What changed in this filing

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Item 1. Business

2023-03-01 compared with 2022-02-28 · 94 added, 83 removed, 368 unchanged (32% of the section changed)

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Our website is www.nationalvision.com .

Investors can obtain copies of our SEC filings from this site free of charge, as well as from the SEC website at www.sec.gov.

The information posted to our website is not incorporated into this Form 10-K.

We are one of the largest and fastest growing optical retailers in the United States and a leader in the attractive value segment of the U.S.

Investors can obtain copies free of charge of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to these reports, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC.

You may access these documents on the “Investors” section of our website.

The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at the following address:

http:// www.sec.gov.

We also make available free of charge on our website our Corporate Governance Guidelines, our Code of Conduct and the charters of our Audit Committee, our Compensation Committee and our Nominating and Corporate Governance Committee.

The information posted to our website is not incorporated into this Form 10-K or any other report we file with the SEC.

We are one of the largest optical retailers in the United States and a leader in the attractive value segment of the U.S.

optical retail industry.

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We deliver exceptional value and convenience to our customers, with an opening price point that strives to be among the lowest in the industry, enabled by our low-cost operating platform.

We reach our customers through a diverse portfolio of 1,278 retail stores across five brands and 18 consumer websites as of January 1, 2022, our 2021 fiscal year end.

Our common stock trades on the NASDAQ Global Select Market (“NASDAQ”) under the symbol “EYE.” Our principal executive offices are located at 2435 Commerce Avenue, Bldg.

2200, Duluth, Georgia 30096.

We reach our customers through a diverse portfolio of 1,354 retail stores across five brands and 16 consumer websites as of December 31, 2022, our 2022 fiscal year end.

Our Corporate History

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was incorporated in Delaware on February 14, 2014 under the name “Nautilus Parent, Inc.” and NVI became our wholly-owned subsidiary in connection with the KKR Acquisition.

In 2017, we changed our name to “National Vision Holdings, Inc.”

In October 2017, we completed the initial public offering of our common stock (the “IPO”).

National Vision was controlled by affiliates of KKR and private equity funds managed by Berkshire until July 30, 2018 and by August 2019, these private equity funds had sold their remaining holds of our common stock.

In 2017, we changed our name to “National Vision Holdings, Inc.” In October 2017, we completed the initial public offering of our common stock (the “IPO”).

Our Business Model

Our history of profitable growth is founded on a commitment to a relatively simple business model:

providing exceptional value and convenience to customers, enabled by our low-cost operating platform.

Our history of profitable growth is founded on a commitment to providing exceptional value and convenience to customers, enabled by our low-cost operating platform.

Our disciplined approach to new store openings, combined with our attractive store economics, has led to strong returns on investment.

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• Recurring Revenue Characteristics .

Eye care purchases are predominantly a medical necessity and are therefore considered non-discretionary in natur e.

Eye care purchases are predominantly a medical necessity and are therefore considered non-discretionary in nature.

We estimate that optical consumers typically replace their eyeglasses every two to three years, while contact lens customers typically order new lenses every six to twelve months, reflecting the predictability of these recurring purchase behaviors.

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We have adopted a disciplined expansion strategy designed to leverage the strengths of our compelling and distinct value proposition and recognized America’s Best and Eyeglass World brand names to develop new stores successfully in an array of markets that are primed for growth, including new, existing, small and large markets.

We have an established partnership with a third party real estate data analytics firm to evaluate potential new America’s Best and Eyeglass World stores and most recently updated our analysis during 2020.

We have an established partnership with a third party real estate data analytics firm to evaluate potential new America’s Best and Eyeglass World stores.

The analysis suggests that we can grow America’s Best to at least 1,300 stores and Eyeglass World to at least 850 stores, inclusive of those already open.

We believe that these two brands can accordingly grow from 965 stores as of January 1, 2022 to a total of at least 2,150 stores, with similar economics to the existing store base.

From time to time we work with the data analytics firm to update the analysis of our expansion opportunities.

We believe that our consistent track record of successfully opening stores across vintages, geographies and markets demonstrates our ability to further increase our store count and, as a result, we believe that our current level of new store growth of at least 75 stores per annum is sustainable for the foreseeable future.

