The country's largest medical laboratory group has backtracked on plans to slash jobs in Nelson-Marlborough.
RNZ earlier revealed the proposal by Awanui to shift histology testing to Christchurch, giving its staff just a week to give feedback on it.
Instead, it has now withdrawn it.
"Having listened to the feedback, and considering recent staff changes at our laboratories, the pragmatic and sensible outcome is not to proceed with the proposal at this stage," it said in a statement.
"This decision will ensure there is no potential risk to turnaround times for testing and patient safety and local services are not compromised."
The proposal had said its Nelson Hospital clinic was suffering from "substandard" work conditions, "ageing" equipment and high staff turnover.
It also said the proposal was part of a lab centralisation strategy, apparently to shift testing away from regional labs to Christchurch, Wellington and Auckland.
Awanui has not said if it was still aiming to centralise nationwide.
It only said it was committed to "continuous improvement and efficiency across our network".
The company has more than $700 million of public contracts with Te Whatu Ora and was half-owned by the government superannuation fund.
Medical lab workers' union Apex said it was glad to see the back of the "ill-thought-out" centralisation proposal.
"We must note that the distress and disruption caused," Apex said.
The company had an opportunity in collective bargaining that begins next week to raise salaries to a competitive level, it said.
Politicians and iwi had also criticised the proposal.
Nelson Mayor Nick Smith said he was deeply concerned it and had written to Health Minister Dr Ayesha Verrall calling for it to be scrapped.
"I take no comfort in the claim by Awanui that the proposed changes will not affect the turn-around times of results.
"I have been contacted by multiple doctors in Nelson as well as the scientists affected who are adamant such a change will inevitably result in delays getting lab results for Nelson patients and a consequential reduction in our standard of cancer care."
Te Rūnanga o Ngāti Rārua pouwhakahaere Shane Graham said the proposal and the loss of local jobs was difficult to understand at a time when a key driver of change in the health system was reducing inequality.
"We are concerned that potential delays to urgent health diagnoses and testing results for the people of Te Tauihu could do the exact opposite of what the reforms are meant to achieve," Graham said.
"Despite assurances, we all know that roads close and that couriers do experience delivery delays," he said.
"We also have concern for staff and their whānau in our region who may be adversely affected by this proposed change, particularly if there is no improvement to the service."
Nelson MP Rachel Boyack said she was contacted by lab staff and Nelsonians, concerned about the changes, which led her to contact Awanui directly and ask them to reconsider the proposal.
She was "absolutely delighted" that her advocacy and the push back from other Nelsonians led to Awanui withdrawing their proposal.