SC 13D

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549	OMB APPROVAL
	OMB Number: 3235-0145
SCHEDULE 13D	Expires: February 28, 2009
(Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO § 240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO § 240.13d-2(a)	Estimated average burden hours per response. . 14.5

UNDER THE SECURITIES EXCHANGE ACT OF 1934

(Amendment No. )*

Given Imaging Ltd.

 (Name of Issuer)

Ordinary Shares, par value NIS 0.05 per share

 (Title of Class of Securities)

M52020100

 (CUSIP Number)

Michael R. Murphy

Discovery Group I, LLC

191 North Wacker Drive

Suite 1685

Chicago, Illinois 60606

Telephone Number: (312) 265-9600

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

September 30, 2013

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

*The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP No.  M52020100
	1.	Names of Reporting Persons. Discovery Equity Partners, L.P.
	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)		o
		(b)		o
	3.	SEC Use Only
	4.	Source of Funds (See Instructions) WC
	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o
	6.	Citizenship or Place of Organization Illinois
Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power None.
			8.	Shared Voting Power 1,175,294
			9.	Sole Dispositive Power None.
			10.	Shared Dispositive Power 1,175,294
	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 1,175,294
	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)   o
	13.	Percent of Class Represented by Amount in Row (11) 3.7%
	14.	Type of Reporting Person (See Instructions) PN

CUSIP No.  M52020100
	1.	Names of Reporting Persons. Discovery Group I, LLC
	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)		o
		(b)		o
	3.	SEC Use Only
	4.	Source of Funds (See Instructions) AF
	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o
	6.	Citizenship or Place of Organization Delaware
Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power None.
			8.	Shared Voting Power 1,175,294
			9.	Sole Dispositive Power None.
			10.	Shared Dispositive Power 1,175,294
	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 1,175,294
	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)   o
	13.	Percent of Class Represented by Amount in Row (11) 3.7%
	14.	Type of Reporting Person (See Instructions) IA

CUSIP No.  M52020100
	1.	Names of Reporting Persons. Daniel J. Donoghue
	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)		o
		(b)		o
	3.	SEC Use Only
	4.	Source of Funds (See Instructions) AF
	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o
	6.	Citizenship or Place of Organization United States of America
Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power None.
			8.	Shared Voting Power 1,175,294
			9.	Sole Dispositive Power None.
			10.	Shared Dispositive Power 1,175,294
	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 1,175,294
	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)   o
	13.	Percent of Class Represented by Amount in Row (11) 3.7%
	14.	Type of Reporting Person (See Instructions) IN

CUSIP No.  M52020100
	1.	Names of Reporting Persons. Michael R. Murphy
	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)		o
		(b)		o
	3.	SEC Use Only
	4.	Source of Funds (See Instructions) AF
	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o
	6.	Citizenship or Place of Organization United States of America
Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power None.
			8.	Shared Voting Power 1,175,294
			9.	Sole Dispositive Power None.
			10.	Shared Dispositive Power 1,175,294
	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 1,175,294
	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)   o
	13.	Percent of Class Represented by Amount in Row (11) 3.7%
	14.	Type of Reporting Person (See Instructions) IN

Item 1.	Security and Issuer
	This statement relates to the Ordinary Shares, par value NIS 0.05 per share (the “Ordinary Shares”), of Given Imaging Ltd., an Israeli corporation (the “Company”), which has its principal executive offices at Hermon Building, New Industrial Park, Yoqneam 20692, Israel.
Item 2.	Identity and Background
	This statement is being jointly filed by the following persons (the “Reporting Persons”): Discovery Equity Partners, L.P. (“Discovery Equity Partners”) is an Illinois limited partnership primarily engaged in the business of investing in securities. Discovery Group I, LLC (“Discovery Group”) is a Delaware limited liability company and a registered investment adviser under the Investment Advisers Act of 1940, as amended, that is primarily engaged in the business of investing in securities on behalf of institutional clients. Daniel J. Donoghue is a Managing Member of Discovery Group and of various related entities, which is his principal occupation. Michael R. Murphy is a Managing Member of Discovery Group and of various related entities, which is his principal occupation.  Both Mr. Donoghue and Mr. Murphy are United States citizens. The business address of each of the Reporting Persons is 191 North Wacker Drive, Suite 1685, Chicago, Illinois 60606.
	During the past five years, none of the Reporting Persons have been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws, or finding any violation with respect to such laws.
Item 3.	Source and Amount of Funds or Other Consideration
	The total purchase price for the 1,175,294 Ordinary Shares beneficially owned by the Reporting Persons as of September 30, 2013 was approximately $22,372,050.  The source of such funds was the assets of Discovery Equity Partners, including proceeds of margin loans under margin loan facilities maintained in the ordinary course of business by the Discovery Equity Partners with a broker on customary terms and conditions.  Discovery Equity Partners is the legal owner of all of the Ordinary Shares beneficially owned by Discovery Group and Messrs. Donoghue and Murphy.