We believe that these two brands can accordingly grow from 1,041 stores as of December 31, 2022 to a total of at least 2,150 stores in the long-term.

We have two reportable segments:

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Lowest Price Eyewear Value Superstore Shop-Within-A-Shop Commissary Store Shop-Within-A-Shop

“Great Deals Everywhere You Look”

“Fantastic Military Pricing”

“Everyday Low Price”

Employed ODs Mostly Independent ODs Mostly Independent ODs Mostly Independent ODs Mostly Independent ODs

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Sister Sites (4) Proprietary Sites (5) Partner Sites (7)

Store count as of January 1, 2022.

Store count as of December 31, 2022.

SKU figures refer to eyeglass frame SKUs.

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By leveraging our efficient centralized laboratory network, America’s Best stores are able to minimize processing costs and drive significant economies of scale.

These stores typically stock approximately 1,300 eyeglass frame SKUs, including imports from low-cost overseas manufacturers, higher-margin private label brands and discounted well-known frame brands.

America’s Best stores, which average approximately 3,500 square feet, are primarily located in high-traffic strip centers next to other value-focused retailers.

These stores typically stock eyeglass frame imports from low-cost overseas manufacturers, higher-margin private label brands and discounted well-known frame brands.

America’s Best stores are primarily located in high-traffic strip centers next to other value-focused retailers.

Our Eyeglass World Brand.

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Lens orders that are not completed in store are completed by our centralized laboratory network.

Due to the wider brand selection and on-site laboratories, Eyeglass World stores average approximately 4,500 square feet and typically stock approximately 1,900 eyeglass frame SKUs.

These stores are primarily located in freestanding or in-line locations near high-foot-traffic shopping centers.

Our Partner Brands.

We have three partner brands consisting of 230 Vision Centers in Walmart stores across the country, 54 Vista Optical locations on military bases and 29 Vista Optical locations within Fred Meyer stores as of January 1, 2022.

Pursuant to a January 2020 amendment to our management & services agreement with Walmart, we added five additional Vision Centers in Walmart stores in fiscal year 2020.

The current term of the management & services agreement between NVI and Walmart ends on February 23, 2024.

The current term of the management & services agreement between NVI and Walmart ends on February 23, 2024, and will automatically renew for a three-year period unless, no later than July 2023, either party gives written notice of non-renewal .

We have strong, long-standing relationships with these partners.

Our strategic relationship with Walmart is in its 32 nd year and our partnerships with Fred Meyer and the U.S.

military have been maintaine d for over 20 ye ars.

Our strategic relationship with Walmart is in its 33rd year and our partnerships with Fred Meyer and the U.S.

military have been maintained for over 20 years.

Our partner brands all compete within the value segment of the U.S.

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AC Lens operates five proprietary branded websites including, among others, aclens.com and discountcontacts.com.

In addition, AC Lens operates and provides support services for nine third-party websites owned by other companies, including Walmart, Sam’s Club and Giant Eagle.

In addition, AC Lens operates and provides support services for seven third-party websites owned by other companies, including Walmart, Sam’s Club and Giant Eagle.

AC Lens handles site management, customer relationship management and order fulfillment and also sells a wide variety of contact lenses, eyeglasses and eye care accessories.

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Our Industry 1

optical retail industry, defined by Vision Monday to include optical retailers’ revenues from the sales of products (including managed vision care benefit revenues and omni-channel and e-commerce sales) and eye care services provided by vision care professionals, including eye exams, is a $31 billion industry that has exhibited consistent, stable growth across economic cycles.

According to Vision Monday, over the period from 2007 to 2019, the industry grew from $26 billion to $37 billion in annual sales, representing a compound annual growth rate (“CAGR”) of 3.2%.

Due to the impact of the COVID-19 pandemic, industry sales in 2020 declined 16.2% from 2019.

Over the period from 2007 to 2020, industry sales grew at a CAGR of 1.5%.

The industry experienced only a modest decline during the 2008 to 2009 recession and rebounded with robust post-recession sales growth of 2.0% CAGR from 2009 to 2020, according to Vision Monday.

