China Health Labs & Diagnostics Ltd. announces $11.6 million sales order for its food safety products

TSX-V: CHO
OTCQX: CHLBF

www.chinahealthlabs.com

TORONTO, Oct. 3, 2012 /CNW/ - China Health Labs & Diagnostics Ltd. ("China Health" or the "Company") (CHO: TSXV; CHLBF: OTCQX), is pleased to announce that it has secured a sales order of RMB 74.0 million ($11.6 million) for food safety products and its Type B BK Food Safety Rapid Test System ("BK-iRT"), which is a product developed by the Company and launched in March 2012 (see press release dated March 27, 2012), from the Beijing municipal government, through a bidding agent, Beijing Scientific and Innovation Technology Co., Ltd.  The sales order is for delivery in 2012 and includes the BK-iRT product for RMB 44.9 million ($7.0 million) and other food safety test products for RMB 29.1 million ($4.6 million).

"We are pleased to win the bid with the Beijing municipal government to deliver our BK-iRT product and other food safety products, which will be used by Beijing's food safety detection units in monitoring the thousands of food preparation and distribution nodes in Beijing," said Wilson Yao, CEO and President of China Health. "Food safety in China continues to be a concern and the Chinese government is committed to significantly improve food safety by increasing its budgets for monitoring and enforcement of regulations.  The Company is well positioned with its past success in delivering to the Chinese government effective solutions to address food safety concerns and also in developing new products to meet future demands".

The BK-iRT is a compact and mobile food safety testing solution and can conduct approximately 100 rapid and accurate types of tests, including physicochemical, veterinary drug residues, biotoxin tests, heavy metal residues, prohibited additives, and food additives. The solution also includes an information management module equipped with a 3G telecommunication function to transmit and communicate data with a network of mobile and stationary labs, which allows data sharing, real-time monitoring and dynamic instructions. Other target markets for the BK-iRT include food distribution centres and facilities such as canteens for large organizations, hospitals and universities.

The expected revenue from this sales order could potentially represent growth of approximately 34% for the Company's food safety business sector compared to the fiscal year 2011, when the Company had revenues of $9.0 million. Further, the Company's gross margins in this sector is expected to increase for fiscal year 2012 as the BK-iRT is a proprietary product developed and manufactured in the Company's Beijing facility, whereas sales in prior years consists of third party products which generate lower gross margins. To date, the Company's food safety solution to the Beijing municipal government includes 337 enterprise level food safety labs, 17 regional labs and 17 mobile labs delivered and installed in Beijing. The Company is actively marketing to other large cities and municipalities in China in growing its food safety sector outside of Beijing.

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 899 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 delivery of the BK-iRT, the revenue growth for the Company's food safety business sector, 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 be able to produce and deliver the BK-iRT product and fulfill the sales order, the payments for the BK-iRT will be made within a reasonable period of time and revenue recognized, 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 risk that the Company may not be able to produce or deliver the BK-iRT product or otherwise fulfill the sales order as expected, that the BK-iRT sales order may be modified or cancelled, that the Company may not be able to generate the revenue expected from the sales order, the Company may not be able to 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.

SOURCE: CHINA HEALTH LABS & DIAGNOSTICS

Judyanna Chen
Chief Financial Officer
China Health Labs & Diagnostics Ltd.
T: [phone]
Email: [email protected]

Babak Pedram
Investor Relations
TMX Equicom
T: [phone] ext. 264
Email: [email protected]