What changed in this filing

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Item 1. Business

2024-02-27 compared with 2023-03-01 · 185 added, 184 removed, 278 unchanged (57% of the section changed)

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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.

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

optical retail industry.

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We achieve this by providing eye exams, eyeglasses and contact lenses to value seeking and lower income consumers.

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 deliver exceptional value and convenience to our customers, with an opening price point that strives to be among the lowest in the industry.

We reach our customers through a diverse portfolio of 1,413 retail stores across five brands and 13 consumer websites as of December 30, 2023, our 2023 fiscal year end.

Our Corporate History

Through its predecessors, NVI commenced operations in 1990.

In 2005, private equity funds managed by Berkshire Partners LLC (“Berkshire”) acquired both NVI and Consolidated Vision Group, Inc., which operated America’s Best Contacts and Eyeglasses (“America’s Best”) stores, and merged these entities, with NVI surviving.

In 2009, NVI acquired the Eyeglass World store chain.

In 2011, after a multi-year partnership, NVI acquired Arlington Contact Lens Service, Inc.

(“AC Lens”) to bolster its e-commerce platform.

In March 2014, NVI was acquired (the “KKR Acquisition”) by affiliates of KKR & Co.

National Vision Holdings, Inc.

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 holdings of our common stock.

Through our corporate predecessors, we commenced operations in 1990.

In 2005, private equity funds managed by Berkshire Partners LLC (“Berkshire”) acquired us as well as the entity that owned America’s Best Contacts and Eyeglasses (“America’s Best”) stores, merging our operations.

We acquired the Eyeglass World store chain in 2009 and, after a multi-year partnership, we acquired Arlington Contact Lens Service, Inc.

(“AC Lens”) in 2011 to bolster our e-commerce platform.

In March 2014, we were acquired (the “KKR Acquisition”) by affiliates of KKR & Co.

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

By August 2019, each of KKR and Berkshire had sold their remaining holdings of our common stock.

Our Business Model

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 history of profitable growth is founded on a commitment to providing exceptional value and convenience to customers.

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

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• Differentiated and Defensible Value Proposition .

We believe our success is driven by our low prices, convenient locations, broad assortment of branded and private label merchandise and the high levels of in-store service provided by our well-trained and passionate store associates and vision care professionals.

We believe our success is driven by our value-based offerings, convenient locations, broad assortment of branded and private label merchandise and the high levels of in-store service provided by our well-trained and passionate store associates and vision care professionals.

We believe our bundled offers, including two pairs of eyeglasses plus an eye exam for $79.95 at America’s Best and two-pairs of eyeglasses for $89 at Eyeglass World, are among the lowest price offerings of any national chain.

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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.

While there are ranges of customer behaviors based on demographics and other factors, it is estimated that optical consumers typically replace their eyeglasses every two to three years and their contact lenses every six to 12 months, reflecting the predictability of these recurring purchase behaviors.

This is further demonstrated by the customer mix of our mature stores, with existing customers representing 66% of total customers in 2023 and new customers representing the remaining 34% of total customers in 2023.

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• Grow Our Store Base.

We believe that we continue to have significant expansion opportunities in the United States.

We believe that we continue to have significant expansion opportunities in the U.S.

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.

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We believe that these two brands can accordingly grow from 1,105 stores as of December 30, 2023 to a total of at least 2,150 stores in the long-term.

We have two reportable segments:

our Owned & Host segment and our Legacy segment.

Our Owned & Host segment includes our two owned brands, America’s Best and Eyeglass World, and our Vista Optical locations in select Fred Meyer stores.

Within this segment, we also provide low-cost vision care products and services to American military service members by operating Vista Optical locations on select military bases across the country.

Our Legacy segment consists of our long-term strategic relationship with Walmart to operate Vision Centers in select Walmart stores.

In addition, our wholly-owned subsidiary, FirstSight Vision Services, Inc.

(“FirstSight”), which is licensed as a single-service health plan under California law, issues individual vision plans in connection with our America’s Best operations in California and arranges for the provision of optometric services at optometric offices next to certain Walmart stores throughout California.

We support our owned brands and our Vista Optical military operations through our omni-channel offerings and we also have an established standalone e-commerce business.

Our e-commerce platform, which is managed by our wholly-owned subsidiary AC Lens, serves our proprietary e-commerce websites and the e-commerce websites of third parties, 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.

The following table provides an overview of our portfolio of brands:

The following table provides an overview of our portfolio of brands, excluding the Legacy segment stores and websites that we operated as of December 30, 2023 but no longer operate or will cease to operate in 2024 (see “Our Partner Brands” below for more information):

Overview of Our Brands and Omni-channel & E-commerce Platform

Owned & Host Brands Legacy

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

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

905 Stores 136 Stores 29 Stores 54 Stores 230 Stores

~1,400 SKUs ~1,400 SKUs ~600 SKUs ~800 SKUs ~800 SKUs

Centralized Lab Lab in Store / Centralized Lab Centralized Lab Centralized Lab Centralized Lab

Owned & Host Brands

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

Employed ODs Mostly Independent ODs Mostly Independent ODs Mostly Independent ODs

957 Stores 148 Stores 29 Stores 54 Stores

~1,400 SKUs ~1,400 SKUs ~600 SKUs ~800 SKUs

Centralized Lab Lab in Store / Centralized Lab Centralized Lab Centralized Lab

OMNI-CHANNEL & E-COMMERCE

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

Store count as of December 30, 2023.

