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Press release from CNW Group


Monday, April 18, 2011

CHINA HEALTH LABS & DIAGNOSTICS LTD. SIGNS CONTRACT TO INSTALL ITS TOTAL LAB SOLUTION IN 587 RURAL HOSPITALS AND CLINICS IN JILIN PROVINCE, CHINA09:00 EDT Monday, April 18, 2011TSX-V: CHOOTCQX: CHLBFwww.chinahealthlabs.comTORONTO, April 18 /CNW/ - China Health Labs & Diagnostics Ltd. ("China Health" or the "Company") (TSXV:CHO; OTCQX:CHLBF), is pleased to announce that it has signed a contract to install its medical diagnostics total lab solution, the BK Clinlab, in 587 rural hospitals in Jilin Province, China. The installation is expected to generate initial revenue of approximately RMB 41 million ($6.1 million).  In addition, it is expected that the clinics will generate ongoing revenues from service and reagent sales.  The Company expects to sign a three-year service contract for RMB 25,000 ($3,700) per lab, which is expected to generate revenues of approximately RMB 14.7 million ($2.2 million) over the three-year period commencing upon the completion of the installation.  The service contract does not include reagents, which the labs are expected to purchase on an ongoing basis to meet the demand for medical diagnostics tests.  China Health secured its bid for the Jilin Province installation in December 2010 as previously announced in the Company's press release dated December 29, 2010.The installations are expected to start in April 2011 and be mostly completed within six months.  After the completion of the Jilin installations, China Health is expected to have installed its BK Clinlab in 797 rural hospitals and clinics in four provinces of China (Jilin, Henan, Guizhou and Liaoning). To date, China Health has installed its BK Clinlab solution in 210 rural hospitals, including 124 of them installed in the fourth quarter of 2010, pursuant to agreements previously announced in the Company's press release dated November 18, 2010."The Jilin installation is the next step in achieving our goal of using our proprietary total lab solution to establish a leading market share for medical diagnostic products and services in the underserved rural market in China," said Wilson Yao, CEO of China Health. "We expect a successful installation in Jilin to further serve as a model of how to deliver reliable diagnostic services to the rural communities, which is in line with the Chinese government policy of improving medical services and living standards to the 800 million Chinese citizens who live outside of major urban centers.  We are the only company in China offering a total lab solution to rural hospitals and clinics, and we plan to realize on our first mover advantage by rapidly expanding our network in targeted provinces of China."The BK Clinlab was developed by China Health as a total lab solution comprising diagnostic equipment, hardware and software, installation and training and an ongoing supply of reagents and service for use in rural hospitals and clinics.  The Company believes that this approach provides added value to the rural hospitals and builds strong customer loyalty compared with selling individual products.  The BK Clinlab total lab solution includes basic in-vitro diagnostic testing equipments (and complementary reagents) such as haematology analyzers, coagulation analyzers, urine analyzers, biochemistry analyzers, and electrolyte analyzers all produced at the Company's Beijing manufacturing plant.  China Health has developed proprietary computer hardware and software that connects the diagnostic equipment facilitating ease of operation, management of patient information and monitoring of reagent inventory. 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 more than 50,000 rural hospitals throughout China.In 2010, China Health had revenues of approximately $33.7 million, of which approximately $3 million was generated from the BK Clinlab total lab solution.  Accordingly, with the Jilin agreement, China Health expects revenues from rural hospitals and clinics to grow by more than 100% in 2011, compared to 2010. China Health intends to expand its business by focusing its efforts on expanding its sales network in three areas where it provides proprietary solutions, has limited competition and which are supported by Chinese government policy and budgets: BK Clinlab total lab solutions for rural hospitals and clinics, POCT solutions for military and emergency rescue services, and food safety solutions for large cites in China.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 generation from the Company's BK Clinlabs to be installed in Jilin 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 Jilin rural labs and clinics, 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 the Company will have the capacity to produce and install the BK Clinlabs in Jilin, 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, additional revenue will be generated from sales of BK Clinlabs, reagents, and service and maintenance packages, 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 be able to generate the expected revenue from its BK Clinlabs installed in Jilin 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, 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 a contract, 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: (416) 804-9228 Email: