National Vision Holdings Inc

Previous wording

We are one of the largest optical retailers in the U.S. and a leader in the attractive value segment of the U.S. optical retail industry. We believe that vision is central to quality of life and that people deserve to see their best to live their best, regardless of their budget. We achieve this by providing eye exams, eyeglasses and contact lenses to value seeking and lower income consumers with an opening price point that strives to be among the lowest in the industry, enabled by our low-cost operating platform. We reach our customers through a diverse portfolio of 1,201 retail stores across four brands as well as multiple consumer websites as of March 30, 2024.

Current wording

We are one of the largest optical retailers in the U.S. and a leader in the attractive value segment of the U.S. optical retail industry. We believe that vision is central to quality of life and that people deserve to see their best to live their best, regardless of their budget. We achieve this by providing eye exams, eyeglasses and contact lenses to value seeking and lower income consumers with an opening price point that strives to be among the lowest in the industry, enabled by our low-cost operating platform. We reach our customers through a diverse portfolio of 1,216 retail stores across four brands as well as multiple consumer websites as of June 29, 2024.

Previous wording

As of March 30, 2024, our operations consisted of one reportable segment. During the three months ended March 30, 2024, our Walmart store operations, including our former Legacy reportable segment, met the requirements to be classified as a discontinued operation; refer to Part I. Item 1. Note 2. “Discontinued Operations” and Note 3. “Costs Related to Wind Down Activities” for more information on the termination of the Walmart MSA and other wind down activities related to our continuing operations.

Current wording

As of June 29, 2024, our operations consisted of one reportable segment. During the six months ended June 29, 2024, our Walmart store operations, including our former Legacy reportable segment and components of our Corporate/Other category met the requirements to be classified as discontinued operations; refer to Part I. Item 1. Note 2. “Discontinued Operations” for more information on discontinued operations.

Previous wording

•Owned & Host - As of March 30, 2024, our owned brands consisted of 990 America’s Best Contacts and Eyeglasses retail stores and 128 Eyeglass World retail stores. Our Host brands consisted of 54 Vista Optical locations on select military bases and 29 Vista Optical locations within select Fred Meyer stores as of March 30, 2024. All brands utilize our centralized laboratories. This segment also includes sales from our America’s Best, Eyeglass World, and Military omni-channel websites.

Current wording

•Owned & Host - As of June 29, 2024, our owned brands consisted of 1003 America’s Best Contacts and Eyeglasses retail stores and 130 Eyeglass World retail stores. Our Host brands consisted of 54 Vista Optical locations on select military bases and 29 Vista Optical locations within select Fred Meyer stores as of June 29, 2024. All brands utilize our centralized laboratories. This segment also includes sales from our America’s Best, Eyeglass World, and Military omni-channel websites.

Previous wording

•Managed care business conducted by FirstSight, our wholly-owned subsidiary that is licensed as a single-service health plan under California law. In connection with the termination of the Walmart MSA, the agreement between FirstSight and Walmart, which arranged for the provision by FirstSight of optometric services at optometric offices next to certain Walmart stores throughout California, terminated on February 23, 2024.

Current wording

•The business conducted by FirstSight, our wholly-owned subsidiary that is licensed as a single-service health plan under California law. In connection with the termination of the Walmart MSA, the agreement between FirstSight and Walmart, which arranged for the provision by FirstSight of optometric services at optometric offices next to certain Walmart stores throughout California, terminated on February 23, 2024.

Previous wording

Current macroeconomic conditions, including elevated inflation and interest rates and overall consumer sentiment, could have a material adverse effect on our business, results of operations and financial condition. Inflation can result in increased costs and greater profitability pressure for us. We have experienced wage investment pressure and increases in raw materials prices, which we expect to continue. We generally employ a simple low price/high value strategy that consistently delivers savings to our customers without the need for extensive promotions. Inflationary pressures, including wage investments, consumer confidence and preferences and increased raw material costs could impact our profitability and lead us to attempt to offset such increases through various pricing actions.

Current wording

Current macroeconomic conditions, including elevated inflation and interest rates and overall consumer sentiment, have negatively impacted and may continue to have adverse effects on our business, results of operations and financial condition, which could be material. Inflation has resulted in increased costs and greater profitability pressure. We have experienced wage rate pressure and increases in raw materials prices, which we expect to continue. Inflationary pressures, including elevated wages, consumer confidence and preferences and increased raw material costs could impact our profitability and lead us to attempt to offset such increases through various pricing actions.We generally employ a simple low price/high value strategy that consistently delivers savings to our customers without the need for extensive promotions. From time to time we introduce limited-time promotions or new offers designed to increase demand and drive sales. Several factors may impact the level of success of such promotions, including consumer sentiment, macroeconomic conditions and marketing effectiveness, and as a result, if they do not meet our expectations, they could negatively impact our margins and profitability.

Previous wording

Additionally, our ability to continue to attract and retain qualified vision care professionals may affect exam capacity. We believe the impacts of the COVID-19 pandemic on vision care professional availability, including a competitive recruiting market and preferences for adjusted work schedules, and the demand for optometrists exceeding supply in certain areas have caused constraints in exam capacity which are continuing. Due to these factors, the costs to employ or retain optometrists have increased and may increase further, potentially materially.

Current wording

Additionally, our ability to continue to attract and retain qualified vision care professionals may affect exam capacity. We believe the impacts of the COVID-19 pandemic on vision care professional availability, including a competitive recruiting market and preferences for adjusted work schedules, and the demand for optometrists exceeding supply in certain areas have caused constraints in exam capacity which are continuing. Due to these factors, among others, the ability to recruit and retain optometrists has become more challenging and the costs to employ or retain optometrists have increased and may increase further, potentially materially.

Previous wording

In the first quarter of 2024, we incurred costs related to the termination of the Walmart MSA and the wind-down of AC Lens operations, as well as an immaterial amount of costs related to the actions taken in fiscal year 2023 to streamline corporate overhead. We may incur other exit-related costs in connection with the termination of the Walmart MSA and wind-down of AC Lens operations, which may be material. In addition, while we seek to reduce costs and replace lost business with new America’s Best or Eyeglass World stores and by other means, including anticipated non-headline pricing actions, we may not be successful in our efforts, which could impact our revenues and profitability. Refer to Part I. Item 1. Note 3. “Costs Related to Wind Down Activities,” in this Form 10-Q for more details.

Current wording

In the first half of 2024, we incurred costs related to the termination of the Walmart MSA and the wind-down of AC Lens operations, as well as an immaterial amount of costs related to the actions taken in fiscal year 2023 to streamline corporate overhead. While we seek to reduce costs and replace lost business with new America’s Best or Eyeglass World stores and by other means, including anticipated non-headline pricing actions, we may not be successful in our efforts, which could impact our revenues and profitability.

Previous wording

SG&A generally fluctuates consistently with revenue due to the variable store, field office and corporate support costs; however, some fixed costs slightly improve as a percentage of net revenue as our net revenues grow over time.

Current wording

SG&A expenses generally fluctuate consistently with revenue due to the variable store, field office and corporate support costs; however, some fixed costs may decrease as a percentage of net revenue as our net revenues grow over time.

Previous wording

The total number of new stores per year and the timing of store openings has, and will continue to have, an impact on our results. We expect to open 65 to 70 stores in the current year. We will continue to monitor and determine our plans for future new store openings based on health, safety and economic conditions.

Current wording

The total number of new stores per year and the timing of store openings has had an impact, and we expect will continue to have an impact, on our results. We expect to open 65 to 70 stores in the current year. We are continuing to monitor and determine our plans for future new store openings at a level appropriate for incremental free cash flow generation and healthy growth, and based on health, safety and economic conditions.

Previous wording

During the three months ended March 30, 2024, our Walmart store operations, including our former Legacy reportable segment, met the requirements to be classified as discontinued operations. Refer to Part I. Item 1. Note 2. “Discontinued Operations” for information related to our discontinued operations. Unless otherwise noted, the discussion of U.S. GAAP results below is based on results from continuing operations.

Current wording

Certain components of our operations met the requirements to be classified as discontinued operations as of June 29, 2024. Refer to Part I. Item 1. Note 2. “Discontinued Operations” for information related to our discontinued operations. Unless otherwise noted, the discussion of U.S. GAAP results below is based on results from continuing operations.

Previous wording

Comparable store sales growth from continuing operations and Adjusted Comparable Store Sales Growth from continuing operations for the three months ended March 30, 2024 were 1.4% and 0.4%, respectively, primarily due to higher average ticket, partially offset by a decrease in customer transactions.