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ODs are Doctors of Optometry.

We reach customers through a portfolio of brands described below.

All of our brands leverage our highly efficient centralized laboratory network and distribution system, which helps us minimize production and distribution costs.

As one of the largest purchasers of eyeglass frames, spectacle lenses and contact lenses in the United States, we also benefit from centralized procurement efforts and purchasing economies of scale.

As one of the largest purchasers of eyeglass frames, eyeglass lenses and contact lenses in the U.S., we also benefit from centralized procurement efforts and purchasing economies of scale.

Our America’s Best Brand.

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We source eyeglass frames for our Eyeglass World stores from leading designer brands, private label manufacturers and low-cost overseas manufacturers.

Eyeglass World locations offer eye exams, primarily from independent optometrists and optometrists employed by independent professional corporations or similar entities, and have on-site laboratories that enable stores to quickly fulfill customer orders and make repairs.

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

Eyeglass World locations offer eye exams, primarily from independent optometrists and optometrists employed by independent professional corporations or similar entities and have on-site laboratories that enable stores to quickly fulfill customer orders and make repairs on site.

Lens orders that are not completed in store are

completed by our centralized laboratory network.

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 December 31, 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, 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 33rd year and our partnerships with Fred Meyer and the U.S.

military have been maintained for over 20 years.

We have two continuing partner brands consisting of 54 Vista Optical locations on military bases and 29 Vista Optical locations within select Fred Meyer stores as of December 30, 2023.

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

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These brands also utilize our centralized laboratories and provide eye exams principally by independent optometrists in nearly all locations.

As of December 30, 2023, our partner brands also included the operation of 225 Vision Centers in select Walmart stores through the Management & Services Agreement by and between NVI and Walmart Inc.

(“Walmart”), dated as of May 1, 2012 (as amended, supplemented or otherwise modified from time to time, the “Walmart MSA”).

On July 20, 2023, we received a notice of non-renewal from Walmart of the Walmart MSA (the “MSA Termination”).

In accordance with the terms of the Walmart MSA and the notice, the agreement terminated on February 23, 2024 and we no longer operate Vision Centers for Walmart.

Our Omni-Channel and E-Commerce Platforms.

We offer our customers an engaging digital shopping experience through an established platform of four omni-channel store websites, and 12 dedicated e-commerce consumer websites.

Our omni-channel store websites augment our America’s Best, Eyeglass World, Vision Center and Vista Optical in military brands and provide a customer experience that extends across our in-store, mobile and e-commerce channels.

We offer our customers an engaging digital shopping experience through an established platform of omni-channel store websites, and dedicated e-commerce consumer websites.

Our omni-channel store websites augment our America’s Best, Eyeglass World and Vista Optical in military brands and provide a customer experience that extends across our in-store, mobile and e-commerce channels.

We offer a range of services to customers, including eyeglass purchasing, online scheduling and appointment reminders, contact lens purchasing, “buy-in-store and ship-to-home” capabilities and online frame browsing, among others.

Our omni-channel offerings work in concert with these brands to enhance the overall quality of the customer experience.

Our dedicated e-commerce websites are managed by our subsidiary, AC Lens.

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 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.

In the aggregate, sales from our omni-channel and e-commerce platforms, which includes “buy-in-store and ship-to-home” transactions, represented approximately 11.2% and 10.5% of our 2022 and 2021 fiscal year net revenue, respectively.

As of December 30, 2023, our dedicated e-commerce websites were managed by our subsidiary, AC Lens.

AC Lens has historically operated proprietary, branded websites and operated and provided support services for third-party websites owned by other companies, including Walmart and Sam’s Club.

Following the receipt of the MSA Termination, AC Lens delivered notices of non-renewal of the agreements it has with Walmart and Sam’s Club regarding wholesale contact lenses distribution and related services, such that these agreements will terminate as of June 30, 2024, unless an earlier date is agreed by the parties and the Company will wind down its remaining AC Lens operations, including the closure of its Ohio distribution center, which largely supported the wholesale distribution and e-commerce contact lens services that the Company provided to Walmart and Sam’s Club.

Our e-commerce platform related to websites associated with our store brands will continue to operate, as will certain websites historically managed by AC Lens.

We are planning to transition the order fulfillment functions currently handled by AC Lens to a third-party vendor.

In the aggregate, sales from our omni-channel and e-commerce platforms, which include “buy-in-store and ship-to-home” transactions, represented approximately 9.9% and 11.2% of net revenue in fiscal year 2023 and 2022, respectively.

Reportable segments:

We had two reportable segments as of December 30, 2023:

our Owned & Host segment and our Legacy segment.

Our Owned & Host segment includes our two owned brands, America’s Best and Eyeglass World, as well as our partner brands, Vista Optical locations within select Fred Meyer stores and Vista Optical locations on select military bases.

Our Legacy segment consisted of our partnership with Walmart to operate Vision Centers in select Walmart stores that ended on February 23, 2024.

