Quest Diagnostics Incorporated (DGX) Earnings Call Transcript

Let's move along. Great. So look, thanks for zooming in. We're going to roll right into our first interview. Our first interview up, it is Cecilia McKenney. Cecilia is the Senior Vice President and CHRO of Quest Diagnostics. Cecilia, welcome to the program.

It's great to be here, Hunter. Thanks.

A little bit about the context of Quest. What -- how big -- what's the scale? What do you actually do, for those who don't know?

Sure. So Quest is a $7.7 billion company. We're a public company with over 46,000 employees. And we're a diagnostics -- so we process health care tests. So we're diagnostic testing company. But what many don't know is we are a logistics company. We complete 80,000 pickups a day. We have 27 planes that fly around the country to pick up those specimens and then get them to the right lab. And overnight, we result over 1 million tests and then touch -- by doing so, touch 1/3 of adult Americans every year. So we're the largest diagnostic company in America and certainly very much in demand right now. Given our work, the vast majority of our employees have to come into work during COVID. We have about, as I said, 46,000 employees. And 37,000 are coming into a Quest site every day, dedicated 24/7 to process COVID tests, and it's just been an amazing experience. The FDA granted us a Emergency Use Authorization, or they call it EUA, to Quest on February 29, and we began testing in San Juan Capistrano in California on March 9. And since then, we have performed over 7.4 million, that's with an M, COVID tests since then.

Cecilia, that's amazing, really impressive. And thanks for the frontline work that you all are doing. Your CEO really is a visionary. Talk to us about some of the strategic relationships that he's put in place in just the past 4 months.

So Steve Rusckowski is our CEO, and he is a leader that translates vision that he has -- he's incredible as you said, into action and results and is a big believer in doing that with partnerships because that enables faster innovation and faster go-to-market. And Steve, as he joined the company, wanted to shift the company from being a B2B to -- largely the hospitals and physicians to B2B and B2C. So getting health care insights directly to consumers, and he did that by forging a partnership with Walmart. And the vision was let's put the diagnostic draw center, so the patient center where you go to donate your -- or get your blood drawn in the front of the Walmart store, where consumers are shopping every day. And that has really been a tremendous disruption to how people get -- experience getting their blood drawn or their urine donated to -- for testing. And so since then, we have put Quest Diagnostics centers in 78 Walmart stores. And this partnership -- who would have ever thought it would be absolutely essential in COVID? Walmart and Quest are members of Vice President Pence's Coronavirus Task Force. And early in March, Steve got a call from Vice President Pence to come down to D.C. And he and Doug McMillon got to talking with Vice President Pence, who asked them, "How do we ramp up testing very, very quickly?" And we got leaders together and came up with this idea of offering testing in parking lots. So a drive-up testing, who would, again, have ever thought we would be doing drive-up testing? And now we have -- we are in 250 Walmarts around the country offering drive-up testing in parking lots today, and that will grow through the summer. And for those in New Jersey, I know we're speaking -- there are 3 in New Jersey, and you can find out on our website if you do need testing, which Walmart to go to.

Cecilia, a great story, and you probably have a bunch of lessons on leadership in a crisis, being in the HR space. Talk to us about some lessons learned.

Yes. It has been incredibly humbling to sort of relearn how to lead in COVID. And I'd offer a few, but who would have ever thought being agile would be so exhausting? And I'm sure everybody is nodding on this summit, and that working at home might be harder than working in the office. But that certainly has been the case over the last 3 months. But what I feel like has been a huge difference in effectively leading through crisis are 3 things. One is overcommunicate. I have this expression 7 times, 7 different ways. COVID has been so stressful that without a pandemic, adults retain about 30% of what they hear. So repetition in communication is so important so we can learn -- hear the other 70%. So we have used multiple mediums to communicate, whether it's video, e-mail, conference calls. We've even sent letters home from Steve to families so that they get the message on Quest priority and that we care. And that we also have to remind leaders, I think, COVID has sort of immobilized some people depending upon what's going on in their family situation, and leaders have to be reminded. We call it the communication cascade that we share information with you, but then it's your job to make sure that you are overcommunicating, reaching out to your employees. So that's kind of number one, overcommunicate 7 times, 7 different ways. The next one is transparency and care. We have found ourselves talking much more familial, being much more expressive, using just very emotional words to try to get across because we can't be together. So to try to connect, use more emotional words. And so we were -- despite doing all this testing, as I said, our base business was incredibly hit. So we had to furlough and reduce schedules and implement pay cuts. We're in Oracle Cloud shock. And I partnered with Gabrielle Wolfson, our CIO, because we had to very quickly update Oracle to enable some of the workforce actions. And we had to explain why, and we had to use words like shared sacrifice and we want to keep jobs because we care about you in the long term. So transparency and care would be the second. And then the third is make sure that you use data to drive your decisions. Don't let your emotions get in your way and be comfortable. That's probably the most important thing is changing your plan. COVID has changed so much day-to-day, week-to-week, state-to-state that we had a return-to-office plan mapped out and we had picked Texas and Florida, that's where we were going to start. And frankly, our leaders, particularly in Texas, really wanted to get started back in the office. And we dug in, pushed back and said, "Wait, let's do it methodically." And my goodness, thank goodness we did because now we've changed that plan. We're probably going to hold for the rest of the summer before we try to return to the office. But being comfortable, some might call it flip flop, but you got to let the data tell you what to do. So being comfortable changing your -- what the decision you made a few weeks ago or just a week ago may be not the right one for today.