Current wording

Comparable store sales growth from continuing operations and Adjusted Comparable Store Sales Growth from continuing operations for the three months ended June 29, 2024 were 2.2% and 2.4%, respectively, both reflecting an increase in customer transactions and higher average ticket.

Previous wording

Net product sales comprised 82.5% and 83.7% of total net revenue for the three months ended March 30, 2024 and April 1, 2023, respectively. Net product sales increased $11.7 million, or 2.7%, in the three months ended March 30, 2024 compared to the three months ended April 1, 2023, primarily due to a $5.9 million, or 1.9%, increase in eyeglass sales, a $2.7 million, or 7.2%, increase in wholesale fulfillment and a $2.6 million, or 2.7%, increase in contact lens sales.

Current wording

Net product sales comprised 80.1% and 81.6% of total net revenue for the three months ended June 29, 2024 and July 1, 2023, respectively. Net product sales increased $9.8 million, or 2.8%, in the three months ended June 29, 2024 compared to the three months ended July 1, 2023, driven primarily by a $4.2 million, or 5.6%, increase in contact lens sales and a $4.2 million, or 1.5% increase in eyeglass sales.

Previous wording

Net sales of services and plans for the three months ended March 30, 2024 increased $10.0 million, or 11.8%, compared to the three months ended April 1, 2023, driven primarily by higher exam revenues of $9.5 million, or 17.9%.

Current wording

Net sales of services and plans for the three months ended June 29, 2024 increased $10.2 million, or 12.8%, compared to the three months ended July 1, 2023, driven primarily by higher eye exam revenues of $9.7 million, or 20.2%.

Previous wording

Owned & Host segment net revenue. Net revenue increased $14.9 million, or 3.2%, driven primarily by new store openings and comparable store sales growth, partially offset by closed and converting stores.

Current wording

Owned & Host segment net revenue. Net revenue increased $20.7 million, or 5.0%, driven primarily by new store openings and comparable store sales growth, partially offset by converted and closed stores.

Previous wording

Costs applicable to revenue of $248.7 million for the three months ended March 30, 2024 increased $13.3 million, or 5.6%, from $235.4 million for the three months ended April 1, 2023. As a percentage of net revenue, costs applicable to revenue increased from 45.2% for the three months ended April 1, 2023 to 45.8% for the three months ended March 30, 2024. This increase as a percentage of net revenue was primarily driven by lower eyeglass mix of 100 basis points, higher growth in optometrist-related costs of 80 basis points and by 20 basis points from other mix and margin effects. These costs were partially offset by a 140 basis point effect from higher exam revenue.

Current wording

Costs applicable to revenue of $193.6 million for the three months ended June 29, 2024 increased $13.3 million, or 7.4%, from $180.3 million for the three months ended July 1, 2023. As a percentage of net revenue, costs applicable to revenue increased from 41.8% for the three months ended July 1, 2023 to 42.9% for the three months ended June 29, 2024. This increase as a percentage of net revenue was primarily driven by lower eyeglass mix of 150 basis points, growth in optometrist-related costs of 100 basis points and 30 basis points from other mix and margin effects. These costs were partially offset by a 170 basis point effect from higher exam revenue.

Previous wording

Owned & Host segment costs of products. Costs of products as a percentage of net product sales increased from 28.1% for the three months ended April 1, 2023 to 28.2% for the three months ended March 30, 2024, primarily driven by lower eyeglass mix and other product mix and margin effects.

Current wording

Owned & Host segment costs of products. Costs of products as a percentage of net product sales increased from 29.3% for the three months ended July 1, 2023 to 29.7% for the three months ended June 29, 2024, primarily driven by lower eyeglass mix and other product mix and margin effects.

Previous wording

Depreciation and amortization expense of $23.6 million for the three months ended March 30, 2024 increased $0.9 million, or 4.0%, from $22.7 million for the three months ended April 1, 2023 primarily driven by new store openings and investments in remote medicine technology.

Current wording

Depreciation and amortization expense of $22.7 million for the three months ended June 29, 2024 increased $0.6 million, or 2.7%, from $22.1 million for the three months ended July 1, 2023 primarily driven by new store openings and investments in remote medicine technology.

