A Message from Our Chairman and CEO
Dear Hologic Stakeholders:
A few months ago, I received an email from one of our sales leaders reminding me of something I had said at our National Sales Meeting in October of 2019. At that time, before anyone had heard of SARS-CoV-2, I said that Hologic was in the right place, at the right time, to make a profound impact on human health. That certainly came true in 2020, on a grander scale than we ever imagined.
The COVID-19 pandemic created a year of unprecedented challenges for Hologic, like every other company on the planet. But in the face of all this uncertainty, the way we responded was also unprecedented and differentiated.
There was no playbook to address the challenges we faced. Our actions were deliberate and thoughtful, but sometimes unconventional. For example, in our diagnostics division, our leadership team and employees came into work every day—they had to in order to develop our tests and scale up production. Even our Board of Directors met in person—while observing social distancing guidelines—throughout the year. Through it all, I’m so proud of how our leadership team navigated the ever-changing situation, and how our employee base rallied in incredible ways to make a massive difference in the world.
It’s important to recognize that the impact we had—and the financial results that followed—didn’t just magically happen overnight. Instead, our successes were the cumulative effect of many decisions—strategic, operational and cultural—made over the last several years.
One of these foundational activities was defining, and centering our culture around, our Purpose, Passion and Promise. As a reminder, our Purpose is to enable healthier lives everywhere, every day. Our Passion is to become global champions of women’s health. And our Promise is The Science of Sure, which is a commitment to provide healthcare professionals clinically differentiated, high quality products.
2020 was a year in which we lived these principles more fully and successfully than ever before. At the same time, the enormous challenges the world faced—from the pandemic to systemic racism—provided opportunities to further refine how we do business, how we interact with each other, and how we measure success. Although these challenges were both unexpected and unwanted, they made us stronger for the future as we continue to evolve and grow.
We look forward to telling you more throughout this sustainability report. To set the stage, I’d like to discuss three topics in this letter. First, the difference we made—and are still making—in the fight against COVID-19. Second, some of the internal actions that made our contributions possible. And third, how we’re striving to promote racial and social equality, both in terms of our products and our people.
Making a Huge Difference in the COVID-19 Fight
For decades, Hologic’s passion has been women’s health. As I said in this letter a year ago, no company has done more to fight cervical and breast cancer than we have. And our commitment to women’s health remains inviolable.
But throughout 2020, we added another chapter to our already rich history by playing an indisputable and vital role in the fight against the COVID-19 pandemic, the worst public health crisis most of us have ever experienced—and hopefully ever will. Although we developed the first FDA-cleared molecular diagnostic test decades ago, and built tremendous scientific expertise in infectious disease detection, we had always been somewhat of a niche player in the broader diagnostics industry. But when the pandemic hit, and it became clear that massive amounts of coronavirus testing would be needed to save lives and safely re-open economies, we were prepared for the moment.
We developed two highly accurate molecular tests in a matter of months, a process that would normally take years. And we more than doubled total molecular diagnostic production capacity—a process that would normally take eight to 10 years—in roughly six months. Based on these efforts, in calendar 2020 we distributed approximately 68 million COVID tests to customers in 40 countries, quite literally enabling healthier lives everywhere, every day. Given the unprecedented demand for our products, our goal was always to communicate available supply to our customers without overpromising, which helped us build credibility and set the stage for future business growth.
We were able to make such a huge impact against COVID-19 because, over the last several years, we had installed nearly 2,000 Panther® instruments, on which our molecular tests run, in all 50 U.S. states and around the world. Because of their sophisticated automation, each Panther system can generate more than 1,000 test results in a 24-hour period, making them critical tools for high-volume COVID testing.
By combining our huge test manufacturing capacity with the largest installed base of fully automated instruments, we created a breakthrough in coronavirus testing. Our products have boosted diagnostic capabilities around the world, and testing volumes have continued to increase. Laboratory customers and physicians are using our products to deliver test results when and where they are needed, which in turn, enables consumers to protect and provide for their loved ones.
Our response to the pandemic also generated substantial benefits for our shareholders. By responding aggressively to the unprecedented public health need, we generated more than $900 million in sales of our COVID tests in fiscal 2020, and clearly demonstrated our ability to “do well by doing good.” It’s never been more clear that the greater impact we have on the world, the better we do financially.
Setting the Stage for Our Pandemic Response
We believe that the way we treated our employees in the early days of the COVID-19 pandemic set the stage for the incredible contributions they made later in the year, and will continue contributing to stellar performance in the future.
Before we had developed our own tests to detect SARS-CoV-2, revenue in our other businesses fell off a cliff as hospitals cut back elective procedures, and consumers skipped regular screenings and checkups because of the pandemic.
In response, we acted quickly to reduce costs and preserve cash. Our approach was to preserve as many jobs as possible, and to lead from the top. Rather than laying off employees outright, we implemented reduced work weeks, temporary plant shutdowns and furloughs depending on local business needs. We reduced compensation for our salaried employees: 50% for the Board of Directors and for myself, 25% for our Global Leadership Team, and 10% for other levels. But at the same time, we preserved funding for our retirement plans, and back-stopped sales teams whose compensation could have been cut by 80% or more based on circumstances beyond their control.