Item 4.

Purpose of Transaction

The Reporting Persons acquired beneficial ownership of the Ordinary Shares reported herein as part of their investment activities on behalf of Discovery Equity Partners.  The Reporting Persons acquired the Ordinary Shares reported herein because they believe that the trading prices of the Ordinary Shares do not adequately reflect the potential value of the Company’s underlying business and assets. On September 30, 2013, Discovery Group sent a letter to the Board of Directors of the Company (the “Board”). The letter relates to the Reporting Persons’ recommendations that the Board (1) implement a $50 million share repurchase or dividend to take advantage of Israel’s expiring “Trapped Profits Law” and (2) pursue a subsequent sale of the Company to a larger strategic buyer that will recognize the Company’s inherent strengths and value. The description of this aforementioned letter of Discovery Group contained in the Schedule 13D is qualified in its entirety by reference to the full text of such letter, which is included in Exhibit 1 to this Schedule 13D. The Reporting Persons intend to review and evaluate their investment in the Ordinary Shares on an ongoing basis and may, depending upon their evaluation of the business and prospects of the Company, or such other considerations as they may deem relevant, determine to increase, decrease, or dispose of their holdings of Ordinary Shares.  As a part of such review and evaluation, the Reporting Persons have held and may in the future hold discussions with the Company’s management and directors, other shareholders and other interested parties. Except as otherwise described in this Item 4, the Reporting Persons do not have present plans or proposals that relate to or would result in any of the following (although the Reporting Persons reserve the right to develop such plans or proposals or any other plans relating to the Company and to take action with respect thereto):  (i) the acquisition by any person of additional securities of the Company, or the disposition of securities of the Company; (ii) an extraordinary corporate transaction, such as a merger, reorganization, or liquidation, involving the Company or any of its subsidiaries; (iii) a sale or transfer of a material amount of assets of the Company or any of its subsidiaries; (iv) any change in the present board of directors or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (v) any material change in the present capitalization or dividend policy of the Company; (vi) any other material change in the Company’s business or corporate structure; (vii) changes in the Company’s certificate of incorporation, bylaws, or instruments corresponding thereto or other actions that may impede the acquisition of control of the Company by any person; (viii) causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (ix) a class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended; or (x) any action similar to any of those enumerated above.

Item 5.	Interest in Securities of the Issuer
	The information concerning percentages of ownership set forth below is based on 31,656,216 Ordinary Shares reported outstanding as of September 2, 2013 in the Company’s Proxy Statement on Form 6-K for the month of September 2013. Discovery Equity Partners beneficially owns 1,175,294 Ordinary Shares as of September 30, 2013, which represents 3.7% of the outstanding Ordinary Shares. Discovery Group beneficially owns 1,175,294 Ordinary Shares as of September 30, 2013, which represents 3.7% of the outstanding Ordinary Shares. Mr. Donoghue beneficially owns 1,175,294 Ordinary Shares as of September 30, 2013, which represents 3.7% of the outstanding Ordinary Shares. Mr. Murphy beneficially owns 1,175,294 Ordinary Shares as of September 30, 2013, which represents 3.7% of the outstanding Ordinary Shares. Discovery Group is the sole general partner of Discovery Equity Partners.  Messrs. Donoghue and Murphy are the sole managing members of Discovery Group.  As a consequence, Discovery Group and Messrs. Donoghue and Murphy may be deemed to share beneficial ownership of all of the Ordinary Shares owned by Discovery Equity Partners. The transactions in Ordinary Shares effected by the Reporting Persons during the past 60 days are set out in Exhibit 2 hereto. No person other than Discovery Equity Partners is known to any Reporting Person to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, any of the Ordinary Shares reported herein.
Item 6.	Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer
	There are no contracts, arrangements, understandings or relationships (legal or otherwise) between or among any of the Reporting Persons and any other person with respect to any securities of the Company other than the governing documents of Discovery Group and Discovery Equity Partners, the margin loan facilities referred to under Item 3 above, the Joint Filing Agreement of the Reporting Persons with respect to this Schedule 13D included as Exhibit 3 to this Schedule 13D, and the Powers of Attorney granted by Messrs Donoghue and Murphy with respect to reports under Section 13 of the Securities Exchange Act of 1934, as amended, which Powers of Attorney are included as Exhibit 4 and Exhibit 5, respectively, to this Schedule 13D.

Item 7.	Material to Be Filed as Exhibits
	Exhibit 1:          Letter dated September 30, 2013 of Discovery Group to the Board of Directors of the Company.
	Exhibit 2:          List of transactions effected by the Reporting Persons in the Company’s Ordinary Shares during the 60-day period preceding this filing.
	Exhibit 3:          Joint Filing Agreement dated as of October 1, 2013, by and among Discovery Equity Partners; Discovery Group; Daniel J. Donoghue; and Michael R. Murphy.
	Exhibit 4:          Power of Attorney of Daniel J. Donoghue, dated as of April 28, 2008.
	Exhibit 5:          Power of Attorney of Michael R. Murphy, dated as of April 28, 2008.

Signature

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

October 1, 2013

Date

DISCOVERY GROUP I, LLC,

for itself and as general partner of

DISCOVERY EQUITY PARTNERS, L.P.

By:  Michael R. Murphy*

Signature

Michael R. Murphy, Managing Member

Name/Title

Daniel J. Donoghue*

Signature

Daniel J. Donoghue

Name/Title

Michael R. Murphy*

Signature

Michael R. Murphy

Name/Title

                                              *By: /s/ Mark Buckley

Mark Buckley

Attorney-in-Fact for Daniel J. Donoghue

Attorney-in-Fact for Michael R. Murphy

Exhibit Index

Exhibit 1	Letter dated September 30, 2013 of Discovery Group to the Board of Directors of the Company.
Exhibit 2	List of transactions effected by the Reporting Persons in the Company’s Ordinary Shares during the 60-day period preceding this filing.
Exhibit 3	Joint Filing Agreement dated as of October 1, 2013, by and among Discovery Equity Partners; Discovery Group; Daniel J. Donoghue; and Michael R. Murphy.
Exhibit 4	Power of Attorney of Daniel J. Donoghue, dated as of April 28, 2008.
Exhibit 5	Power of Attorney of Michael R. Murphy, dated as of April 28, 2008.

EX-1

Mark Buckley

1 312 265 9607

mbuckley@thediscoverygroup.com

September 30, 2013

The Board of Directors

c/o Mr. Nachum “Homi” Shamir

President, Chief Executive Officer

Given Imaging Ltd.

3950 Shackleford Rd NW

Duluth, GA  30096

Dear Directors:

As one of the largest and longest-tenured shareholders of Given Imaging, we are writing to urge you to take two immediate actions for the sake of all shareholders; (1) implement a $50 million share repurchase or dividend to take advantage of the expiring “Trapped Profits Law”, and (2) pursue a subsequent sale of the Company to a larger strategic buyer that will recognize Given Imaging’s inherent strengths and value.

Given Imaging has until November 15, 2013 to elect to participate in the “Trapped Profits Law,” an amendment to Israel’s “Investment Law” which governs the taxation of the Company. The “Trapped Profits Law” will allow Given Imaging to take advantage of reduced corporate income tax rates while returning up to $50 million in excess cash to shareholders. We recommend that the Company utilize a fixed-price tender offer or Dutch Auction share repurchase to disgorge its excess cash, as opposed to a dividend, in order to capitalize on Given Imaging’s depressed share price. We expand on these alternatives later in this letter.

