DULUTH, Ga.—National Vision Holdings, Inc. (NASDAQ: EYE) reported net revenue increased 6.6 percent to $562.4 million compared to the first quarter of 2022, comparable store sales growth of 3.0 percent and adjusted comp store sales growth of 0.8 percent for the period. Net income for Q1 $18.3 million compared to $30.1 million respectively in Q1 2022.  Reade Fahs, CEO, stated, “Amidst an uncertain macro environment, we delivered positive comparable sales growth for the first quarter driven primarily by strength in our managed care business.

"Although we continue to experience exam capacity constraints and softness from our core uninsured customer, we are encouraged by the early results we are seeing with optometrist recruiting and retention initiatives. We remain focused on executing against our strategic initiatives to evolve our operating model to thrive amidst the new realities facing our business and the industry and are reaffirming our guidance for fiscal 2023,” he said.

In the first quarter, National Vision opened eight new stores, closed five stores, and ended the quarter with 1,357 stores. Overall, store count grew 5.0 percent from April 2, 2022 to April 1, 2023. The company said it sees a lot of "white space" for new store opportunities. Currently, National Vision's America's Best store count is 905 stores in 32 states. Eyeglass World current store count is 140 in 23 states.

Net income decreased 39.4 percent for Q1 2023 compared to the first quarter of 2022. 

The company’s cash balance was $246.9 million as of April 1, 2023 and the company had no borrowings under its $300.0 million first lien revolving credit facility, exclusive of letters of credit of $6.4 million. Total debt was $566.9 million as of April 1, 2023, consisting of outstanding first lien term loans, convertible senior notes and finance lease obligations, net of unamortized discounts.

Cash flows from operating activities for the first quarter of 2023 were $74.1 million compared to $47.1 million for the first quarter of 2022. Capital expenditures for the first quarter of 2023 totaled $27.7 million compared to $28.1 million for the first quarter of 2022.

In the first quarter, the company repurchased an additional 1.1 million shares of its common stock for $25.0 million. The company has $25.0 million remaining under the current share repurchase authorization.

National Vision reaffirmed the previously provided outlook for its key operating metrics, providing the following outlook for the 52 weeks ending Dec. 20, 2023: The opening of between 65 to 70 new stores, adjusted comp store sales growth of between 0 percent to 3 percent and net revenue for the year of between $2.075 billion to $2.135 billion.  

In a call with financial analysts following the release of the Q1 results, Fahs stated, "As we discussed last quarter, National Vision is moving rapidly down the path to adapt our business to thrive amidst the new realities facing our business and the industry. These new realities include exam capacity constraints and persistent inflationary pressures on our business and our customers' wallets."  

"Let's start with exam capacity. On the whole, in stores where we are achieving capacity objectives, comps are positive, thus demonstrating the strength of our business model. There are three components to achieving optimal exam capacity. The first is retention of the optometrists who currently practice in and alongside our stores.

"As we've previously shared, our optometrist retention rate is in the 80 percent to 90 percent range. While there are some variability within that range from 2019 to 2021, mainly due to increased retirements and other pandemic-related factors, our retention rate improved in 2022 compared with 2021. Given our healthy Q1 retention levels, we expect to see another step-up in retention in 2023 over 2022.

"The second is the recruitment of new optometrists to our network. We are pleased that our recruitment efforts are off to a strong start this year. Both recruitment and retention have been aided by the addition of a menu of more flexible scheduling options available to optometrists in our network.

"As we discussed last quarter, these updates were piloted late last year, and based on positive results, they are being further rolled out in the first half of this year. We continue to learn how best to optimize the new schedule management that goes along with this program and balance customer desired shopping patterns with the flexibility desired by the optometrist.

"Third, we're deploying our remote medicine capabilities to help improve exam capacity. Remote medicine provides patients with greater access to care and optometrists with the ability to see patients across geographies. This is because remote optometrists can be licensed in multiple states and see patients in remote-enabled exam rooms across the country where they are licensed."

Fahs said, "Our remote program is a fairly sophisticated start-up within our organization, and we expect it to significantly unlock additional exam capacity over time. While we continue to learn and evolve the program, it remains on track to contribute to profitability this year. While the greatest benefit, of course, is to dark and dim stores, there's also an important benefit in covering situations where an in-person optometrist is out of the office and is supplementing the coverage that a live doctor provides in store when there is strong demand.

"We remain on track with our expansion into at least an additional 200 remote-enabled stores this year, taking into account planned pauses expected for peak volume periods for our stores. I encourage everyone to take a look at the video we recently published on our website, demonstrating a remote exam." With the expansion of an additional 200 remote-enabled stores this year, National Vision will be at approximately 500 such remote-enabled stores by the end of the year, the company's CFO said on the call.

Fahs also reiterated National Vision's recent investment in Toku, a leader in applying AI-powered diagnostics and screening tools to retinal imaging, a move to everually bring more people affordable access to critical health care data. This was an $8 million Series A Preferred financial round co-led by National Vision and Topcon Healthcare as VMAIL reported last month.