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Press release from CNW Group


Thursday, November 18, 2010

CHINA HEALTH LABS & DIAGNOSTICS LTD. ANNOUNCES CONTRACTS TO INSTALL ITS TOTAL LAB SOLUTION IN 124 RURAL CLINICS IN HENAN AND GUIZHOU PROVINCES OF CHINA09:00 EST Thursday, November 18, 2010VANCOUVER, Nov. 18 /CNW/ - China Health Labs & Diagnostics Ltd. ("China Health" or the "Company") (CHO: TSXV), is pleased to announce that it has signed agreements to install its total diagnostic lab solution (the "BK Clinlab") in 124 rural hospitals and clinics in Henan and Guizhou Provinces in China. The installation is expected to generate initial revenues of approximately RMB 18.6 million (approximately CAD$2.86 million). In addition, all of these diagnostic clinics are expected to produce ongoing revenues for China Health through agreements to purchase the Company's reagents and its service and maintenance packages. After the completion of the installation, China Health will have installed its BK Clinlab in 210 rural hospitals and clinics in three provinces of China (Henan, Guizhou and Liaoning). The installations will start before the end of November and are expected to be mostly completed by the end of 2010. China Health is also finalizing arrangements with 587 rural clinics in Jilin Province, and expects to sign a definitive agreement for this project and commence installations in late 2010 or early 2011.China Health has developed a suite of standard diagnostics equipment and reagents, hardware and software, for use in rural labs, as well as developing a service network in support of such labs. The BK Clinlab total lab solution includes basic in-vitro diagnostic testing equipment (and complementary reagents) such as hematology analyzers, coagulation analyzers, urine analyzers, biochemistry analyzers, and electrolyte analyzers.  China Health has developed proprietary computer hardware and software that connects the diagnostic equipment and assists with analysis, allowing rural labs to conduct basic diagnostic tests without having patients travel long distances.  As part of the BK Clinlab, a network of service centres staffed with trained technicians has and is being set up to provide support to rural labs within the service area and to provide a dependable source of reagents.  As rural diagnostic facilities in China are typically underserviced and often lack even basic diagnostic capabilities, China Health believes that it is uniquely positioned to capitalize on this opportunity, as they are the first company in China to identify and create a medical laboratory solution specifically tailored to service the approximately 50,000 rural hospitals throughout China.  In addition, in 2009 the Chinese government announced plans to spend RMB 850 billion (approximately CAD$130 billion) to improve health care over a three year period, including the construction of almost 40,000 new rural hospitals and clinics."These agreements are a result of noticeable improvements in health care delivered by the 86 rural diagnostic clinics in which our BK Clinlabs were installed in 2007 and 2008 in Henan and Liaoning Provinces. Provincial and central government decision makers recognize reliable local diagnostics as a key success factor to achieving their policy goal of improving rural health care and we believe we arethe only company in China with a proven solution for rural communities," said Wilson Yao, CEO of China Health. "Our goal in 2007 when we installed our first 20 BK Clinlabs in clinics in Henan Province was to deliver reliable diagnostic testing with a sustainable profitable business model.  The Henan Province agreement to expand their network by 110 clinics validates our rural lab solution. The agreement to install 110 clinics brings our total to 130 in Henan Province, but we have plenty of room to grow in this province since Henan has approximately 2,400 rural hospitals that need improved diagnostic labs.  We are also very pleased to be installing our first 14 clinics in Guizhou as it gives us an opportunity to establish a track record in another province in China.  In 2009, the BK Clinlab accounted for about 2 percent of our revenues. In 2010 and beyond we expect rural labs to one of our main sources of revenue and earnings growth."China Health intends to expand its business by focusing its efforts on expanding its sales network to three areas where it has proprietary products, limited competition and strong government support: rural diagnostic medical facilities in China, military and emergency services, and food testing applications. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.FORWARD LOOKING INFORMATION AND NON-GAAP MEASURESThis press release contains forward-looking statements and information that are based on the beliefs of management and reflect China Health's current expectations.  When used in this press release, the words "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may" or "should" and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information.  The forward-looking statements and information in this press release includes information relating to revenue growth from the Company's BK Clinlabs installed in rural hospitals and from sales of the Company's reagents and its service and maintenance packages, the installation schedule for the BK Clinlabs to be installed in Henan and Guizhou, an agreement for additional BK Clinlab installations in Jilin, growth prospects of the Company in Henan, the installation of BK Clinlabs in Chinese rural areas as a main source of revenue and earnings growth, and the expansion of the Company's business through its sales network in areas where it has proprietary products, limited competition and strong government support.  The forward-looking information is based on certain assumptions, which could change materially in the future, including the assumption that a binding agreement will be entered into for the BK Clinlabs to be installed in Henan and Guizhou, the Company will have the capacity for the additional BK Clinlabs, the installation of the BK Clinlabs will be on schedule, payments for the BK Clinlabs will be made within a reasonable period of time and revenue recognized, revenue growth will be from sales of BK Clinlabs and reagents, and the Company will be able to expand its sales network and business.  Such statements and information reflect the current view of China Health with respect to risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information.  By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Such factors include, among others, the risks that the Company may not experience the expected revenue growth from its BK Clinlabs installed in rural hospitals and clinics or from sales of the Company's reagents and its service and maintenance packages, the BK Clinlabs may not be installed according to the expected schedule or at all, a further agreement for additional BK Clinlabs in Jilin may be settled, the growth prospects of the Company in Henan may not materialize, the BK Clinlabs installed in rural areas may not be a main source of revenue and earnings growth for the Company, and the Company may not expand its business as expected through its sales network in any of the areas in which it has proprietary products, limited competition and strong government support.  China Health cautions that the foregoing list of material factors is not exhaustive.  When relying on China Health's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events.  China Health has assumed a certain progression, which may not be realized.  It has also assumed that the material factors referred to above will not cause such forward-looking statements and information to differ materially from actual results or events.  However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.China Health has also included in this press release figures based on orders received, which is a non-GAAP measure.  Readers are cautioned that such a measure is not recognized under Canadian GAAP and should not be construed to be an indicator of performance or liquidity or cash flows.  China Health's method of calculating this measure may differ from the method used by other entities and accordingly China Health's measure may not be comparable to the measure used by other entities.THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS PRESS RELEASE REPRESENTS THE EXPECTATIONS OF CHINA HEALTH AS OF THE DATE OF THIS PRESS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE.  READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE.  WHILE CHINA HEALTH MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME EXCEPT AS REQUIRED IN ACCORDANCE WITH APPLICABLE LAWS.For further information: Kim Oishi Director Telephone: (778) 997-6228 Email: