In a bid to optimize its resources and maximize long-term
Endo Health Solutions
) inked a deal to sell its struggling HealthTronics division
(formerly sevices) to an investment firm, Altaris Capital
Partners, for up to $130 million. Endo Health expects the deal to
close by Mar 31, 2014.
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The total value of the transaction includes an upfront payment to
Endo Health of $85 million in cash. Endo Health is also eligible
to receive up to $45 million depending on the performance of the
HealthTronics division. We note that Endo Health had already sold
two sub-groups - image guided radiation therapy and anatomical
pathology - of the HealthTronics unit for a total of $25 million.
We remind investors that Endo Health had announced its intention
to divest its HealthTronics business, which provides urological
services, products and support systems to multiple healthcare
providers in the U.S., in Jun 2013. The offerings of the division
were added to Endo Health's portfolio following its acquisition
of HealthTronics in 2010. The other three divisions at Endo
Health are Endo Pharmaceuticals (formerly branded
pharmaceuticals), Qualitest (formerly generics) and American
Medical Systems (formerly devices).
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. Endo Health's
revenues in the third quarter of 2013 declined on a
year-over-year basis due to lower sales of painkillers Opana ER
and Lidoderm due to generic competition from companies like
Endo Health carries a Zacks Rank #3 (Hold). Better ranked stocks
Forest Laboratories Inc.
). While Forest Laboratories holds a Zacks Rank #1 (Strong Buy),
Jazz Pharmaceuticals holds a Zacks Rank #2 (Buy).