Please ensure Javascript is enabled for purposes of website accessibility

WellPoint Selling 1-800-Contacts

By Associated Press – Jan 8, 2014 at 10:29AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The deal to by 1-800-Contacts gave WellPoint its first direct-to-consumer business outside of individual health coverage.

WellPoint is unloading 1-800-Contacts less than two years after buying the contact lens retailer as it sought to diversify its revenue sources.

The nation's second-largest health insurer said Tuesday after markets closed that it would sell 1-800 Contacts to the private equity firm Thomas H. Lee Partners. Terms of the deal were not disclosed. It also is selling its stake in the website. And the eyewear maker Luxottica will invest in some technology developed by 1-800-Contacts that allows customers try on glasses virtually.

WellPoint expects both the sales to close in the first quarter. It will book an impairment charge of between $0.52 and $0.57 per share in the fourth quarter, but the insurer said it still expects to report adjusted earnings of at least $8.40 per share in 2013. That doesn't count one-time charges.

1-800-Contacts fills orders for several brands of contact lens by phone, Internet, mail or fax. It also sells eye glasses through

WellPoint announced the acquisition in June 2012, saying then that the business presented significant growth opportunities and profit margins in the double-digit range.

The deal gave WellPoint its first direct-to-consumer business outside of individual health coverage. It was one of a handful of acquisitions the insurer put together under former chairwoman and CEO Angela Braly.

A couple months after the 1-800-Contacts deal, the insurer posted a disappointing quarterly profit, cut its 2012 forecast and Braly resigned.

WellPoint's current CEO, Joseph R. Swedish, said Tuesday that the company needs to focus on core growth of both its commercial insurance and its government business segments.

Leerink analyst Ana Gupte believes that the sale marks a decisive action by Swedish to reverse one of Braly's less popular decisions.


The Motley Fool recommends WellPoint. The Motley Fool owns shares of WellPoint. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.