Medibank Private Limited (ASX: MPL) has announced that it has lost the ADF Garrison Health Services contract.
Medibank Private is Australia’s largest private health insurer. It also operates the low-cost AHM brand.
What contract has Medibank lost?
Medibank provided healthcare services to the Australian Defence Force (ADF) for the last six years. It served 60,000 permanent and 20,000 reserve ADF personnel.
According to Medibank, the operating profit from the Garrison Health Services contract in FY18 was around $30 million, which compares to $548.8 million of total operating profit in the year. This represents just over 5% of profit last financial year.
The health insurer also said it expects exit costs of around $5 million in the second half of FY19. However, it doesn’t expect any material “stranded” costs.
Medibank will continue to operate the contract until it finishes at the end of FY19 on 30 June 2019.
After coming out of a trading halt, the Medibank Private share price is down nearly 6% in response to this news according to CommSec.
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