The steady growth of the industry and its resilience to economic cycles is due in large part to the medical, non-discretionary and recurring nature of eye care purchases.

Vision Monday

We operate in the U.S.

optical retail industry, which is defined by The Vision Council to include the sale of exams, frames, lenses, contact lenses, plano sunglasses, and readers.

We believe the industry’s continued growth and its resilience to economic cycles is due in large part to the medical, non-discretionary and recurring nature of eye care purchases.

The majority of eyewear purchases are driven by need, with two primary drivers of demand:

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• Aging Population .

According to The Vision Council, 76% of adults in the United States used some form of vision correction as of September 2021.

According to The Vision Council, at age 45, the need for vision correction begins to increase significantly, with approximately 86% of adults in the United States between the ages of 45 and 54 and approximately 89% of adults in the United States aged 55 and older using vision correction.

According to The Vision Council, over 80% of adults in the United States use some form of vision correction, and there is a significant increase in the use of vision correction above age 45, with further increases for above age 55.

population ages and life expectancy increases, the pool of potential customers and opportunities for repeat purchases in the optical retail industry are anticipated to rise.

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Most optometrists recommend annual eye exams as a preventive measure against serious eye conditions and to help patients identify changes in their vision correction needs.

According to The Vision Council, an estimated 197 million people in the United States using vision correction devices received over 121 million eye exams that year, implying an average interval between exams of 19 months.

The interval between exams contributes to the industry’s stability and shortening this interval represents an opportunity to increase the frequency of customer purchases.

1 This section includes the most recently available industry information, primarily as of 2020.

We expect industry data for 2021, that would include the impacts of COVID-19, to be available later in 2022.

According to the Vision Council, over 175 million eye exams were performed in the United States during 2022;

further, we estimate that optical consumers typically replace their eyeglasses every two to three years, and contact lens customers order new lenses every six to 12 months, reflecting the predictability of these recurring purchase behaviors .

• Increased Usage of Computer and Mobile Screens .

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population has experienced a dramatic increase in the amount of time spent viewing electronic screens.

According to The Vision Council, about 80% of American adults report using digital devices for more than two hours per day with approximately 70% using two or more devices simultaneously, and approximately 60% reporting experiencing symptoms of digital eye strain.

According to The Vision Council, about 90% of American adults report using digital devices for more than three hours per day with approximately 80% reporting experiencing symptoms of digital eye strain.

This is anticipated to result in a larger percentage of the population suffering from screen-related vision problems, driving incremental sales of vision correction devices, such as traditional eyeglasses and contact lenses, as well as higher margin products designed specifically to counteract the effect of looking at screens for prolonged stretches of time.

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Furthermore, this increased focus on health means that people are living longer, which increases the overall demand for vision care and the frequency with which people visit their eye care practitioners for vision care products and services.

1 Our industry section in prior annual reports on Form 10-K includes the most recently available industry information from The Vision Council, published in its Market inSights report.

In January 2023, The Vision Council released a report on the optical retail industry based on a new model for estimating the industry, which includes new and updated sources for such data that had not been previously utilized for past industry estimates.

As such, The Vision Council has indicated the market estimates previously published by them in prior VisionWatch reports and included by the Company in its annual reports on Form 10-K in prior years are not comparable to these new estimates.

Due to the timing of the revised methodology and report in January 2023, the Company continues to evaluate the updated methodology and the new market estimate of a $76.5 billion optical retail industry in 2022 under such revised methodology at this time.

Our Products and Services

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Nonetheless, our diverse product portfolio encompasses many brand names and thousands of SKUs.

Depending on the brand, our stores display approximately 600 to 1,900 eyeglass frame SKUs, covering all age groups.

Offerings include both brand name designers, like Ray-Ban, Guess and Calvin Klein, as well as private label options at attractive prices.

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Through one-on-one consultative-selling, our sales associates have a number of opportunities to share information about value-added lenses, including thinner, higher-quality lenses and photochromatic options, which carry higher margins.

As a result, a significant number of A merica’s Best customers and Eyeglass World customers who purchase eyeglasses choose upgraded lenses and/or frames instead of each brand’s base offer.