Immediately following the share repurchase, we also strongly urge the Board to initiate a comprehensive and complete process to sell the Company. Given Imaging has been chronically undervalued in the public markets during the past several years primarily due to mismanagement. As evidence, this letter will present four major areas in which management has squandered the fair value of the Company: (1) Failed Execution of Business Strategy; (2) Weak Financial Performance; (3) Loss of Management Credibility with Investors; and (4) Inefficient Capital Structure. Despite the mismanagement of the Company, we are not calling for a change in management. A sale to a strategic buyer is the most timely and compelling means of maximizing shareholder value. Excluding the impact of a potential share repurchase or dividend, our detailed valuation analysis shows that Given Imaging could reasonably achieve a value of $26 to $30 per share in a company sale.

Discovery Group invested in Given Imaging because of its transformative and disruptive technology, as well as the large untapped end-markets related to Crohn’s monitoring and colorectal cancer screening. However, we no longer believe the Company can attain its true intrinsic value in the public markets. By returning excess cash to shareholders and conducting a full auction process to sell the Company, the Board will remove the execution risk that we believe exists under the current management while providing shareholders with an attractive return.

191 N. Wacker Drive, Suite 1685, Chicago, IL 60606

Board of Directors

Given Imaging Ltd.

Page 2

Discovery Group Background

Discovery Group is a long-time shareholder, initially investing in the Company in early 2011. We currently own approximately 4% of the common stock outstanding and have consistently been one of Given Imaging’s largest shareholders. We have maintained a high degree of interaction with the Company since our initial investment, including over 25 in-person meetings and conference calls with Mr. Homi Shamir, Chief Executive Officer and Mr. Yuval Yanai, Chief Financial Officer, and other senior management; two visits to the Digestive Disease Week trade show; conversations with representatives from IDB Holding Corporation, the Company’s largest shareholder; and due diligence calls with various GI physicians.

In the 12+ years of operating our fund, we have successfully invested in hundreds of undervalued micro-cap companies, including numerous medical device companies such as Micrus Endovascular, Cardiovascular Systems, Somanetics, Endologix, Home Diagnostics, Sonosite, I-Flow, VNUS Medical Technologies, and Cholestech.

Chronic Undervaluation

It is common for the public market to discount micro-cap companies relative to their inherent values since their small float, limited trading volume, and general lack of research coverage lead to low institutional investor interest. In Given Imaging’s case, we believe the discount is exacerbated due to mismanagement of both the business and investor expectations.  Since the beginning of Mr. Shamir’s tenure as CEO the stock has declined approximately 10%, significantly underperforming the NASDAQ Composite during the same time period. Managements’ response to this fact is that Given Imaging is burdened by its location in Israel. However, the Company’s stock has also significantly underperformed the TA-100 Index of the 100 most highly capitalized companies listed on the Tel Aviv Stock Exchange.

Board of Directors

Given Imaging Ltd.

Page 3

Failed Execution of Business Strategy

By our analysis, Given Imaging posted organic growth of 1.1% in 2012 and has averaged only 4.2% organic growth during the past five fiscal years. Several growth initiatives failed to materialize, were delayed numerous times, and generally did not live up to the expectations set by management.

● The Company received updated clearance from the FDA for its PillCam SB capsule in March 2011, allowing it to be utilized in the monitoring of inflammatory bowel diseases such as Crohn’s disease. Despite increased sales & marketing activities, the impact on revenue has been minimal due to limited reimbursement and an inability to convince medical practitioners to adopt the technology. In the first six months of 2013, the number of PillCam SB capsules sold in the Americas region declined 5% compared to the same period in 2012.

In our conversations with management, they have placed the blame for the stagnant growth on the global financial crisis and its impact on procedure volumes. However, softer procedure volumes is an issue impacting the entire medical device industry.  As demonstrated in the chart below, Given Imaging has severely underperformed the industry in terms of growth whether measured over the last one, three, or five years.

	Average Revenue Growth
	1-Year			3-Year			5-Year
Given Imaging (reported growth)		1.4	%		8.5	%		9.9	%
Given Imaging (organic growth)		1.1	%		3.0	%		4.2	%
U.S Exchange-Traded Medical Device Companies (Market Cap > $100M: 91 Companies)
Top Quartile		16.5	%		17.6	%		16.0	%
Median		9.7	%		11.1	%		9.8	%
Bottom Quartile		2.6	%		5.1	%		4.8	%
Source: Capital IQ

Management has also claimed that the longer reading times required by the PillCam SB hampered market adoption. While this may be true, management’s failure to achieve broad reimbursement is a significant contributor to the poor market adoption. Less than 20% of the U.S. population has coverage for capsule endoscopy of the small bowel for diagnostic re-evaluation of Crohn’s disease.