“Segment Reporting” for more information.

Other operations not classified in reportable segments include:

• Our wholly-owned subsidiary, FirstSight Vision Services, Inc.

(“FirstSight”), which is licensed as a single-service health plan under California law, issues individual vision plans in connection with our America’s Best operations in California.

Until February 23, 2024, it also arranged for the provision of optometric services at optometric offices next to certain Walmart stores throughout California.

• Our e-commerce platform, which is managed by our wholly-owned subsidiary, AC Lens, serves our proprietary e-commerce websites and the e-commerce websites of third parties, including Walmart, Sam’s Club and Giant Eagle.

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

Refer to “Our Omni-Channel and E-Commerce Platforms.” above for more information about the wind down of AC Lens operations.

Our Industry 1

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• Aging Population .

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.

According to The Vision Council, approximately 80% of adults in the U.S.

use some form of vision correction, and there is a significant increase in the use of vision correction above age 45, with further increases 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, 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 .

According to the Vision Council, approximately 115 million eye exams were performed in the U.S.

• 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 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.

According to The Vision Council, about 90% of American adults reported 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.

We believe that remote working and learning arrangements that have been necessitated by the COVID-19 pandemic have led to increased use of electronic screens.

Additionally, we believe that remote working and learning arrangements that were necessitated by the COVID-19 pandemic have led to increased use of electronic screens.

• Growing Focus on Health and Wellness .

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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.

1 In recent years, the Vision Council has made multiple updates to its methodology for estimating the size of the optical retail industry including the use of new and updated sources for such data that had not been previously utilized for past industry estimates.

As more recent estimates are not comparable to estimates that the Company had disclosed in previous annual reports on Form 10-K, the Company continues to evaluate the updated methodology and the new market estimate of a $65.6 billion optical retail industry in 2023 under such revised methodology at this time.

Our Products and Services

Within our two reportable segments, we primarily offer two products and one service:

Within our store brands, we primarily offer two products and one service:

eyeglasses, contact lenses and eye exams.

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

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

Nonetheless, our diverse product portfolio encompasses many brand names and thousands of stock keeping units (“SKUs”).

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

Our brand-name frame offerings are manufactured by market leaders and we partner with several overseas factories to direct source our private label products.

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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 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.

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 signature or opening offer.

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

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, 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.

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, as part of our efforts to provide quality, accessible eye care, we have 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 visit our stores for eye care 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.

As of December 30, 2023, this technology has been enabled in over 500 of our America’s Best locations.

We believe remote medicine not only helps provide quality, accessible eye care 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.

We anticipate continuing to invest in these capabilities, including implementing the EHR platform in all America’s Best locations by the end of 2024.

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

As of December 30, 2023, 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.

Eyecare Club members receive two free eye exams per year and 10% off all contact lenses and eyeglasses for the duration of the three-year membership, as well as other periodic benefits and discounts, for a one-time fixed payment.

Memberships can be purchased in stores or on our America’s Best website.

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Our customers need to see their best to perform their jobs, care for their families and contribute to their communities.

Purchasing decisions are based on value, quality of service, fashion, location and eye health, among others.

Purchasing decisions are based on value, quality of service, fashion, location and eye health, among other factors.

Based on a variety of third-party research studies, we have found that our customers typically prioritize value and convenience above other considerations.

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We developed our marketing strategy based on the in-depth knowledge we have of our customers.

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.

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

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.

A significant portion of America’s Best and Eyeglass World’s advertising investments are on awareness-driving video advertisements, network television and digital platforms, 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 new and existing markets.

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

We are continually tracking consumer media consumption behaviors and adjusting our media plan accordingly.

For our Host and Legacy brands, we rely on our Host and Legacy partners’ marketing initiatives to drive traffic into their stores, and then we develop and execute highly targeted local marketing campaigns within stores to create awareness of our service and product offerings.

Our customer relationship management (“CRM”) system is used to collect customer demographic data.

With this information and the third-party data that we use to supplement the customer information, we enhance our customer relationships with communications based on their vision needs and interests to help improve existing customer retention.

For our Host brands, we rely on our Host partners’ marketing initiatives to drive traffic into their stores.

We then develop and execute highly targeted local marketing campaigns within stores to create awareness of our service and product offerings.

Our CRM system is used to collect customer demographic data.

With this information and the third-party data that we use to supplement the customer information, we enhance our customer relationships with communications based on their individual vision needs and interests to help improve existing customer retention.

We are also in the early stages of an upgrade to our CRM capabilities.

In addition to our CRM program, digital advertising is a critical component of our media mix, as we believe both of these programs generate a high rate of return.

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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 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.

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

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

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

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

Our Optical Laboratories and Distribution Network

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;

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

Cloud, Minnesota;

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We have developed a high-volume, low-cost lens processing model to provide seven-day turnaround service through our domestic owned laboratories and our international partner laboratories.

This network was created through significant investment by us, and is leveraged across our portfolio of brands in both segments to provide efficiency and scale.

This network was created through significant investment by us and is leveraged across our portfolio of brands to provide efficiency and scale.

