a 3 percent increase compared to the prior year, driven by performance in the vision business, which experienced among its best results ever with revenue of more than $1.4 billion and operating income of nearly $120 million. This is attributable to strong retail sales at more than 650 Visionworks stores and a 2.4 million increase in our Davis Vision insurance enrollment, which now totals 21 million members,” Holmberg said.

With the addition of 42 new retail locations in 2014, Visionworks now has a presence in 40 states and Washington, D.C. The chain, which completed a national rebranding under the single Visionworks banner almost a year and a half ago, will continue expanding, anticipating 50 new stores in 2015, according to Holmberg. In addition to New York and Michigan, he said that Visionworks will continue to grow in other markets as well, specifically citing Florida and Indiana.

Holmberg said that Visionworks renovated all of its stores and is “starting to reap the benefits” of the “complete rebranding over the last three years. We have been using national network TV and media which enables us to provide media support to some of the smaller markets,” he added. “We've experienced strong sales and strong profitability. That's what's allowed us to invest and add new stores.”

Davis Vision, also a part of the HVHC division, increased its enrollment by 2.4 million in 2014, bringing the managed vision care company’s total number of covered lives to 21 million. “Davis Vision experienced very strong growth in the 'individual' market,” said Holmberg. “We partner with a variety of health plans around the country, including the Blues and others.” In addition to growth in the individual market, he also credited the Affordable Care Act and corporate client growth for the company’s increase in the number of lives covered.

“In terms of clients, we had several big wins. We expanded our existing business with FedEx. We grew via commercial and partnerships across the enterprise. We also saw an improvement in our Federal Employees program which we do in conjunction with the Blues,” said Holmberg, who alluded to “another new large win that will be announced jointly with the client, perhaps in July.”

According to the financial report, in addition to operating revenue of $16.8 billion in 2014, “Highmark Health also reported a deficit of revenue over expenses of $83 million in 2014, primarily driven by a one-time accounting action related to the collectability of risk corridor payments for Affordable Care Act exchange products. Despite this conservative accounting action, the company remains strong and stable and maintains nearly $6.5 billion in cash and investments and $5.4 billion in surplus.”

Highmark Health, based here, employs more than 35,000 people nationwide, serves 40 million Americans in all 50 states, and is the third largest integrated health care delivery and financing network in the nation. Highmark Health is the parent company of Highmark Inc., Allegheny Health Network, and HM Health Solutions. Highmark Inc. and its subsidiaries and affiliates provide health insurance to 5.3 million members in Pennsylvania, West Virginia and Delaware as well as dental insurance, vision care and related health products through a national network of diversified businesses that include United Concordia Companies, HM Insurance Group, Davis Vision and Visionworks.