China Health Labs & Diagnostics Ltd. enters agreement to install 59 BK Clinlabs in Jilin province

TSX-V: CHO
OTCQX: CHLBF

www.chinahealthlabs.com

TORONTO, May 29, 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 with the Jilin Department of Health to install 59 rural diagnostic lab total solutions ("BK Clinlabs"), expected to generate approximately $0.66 million (RMB 4.1 million) in revenues in 2012.  This agreement increases the Company's network to 965 BK Clinlabs installed or contracted for installation in eight provinces of China, compared to 210 locations at the beginning of 2011.

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.

"Our successful installation of 587 BK Clinlabs in Jilin, including the service centers that provide an ongoing supply of reagents and maintenance, gave the Jilin government the confidence to increase its investment in our diagnostic lab total solution.  Our diagnostic lab solution is enabling rural hospitals to diagnose and treat patients, increasing their revenues and supporting the Chinese government policy of improving rural health care," said Wilson Yao, CEO of China Health.  "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."

During the fourth quarter of fiscal year 2011, the Company entered into an agreement to install 44 BK Clinlabs in Chongqing.  The 44 Chongqing BK Clinlabs are being installed under a new business model, whereby the Company will install the BK Clinlabs in return for a five-year contract to provide testing reagents and maintenance services that is expected to generate revenues of a minimum of $2.81 million (RMB 17.7 million).

In the three-month period ended March 31, 2012 the Company entered into agreements to install up to a total of 45 BK Clinlabs in three new areas being Hebei Province, Qinghai Province and the Xinjiang Uygur Autonomous Region. As at March 31, 2012, the Company completed installation of 41 BK Clinlabs, including the 40 BK Clinlabs in Chongqing and 1 BK Clinlabs in the Xinjiang Uygur Autonomous Region.

During the fourth quarter of fiscal year 2011, the Company entered into an agreement to provide 63 Rural Mobile Labs to the Health Care Bureau in Xinjiang Uygur Autonomous Region, which was all delivered by March 31, 2012. The Rural Mobile Labs are a new product developed to serve sparsely populated remote rural areas that do not have local hospitals. This new product integrates the Company's lab diagnostic equipment, point of care technology and lab management system into a vehicle equipped with an extensible treatment space. The vehicle is to be provided by a separate supplier. The Company generated total revenues of approximately $2.38 million during the quarter ended March 31, 2012 from the rural hospitals and clinics sector, an increase of 1657% compared to the quarter ended March 31, 2011, which had total revenues of approximately $0.14 million.

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.

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 833 rural hospitals.  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 AND NON-GAAP MEASURES

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 and revenues to be generated from the installations, reagents and maintenance services, the completion of the installations, the expansion of the Company's installed base in the eight provinces and expansion to new provinces 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 expand to new provinces 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 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 deliver the outstanding installations as scheduled or at all, the Company may not be able to generate the expected revenue from its installations, reagents and maintenance services as expected, the 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 in the eight provinces and to new provinces, 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]