You may not know the name National Vision. But if you bought your glasses at a Walmart—or at one of hundreds of other eyewear retailers across the US—you might be wearing the company's product on your face as you read this sentence.
In the past three decades, National Vision has grown from nothing into one of the major optical retailers in the US, including more than 200 locations inside Walmarts across the US. And one part of that recipe for success has been private equity. For much of its recent growth, National Vision was backed by KKR—a very profitable relationship between eyewear provider and buyout firm that began four years ago today.
On February 7, 2014, KKR agreed to acquire the business from former private equity owner Berkshire Partners, reportedly for more than $1 billion. In an interview at the time with The Wall Street Journal, KKR partner Nate Taylor highlighted three key reasons for the firm's interest in the company: An aging population in the US, an increased focus by insurers on vision plans and the fact that glasses aren't subject to the whims of the market. Even if there's a recession, people still need to see.
Founded in 1990, National Vision was publicly traded for more than a decade until it was taken private by Berkshire Partners in 2005 for a reported $190 million, a deal funded with $153 million in debt. Simultaneously, National Vision bought the parent company of America's Best Contacts & Eyeglasses for about $88 million, adding more than 100 new stores to an existing portfolio of about 400 locations.
Four years later—and after a $200 million recapitalization in 2006—National Vision made another acquisition, taking on Eyeglass World and its 64 retail locations in 2009. In 2011, the company went on to purchase AC Lens in an effort to improve its ecommerce operations.
Shortly thereafter, in 2012, National Vision secured a $300 million term loan in order to pay off its existing debt and issue a $117 million dividend to its shareholders, according to Moody's. Combined with a reported $88 million dividend from 2010, Berkshire Partners had already returned more than its initial investment.
It therefore came as little surprise that, in 2013, the firm began pursuing a sale. By late in the year, PE heavyweights The Carlyle Group and KKR had seemingly emerged as the primary suitors. And in early February, KKR and National Vision made a deal.
The early days of KKR's ownership were a continuation of the company's steady expansion during its previous private equity ownership, as National Vision reportedly generated a 7% sales growth during 2014 and an 8% figure during 1Q 2015. In May 2015, the company took out a loan in order to pay a $145 million dividend, again per Moody's.
As KKR's ownership continued, so did the impressive growth. Between 2014 and 2016, National Vision's net revenue increased from about $933 million to $1.2 billion. During that same timeframe, the company's adjusted net income rose from around $9 million to $33 million, and its adjusted EBITDA jumped from about $82 million up to $138 million.
Only three years after buying the business, KKR was ready for an exit. In October 2017, National Vision launched an IPO, initially planning to sell 15.8 million shares on the NASDAQ for between $18 and $20 each. About two weeks later, when the company debuted on October 26, it priced those shares instead at $22 apiece, generating $322.4 million in proceeds. KKR owned about 77% of the business at the time of the offering, per an SEC filing, while Berkshire Partners retained an 18% stake.
In the few months since its public debut, National Vision's stock price has already shot up. The company's shares finished Tuesday trading at $38.08, representing a 73% rise from the $22 price of its IPO.
In the past decade-plus, National Vision has put glasses on the faces of thousands of Americans. It is also continuing to put millions in the pockets of its investors.