We route eyeglass orders to both our owned and outsourced laboratories through an automated decision tree that incorporates information on (i) the nature of the job;

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(iv) the inventory at each laboratory;

and (v) the cost of that particular type of job at each laboratory.

and (v) the cost of that particular job at each laboratory.

This architecture is integrated with the point-of-sale system and enables us to minimize our processing costs, while ensuring on-time deliveries.

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All lens orders that are not processed or completed in store are processed or completed by our centralized laboratory network.

We have a 118,000 square foot distribution center in Lawrenceville, Georgia and a 52,000 square foot distribution center in Columbus, Ohio.

As of December 30, 2023, we had a 118,000 square foot distribution center in Lawrenceville, Georgia and a 52,000 square foot distribution center in Columbus, Ohio, the latter of which is expected to be closed in 2024 as part of the

aforementioned wind down of AC Lens operations.

We utilize third-party carriers to transport products from these centers to customers and store locations.

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In the U.S., through our partnership with charitable organizations, we provide free vision screenings, eye exams and eyeglasses to young Americans and other underserved communities.

In addition, through multiple charitable partnerships with organizations such as VisionSpring, RestoringVision, the International Agency for the Prevention of Blindness and VOSH International, we both directly assist and indirectly help improve the vision of millions of individuals globally.

In addition, through multiple charitable partnerships with organizations such as VisionSpring, RestoringVision, the International Agency for the Prevention of Blindness and VOSH International, we both directly assist and indirectly help to improve the vision of millions of individuals globally.

We also work collaboratively with others in the industry to help a portion of the world’s population who live with uncorrected vision problems.

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.

As of December 30, 2023, we had 13,998 full-time and part-time associates, including 582 directly employed optometrists.

As of December 30, 2023, our network of optometrists included 2,645 optometrists, which consists of the 582 directly employed optometrists, 1,621 optometrists employed by professional corporations or similar entities with which we contract, and 442 optometrists who sublease in our store locations.

As of December 31, 2022, we had 13,975 full-time and part-time associates, including 471 directly employed optometrists.

As of December 31, 2022, our network of optometrists included 2,312 optometrists, which consists of the 471 directly employed optometrists, 1,337 optometrists employed by professional corporations or similar entities with which we contract, and 504 optometrists who sublease in our store locations.

Our network of optometrists includes a mix of full-time and part-time optometrists, and this mix can change over time.

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.

Board Oversight

Our Board of Directors (the “Board”) through its 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

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We believe everyone deserves to see their best to live their best and our goal is to help people achieve this by making quality eye care and eyewear more affordable and accessible.

This purpose is supported by our associates and their values – they are empowered to do what is right, committed to creating happiness every day and energized to serve.

This purpose is supported by our associates and their values – passion for people, committed to community, results done right, and be your best self.

With an inclusive and people-first culture, we are focused on celebrating and respecting our backgrounds, empowering, rewarding and developing our associates, and aiming to give back to the communities in which we serve.

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At National Vision, we are committed to attracting talent aligned with our Vision, Mission and Values.

We have invested in key leadership roles within the talent organization to refine our approach and have incorporated new technology to improve both the candidate and hiring manager experience.

In addition, we have partnered with schools and other organizations to promote the profession of optometry, including continuing our multi-year sponsorship of the Association of Schools and Colleges of Optometry campaign “Optometry Gives Me Life” targeted at high school and college students, and ensuring that graduating optometrists are educated on the variety of career options available to them.

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.

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.

We continue to refine our technology to improve both the candidate and hiring manager experience.

In addition, we have established critical partnerships with outside vendors that provide us with additional resources to drive candidate flow for key roles.

We are continuing our multi-year sponsorship of the Association of Schools and Colleges of Optometry campaign “Optometry Gives Me Life” targeted at high school and college students, and ensuring that graduating optometrists are educated on the variety of career options available to them.

Additionally, we support our associates’ interest in attending Optometry school through our internal National Vision Doctor of Optometry Tuition Reimbursement program, which provides for the reimbursement of education expenses to associates attending optometry school.

We utilize both in-person events and online platforms for job fairs and on-campus events, and selectively offer key incentives, such as a student loan repayment program.

Talent Development

We have a proven record of opening new stores with high-quality training support.

As a result of the COVID-19 pandemic, we adapted our new store training approach by introducing and enhancing virtual instructor-led training classes, allowing for a continuation of high touch training to prepare stores to open safely and effectively.

We also increased ongoing training, especially in the areas of safety protocol procedures and customer interactions.

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.

We have adapted our new store training approach by introducing and enhancing virtual instructor-led training classes, allowing for high-touch training in a remote setting to prepare stores to open safely and effectively.

We have also increased ongoing training in recent years, especially in the areas of safety protocol procedures and customer interactions.

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

We have invested in supporting our store managers through a 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.

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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.

We continued to grow and invest in the Training Store Manager Program in 2023, building 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 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.

Programs like our 401(k) plan, core and supplemental life insurance, health plan, short 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.

Additionally, our associates receive an annual associate eyewear ticket and eyewear gift tickets that provide them, along with 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 and 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.

Each year, ten recipients are granted an award of $2,500 each and awards are renewable for 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 degree with financial support through a tuition reimbursement program.

Our compensation programs are 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.

