Medibank Private says it has been "verbally informed" by the Department of Defence that it has not been selected as the preferred tenderer for the renewal of the Garrison Health Services contract.
The service currently provided by Medibank Private provides access to healthcare to the over 60,000 permanent and 20,000 reservist Australian Defence Force personnel.
"It has been a privilege to provide healthcare services to the Australian Defence Force (ADF) for the last six years," said Medibank in a statement.
"We will continue to perform the services under the current contract until its expiry date on 30 June 2019," it added.
The company said the contract contributed operating profit of approximately $30 million last year.
"We expect exit costs associated with the loss of the Garrison Health Services contract to be in the order of $5 million in the second half of FY19. We don’t expect any material stranded costs," it said.