Shares of The Medicines Co. ( MDCO) sank 5.6% to $31.87 Tuesday after the company got a brokerage downgrade and set plans to sell 6 million shares.

"Our downgrade is based on valuation, as potential upside from current levels no longer supports a neutral rating," wrote UBS analyst Maged Shenouda, who lowered his rating to reduce from neutral.

Shares of Genesis Healthcare ( GHCI) soared 16.1% to $61.35 after the company said it's being acquired by private equity investment firms Formation Capital and JER Partners.

The firms will acquire the company for $63 a share in cash. Including the assumption of approximately $450 million of debt, the deal is worth $1.7 billion.

Shares of drugmaker Cephalon ( CEPH) rose Tuesday after JPMorgan upgraded the stock to overweight from neutral on strong sales trends.

"We believe CEPH shares deserve to trade at a premium," wrote JPMorgan health care analyst Adam Greene in a research report, saying the company's current valuation leaves room for upside. Shares rose 30 cents to $70.61.

Vertex Pharmaceuticals' ( VRTX) shares gained 1.4% to $38.32 on an upgrade to neutral from negative by Susquehanna Financial.

The stock slid late last year on disappointing data on its hepatitis C drug VX-950, and the company lost nearly $1 billion in market capitalization, but the side effects of the drug are now considered manageable and analyst Jason Kolbert says doctors should adopt the use of VX-950 quickly. Vertex is also expected to receive significant royalties from its partners Johnson & Johnson ( JNJ) and Mitsubishi.

Among other health stock winners Tuesday were GlaxoSmithKline ( GSK), 1.4% higher to $54.51; AstraZeneca ( AZN), up 1.3% to $57.09; Genentech ( DNA), lifting 1.4% to $88.07; Novavax ( NVAX), gaining 14.6% to $4.55; and GPC Biotech ( GPCB), rising 15.8% to $30.35.

Among the losers were Novogen ( NVGN), losing 3% to $11.56; Keryx Biopharmaceuticals ( KERX), down 1.6% to $12.70, Par Pharmaceutical ( PRX), off 1.1% to $23.51; Meridian Bioscience ( VIVO), falling 2.1% to $26.81; and Immucor ( BLUD), down 1.8% to $33.05.

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