Donations made to the Crisis Relief Fund are matched by the Company.

Since its creation, over $1.3 million have been provided to associates for assistance, with over 95% provided since the beginning of the COVID-19 pandemic.

In 2019, 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.

Since its creation, the fund has provided over $1.7 million to associates for assistance.

Diversity, Equity and Inclusion

We are committed to a diverse and inclusive culture and in 2020, we formed a new Diversity, Equity and Inclusion (“DEI”) department within the Company.

As we move forward in our DEI journey, we are focused on advancing diversity in our recruitment, training, career mentorship and development, employment, branding and community service.

In 2021, we continued our focus on reviewing best practices and initiatives and conducted listen and learn sessions with associates and optometrists to solicit feedback and identify opportunity areas.

As a part of these efforts, we collaborated with non-profit and educational institutions with the goal of increasing the percentage of Black doctors in the industry, including sponsoring and participating in the “Impact HBCU” event sponsored by Black Eyecare Perspectives with the goal of increasing awareness in the field among historically black college and university (“HBCU”) students.

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, 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.

We are committed to promoting an inclusive culture and in 2020, we formed a Diversity, Equity and Inclusion department within the Company.

We remain focused on advancing diversity in our recruitment, training, career mentorship and development, employment, branding and community service.

We 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.

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

We believe that we are in material compliance with applicable Occupational Safety and Health Administration (“OSHA”) 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.

In our retail locations, we support 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.

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.

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.

Health and safety remain at the forefront for us.

Managed Vision Care

Our managed care business relates to vision care programs and associated benefits (i) sponsored by associates or other groups, (ii) provided by insurers and managed care entities, such as health maintenance organizations to individuals, and (iii) delivered, typically on a fee-for-service or capitated basis, by health care providers, such as ophthalmologists, optometrists and opticians.

Our managed care business primarily consists of participation in private managed care programs.

Our managed care business relates to vision care programs and associated benefits provided by stand-alone vision insurance entities, healthcare plans and government programs.

National Vision participates as a provider of both vision care and related vision product solutions, including eyeglasses and contact lenses, and primarily participates in private managed care programs.

While our managed care business has continued to grow, we are underpenetrated in the managed care market relative to the broader optical retail industry, and we believe that this continues to represent a growth opportunity.

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Such changes may require us to update our processes and could impact our ability to submit claims or to timely receive reimbursements from our managed care partners.

As such, when asked, we have assisted a number of our larger vision care insurance payors to either implement or improve their existing EDI claim systems.

As such, when asked, we have assisted a number of our larger vision care insurance payors to either implement or improve claims transmission processes via application programming interfaces.

The optical retail industry is highly competitive.

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We operate within the value segment of the U.S.

optical retail industry, which emphasizes price and value.

optical retail industry, which emphasizes price and affordability.

This segment is fragmented.

We compete with mass merchants and warehouse club stores, specialty retail chains, and independent eye care practitioners and opticians.

In the broader optical retail industry, we also compete with large national retailers such as (in alphabetical order) LensCrafters, Pearle Vision and Visionworks.

This competition takes place both in physical retail locations and online.

In the broader optical retail industry, we also compete with large national retailers such as LensCrafters, Pearle Vision and Visionworks, both in physical retail locations and online.

We also compete with online sellers of contact lenses and eyewear.

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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.

Competition is based on many factors, including price and the density of the provider network.

Several large managed care payors are vertically integrated, with substantial retail networks.

We may also face competition in the future as companies increasingly employ emerging technologies in the optical retail industry, including, for example, online vision exams.

In our managed care business, we also compete with other managed care payors, several of which are vertically integrated, with substantial retail networks.

As a provider under managed care contracts, we may have access to new customers while better serving our existing 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.

Competition in our managed care business is based on many factors, including price and the density of the provider network.

We have, in the past, and may, in the future, experience heightened challenges to be admitted as a provider to these networks or to maintain our status in them.

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The first half seasonality is attributable primarily to the timing of our customers’ income tax refunds and annual health insurance program start/reset periods.

We believe that many customers in our target market, which consists of value seeking and lower income consumers, rely on tax refunds to pay for eyewear and eye care.

We believe that many customers in our target market are value seeking and lower income consumers who rely on tax refunds to pay for eyewear and eye care.

A delay in the issuance of tax refunds can accordingly have a timing impact on our quarterly financial results in the first half of the year.

Consumers could also alter how they utilize tax refund proceeds.

With respect to our fourth quarter results, compared to other retailers, our products and services are less likely to be included in consumer’s holiday spending budgets, therefore reducing spending on personal vision correction during the weeks preceding December 25th of each year.

Additionally, although the period between December 25th and the end of our fiscal year is typically a high-volume period, the net revenue associated with substantially all orders of prescription eyeglasses and contact lenses during that period is deferred until January due to our policy of recognizing revenue only after the product has been accepted by the customer, further contributing to higher first half of the year results.

Our quarterly results may also be affected by the timing of new store openings and store closings, the amount of sales contributed by new and existing stores, the timing of certain holidays, as well as the timing of weather-related store closures.

