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Press release from CNW Group

China Health Labs & Diagnostics Ltd. provides update on rural hospital total lab solution business

Tuesday, December 13, 2011

China Health Labs & Diagnostics Ltd. provides update on rural hospital total lab solution business09:00 EST Tuesday, December 13, 2011TSX-V: CHOOTCQX: CHLBFwww.chinahealthlabs.comTORONTO, Dec. 13, 2011 /CNW/ - China Health Labs & Diagnostics Ltd. ("China Health" or the "Company") (TSXV:CHO; OTCQX:CHLBF) is pleased to provide an update regarding its rural hospital total diagnostic lab solution business. Subsequent to the third quarter in 2011, China Health has installed an additional 20 BK Clinlab total diagnostic lab solutions (the "BK Clinlab") in rural hospitals located in Guizhou Province, China, bringing the total to 34 labs in Guizhou Province.  After the completion of the Guizhou installations, China Health has installed in total 817 BK Clinlabs in rural hospitals and clinics in four provinces of China (Jilin, Henan, Guizhou and Liaoning), compared to 210 locations at the end of 2010.China Health is now actively marketing its BK Clinlab solution in 11 provinces of China, including the four provinces where it has existing installations.   The Company is in the final stages of negotiating agreements to install 52 BK Clinlabs in two Chinese provinces where it does not currently have installed labs.  Preparations for the construction and installation of these labs have commenced, with installations expected to be completed in 2011 or early 2012.  In addition to the Company's direct sales activities described above, Biosino Bio-Technology and Science Inc. ("Biosino") has been allocated five provinces in China where it will lead the marketing of the BK Clinlab, pursuant to the Company's five year agreement with Biosino previously announced in a press release dated November 7, 2011."After the successful installation of the 587 BK Clinlabs in Jilin, we have seen increasing interest from our existing customers and in provinces where we have been working hard to introduce our total diagnostic lab solution," said Wilson Yao, Chairman and CEO of China Health. "With our direct sales team and Biosino actively marketing to 16 provinces in China, we expect to complete additional installations in 2011, and be ready for another strong year in 2012.  We are very pleased to be providing a total diagnostic lab solution that is helping the Chinese government achieve one of its key healthcare policies of improving healthcare in rural communities, while making strong returns for our shareholders."As previously announced, China Health completed installation of 587 BK Clinlabs in Jilin Province, China in August 2011.  The Jilin installation was a major driver of revenue and profit growth for the nine months ended September 30, 2011, during which revenues from the total diagnostic lab solution for rural hospital business grew by over 500 percent to $7.71 million to account for 30% of Company's total revenues, compared to revenues of $1.26 million, accounting for 7% of total revenues for the same period in 2010.   The growth of the total diagnostic lab solution business for rural hospitals also contributed to the increase in gross margin as a percentage of revenues to 45% for the nine months ended September 30, 2011 compared to 32% for the same period in 2010.  The Company generates strong margins from this business due to the value provided to customers by its proprietary lab management system and diagnostic equipment produced in the Company's Beijing manufacturing facility.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 equipment (and complementary reagents) such as haematology analyzers, coagulation analyzers, urine analyzers, biochemistry analyzers, and electrolyte analyzers are mostly produced at the Company's Beijing manufacturing plant.  China Health has developed and patented the Lab Management System ("LMS"), a proprietary computer hardware and software system that connects the diagnostic equipment facilitating ease of operation, quality control, 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.About China Health Labs & Diagnostics Ltd.China Health, operating in China as the Biochem Group, is a leading diagnostic lab solution provider for the public healthcare industry in China. The Company develops and sells Biochem Group branded and third-party medical diagnostic products and services to diagnostic facilities in China. Customers include large urban hospitals, rural hospitals, Chinese military and rescue operations, the Beijing government and third-party distributors.In 2010, China Health had revenues of approximately $33.7 million, and 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 policies 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 cities 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 INFORMATIONThis 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 the completion of the 52 BK Clinlabs installation in two Chinese provinces, the marketing lead by Biosino in five Chinese provinces 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 52 BK Clinlabs, the 52 BK Clinlabs will be installed in the two Chinese provinces in 2011 or in early 2012, Biosino will lead the marketing in the five Chinese provinces 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 have the capacity to produce the 52 BK Clinlabs, the Company may not be able to install the 52 BK Clinlabs on schedule or at all, Biosino may not lead the marketing of the BK Clinlabs in the five Chinese provinces or perform some or all of its obligations under its five-year agreement with 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.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: Judyanna Chen Chief Financial Officer China Health Labs & Diagnostics Ltd. T: (416) 865-3351 Email: jchen@chinahealthlabs.com Babak Pedram Investor Relations TMX Equicom Group T: (416) 815-0700 ext. 264 Email: bpedram@equicomgroup.com