● Given Imaging had to initiate two separate recalls of its Bravo product in early 2012. After initially experiencing strong growth following the acquisition of the business, current Bravo revenue remains significantly lower than pre-recall levels.

In their defense of the poor Bravo performance, management has again pointed to issues affecting the industry as a whole: (1) changes in Medicare reimbursement rates; and (2) limiting of payment for procedures performed in Ambulatory Surgical Centers as a result of the Affordable Care Act. The second rationale especially rings hollow since the change in payment did not take effect until the second quarter of 2013, well after the Bravo product had experienced a significant decline in revenue.

● Given Imaging has long touted the market opportunity for PillCam COLON, particularly in the U.S. and Japanese markets. The Company initially communicated that a clinical trial for FDA submission would commence in the second half of 2010 with potential commercialization in 2012. The trial was ultimately delayed over a year from initial expectations. The Company and its shareholders are still waiting for FDA approval. Even if Given Imaging receives FDA approval in the near-term, management has indicated commercialization is several years away since the Company will need to first establish reimbursement coverage.

Board of Directors

Given Imaging Ltd.

Page 4

In addition, the Company abruptly changed its FDA submission in August 2012 to target only those patients who previously had incomplete colonoscopies. This change reduced the potential end-market from roughly 3.5 million people annually to roughly 750,000 people annually.

● The Company has not secured reimbursement coverage and market acceptance in several important geographies. For example, despite previous assurances from management, neither Germany nor Brazil, with a combined population of approximately 260 million, have successfully implemented national coverage of certain Given Imaging products.

Weak Financial Performance

In addition to failing to generate organic growth, management has also failed to increase profitability and achieve operating efficiencies in the business. Aided by several acquisitions, revenue grew 27% between 2009 and 2012; yet the Company’s operating margin remained flat.

$ in thousands; FYE 12/31	Fiscal Years Ending
	2006		2007		2008		2009		2010		2011		2012
Revenue	$	95,029	$	112,868	$	125,108	$	141,763	$	157,809	$	177,955	$	180,501
Reported Growth		9.5%		18.8%		10.8%		13.3%		11.3%		12.8%		1.4%
Organic Growth		9.5%		18.8%		10.1%		2.1%		(1.3%)		9.3%		1.1%
Cost of goods sold		24,154		29,721		33,001		33,145		37,629		41,466		42,971
Gross profit		70,875		83,147		92,107		108,618		120,180		136,489		137,530
Gross margin		74.6%		73.7%		73.6%		76.6%		76.2%		76.7%		76.2%
Research and development, net of grants		10,811		16,448		18,296		16,733		20,218		25,016		24,188
% of sales		11.4%		14.6%		14.6%		11.8%		12.8%		14.1%		13.4%
Sales and marketing		50,732		55,446		60,902		61,428		67,114		75,014		76,272
% of sales		53.4%		49.1%		48.7%		43.3%		42.5%		42.2%		42.3%
General and administrative		16,027		20,981		19,320		18,919		24,452		23,078		22,746
% of sales		16.9%		18.6%		15.4%		13.3%		15.5%		13.0%		12.6%
Total operating expenses		77,570		92,875		98,518		97,080		111,784		123,108		123,206
% of sales		81.6%		82.3%		78.7%		68.5%		70.8%		69.2%		68.3%
Operating profit		(6,695)		(9,728)		(6,411)		11,538		8,396		13,381		14,324
Operating margin		(7.0%)		(8.6%)		(5.1%)		8.1%		5.3%		7.5%		7.9%

Management asserts that Given Imaging is unique in that it has a global infrastructure that no other comparably-sized medical device company possesses. In a detailed analysis of dozens of large and small medical device firms which we shared with management, we found no meaningful difference in their respective geographic breakdown of revenue when compared to Given Imaging.

Board of Directors

Given Imaging Ltd.

Page 5

Loss of Management Credibility with Investors

The Company’s public market valuation has also been severely hampered by repeatedly mismanaging expectations with respect to future financial performance. Given Imaging has either missed guidance or revised guidance downward in five of the seven fiscal years that Mr. Shamir has been CEO. Just recently, the Company significantly missed its Q4 2012 guidance (roughly 15% revenue miss) and drastically underperformed expectations during Q1 2013.

Revision						% Below Initial
Date	Period	Measure	Initial Guidance	Revision	Actual	Guidance Mid-point
07/26/06	FY2006	Revenue	$110M - $120M	$92M - $97M	$95M	-17%
10/31/07	FY2007	Revenue	$114M - $119M	$109M - $112M	$112.9M	-3%
11/11/08	FY2008	Revenue	$130M - $136M	$125M	$125.1M	-6%
11/11/08	FY2008	GAAP EPS	$0.34 - $0.42	$0.25	$0.13	-66%
11/03/10	FY2010	Revenue	$167M - $174M	$154M - $157M	$157.8M	-7%
11/03/10	FY2010	GAAP EPS	$0.44 - $0.52	$0.18 - $0.23	$0.28	-42%

Management also publicized long-term P&L targets in 2011 that they now concede will be tough to achieve and significantly overpromised on the timing with respect to commercialization of the colonoscopy opportunity. Finally, after growing revenue only 4.3% in the first half of 2013, Given Imaging will need record revenue growth of 16.7% in the second half to hit the mid-point of its guidance. Based on recent history, we are expecting another disappointment.

This repeated history of not delivering on financial targets undermines the Company’s credibility with investors. In fact, during the past two years almost all of Given Imaging’s top-ten shareholders have either lowered or completely exited their respective ownership stakes in the Company. IDB Holding Corporation, which owns roughly 49% of common stock, also recently attempted to sell its stake.

Inefficient Capital Structure

Given Imaging is carrying an excessive amount of cash on its balance sheet, approximately $130 million or 21% of the Company’s market capitalization. The excess cash is especially acute when considering Given Imaging routinely generates annual operating cash flow in excess of $20 million. Carrying a large cash balance implies a lack of management confidence in future performance and/or a lack of regard for shareholder resources.

Board of Directors

Given Imaging Ltd.

Page 6

		Share		Market		Enterprise									Net Cash /
Company	Ticker	Price		Value		Value		Cash		Debt		Net Cash			Market Cap
Given Imaging Ltd.	GIVN	$	19.21	$	608.1	$	479.1	$	130.3	$	1.2	$	129.0			21	%
Large Cap Med Device
Johnson & Johnson	JNJ	$	86.73	$	244,411.5	$	242,908.5	$	25,481.0	$	23,978.0	$	1,503.0			1	%
Abbott Laboratories	ABT		33.14		51,503.7		56,017.3		9,651.9		14,073.9		(4,422.0	)		-9	%
Medtronic, Inc.	MDT		53.00		52,865.8		51,644.8		12,416.0		11,195.0		1,221.0			2	%
Covidien plc	COV		60.96		28,041.5		30,998.5		2,119.0		5,076.0		(2,957.0	)		-11	%
Stryker Corporation	SYK		67.65		25,580.6		23,637.6		4,714.0		2,771.0		1,943.0			8	%
St. Jude Medical Inc.	STJ		52.39		15,046.0		17,289.0		1,610.0		3,613.0		(2,003.0	)		-13	%
Zimmer Holdings, Inc.	ZMH		82.30		13,953.9		14,390.1		1,255.6		1,688.1		(432.5	)		-3	%
Intuitive Surgical, Inc.	ISRG		367.46		14,591.8		11,761.3		3,027.2		196.7		2,830.5			19	%
CR Bard Inc.	BCR		115.74		9,161.2		9,774.8		869.5		1,483.1		(613.6	)		-7	%
Edwards Lifesciences Corp.	EW		68.79		7,723.3		7,353.7		596.9		227.3		369.6			5	%
						Mean		$	6,174.1	$	6,430.2	($	256.1	)		-1	%
						Median		$	2,573.1	$	3,192.0	($	31.5	)		-1	%
Small Cap Med Device
DexCom, Inc.	DXCM	$	27.23	$	1,943.6	$	1,904.9	$	46.4	$	7.7	$	38.7			2	%
Thoratec Corp.	THOR		36.92		2,123.9		1,850.7		273.2		0.0		273.2			13	%
Volcano Corporation	VOLC		23.68		1,292.7		1,198.8		500.9		407.1		93.9			7	%
Endologix Inc.	ELGX		15.98		1,008.8		969.0		39.8		0.0		39.8			4	%
Abaxis, Inc.	ABAX		41.47		925.6		824.9		106.5		5.9		100.6			11	%
Luminex Corporation	LMNX		20.12		832.8		793.5		48.1		8.7		39.4			5	%
ABIOMED, Inc.	ABMD		18.75		709.6		624.8		88.8		4.0		84.8			12	%
MAKO Surgical Corp.	MAKO		29.48		1,386.4		1,330.0		67.1		10.7		56.4			4	%
The Spectranetics Corporation	SPNC		16.61		678.1		560.7		119.4		1.9		117.4			17	%
AtriCure, Inc.	ATRC		10.96		229.9		202.4		34.9		7.4		27.5			12	%
						Mean		$	132.5	$	45.3	$	87.2			9	%
						Median		$	78.0	$	6.6	$	70.6			9	%