We also offer contact lenses and accessories from all major contact lens manufacturers, including our own private label brands (Sofmed and Natural Eyes HydraWear, made by CooperVision) that are offered in our America’s Best and Eyeglass World stores.

As a result, a significant number of America’s Best customers and Eyeglass World customers who purchase eyeglasses choose upgraded lenses and/or frames instead of each brand’s base offer.

We also offer in our America’s Best and Eyeglass World stores contact lenses from all major contact lens manufacturers, including our own private label brands (Sofmed and Natural Eyes HydraWear, made by CooperVision), and accessories.

Collectively, our broad product offerings deliver consistent financial results and reduce our reliance on any individual product, style or trend.

In both of our reportable segments, eye exam services are provided by optometrists employed by us or by professional corporations or similar entities owned by eye care practitioners with whom we have contractual arrangements or by independent optometrists with whom we have contracted.

In addition, in certain locations, eye exam services may be provided utilizing a remote medicine platform.

In addition, as part of our efforts to provide quality, accessible eyecare, we recently deployed a telehealth solution in certain locations that allows optometrists working remotely to provide eye exam services to patients.

Through this remote medicine platform, patients still come to the office for eyecare services, but instead of seeing the optometrists in person, the patients are connected with optometrists licensed in their state through video conferencing technology.

The optometrists work with trained optometric technicians and clinical assistants to collect preliminary data, and then the optometrists control the optometric equipment remotely to conduct the refractions and eye health examinations while communicating with the patients in real-time via 2-way synchronous audio and visual connection.

As of December 31, 2022 this new technology has been enabled in approximately 300 of our America’s Best locations.

We believe remote medicine not only helps provide quality, accessible eyecare to more patients, but also helps address constraints in exam capacity from optometrist availability in store.

As part of the rollout, we have also invested in the transition to an electronic health record (EHR) platform for locations receiving the remote medicine technology.

We anticipate continuing to invest in these capabilities primarily in America’s Best stores in the near term.

Within our Owned & Host segment, America’s Best offers its Eyecare Club programs primarily to its contact lens customers.

As of January 1, 2022, the Eyecare Club had approximately 1.6 million active members.

As of December 31, 2022, the Eyecare Club had approximately 1.6 million active members.

Benefits of the Eyecare Club include two free eye exams per year for the duration of the multi-year membership, 10% off all contact lenses and eyeglasses and other periodic benefits and discounts.

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Our brands are positioned to stand for low prices and great value, which resonate with our target consumers and leave a lasting impression that is distinct from the competition.

We believe that television is a key channel for connecting with our customers.

A significant p ortion of America’s Best and Eyeglass World’s advertising investments are on traffic-driving television advertisements, which we leverage broadly across multiple stores in each television market to gain a larger share of voice, and, in turn, drive traffic and margins.

We continue to benefit from America’s Best national television advertising campaigns, which we believe are cost effective and help raise our brand awareness in both existing and new markets.

We believe that video is a key channel for connecting with our customers.

A significant portion of America’s Best and Eyeglass World’s advertising investments are on traffic-driving video advertisements, which we leverage broadly across multiple stores in each market to gain a larger share of voice, and, in turn, drive traffic and margins.

We continue to benefit from America’s Best national advertising campaigns, which we believe are cost effective and help raise our brand awareness in both existing and new markets.

Additional advertising investments include digital media, search, direct mail, email and local store marketing.

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Our Sourcing and Supplier Relationships

We purchase our merchandise from a wide variety of vendors, with a limited number of vendors supplying the majority of our eyeglass lenses and contact lenses.

We purchase our frame merchandise from a wide variety of vendors, with a limited number of vendors supplying the majority of our eyeglass lenses and contact lenses.

We are a large customer for all of our suppliers and we strive to form meaningful, long-lasting and mutually beneficial relationships with our vendors.

We have long-term contracts with certain of our suppliers, including Essilor and CooperVision.

We have long-term contracts with some key suppliers, including Essilor and CooperVision.

Under our agreement with Essilor, Essilor has the sole and exclusive right to supply certain lenses for eyeglasses to us.

The current term of our agreement with Essilor runs through May 2026.

