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") (TSXV:CHO; OTCQX:CHLBF), 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.

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

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