The COVID-19 pandemic has caused changes to the seasonality we have historically experienced, including the resulting temporary closure of our stores for a portion of the first half of 2020 and impacts from the emergence of variants or delays in the issuance of tax refunds, and may continue to cause changes for the foreseeable future.

Consumer behavior with respect to the utilization of tax refund proceeds is also subject to change.

With respect to our fourth quarter results, compared to other retailers, our products and services are less likely to be included in consumers’ holiday spending budgets, therefore reducing spending on personal vision correction during the weeks preceding December 25th of each year.

Changes in consumer behavior driven by lingering effects of the COVID-19 pandemic have resulted in a departure from seasonal norms we have experienced in recent years and may continue to disrupt the historical quarterly cadence of our results of operations for an unknown period of time.

Information Technology

Information technology systems are critical to our day-to-day operations as well as to our long-term growth strategies.

Information technology systems are critical to our day-to-day operations as well as to our long-term growth strategy.

Our systems are designed to deliver a consistent, scalable, high-performing and secure experience for our customers and partners.

We utilize a combination of co-location data center and cloud-based solutions for our infrastructure and the majority of our applications consist of standard, integrated software solutions.

We utilize a combination of co-location data centers and cloud-based solutions for our infrastructure and the majority of our applications consist of standard, integrated software solutions.

Our systems provide the data analysis and automation necessary to support our marketing, merchandising, inventory, distribution, store operations and point-of-sale, e-commerce, remote medicine, finance, accounting and human resources initiatives.

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 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).

Areas in which we have invested and continue to invest in include, among others, software systems to enhance the growth of omni-channel, customer engagement efforts, CRM, remote medicine and EHR platforms rollout, cybersecurity programs, our overall security posture, point-of-sale systems 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.

Intellectual Property

We own a number of registered and common law trademarks and pending applications for trademark registrations in the United States, primarily through our subsidiaries.

We own a number of registered and common law trademarks and pending applications for trademark registrations in the U.S., primarily through our subsidiaries.

Solely for convenience, the trademarks, service marks and trade names referred to in this report are presented without the ®, SM and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names.

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Many states prohibit the corporate practice of medicine/optometry where an unlicensed entity practices medicine or employs a physician or optometrist to provide professional medical services.

Many states interpret the corporate practice of medicine/optometry rules broadly to prohibit employment of eye care practitioners by corporations like us and to prohibit various financial arrangements, such as fee-splitting, between eye care practitioners and other entities.

Many states also regulate certain business practices as well as landlord-tenant arrangements between optical companies and optometrists.

Further, many states interpret these or similar rules broadly to prohibit employment of eye care practitioners by corporations like us and to prohibit various financial arrangements, such as fee-splitting, between eye care practitioners and other entities.

Many states also

regulate certain business practices as well as landlord-tenant arrangements between optical companies and optometrists.

For example, some states prohibit a common entrance to a retail optical location and an optometric office.

These laws and regulations can vary significantly by state, requiring us to tailor our operations in each state to the particular laws of such state.

Many of these laws and regulations are vague and are subject to the interpretation of regulators and enforcement authorities, which may change over time.

States periodically revisit these laws and regulations and we are subject to the ongoing risk that the regulatory scheme in any state can change in ways adverse to us.

Many of these laws and regulations are vague and subject to the interpretation of regulators and enforcement authorities, which may change over time.

States periodically revisit these laws and regulations and we are subject to the ongoing risk that the regulatory scheme in any state could change in ways adverse to us.

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.

Additionally, state legislators and regulators may be reluctant to accept telehealth and remote medicine as a way to provide access to quality patient care.

Recently, there has been an increase in legislative and rulemaking activity that creates disparity across jurisdictions in 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 at all 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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All states license the practice of ophthalmology and optometry and many states license opticians.

The dispensing of prescription eyewear is also regulated in most states in which we do business.

In some states, we are required to register our stores as optical dispensaries.

The dispensing of prescription eyewear is also regulated in most states in which we do business and, in some states, we are required to register our stores as optical dispensaries.

Fairness to Contact Lens Consumers Act (“FCLCA”) and E-commerce Laws

In connection with our sales of contact lenses, we must comply with the FCLCA, and its implementing regulations, including the Contact Lens Rule, promulgated by the Federal Trade Commission (“FTC”), which establish a national uniform standard in the United States with regard to releasing and verifying contact lens prescriptions.

This law and rule require that we verify the prescriptions we receive from our customers prior to selling contact lenses online.

A violation of the Contact Lens Rule constitutes an unfair or deceptive act or practice under the FTC Act.

In 2020, the FTC adopted changes to the Contact Lens Rule under the FCLCA, that include, among other topics, updates to the “passive verification” requirement, updates to certain other prescription requirements and new requirements regarding automated telephone verification messages.

with regard to issuing, releasing and verifying contact lens prescriptions.

This law and rule require that we verify prescriptions we receive from our customers prior to selling contact lenses online.

Recent changes to the Contact Lens Rule include, among others, updates to the verification requirements, updates to certain prescription requirements, and new requirements regarding automated telephone messages.

A violation of the Contact Lens Rule constitutes an unfair or deceptive act or practice under the Federal Trade Commission Act (the “FTC Act”).

Our e-commerce business must comply with various federal and state laws, most notably the FCLCA.