Thereafter, the agreement will automatically renew on a month-to-month basis unless either party gives 30 days’ prior written notice of termination, and we also have the ability to unilaterally extend the agreement an additional calendar quarter after the proposed termination date.

We are collaborative in our vendor negotiations so as to develop a partnership with our vendors and, in time, a sense of loyalty to National Vision.

Each of our top 10 vendors has been with us for approximately 10 years, and several of these vendors have been with us since our inception in 1990.

We focus on sourcing low-cost products, including discounted well-known frame brands, secondary frame brands, direct import frames and private label contact lenses.

By investing in our sourcing operations, we have increased our direct importation of eyeglass frames, which has enabled us to offer high quality frames at low prices while also generating strong gross margins.

We focus on sourcing low-cost products, including well-known frame brands, secondary frame brands, direct import and private label frames and private label contact lenses.

Our well-developed capability of direct-to-factory sourcing and importing of frames allows us to offer high quality, low priced frames while generating strong gross margins.

Our Optical Laboratories and Distribution Network

We use a highly-efficient mix o f four domestic, company-operated processing facilities and two international, outsourced facilities.

We use a highly-efficient mix of four domestic, company-operated processing facilities and have two outsourcing relationships with international, third-party facilities.

We have state-of-the-art lens processing capabilities in our four geographically-diverse, company-operated production facilities in Lawrenceville, Georgia;

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Human Capital Management

As of December 31, 2022, we had 13,975 full-time and part-time associates.

In addition, the professional corporations or similar entities with which we contract employed 1,841 optometrists as of December 31, 2022.

We are not a party to any collective bargaining agreements.

We have never experienced a strike or work stoppage, and we believe that our relations with our associates and optometrists are good.

Our Board of Directors through our Board committees oversees human capital matters with regular updates and discussion on organizational structure, hiring and retention, compensation and benefits, health and safety matters, employee training and development, succession planning and associate survey results.

Value and Culture

We aim to maintain a strong and resonating culture guided by our Vision, Mission and Values.

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Our human capital initiatives are focused on attracting highly qualified individuals and providing them with continued opportunities for growth and development.

As of January 1, 2022, we had 13,735 full-time and part-time associates.

In addition, the professional corporations or similar entities with which we contract employed 1,256 optometrists as of January 1, 2022.

We are not a party to any collective bargaining agreements.

We have never experienced a strike or work stoppage, and we believe that our relations with our associates and optometrists are good.

Talent Acquisition

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Additionally, we increased accessibility to our own internal National Vision Doctor of Optometry Tuition Reimbursement program, which provides for the reimbursement of education expenses to associates attending optometry school.

To mitigate the impact the COVID-19 pandemic and temporary closure of our stores had on our traditional recruiting efforts and hiring cycles in 2020, we transitioned to online platforms for job fairs and on-campus events, selectively offered key incentives, such as a student loan repayment program, and educated applicants on the health and safety protocols implemented in our stores.

We have continued with both online platform recruitment as well as in person events as part of our recruitment and hiring efforts in 2021.

We have utilized in person events and online platforms for job fairs and on-campus events, selectively offered key incentives, such as a student loan repayment program, and educated applicants on the health and safety protocols implemented in our stores.

Talent Development

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We provide associates and optometrists with several opportunities and mechanisms through which they can provide feedback and allow us to continue developing programs for training and growth.

We have invested in supporting our store managers through a new Training Store Manager program, which provides training during their critical first steps as new managers.

The program offers high-performing store managers the opportunity to certify as Training Store Managers through a five-week certification process focused on coaching, self-awareness, giving and receiving feedback, and time management.

Once participants are certified as Training Store Managers, they provide onboarding and training support to store managers across their district.

In addition to providing valuable support to new managers and new store teams, the program provides our associates with a new avenue for leadership opportunities and professional development.

After the Training Store Manager program launched in May 2021, we selected and certified more than 60 Training Store Managers across the country in 2021, and we continued to expand the program in 2022.

The Training Store Manager program builds on our culture of developing and promoting our associates.

Benefits and Wellness

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We demonstrate this commitment through many of our benefits and wellness offerings.

Programs like our health plan, wellness and disease management programs, including personalized programs for diabetes and hypertension, and a financial protection resource, provide the needed resources essential for helping our people care for themselves and their families.