Previous wording

We recognized $0.5 million primarily for impairment of tangible long-lived assets and ROU assets associated with our retail stores during the three months ended March 30, 2024, compared to $0.4 million impairment recognized during the three months ended April 1, 2023. The store asset impairment charge is related to our Owned & Host segment and is driven by lower than projected customer sales volume in certain stores, and other entity-specific assumptions. We considered multiple factors including, but not limited to: forecasted scenarios related to store performance and the likelihood that these scenarios would be ultimately realized; and the remaining useful lives of the assets. Asset impairment expenses were recognized in Corporate/Other.

Current wording

We recognized $3.5 million primarily for impairment of tangible long-lived assets associated with our retail stores during the three months ended June 29, 2024, compared to $0.9 million impairment recognized during the three months ended July 1, 2023. The store asset impairment charge is related to our Owned & Host segment and is driven by lower than projected customer sales volume in certain stores, and other entity-specific assumptions. We considered multiple factors including, but not limited to: forecasted scenarios related to store performance and the likelihood that these scenarios would be ultimately realized; and the remaining useful lives of the assets. Asset impairment expenses were recognized in Corporate/Other.

Previous wording

Income (loss) from discontinued operations, net of tax of $(0.6) million for the three months ended March 30, 2024, decreased $2.9 million from $2.3 million for the three months ended April 1, 2023. Net revenue, costs applicable to revenue and SG&A from discontinued operations decreased by $23.2 million, $9.4 million and $5.2 million, respectively, as compared to the three months ended April 1, 2023, primarily due to the current year including the results of the Walmart store operations, including our former Legacy segment, for a partial period prior to the Walmart MSA termination date. Income tax expense (benefit) decreased by $4.2 million, due to lower income before income taxes in the current period as compared to the prior year, as well as other permanent items related to discontinued operations, primarily related to tax impacts of consolidated VIEs.

Current wording

Income (loss) from discontinued operations, net of tax of $(2.1) million for the three months ended June 29, 2024, decreased $4.1 million from $2.0 million for the three months ended July 1, 2023. Net revenue, costs applicable to revenue and SG&A from discontinued operations decreased by $40.1 million, $17.6 million and $14.5 million, respectively, as compared to the three months ended July 1, 2023, primarily due to the current year including the discontinued operations results only for a partial period prior to the Walmart MSA termination date and the wind-down of AC Lens operations. Income tax expense (benefit) decreased by $1.4 million, due to lower income (loss) before income taxes in the current period as compared to the prior year, as well as other permanent items related to discontinued operations, primarily related to tax impacts of consolidated VIEs.

Previous wording

(3)Adjusted Comparable Store Sales Growth from continuing operations includes the effect of deferred and unearned revenue as if such revenues were earned at the point of sale, resulting in a decrease of 1.0% and a decrease of 2.1% from total comparable store sales growth from continuing operations based on consolidated net revenue for the three months ended March 30, 2024 and April 1, 2023, respectively.

Current wording

(3)Adjusted Comparable Store Sales Growth from continuing operations includes the effect of deferred and unearned revenue as if such revenues were earned at the point of sale, resulting in a decrease of 0.5% and a decrease of 0.4% from total comparable store sales growth from continuing operations based on consolidated net revenue for the six months ended June 29, 2024 and July 1, 2023, respectively.

Previous wording

Total net revenue of $542.5 million for the three months ended March 30, 2024 increased $21.7 million, or 4.2%, from $520.8 million for the three months ended April 1, 2023. The increase was driven by approximately 75% growth from new store sales, 15% by our AC Lens business, 15% from the timing of unearned revenue, and 5% by Adjusted Comparable Store Sales Growth from continuing operations, partially offset by closed and converting stores.

Current wording

Total net revenue of $934.5 million for the six months ended June 29, 2024 increased $37.9 million, or 4.2%, from $896.6 million for the six months ended July 1, 2023. Approximately 80% of the increase was driven by growth from new store sales, approximately 30% was driven by Adjusted Comparable Store Sales Growth from continuing operations, and approximately 10% was driven by the timing of unearned revenue, partially offset by effects of converted and closed stores.

Previous wording

In the three months ended March 30, 2024, we opened 14 new America’s Best stores and converted 20 Eyeglass World stores to America’s Best stores. Overall, store count grew 6.5% from April 1, 2023 to March 30, 2024 (65 and 8 net new America’s Best and Eyeglass World stores, respectively).