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These programs may be subject to regulation under managed care and related state laws, including those of California, where these programs are offered as managed care products by FirstSight.

In addition, our Eyecare Club programs may subject us to state statutes regulating discount medical plans.

In addition, our Eyecare Club programs may subject us to state laws regulating discount medical plans.

These laws, which have been adopted in a number of states, require the licensing or registration of organizations that provide discounted access to health care providers.

It is possible that state regulators could determine that we are operating as a discount medical plan and as such are subject to the various registration, disclosure and solvency requirements.

It is possible that state regulators could determine that we are operating as a discount medical plan and thus subject to various registration, disclosure and solvency requirements.

Privacy and Security

We directly collect, use, access, disclose, transmit and/or store protected health information (“PHI”) and personally identifiable information (“PII”) in connection with the sales of our products and services, customer service, billing and employment practices.

As a health care provider and as a business associate to health care providers, we are subject to federal and comparable state laws governing privacy and security, including the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and its implementing regulations, such as the Privacy Rule, the Security Rule and the Breach Notification Rule.

As a health care provider and as a business associate to health care providers, we are subject to federal and state laws governing privacy and security, including the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and its implementing regulations, such as the Privacy Rule, the Security Rule and the Breach Notification Rule.

The Health Information Technology for Economic and Clinical Health Act of 2009 (the “HITECH Act”) extends the Privacy Rule and the Security Rule directly to business associates.

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

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.

We believe that the Office of Civil Rights, which is the enforcement agency for HIPAA, may implement modest changes to HIPAA in 2024, 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, including new comprehensive consumer privacy laws that have or will go into effect in multiple states in 2023.

In addition, California and a number of other states have adopted comprehensive consumer privacy laws, and additional states may amend or adopt new laws or regulations regarding data privacy that may be applicable to us, including additional consumer privacy laws.

Laws Related to Reimbursement by Government Programs

Our participation in federal reimbursement programs, such as Medicare and Medicaid, subjects us to state and federal anti-kickback, false claims, physician self-referral and similar laws.

Our participation in federal reimbursement programs, such as Medicare and Medicaid, subjects us to state and federal laws and regulations with respect to anti-kickback, false claims and physician self-referral, among other similar areas.

The federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, paying, receiving or providing remuneration, directly or indirectly, to induce, or in exchange for, the referral of an individual or purchasing, furnishing, recommending or arranging for a good or service for which payment may be made under a federal healthcare program, such as Medicare or Medicaid.

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Healthcare providers that have financial relationships may structure their arrangements to meet certain voluntary safe harbors under the federal Anti-Kickback Statute so that such financial relationships and business practices are not treated as offenses under the statute.

Several courts have found a violation of the statute’s intent requirement if a single purpose of an arrangement involving remuneration is to induce referrals of patients or consumers purchasing healthcare goods or services paid for, in whole or in part, by federal government programs.

Several courts have found a violation of the statute’s intent requirement where the single purpose of an arrangement involving remuneration is to induce referrals of patients or consumers purchasing healthcare goods or services paid for, in whole or in part, by federal government programs.

There are also a number of healthcare fraud statutes that impose criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement, in connection with the delivery of, or payment for, healthcare benefits, items or services.

A person or entity does not need to have actual knowledge of the Anti-Kickback Statute or healthcare fraud statutes, or specific intent to violate them in order to have committed a violation.

Many states have adopted similar laws that apply to any third-party payors including commercial plans.

Many states have adopted similar laws that apply to third-party payors including commercial plans.

In addition, the federal Anti-Kickback Statute provides that any claim for government reimbursement in violation of the statute also violates the False Claims Act (“FCA”).

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The Social Security Act also imposes significant penalties for false or improper Medicare and Medicaid billings.

Physician Self-Referral Law, or the Stark Law, generally prohibits physicians (which the Stark Law defines to also include optometrists) from referring, for “designated health services” (as defined by the Centers for Medicare & Medicaid Services), Medicare or Medicaid beneficiaries to any entity with which the physician or an immediate family member of the physician has a financial relationship.

Designated health services do not include optometric services for physician referrals.

This law further prohibits the entity receiving a prohibited referral from presenting a claim for reimbursement by Medicare or Medicaid for services furnished pursuant to the prohibited referral.

Physician Self-Referral Law, or the Stark Law, generally prohibits physicians (which the Stark Law defines to include optometrists) from referring, for “designated health services” (as defined by the Centers for Medicare & Medicaid Services), Medicare or Medicaid beneficiaries to any entity with which the physician or an immediate family member of the physician has a financial relationship.

Designated health services do not include physician referrals for optometric services.

The Stark Law further prohibits the entity receiving a prohibited referral from presenting a claim for reimbursement by Medicare or Medicaid for services furnished pursuant to the prohibited referral.

The Stark Law has a number of specific mandatory exceptions for financial hardships between regulated healthcare providers that do not pose a risk of abuse to Medicare programs or patient abuse.

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The Stark Law is a strict liability law, meaning that intent is not required;

the mere presence of a prohibited relationship may constitute a Stark Law violation if certain mandatory exceptions are not met.

the mere presence of a prohibited relationship may constitute a violation if certain mandatory exceptions are not met.