Fortunately, as sales of our SARS-CoV-2 tests increased, we were able to reinstate compensation and begin returning our manufacturing facilities to regular operations within about three months. And later in the year, we were able to “pay back” employees for their lost compensation.
For the frontline employees who came to work every day to develop and manufacture our COVID tests, or who installed new Panther instruments in locked-down hospitals during the most uncertain times of the pandemic, we were able to provide extraordinary financial awards. Specifically, we redirected about 30% of our fiscal year-end bonus pool to these employees, many of whom received eight to ten times their normal bonus as a result.
We believe all these actions are contributing to improved performance today, as our non-COVID businesses recover more rapidly than expected, and as we gain market share in multiple segments.
Advancing Healthcare Equality
As if the COVID-19 pandemic wasn’t bad enough, another major issue that reared its ugly head in the United States in 2020 was social and racial inequality.
The murder of George Floyd and other examples of racism in 2020 touched many of us at Hologic, including me. As someone with a Black stepfather, I’ve seen firsthand the pernicious effects of systemic racism.
Internally, we’ve always taken a different approach to diversity issues. As described in last year’s sustainability report, we’ve never been fans of diversity quotas, or committees, or checklists. In fact, I consider myself our chief diversity officer, and in this role, my job is to create a culture in which every employee can achieve his or her full potential. Rather than creating formal diversity programs, we strive to increase diversity by using objective tools to hire the most talented person for every open position, then we coach and develop them aggressively.
This approach yielded good results in 2020, especially at senior levels. When our longtime Breast Health president Pete Valenti retired, we changed our structure and promoted three internal executives to our Global Leadership Team. One was a Black man and another a White woman—and all three were developed and promoted from within.
More Women’s Health Leadership to Come
Externally, we have a responsibility to ensure that people of all genders and races, with varying levels of socioeconomic resources, have equal opportunities to benefit from our products. But unfortunately, the healthcare needs of women and minorities are often overlooked by society. We are striving to change this in three main ways:
Partnerships.By collaborating with like-minded nonprofits and patient advocacy groups, we have promoted health equality through grants, direct-to-consumer educational and awareness campaigns, and research projects. For example, we have partnered with the Clinton Health Access Initiative and others to provide resource-limited countries in Africa with a single, reduced price for our viral load assays and, most recently, COVID-19 tests. In addition, in 2020 we launched Project Health Equality, a multi-year, multimillion-dollar commitment to improve access to our lifesaving early detection products among minorities and lower income women. As a first step, we are partnering with the Black Women’s Health Imperative, RAD-AID and Grammy award-winning artist Mary J. Blige to decrease breast cancer screening disparities among Black women, who are almost 40 percent more likely to die from breast cancer than non-Hispanic white women. In addition, we plan to expand our efforts to help reduce the rates of cervical cancer, with more areas still to come.
Philanthropy. Given our outstanding financial results in fiscal 2020, we donated $15 million to our corporate charitable fund, the largest donations we have ever made by far. Over the next several years, we intend to use this money to support causes and issues that are close to Hologic’s mission and near to many of our hearts. Specifically, we plan to increase the charitable donations we already make to nonprofit organizations focused on women’s health and science, technology, engineering and math (STEM) education, as well as expand our giving to groups focused on social and racial justice.
In addition, based on the belief that education is the key to social equality, we created two scholarship programs focused on lower income and first-generation college students—one for the families of Company employees, and another for nonprofit groups near our facilities that provide college readiness programs. Finally, we instituted a limited “matching program” to magnify the impact that our employees’ donations have in their communities.
Policy. Persistent gaps in women’s health equality are often tied to legislation and policy. Understanding this, we have played a proactive role in advocating for insurance coverage for our innovative products. For example, we supported the Protect Access to Lifesaving Screenings (PALS) Act to ensure that as many women as possible have access to mammography screening.
In addition to this and many other initiatives, we are pursuing our Passion to become global champions of women’s health in a unique, groundbreaking way. We are excited to be partnering with Gallup, the leading analytics and advice firm, to conduct the world’s first comprehensive study of women’s health. In this landmark study, approximately 120,000 people in 115 countries are answering a series of questions that will establish the Hologic Global Women’s Health Index, the first study to definitively track women’s health by country and over time. We have made a long-term commitment to this project so that we can provide government leaders and policy makers valuable data and actionable insights to improve women’s health in their countries. Stay tuned for more information on this exciting project this year, and in our next sustainability report.
In conclusion, the challenges of 2020 enabled us to make a bigger, more profound impact on the world than we ever imagined. At the same time, our successes helped us refine how we want to operate as an organization in pursuit of our Purpose, Passion and Promise. By having the courage to make decisions that sometimes appeared unconventional, we played an integral role in fighting the COVID-19 pandemic, while continuing to be a leader in women’s health. To us, that is the true definition of sustainability.
-Steve MacMillan, Hologic Chairman and CEO