Medibank has failed to win a new contract to provide healthcare services to the Australian Defence Force – and is now waiting to find out why.
Shares in Medibank, which was government-owned until its 2014 privatisation, were halted on Monday after the ADF told the insurer it would not extend its current arrangement with Medibank’s Garrison Health Services past June next year.
Chief executive Craig Drummond said Medibank had been advised verbally of the decision, and was waiting for written confirmation and more information.
Mr Drummond told investors the company had met all its performance targets.
“We’re still awaiting written confirmation so we’re operating in a lot of dark space here,” Mr Drummond said told an investor briefing.
“We are disappointed, unquestionably.”
Despite meeting all their major performance indicators, Mr Drummond acknowledged the tender process was very competitive and there had been no “lay down misere” scenario.
Medibank predicts exit costs from the contract of about $5 million to be incurred in the second half of the 2019 financial year.
Medibank last year made an operating profit of about $30 million from the ADF contract, which it has held for six years.
“We will remain disciplined in what we do we’re not going to go out and do anything irrational or left field,” Mr Drummond said.
“We will retain the same rigour and discipline we have over the last few years.”