China Health Labs & Diagnostics Ltd. enters agreement to install 12 BK Clinlabs in Tibet

    




  

 TSX-V: CHO OTCQX: CHLBF 

 www.chinahealthlabs.com 

 TORONTO, June 13, 2012 /CNW/ - China Health Labs & Diagnostics Ltd.  ("China Health" or the "Company") , is pleased  to announce that it has entered into an agreement to install 12 rural  diagnostic lab total solutions ("BK Clinlabs") in the Tibet Autonomous  Region ("Tibet"), which is expected to generate approximately $150,000  (RMB 936,000) in revenues.  This agreement increases the Company's  network to 977 BK Clinlabs installed or contracted for installation in  nine provinces and territories of China, compared to 210 locations in  three provinces at the beginning of 2011. 

 The 12 BK Clinlabs are being purchased by the Jilin Department of Health  ("JDH") and donated to Tibet.  This new agreement with the JDH is in  addition to recently announced agreement with JDH to install 59 BK  Clinlabs in Jilin Province (see press release dated May 29, 2012).  After the completion of the 59 new labs, China Health will have an  installed base of 646 BK Clinlabs in Jilin Province.  In 2011, China  Health installed 587 BK Clinlabs in Jilin Province, successfully  completing its largest installation to date. 

 To date in 2012, China Health has installed 74 BK Clinlabs, bringing the  installed base to 891 labs, with another 86 labs under contract to be  installed in 2012.  The installed base includes 21 BK Clinlabs in  Qinghai Province, 44 BK Clinlabs in Chongqing, eight BK Clinlabs in  Hebei Province, and one in Xinjiang Province, all completed in 2012.  The contract to install 8 BK Clinlabs in Hebei Province in return for a  five-year contract to provide testing reagents and maintenance services  is expected to generate revenues of at least $0.29 million (RMB 1.79  million).  The terms under the agreement with Hebei Province are  similar to the agreement signed with the Wanzhou district Department of  Health in Chongqing during the fourth quarter of fiscal year 2011,  under which the Company installed 44 BK Clinlabs.  The 44 Chongqing BK  Clinlabs were installed under a new business model, whereby the Company  installed the BK Clinlabs in return for a five-year contract to provide  testing reagents and maintenance services that is expected to generate  revenues of at least $2.85 million (RMB 17.7 million).   The Hebei and  Chongqing agreements are expected to generate higher total and  recurring revenues over the five-year agreements compared to BK  Clinlabs installed under agreements where the customer pays for the  labs upon completion of the installation. 

 "We are very pleased to work with the Jilin Department of Health to  bring our total diagnostic lab solution to Tibet.  This agreement helps  deliver better healthcare to a rural area of Tibet, enhances our  relationship with our largest BK Clinlab customer and adds value to our  brand in China," said Wilson Yao, CEO of China Health.  "We are off to  a good start in 2012 with our diagnostic lab network expanding to nine  provinces in China.  Our track record of delivering a working solution  is supporting our efforts to expand our network of labs in the eight  provinces where we have established BK Clinlabs and into new  provinces." 

 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 defense and rescue operations, the Beijing  government and third-party distributors. 

 The Company intends to continue its growth 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.  In 2011, China Health increased its revenues by 35%  to $45.6 million, and increased its installed base of BK Clinlab total  solution diagnostic labs ("BK Clinlabs") from 210 at the start of 2011  to 891 rural hospitals to date.  In addition, the Company grew revenues  from its overall total lab solutions business by 99% from 2010, which  increased gross margins to 44% in 2011 as compared to 39% in 2010. 

  

 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 

 This 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 installations to be delivered, the  revenues to be generated from the installations and the reagents and  maintenance services, the higher revenues to be generated from the  Hebei and Chongqing services agreements as compared to the installation  agreements, the expansion of the Company's installed base, and the  growth 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 be able to deliver the  new installations, that payment for the installations, reagents and  maintenance services will be made and revenue recognized, that the  Company will have the resources and ability to expand its installed  base, and that the Company will be able to grow 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 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 risk that the Company may not be able to  deliver the new installations, the Company may not be able to generate  the expected revenue from the new installations, reagents and  maintenance services as expected, customers may not make payment on a  timely basis or at all upon installation, the Company may not have the  ability or resources to expand its installed base, and the Company may  not be able to grow 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. 



CHINA HEALTH LABS & DIAGNOSTICS


CONTACT:  Judyanna ChenChief Financial OfficerChina Health Labs & Diagnostics Ltd.T: [phone]Email: [e-mail] PedramInvestor RelationsTMX Equicom GroupT: [phone] ext. 264Email: [e-mail] 


    

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