Current wording

In the six months ended June 29, 2024, we opened 28 new America’s Best stores and three Eyeglass World stores, closed two America’s Best stores and one Eyeglass World store and converted 20 Eyeglass World stores to America’s Best stores. Overall, store count grew 5.6% from July 1, 2023 to June 29, 2024 (57 and seven net new America’s Best and Eyeglass World stores, respectively).

Previous wording

Net revenue reconciliations. The impact of reconciliations positively impacted net revenue by $3.7 million in the three months ended March 30, 2024 compared to the three months ended April 1, 2023. Net revenue was positively impacted by $2.8 million due to the timing of unearned revenue. Net revenue was positively impacted by $0.9 million primarily due to lower sales of product protection plans and higher recognition of product protection plan revenue in the three months ended March 30, 2024 compared to the three months ended April 1, 2023.

Current wording

Net revenue reconciliations. The impact of reconciliations positively impacted net revenue by $3.1 million in the six months ended June 29, 2024 compared to the six months ended July 1, 2023. Net revenue was positively impacted by $2.8 million due to the timing of unearned revenue. Net revenue was positively impacted by $0.3 million primarily due to lower sales of product protection plans and higher recognition of product protection plan revenue in the six months ended June 29, 2024 compared to the six months ended July 1, 2023.

Previous wording

Owned & Host segment costs of services and plans. Costs of services and plans as a percentage of net sales of services and plans decreased from 86.2% for the three months ended April 1, 2023 to 85.5% for the three months ended March 30, 2024. The decrease was primarily driven by higher exam revenue, partially offset by growth in optometrist-related costs.

Current wording

Owned & Host segment costs of services and plans. Costs of services and plans as a percentage of net sales of services and plans decreased from 89.5% for the six months ended July 1, 2023 to 88.3% for the six months ended June 29, 2024. The decrease was primarily driven by higher exam revenue, partially offset by growth in optometrist-related costs.

Previous wording

SG&A of $245.4 million for the three months ended March 30, 2024 increased $12.0 million, or 5.2%, from the three months ended April 1, 2023. As a percentage of net revenue, SG&A increased from 44.8% for the three months ended April 1, 2023 to 45.2% for the three months ended March 30, 2024. The increase in SG&A as a percentage of net revenue was primarily driven by litigation settlement of 80 basis points and legal and professional expenses of 30 basis points as well as other operating expenses, partially offset by decreases in performance-based incentive compensation of 100 basis points and stock-based compensation expense of 30 basis points.

Current wording

SG&A of $471.5 million for the six months ended June 29, 2024 increased $19.9 million, or 4.4%, from the six months ended July 1, 2023. As a percentage of net revenue, SG&A increased from 50.4% for the six months ended July 1, 2023 to 50.5% for the six months ended June 29, 2024. The increase in SG&A as a percentage of net revenue was primarily driven by litigation settlement of 50 basis points and legal and professional expenses of 40 basis points as well as other operating expenses, partially offset by decreases in performance-based incentive compensation of 100 basis points.

Previous wording

Owned & Host SG&A. SG&A as a percentage of net revenue increased from 36.3% for the three months ended April 1, 2023 to 37.7% for the three months ended March 30, 2024, driven primarily by higher payroll, occupancy expense and advertising expense.

Current wording

Owned & Host SG&A. SG&A as a percentage of net revenue increased from 37.9% for the six months ended July 1, 2023 to 38.6% for the six months ended June 29, 2024, driven primarily by higher occupancy expense and payroll.

Previous wording

Interest expense, net was $4.3 million for the three months ended March 30, 2024, compared to $4.9 million for the three months ended April 1, 2023. The change was primarily a result of higher derivative income of $1.0 million and lower interest expense on our long-term debt of $0.4 million, partially offset by lower income on cash balances of $0.8 million.

Current wording

Interest expense, net was $7.5 million for the six months ended June 29, 2024, compared to $6.7 million for the six months ended July 1, 2023. The change was primarily a result of lower derivative income of $1.7 million and lower income on cash balances of $0.6 million, partially offset by lower interest expense on our long-term debt of $1.3 million.

Previous wording

Our effective tax rates for the three months ended March 30, 2024 and April 1, 2023 were 39.3% and 34.0%, respectively. The change in effective tax rates reflects our statutory federal and state rates of 25.2% and 25.4%, respectively, and non-deductible compensation expense as well as effects of other permanent items.