Given Imaging has repeatedly resisted calls to return excess cash to shareholders, citing potential tax ramifications. However, according to management the Company can utilize the recently-enacted “Trapped Profits Law” to return up to $50 million to shareholders while only incurring a 10% tax payment.

Path to Value Recognition

After patiently waiting several years for better management performance and for Given Imaging to achieve its potential in the public markets, we feel the time has arrived for the Board to take decisive action. To remedy the situation, Discovery Group strongly recommends that the Board take the following steps to achieve the Company’s true intrinsic value: (1) stop hoarding cash and instead return the capital to shareholders; and (2) conduct a comprehensive and competitive sale process to solicit bids for the Company.

Step 1 – Share Repurchase: The Company should utilize the “Trapped Profits Law” to return $50 million to shareholders. Even with the one-time tax payment of 10%, either a dividend or a share repurchase is preferred to the current capital structure. At the very least, it guarantees a partial return of capital to shareholders in the event management and the Board fail to consummate a sale.

Our preference is for a fixed-price tender offer or Dutch Auction share repurchase, with either option having numerous benefits. A share repurchase allows individual shareholders to decide whether or not to participate. For those that choose to participate and sell shares, it reduces their respective risk and provides capital to invest in competing opportunities. For those shareholders that choose not to participate, a share repurchase accretes their ownership position, resulting in a higher return when the Company ultimately pursues a value recognition event such as a change-of-control.

Board of Directors

Given Imaging Ltd.

Page 7

It is important to note that we are not advocating a share repurchase plan with the hopes of increasing Given Imaging’s stock price. Instead, we are calling for a more efficient capital structure which will optimize the financial return in a change-of-control transaction. In an eventual sale of the Company, acquirers will not pay a premium for excess cash sitting on the balance sheet. Therefore, the overall reported premium paid for Given Imaging would be low unless the excess cash is disgorged.

According to management, Given Imaging has until November 15, 2013 to utilize the “Trapped Profit Law”. We vigorously implore the Board to exercise sound financial judgment in returning a portion of the Company’s excess cash to shareholders.

Step 2 – Proper Change-of-Control Process: Given Imaging ran a sale process in late 2012 and early 2013 at the behest of IDB Holding Corporation that we believe was limited in scope and half-hearted. Considering the circumstances – IDB Holding Corporation’s perceived financial condition, recent history of guidance misses, pending regulatory approvals – we agree with management that the timing was not ideal. However, we believe the proper time for an earnest sale process is now upon us.

Given Imaging recently received regulatory approval for PillCam COLON in Japan and is anticipating reimbursement coverage in early 2014. The Company received FDA approval and Japanese regulatory approval for the PillCam SB3 in August 2013 and September 2013, respectively. The Company is also expecting FDA approval for PillCam COLON prior to year-end. Once Given Imaging receives this final regulatory approval, it should conduct a full and thorough auction, which will allow an efficient market to develop for the Company’s true value. This process should include both direct competitors and additional medical device companies, as well as pharmaceutical companies that already focus on the gastrointestinal and/or oncology markets. It is imperative for the Board to recognize that a change-of-control transaction will eliminate the execution risks that have repeatedly plagued Given Imaging in the past several years.

