Medlab South in Christchurch has lost its community medical testing contract and will have to lay off most of its 150 employees as a result.
Medlab South says it has lost to the smaller of two firms that have done the work, Southern Community Laboratories.
Medlab South chief executive Brian Willcox says it has been serving Christchurch for more than 60 years and staff are devastated.
The move follows a decision by Canterbury District Health Board to change from having two firms working with its hospital laboratory to provide all community medical testing in the region to a partnership with just one private lab.
Medlab South says its unsuccessful bid means most of its 150 staff will be made redundant at the end of March.
Mr Willcox says his staff, who have had an extremely difficult year already, are devastated, and some will leave the city and the industry. He says it is a kick in the guts for them after a difficult year.
120 new jobs - DHB
The DHB's manager of planning and funding, Carolyn Gullery, says it believes most Medlab staff will find work at SCL, the hospital lab, or elsewhere in the Canterbury health system.
She estimates there will be close to a total of 100 full-time jobs.
The DHB says SCL has estimated it will need to recruit an extra 88 full-time equivalent staff members.
It says it will work to ensure the vast majority of Medlab South's staff get suitable work.