Current wording

Our effective tax rates for the six months ended June 29, 2024 and July 1, 2023 were 35.4% and 30.0%, respectively. The change in effective tax rates reflects our statutory federal and state rates of 25.2% and 25.4%, respectively, tax impacts of consolidated VIEs and non-deductible compensation expense as well as effects of other permanent items.

Previous wording

We define Adjusted Operating Income as net income, plus interest expense (income), net and income tax provision (benefit), further adjusted to exclude stock-based compensation expense, loss on extinguishment of debt, asset impairment, litigation settlement, secondary offering expenses, management realignment expenses, long-term incentive plan expenses, amortization of acquisition intangibles, ERP implementation expenses and certain other expenses. We define Adjusted Operating Margin as Adjusted Operating Income as a percentage of net revenue. We define EBITDA as net income, plus interest expense (income), net, income tax provision (benefit) and depreciation and amortization. We define Adjusted EBITDA as net income, plus interest expense (income), net, income tax provision (benefit) and depreciation and amortization, further adjusted to exclude stock-based compensation expense, loss on extinguishment of debt, asset impairment, litigation settlement, secondary offering expenses, management realignment expenses, long-term incentive plan expenses, ERP implementation expenses and certain other expenses. We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of net revenue. We define Adjusted Diluted EPS as diluted earnings per share, adjusted for the per share impact of stock-based compensation expense, loss on extinguishment of debt, asset impairment, litigation settlement, secondary offering expenses, management realignment expenses, long-term incentive plan expenses, amortization of acquisition intangibles, amortization of debt discounts and deferred financing costs of our term loan borrowings, amortization of the conversion feature and deferred financing costs related to our 2025 Notes when not required under U.S. GAAP to be added back for diluted earnings per share, derivative fair value adjustments, ERP implementation expenses, certain other expenses, and tax expense (benefit) from stock-based compensation, less the tax effect of these adjustments.

Current wording

We define Adjusted Operating Income as net income, plus interest expense (income), net and income tax provision (benefit), further adjusted to exclude stock-based compensation expense, loss on extinguishment of debt, asset impairment, litigation settlement, secondary offering expenses, management realignment expenses, long-term incentive plan expenses, ERP and CRM implementation expenses and certain other expenses. We define Adjusted Operating Margin as Adjusted Operating Income as a percentage of net revenue. We define EBITDA as net income, plus interest expense (income), net, income tax provision (benefit) and depreciation and amortization. We define Adjusted EBITDA as net income, plus interest expense (income), net, income tax provision (benefit) and depreciation and amortization, further adjusted to exclude stock-based compensation expense, loss on extinguishment of debt, asset impairment, litigation settlement, secondary offering expenses, management realignment expenses, long-term incentive plan expenses, ERP and CRM implementation expenses and certain other expenses. We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of net revenue. We define Adjusted Diluted EPS as diluted earnings per share, adjusted for the per share impact of stock-based compensation expense, loss on extinguishment of debt, asset impairment, litigation settlement, secondary offering expenses, management realignment expenses, long-term incentive plan expenses, amortization of debt discounts and deferred financing costs of our term loan borrowings, amortization of the conversion feature and deferred financing costs related to our 2025 Notes when not required under U.S. GAAP to be added back for diluted earnings per share, derivative fair value adjustments, ERP and CRM implementation expenses, certain other expenses, less the tax effect of these adjustments, including tax expense (benefit) from stock-based compensation.

Previous wording

The following table reconciles our Adjusted Operating Income from continuing operations, Adjusted Operating Margin from continuing operations, EBITDA from continuing operations, Adjusted EBITDA from continuing operations, and Adjusted EBITDA Margin from continuing operations to net income from continuing operations; and Adjusted Diluted EPS from continuing operations to diluted EPS from continuing operations for the periods presented:

Current wording

The following table reconciles our Adjusted Operating Income from continuing operations, Adjusted Operating Margin from continuing operations, EBITDA from continuing operations, Adjusted EBITDA from continuing operations, and Adjusted EBITDA Margin from continuing operations to net income (loss) from continuing operations; and Adjusted Diluted EPS from continuing operations to diluted EPS from continuing operations for the periods presented:

Previous wording

(e)Amortization of deferred financing costs and other non-cash charges related to our long-term debt. We adjust for amortization of deferred financing costs related to the 2025 Notes only when adjustment for these costs is not required in the calculation of diluted earnings per share under U.S. GAAP.

