Health stocks fell Wednesday, hit by the continuing effects of a bum trial, and a handful of disappointing earnings.

The bright spot was Encysive ( ENCY), whose shares more than doubled after Pfizer ( PFE) agreed to buy the troubled company for $2.35 a share, or about $195 million. The deal represents a more than 100% premium to Encysive's closing share price Tuesday of $1.08. Shares added $1.20 to $2.27.

Shares of Pfizer, which will gain rights to Encysive's pipeline and pulmonary arterial hypertension drug Thelin, lost 10 cents to $22.47.

On the down side, Onyx ( ONXX) lost ground for the second straight day following news that the biotech and partner Bayer AG ended a late-stage trial on their drug Nexavar in lung cancer patients. The stock, which lost more than 20% on Tuesday, sank another $2.35, or 6.9%, to $30.80, on Wednesday.

Onyx contributed to a drop in the Nasdaq biotechnology index, which fell 0.7% to 788.08.

Elsewhere, Inverness Medical Innovations ( IMA) plunged 16% even after the company reported better-than-expected fourth-quarter results. Inverness posted a loss of 19 cents a share, compared to a profit of 15 cents a share a year earlier.

But on an adjusted basis, the company said its earnings per share rose to 40 cents from 34 cents a year earlier. Analysts surveyed by Thomson Financial were looking for 38 cents a share, on average.

Inverness shares fell $7.04 to $36.83. Matria Healthcare ( MATR) -- which agreed last month to be acquired by Inverness for $900 million -- shed $1.94, or 6.6%, to $27.45.

Medical-device company Xtent ( XTNT) also declined on its fourth-quarter report. The company posted a loss of $11.9 million, or 52 cents a share, based on 22.8 million weighted average shares outstanding. In the year-ago quarter the company had a loss of $7.2 million, or $2.46 a share, based on 2.9 million weighted average shares outstanding. Its stock gave up $1.40 to $8.11.

Kindred Healthcare ( KND) shares tumbled on a disappointing first-quarter forecast. The health care services company said after the bell Tuesday that its fourth-quarter profit fell to $16.3 million, or 43 cents a share, from $22.1 million, or 56 cents a share, in the year-earlier period.

Excluding items, Kindred Healthcare did surpass the Thomson Financial average analyst target by two cents, earning 51 cents a share. For the first quarter, however, the company forecast earnings of 22 cents to 27 cents a share, well below analysts' target of 39 cents. Shares declined $2.58, or 10%, to $23.25.

One stock higher on earnings was Cyberonics ( CYBX), which soared 17% after the device maker posted a narrower-than-expected quarterly loss and announcing plans to buy back up to 1 million shares. The company reported a loss of $1 million, or 4 cents a share, narrowed from a loss of $19.4 million, or 76 cents a share, a year earlier.

Analysts polled by Thomson Financial were expecting a loss of 9 cents a share. The company's sales declined, but a 12% cut in staff helped to push down operating expenses. Shares of Cyberonics rose $1.68 to $11.41.