Awanui profit drops 225 per cent: concerns over lab-testing sector stability

“You would hope it doesn’t impact on services. But it’s incredibly unsettling for the profession when you see the biggest private provider in the lab-testing sector in this sort of financial difficulty”

Lab provider Awanui (NZ Healthcare Investments) posted a $16.4 million loss for the 2023 calendar year, down 225 per cent on 2022’s $13.1 million profit.

The company’s total operating revenue fell 10.5 per cent, from $357.3 million to $319.7 million during the same period. Cash generated by its operating activities also dropped markedly, from $85.6 million in 2022 to $32.7 million in 2023. 

The New Zealand Super Fund and Ontario Ltd, a Canadian pension fund, own 96 per cent (48 per cent each) of the shares in the company, previously called Asia Pacific Healthcare Group.

According to New Zealand Institute of Medical and Laboratory Science president Tony Barnett, the company’s financial position is a risk to the whole lab-testing sector. 

“Just looking at the numbers, it doesn’t look great. It’s probably a reflection of where things are at in health. It’s an incredibly challenging time,” Mr Barnett says. “You would hope it doesn’t impact on services. But it’s incredibly unsettling for the profession when you see the biggest private provider in the lab-testing sector in this sort of financial difficulty.” 

Mr Barnett says he doesn’t know the reason for the company’s poor results but noted it had spent millions in the last year rebranding its labs nationwide as Awanui. 

In a statement, Awanui Group CEO Anoop Singh says that while the company's profit has dropped, it remains financially viable. 

“The reduction in profit has been driven by a combination of an overall reduction in revenue, unfunded wages and general cost inflation,” Mr Singh says. “Awanui is in dialogue with Health NZ–Te Whatu Ora to ensure our contracts are adequately funded to ensure laboratory services contracted by Health NZ are financially sustainable.” 

Minister of health Shane Reti was approached for comment, but press secretary Charlotte Gendall said Dr Reti didn’t “have a view on the affairs of private companies”. 

An open letter from a group of Awanui Labs staff to Dr Reti and Te Whatu Ora last month painted a damning picture of the problems with the company and the sector. 

The letter, signed by 19 scientists, technicians and phlebotomists, states that many signees have been in the profession for years and felt compelled to speak out about the critical staff shortages and the poor pay and conditions the company offers. 

“The Awanui Labs laboratory workforce is stretched to breaking point. Work from some sites is being sent away because of lack of trained staff, which is undesirable, inefficient and puts not only patient samples but, potentially, patient lives at risk.” 

Last October, Te Whatu Ora lab workers were part of a pay-equity settlement that saw many receive salary increases of up to 20 per cent. 

That settlement has seen a growing pay gap between those working for Awanui Labs and those in the public sector. In areas such as Christchurch and Auckland, staff are resigning from Awanui sites and moving to Te Whatu Ora laboratories.

In February, Awanui Labs workers, who had been taking industrial action against the company, settled for a $5000 increase on all base salaries or a 5.5 per cent pay rise (whichever was higher) and a $3000 recruitment and retention bonus. APEX union advocate Sam Heimsath described the deal last month, backdated to 1 July 2023, as a “cost of living adjustment” and said it didn’t address the pay gap with hospital lab workers.