Current wording

(d)Amortization of deferred financing costs and other non-cash charges related to our long-term debt. We adjust for amortization of deferred financing costs related to the 2025 Notes only when adjustment for these costs is not required in the calculation of diluted earnings per share under U.S. GAAP.

Previous wording

(f)The adjustments for the derivative fair value (gains) and losses have the effect of adjusting the (gain) or loss for changes in the fair value of derivative instruments and amortization of AOCL for derivatives not designated as accounting hedges. This results in reflecting derivative (gains) and losses within Adjusted Diluted EPS during the period the derivative is settled.

Current wording

(e)The adjustments for the derivative fair value (gains) and losses have the effect of adjusting the (gain) or loss for changes in the fair value of derivative instruments and amortization of AOCL for derivatives not designated as accounting hedges. This results in reflecting derivative (gains) and losses within Adjusted Diluted EPS during the period the derivative is settled.

Previous wording

(g)Costs related to the Company’s ERP implementation.

Current wording

(f)Costs related to the Company’s ERP and CRM implementation.

Previous wording

(h)Other adjustments include amounts that management believes are not representative of our operating performance (amounts in brackets represent reductions in Adjusted Operating Income, Adjusted Diluted EPS and Adjusted EBITDA), which are primarily related to costs associated with the digitization of paper-based records of $1.8 million, costs primarily related to the wind down of AC Lens of $0.9 million, excess payroll taxes on vesting of restricted stock units and exercises of stock options, executive severance and relocation and other expenses and adjustments for the three months ended March 30, 2024.

Current wording

(g)Other adjustments include amounts that management believes are not representative of our operating performance (amounts in brackets represent reductions in Adjusted Operating Income, Adjusted Diluted EPS and Adjusted EBITDA), which are primarily related to costs associated with the digitization of paper-based records of $2.3 million and $4.1 million for the three and six months ended June 29, 2024, respectively, and other expenses and adjustments. Other adjustments for both Adjusted Operating Income and Adjusted Diluted EPS include amortization of the increase in carrying values of finite-lived intangible assets resulting from the application of purchase accounting following the acquisition of the Company by affiliates of KKR & Co. Inc. Adjusted Diluted EPS is also adjusted to include debt issuance costs.

Previous wording

(j)Represents the income tax effect of the total adjustments at our combined statutory federal and state income tax rates.

Current wording

(h)Represents the income tax effect of the total adjustments at our combined statutory federal and state income tax rates, including tax expense (benefit) from stock-based compensation.

Previous wording

Our primary cash needs are for inventory, payroll, store rent, advertising, capital expenditures associated with new stores and updating existing stores, as well as information and remote medicine technology and infrastructure, including our corporate office, distribution centers, and laboratories. When appropriate, the Company may utilize excess liquidity towards debt service requirements, including voluntary debt prepayments, or required interest and principal payments, if any, as well as repurchases of common stock or other securities, based on excess cash flows. The most significant components of our operating assets and liabilities are inventories, accounts receivable, prepaid expenses and other assets, accounts payable, deferred and unearned revenue and other payables and accrued expenses. We exercise prudence in our use of cash and closely monitor various items related to cash flow including, but not limited to, cash receipts, cash disbursements, payment terms and alternative sources of funding. We continue to be focused on these items in addition to other key measures we use to determine how our consolidated business and operating segments are performing. We believe that cash on hand, cash expected to be generated from operations and the availability of borrowings under our Revolving Loans will be sufficient to fund our working capital requirements, liquidity obligations, anticipated capital expenditures, and payments due under our existing debt for the next 12 months and thereafter for the foreseeable future. Depending on our liquidity levels, conditions in the capital markets and other factors, we may from time to time consider the prepayment, refinancing or issuance of debt, issuance of equity or other securities, the proceeds of which could provide additional liquidity for our operations, as well as modifications to our Term Loan A where possible. Our ability to maintain sufficient liquidity may be affected by numerous factors, many of which are outside of our control. We primarily fund our working capital needs using cash provided by operations. Our working capital requirements for inventory will increase as we continue to open additional stores.

