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

    




 TSX-V: CHO OTCQX: CHLBF  www.chinahealthlabs.com 

 TORONTO, Dec. 13, 2011 /CNW/ - China Health Labs & Diagnostics Ltd.  ("China Health" or the "Company")  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 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 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. 

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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