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HealthTronics, Inc. - a subsidiary of Endo Health Solutions (ENDP - Analyst Report) - intends to sell its anatomical pathology business (HealthTronics Laboratory Solutions). To achieve this objective, it inked a deal with the privately-held biotechnology company, Metamark Genetics, Inc. The value of the deal was not disclosed.

Endo Health intends to optimize its resources and maximize long-term growth potential through this move. We remind investors that in Jun 2013, Endo Health had announced that it is exploring options regarding its struggling HealthTronics (services) segment.

Through the segment, Endo Health currently focuses on providing urological services, products and support systems to multiple healthcare providers in the U.S. The offerings were added to Endo Health’s portfolio following its acquisition of HealthTronics in 2010. The company further stated that it intends to work on driving growth at its other three segments - Qualitest, Branded Pharmaceuticals and American Medical Systems.

At that time, Endo Health had also announced that it will trim its work-force by approximately 15%. The move is expected to result in annual savings of approximately $325 million.

We note that the below-par sales of the HealthTronics unit is not the only concern currently facing Endo Health. The threat of genericization looms large over Endo Health. Recently, Endo Health’s revenues in the second quarter of 2013 declined on a year-over-year basis due to lower sales of painkiller Opana ER. Opana ER sales were hurt by generic competition during the second quarter.

We note that another painkiller at Endo Health, Lidoderm will be facing generic competition from Actavis, Inc. (ACT - Analyst Report) shortly. In Aug 2012, the U.S. Food and Drug Administration cleared Actavis’ generic version of Lidoderm. However, Actavis’ agreement with Endo Health prohibits the former from selling the drug prior to Sep 15, 2013.

Endo Health currently carries a Zacks Rank #3 (Hold). Currently, companies like Biogen Idec (BIIB - Analyst Report) and Gilead Sciences, Inc. (GILD - Analyst Report) look attractive, each with a Zacks Rank #1 (Strong Buy).

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