Programs like our 401(k) plan, core and supplemental life insurance, health plan, short-term and long-term disability, wellness and disease management programs, including personalized programs for diabetes and hypertension, vacation pay, parental and adoption leave, accident, critical illness, group legal and identity theft programs, and a financial protection resource, provide the needed resources essential for helping our people care for themselves and their families.

We also offer free on-demand mental and behavioral health resources, to provide needed guidance when work and personal challenges affect an associate’s overall well-being.

Additionally, our associates receive an annual associate eyewear ticket and eyewear gift tickets that provide them or their friends and family discounted eyewear purchases in our stores.

Our college scholarship program was established to assist associates with children (age 24 or under), who are high school seniors or graduates, planning to enroll in a full-time undergraduate course of study at an accredited U.S.

college or university.

Each year, ten recipients are granted an award of $2,500 each and awards are renewable up to three years for a total scholarship of $10,000.

We also provide current and former associates who are in pursuit of a Doctor of Optometry (O.D.) degree with financial support through a tuition reimbursement program.

Our compensation programs are also designed to reinforce our growth agenda and talent acquisition strategy.

In addition to competitive base pay, we seek to reward associates with annual incentive awards, recognition programs, and equity awards for associates at certain levels.

Shortly after our IPO, we established the National Vision Crisis Relief Fund to help support associates who are facing financial hardship as a result of a natural disaster, family emergency or other unexpected events.

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In 2021, our Chief Executive Officer became a signatory to the CEO Action for Diversity and Inclusion pledge, committing to a series of actions related to diversity, equity and inclusion across the Company, industry and communities.

We were named one of Forbes’ Best Employers for Women and one of Forbes’ Best Employers for Veterans in 2021 and received the highest ranking given by 50/50 Women on Boards for balanced gender representation among the independent members of the Company’s Board of Directors.

We were also recognized as one of Forbes’ Best Employers for Diversity in 2021 for, among other things, our proactive diversity and inclusion initiatives.

The COVID-19 pandemic has presented unique challenges for our associates, doctors, customers and patients.

We prioritized the safety of our associates, optometrists, customers and patients by voluntarily closing our stores to the public for a temporary period of time in 2020 to implement enhanced safety and cleaning protocols in order to serve

our customers and patients with everyone’s health and safety in mind.

We were named one of Forbes’ Best Employers for Women and one of Forbes’ Best Employers for Veterans in 2021, received the highest ranking given by 50/50 Women on Boards for balanced gender representation among the independent members of the Company’s Board of Directors.

We were also recognized as one of Forbes’ Best Employers for Diversity in 2021 for, among other things, our proactive

diversity and inclusion initiatives and were named one of Newsweek’s America’s Most Responsible Companies for 2023 for our corporate responsibility and citizenship.

Health and Safety

Our health and well-being efforts are built on a foundational commitment to the safety of our associates and doctors in our network.

We believe that we are in material compliance with applicable Occupational Safety and Health Administration guidelines and state regulations.

At each of our labs and distribution centers, there are specific leaders responsible for the management of associate safety.

For example, lab directors organize and run safety trainings for local associates, some of which are conducted through our Learning Management System and others through in-person instruction.

For our retail locations, we provide support to managers and field leaders in understanding and complying with applicable laws and regulations.

The COVID-19 pandemic presented unique challenges for our associates, doctors, customers and patients.

Health and safety remain at the forefront for us as the pandemic and variants continue to evolve and present challenges for us.

Beginning in 2020, we created multiple resources for associates, including frequent and transparent communication tools, additional leave of absence and paid leave options, and centralized support to address COVID-19 questions and concerns, including regarding the availability of vaccines.

We paid one-time appreciation bonuses to customer-facing associates, granted additional company holidays in the fourth quarter of fiscal year 2020 and paid benefits for associates furloughed in response to the COVID-19 pandemic.

In addition, contributions to our Crisis Relief Fund more than tripled, reflecting the empathetic nature of our community.

Managed Vision Care

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See “Government Regulation” below for more detail.

The online sale of eyeglasses has not developed as quickly, but a number of firms are focused on this market, including Warby Parker and Zenni Optical.