Current wording

Our primary cash needs are for inventory, payroll, store rent, advertising, capital expenditures associated with new stores and updating existing stores, as well as information and remote medicine technology and infrastructure, including our corporate office, distribution centers, and laboratories. When appropriate, the Company may utilize excess liquidity towards debt service requirements, including voluntary debt prepayments, or required interest and principal payments, if any, as well as repurchases of common stock or other securities, based on excess cash flows. The most significant components of our operating assets and liabilities are inventories, accounts receivable, prepaid expenses and other assets, accounts payable, deferred and unearned revenue and other payables and accrued expenses. We exercise prudence in our use of cash and closely monitor various items related to cash flow including, but not limited to, cash receipts, cash disbursements, payment terms and alternative sources of funding. We continue to be focused on these items in addition to other key measures we use to determine how our consolidated business and operating segments are performing. We believe that cash on hand, cash expected to be generated from operations and the availability of borrowings under our Revolving Loans will be sufficient to fund our working capital requirements, liquidity obligations, anticipated capital expenditures, and payments due under our existing debt for the next 12 months and thereafter for the foreseeable future. Depending on our liquidity levels, conditions in the capital markets and other factors, we may from time to time consider the prepayment, refinancing or issuance of debt, issuance of equity or other securities, the proceeds of which could provide additional liquidity for our operations, as well as modifications to our Term Loan A where possible. In addition, depending on market conditions and other factors, we may elect to repurchase all or a significant portion of our outstanding 2025 Notes prior to their maturity on May 15, 2025, utilizing cash on hand and/or one or more of the additional liquidity sources noted above. Our ability to maintain sufficient liquidity may be affected by numerous factors, many of which are outside of our control. We primarily fund our working capital needs using cash provided by operations. Our working capital requirements for inventory will increase as we continue to open additional stores.

Previous wording

As of March 30, 2024, we had $150.0 million in cash and cash equivalents and $293.6 million of availability under our Revolving Loans, which includes $6.4 million in outstanding letters of credit.

Current wording

As of June 29, 2024, we had $179.5 million in cash and cash equivalents and $293.6 million of availability under our Revolving Loans, which includes $6.4 million in outstanding letters of credit.

Previous wording

As of March 30, 2024, we had $144.4 million of Term Loan A outstanding under our credit agreement. We were in compliance with all covenants related to our long-term debt as of March 30, 2024.

Current wording

As of June 29, 2024, we had $142.5 million of Term Loan A outstanding under our credit agreement. We were in compliance with all covenants related to our long-term debt as of June 29, 2024.

Previous wording

Cash flows provided by operating activities decreased by $50.1 million to $24.0 million, during the three months ended March 30, 2024 from $74.1 million for the three months ended April 1, 2023 as a result of changes in net working capital and other assets and liabilities, which used $38.2 million of cash year-over-year, also driven by a decrease in net income and non-cash reconciling items of $11.9 million, as compared to the three months ended April 1, 2023.

Current wording

Cash flows provided by operating activities decreased by $36.8 million to $75.4 million, during the six months ended June 29, 2024 from $112.2 million for the six months ended July 1, 2023 as a result of a decrease in net income and non-cash reconciling items of $21.5 million, as compared to the six months ended July 1, 2023. The decrease was also driven by changes in net working capital and other assets and liabilities, which used $15.3 million of cash year-over-year.

Previous wording

Decreases in other liabilities during the three months ended March 30, 2024 used $26.2 million in year-over-year cash primarily due to decreases in compensation-related accruals. Decreases in accounts payable used $16.1 million in year-over-year cash, primarily as a result of timing of payments. These were partially offset by decreases in accounts receivable which contributed $12.7 million in year-over-year cash, primarily due to decreases in managed care accruals and credit card receivables during the three months ended March 30, 2024, compared to the three months ended April 1, 2023.

Current wording

Decreases in other liabilities during the six months ended June 29, 2024 used $37.6 million in year-over-year cash, primarily due to decreases in compensation-related accruals. Decreases in accounts payable used $16.4 million in year-over-year cash, primarily as a result of the AC Lens wind down. These were partially offset by decreases in inventories which contributed $25.7 million in year-over-year cash, primarily due to AC Lens inventory decreasing and decreases in accounts receivable which contributed $23.8 million in year-over-year cash, primarily due to decreases in trade and credit card receivables during the six months ended June 29, 2024, compared to the six months ended July 1, 2023.