Federal Food and Drug Administration (“FDA”) Regulation

The FDA generally has authority to, among other things, regulate the manufacture, distribution, sale and labeling of medical devices, including contact and spectacle lenses.

The FDA generally has authority to, among other things, regulate the manufacture, distribution, sale and labeling of medical devices, including contact and eyeglass lenses.

Under the U.S.

Federal Food, Drug and Cosmetic Act (the “FDC Act”), medical devices must meet a number of regulatory requirements.

We engage in certain manufacturing, repackaging and relabeling activities at our optical laboratories and at certain Eyeglass World stores, which subject us to the FDA’s registration, listing and quality requirements.

We engage in certain manufacturing, repackaging and relabeling activities at our optical laboratories and in certain Eyeglass World stores, which subject us to the FDA’s registration, listing and quality requirements.

We are required to register our centralized laboratories with the FDA.

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Some of our promotions, such as our America’s Best offer of a “free” eye exam, are subject to compliance with laws and regulations governing use of this term.

The FTC has authority under Section 5 of the Federal Trade Commission Act (the “FTC Act”) to investigate and prosecute practices that are “unfair trade practices,” “deceptive trade practices,” or “unfair methods of competition.” State attorneys general typically have comparable authority and many states permit private plaintiffs to bring actions on the basis of these laws.

The FTC has authority under Section 5 of the FTC Act to investigate and prosecute practices that are “unfair trade practices,” “deceptive trade practices,” or “unfair methods of competition.” State attorneys general typically have comparable authority and many states permit private plaintiffs to bring actions on the basis of these laws.

In addition, state regulators or boards of optometry may challenge our promotional practices, including America’s Best’s bundled offers, as, among other things, violating applicable state laws regarding unfair competition, false advertising to consumers or corporate practice of optometry prohibitions.

Foreign Corrupt Practices Act (“FCPA”)

We source a significant portion of our products from outside the United States.

We source a significant portion of our products from outside of the U.S.

The FCPA and other similar anti-bribery and anti-kickback laws and regulations generally prohibit companies and their intermediaries from making improper payments or offering anything of value to non-U.S.

officials for the purpose of obtaining or retaining business.

Our policies and our code of conduct mandate compliance with applicable law, including these laws and regulations.

Our policies and our code of conduct mandate compliance with applicable laws and regulations, including these.

Payment Card Industry Data Security Standard (“PCI Standard”)

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Certain states have incorporated these requirements into state law.

Our credit card agreements with our banks require that we comply with this standard and pay for any fines and assessments imposed by the credit card companies in the event of a compromise of card data.

Our credit card agreements with our banks require that we comply with this standard and pay any fines or assessments imposed by the credit card companies in the event of a compromise of card data.

Service Contract Regulations

We offer product protection plans for our eyeglasses.

In certain states, service contract and similar laws regulate these plans.

In certain states, laws governing service contracts regulate these plans.

These laws, which vary by state, mandate that sellers of such contracts comply with various registration, disclosure and financial requirements.

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Environmental and Safety Regulation

Our optical laboratories in the United States and our in-store laboratories in our Eyeglass World locations subject us to various federal, state and local laws, regulations and other requirements pertaining to protection of the environment, public health and associate safety, including, for example, regulations governing the management of hazardous substances, and the maintenance of safe working conditions.

Our optical laboratories in the U.S.

and our in-store laboratories within Eyeglass World locations subject us to various federal, state and local laws, regulations, and other requirements pertaining to protection of the environment, public health, and associate safety, including, for example, regulations governing the management of hazardous substances and the maintenance of safe working conditions.

These laws also apply generally to all our properties.

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

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.

To the extent we become subject to a vaccine mandate in the future, our implementation of the mandate could result in employee attrition, including attrition of critical skilled labor, and difficulty meeting future labor requirements.

We believe we are meeting state and federal rules and regulations protecting the health and safety of our employees.

Based on new or revised regulatory developments, we may be required to take additional actions or increase expenditures in the future to comply with higher industry and regulatory safety standards.

Employment Laws and Occupational Safety and Health Administration

We are a labor-intensive business that is subject to complex labor and employment laws established by federal, state and local laws and regulations.

These laws and regulations govern areas that include working conditions, paid time off, workplace safety, wage and hour standards and hiring and employment practices.

In particular, we are subject to the requirements of OSHA and other federal and state agencies that address employee health, including from infectious diseases and safety.

We currently have processes in place to support our compliance with these requirements.

Based on new or revised regulatory developments, we may be required to take additional actions or increase expenditures in the future to comply with changing employment requirements and higher industry and regulatory safety standards.

Insurance and Risk Management

We use a combination of insurance and self-insurance for workers’ compensation, general liability, property insurance, director and officers’ liability insurance, vehicle liability and associate health-care benefits, among others.

We use a combination of purchased insurance and self-insurance for workers’ compensation, general liability, property, director and officers’ liability, and vehicle liability, and associate health-care benefits, among others.

Liabilities associated with the risks that are retained by us are estimated, in part, by considering historical claims experience, demographic factors, severity factors and other actuarial assumptions.

1 unchanged sentence

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