We also face potential competition from companies that employ emerging technologies in the optical industry, including, for example, online vision exams.

The online sale of eyeglasses has not developed as quickly, but a number of firms are primarily focused on this market, including Warby Parker and Zenni Optical.

We also face potential competition from companies that employ emerging technologies in the optical retail industry, including, for example, online vision exams.

We also compete to be a provider under managed care contracts, which can provide us with access to new customers and also allow us to better serve our customers who are covered by managed care by filing claims directly with the payor and collecting only the applicable co-pay amount from these customers.

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We believe our current systems allow us to identify and respond to operating trends in our business.

Examples of areas in which we have invested and continue to invest in include software systems to enhance the growth of our omni-channel, customer engagement efforts, remote medicine, cybersecurity programs and our overall security posture and our point-of-sale system.

Examples of areas in which we have invested and continue to invest in include software systems to enhance the growth of omni-channel, customer engagement efforts, the remote medicine and electronic healthcare records (EHR) platform rollout, cybersecurity programs, our overall security posture, our point-of-sale system and enterprise resource planning (ERP).

We believe these investments, along with maintenance of our existing information technology capabilities, will provide the flexibility and capacity to accommodate our future growth plans.

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Our America’s Best operations, which feature a bundled offer of eyeglasses and an eye examination, are particularly implicated by these laws.

State legislators and regulators may be reluctant to accept telehealth and remote medicine as an additional way to provide access to quality patient care.

Recently, there has been an increase in legislative and rulemaking activity that creates disparity across jurisdictions on how telehealth is regulated and how we are able to implement our remote medicine solution.

Our ability to launch our remote medicine solution in certain jurisdictions or in the most cost-efficient manner is highly dependent on the evolution of these state-by-state requirements and restrictions.

Professional Licensure and Regulation

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We are also subject to comparable state health privacy laws to the extent they are more protective of individual privacy than the Privacy Rule.

Nearly all states have adopted their own data breach laws with comparable (and sometimes conflicting) standards and requirements.

We anticipate that the Office of Civil Rights, which is the enforcement agency for HIPAA, will implement modest changes to HIPAA sometime in 2023, pursuant to a notice of proposed rulemaking that was issued in December 2020.

Moreover, nearly all states have adopted their own data breach laws with comparable (and sometimes conflicting) standards and requirements.

These state laws apply to breaches of specified elements of PII.

In addition, states may amend or adopt new laws or regulations regarding data privacy that may be applicable to us, such as the California Consumer Privacy Act of 2018 (the “CCPA”), which went into effect January 2020, and the amendments to the CCPA made by the California Privacy Rights Act of 2020, which will go into effect in January 2023.

In addition, states may amend or adopt new laws or regulations regarding data privacy that may be applicable to us, including new comprehensive consumer privacy laws that have or will go into effect in multiple states in 2023.

Laws Related to Reimbursement by Government Programs

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Our failure to comply with these laws can subject us to criminal and civil liabilities.

COVID-19-Related Regulations

Certain federal and state laws and regulations have been adopted in response to the COVID-19 pandemic that, among other things, include liability protections for certain businesses.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was enacted in response to the COVID-19 pandemic.

The CARES Act, among other things, provides tax relief to businesses, including the deferral of certain payroll taxes, relief for retaining employees, accelerating a company’s ability to recover Alternative Minimum Tax (“AMT”) refundable credits and other income tax provisions.

We have elected to apply the AMT refundable credit provision and the employee retention credit provisions of the CARES Act.

“Business and Significant Accounting Policies” for more details.

Additional federal or state laws and regulations may be adopted in the future in response to the pandemic and continued impact of the pandemic.

We are also subject to the requirements of the Occupational Safety and Health Administration (OSHA) and other federal and state agencies that address employee health, including from infectious diseases such as COVID-19, and safety.

Occupational Safety and Health Administration (“OSHA”)

We are also subject to the requirements of OSHA and other federal and state agencies that address employee health, including from infectious diseases such as COVID-19, and safety.

While we are not currently subject to any vaccine mandate, it continues to be our policy to encourage each of our employees to be fully vaccinated against COVID-19.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business