Analysis: For most of us, visits to Awanui Labs will become more frequent as we get older. Its shopfront style services are ubiquitous throughout almost the entire country. The business says 25,000 New Zealanders use its services every single day. That’s massive.
The picture above is me getting bloods taken at their Onehunga clinic. That was to test my vital statistics for my Powder Keg podcast, investigating the efficacy of a dubious billion-dollar health supplement. The staff were great. And like they said, it truly didn’t hurt!
But most of us will be sent there by our doctors for more routine tests.
Awanui also operates many of the hospital labs around the country. About 70 percent of medical decisions and 100 percent of cancer diagnoses rely on pathology and laboratory tests, it says.
New Zealand began outsourcing its community laboratory testing in the 1990s; more than 20 regional businesses picked up contracts. The outsourcing was extended to regional hospital labs about 20 years ago.
Through this, a small Dunedin company called Southern Community Laboratories gradually expanded as it bought up other lab companies. In 2023 it unified eight lab-testing businesses under the single national brand, Awanui.
It’s owned by the New Zealand Super Fund (48 percent) and the Ontario Teachers’ Pension Plan (48 percent) with just under 4 percent held by Te Pūia Tāpapa iwi investment fund.
Its revenues (almost entirely from Health NZ contracts) have been increasing by the year. $340 million in the year to December 2025. It has a near-monopoly. It should be a licence to print money. We should be concerned.
Yet this week, Awanui reported a pre-tax loss of $2.9m. It’s the company’s third loss in three years ($22.5m in 2023, $21.4m in 2024). So what’s going wrong?
Health NZ is conducting a national review of pathology services, with a 10-year plan being developed for laboratory testing across public and private sectors. That review is due back later this year, and might help answer some questions about Awanui’s financial sustainability.
Anoop Singh, the chief executive, tells me that this year’s loss has narrowed. “Like many healthcare providers across New Zealand, Awanui is operating in a system under pressure from increasing demand, workforce shortages, rising costs and a constrained funding environment.”
Despite these challenges, he says, the company has continued to focus on building its workforce capability, services, and the technology and infrastructure needed to underpin a modern and efficient pathology system.
Awanui’s leadership has been working hard to manage down costs and maintain discipline to its investment in a challenging operating environment, he says. The losses pose no threat to its much-needed services.
“The hospital and community laboratory services we provide remain stable, resilient and focused on meeting the needs of patients and clinicians across New Zealand,” he insists. “Awanui delivers more than seven million diagnostic results annually, and we remain focused on maintaining safe, reliable and high-quality services in the regions where we operate.”
The company has been embroiled in industrial action. About 500 Apex union staff went on strike last year over pay talks. They won a 6 percent rise, followed by a smaller increase this year – yet employee expenses have remained fairly flat, suggesting the pay rise has been offset by at least some staff cuts. The company declines to disclose its FTE headcount to me.
Since the December 31 balance date, it’s also refinanced $313m in debt, pushing back repayment obligations to March 2031. These are not the actions of a company with healthy cashflow, nor a sustainable capex strategy.
Health commentator Ian Powell, the former executive director of the Association of Salaried Medical Specialists, isn’t so convinced that Awanui can sustain its losses. “This situation has been predictable for many years,” he tells me. “Awanui is no longer able to extract profits from the public system. Its only hope is to further reduce services. Laboratories affect around 70 percent of hospital clinical decision-making. Privatisation of these labs needs to end.”
Institute of Medical Laboratory Science president Tony Barnett welcomes the narrowed loss. “But it illustrates how hard it is in the lab sector at the moment,” he tells NZ Doctor. “From the profession’s point of view, it’s always hard to say how these things will play out.”
The public needs to have confidence that the ongoing problems in the lab sector are going to be “fixed at some stage”, Barnett adds. “Awanui has a contract with the Government, and Health NZ really needs to help find a way through this.”
Singh, Powell and Barnett are all right in one respect. This Government has been demanding efficiencies wherever they can be found (and sometimes where they can’t be found). Public funding for the company, like other healthcare providers, is increasingly constrained.
But Awanui is not like other companies. It provides urgent and critical services. And it has a monopoly in many regions. The implications if it were to close its doors are unthinkable.
So the question for me is, how did we get to a point where the sustainability of one big company could have such a far-reaching impact on healthcare nationwide?
Back in 2005, the Commerce Commission rejected an attempt to merge two of the lab testing companies. The chair, Paula Rebstock, warned of the risks to the public health system if one company became dominant. Yet that’s now happened – without any further protest from competition regulators.
Rebstock’s concern was that a single company like Awanui would have district health boards over a barrel and be able to name its price. What she couldn’t anticipate is that the country’s 20 DHBs would be merged into one massive national health service, which was able to clamp down on what it pays.
The net outcome is that, instead of having a singularly powerful lab service provider that can hike prices, we have a singularly exposed and co-dependent relationship between Awanui and Health NZ. Both depend on the other.
The uncomfortable conclusion is that Awanui Labs is too big to be allowed to fail.
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