The differential between the Company’s current value and a potential change-of-control value is significant. As shown in the table below, which excludes the impact of our proposed share repurchase, Given Imaging could reasonably achieve a value of $26 to $30 per share from a strategic buyer. This valuation is comprised of two elements: roughly $22 to $26 per share for the existing business, and a potential incremental $4 per share for the Crohn’s and colonoscopy opportunities. At the mid-point, the expected change-of-control value equates to a 45+% premium to the current stock price and almost 6.0x the Company’s LTM Gross Profit.

Board of Directors

Given Imaging Ltd.

Page 8

We believe a change-of-control transaction provides an attractive value for shareholders while also eliminating continued execution risk. It is important the Board maintains a realistic view of the amount a strategic buyer is willing to pay. As discussed earlier, a strategic buyer will only pay 100 cents on the dollar for cash on the balance sheet. In addition, a strategic buyer will unlikely pay full value for the Crohn’s and colonoscopy market opportunities as it will be implementing the commercialization strategy and bearing the corresponding risk.

Conclusion

Discovery Group believes that Given Imaging possesses best-in-class technology and participates in a market that has significant long-term growth potential. However, it is our strong opinion that the Company has been mismanaged and its intrinsic value will not be recognized in the public markets. By returning excess capital to shareholders and engaging in a competitive sale process, shareholders will achieve an outcome that we believe is far superior to, and presents significantly less risk, than the status quo.

We have held discussions with potential strategic buyers. Consistent with our observations, these companies recognize the same missed opportunities and failed management. Most importantly, the strategic buyers also recognize the compelling opportunity which still exists and are eager to participate in a formal and legitimate sale process. Absent the commencement of a share repurchase and proactive sale process, Discovery Group will withhold support for the Board, management, and approval for matters put to proxy votes and will urge other shareholders to do the same.

Board of Directors

Given Imaging Ltd.

Page 9

We are requesting a formal response from the Board acknowledging the receipt of this letter and initial feedback on our proposals. We are available to answer any questions and are anxious to discuss our analysis in greater detail.

Sincerely,

/s/ Mark Buckley

Mark Buckley

Partner

EX-2

EXHIBIT 2

TRANSACTIONS DURING PAST 60 DAYS

The Reporting Persons engaged in the following transactions in Ordinary Shares of the Company during the past 60 days. Such transactions involved the purchase of shares on the NASDAQ Global Select Market. The Reporting Persons hereby undertake to provide upon request to the SEC staff full information regarding the number of shares and prices at which each transaction was effected.

Date	Type	Price	Shares
8/5/2013	Purchase	$15.5000	200

EX-3

EXHIBIT 3

JOINT FILING AGREEMENT

The undersigned hereby agree to the joint filing of the Schedule 13D to which this Agreement is attached.

Dated:  October 1, 2013

DISCOVERY GROUP I, LLC,
for itself and as general partner of DISCOVERY EQUITY PARTNERS, L.P.
By:	/s/ Michael R. Murphy*
	Michael R. Murphy Managing Member

Daniel J. Donoghue*
Daniel J. Donoghue*
Michael R. Murphy*
Michael R. Murphy
By:	/s/ Mark Buckley
	Mark Buckley
	Attorney-in-Fact for Daniel J. Donoghue
	Attorney-in-Fact for Michael R. Murphy

EX-4

EXHIBIT 4

POWER OF ATTORNEY

The undersigned, Daniel J. Donoghue, hereby appoints Mark Buckley his true and lawful attorney-in-fact and agent, with full power to execute and file with the United States Securities and Exchange Commission and any stock exchange or similar authority, for and on his behalf in any and all capacities, any and all reports required to be filed pursuant to Section 13 of the Securities Exchange Act of 1934 and the rules thereunder on Schedule 13D or 13G, any and all amendments to such reports, with all exhibits, and any other forms or documents as may be necessary in connection with the filing of such reports with the United States Securities and Exchange Commission and any stock exchange or similar authority, granting unto said attorney full power and authority to do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable to complete, as fully as the undersigned might or could do in person.

This Power of Attorney shall remain in full force and effect until revoked by the undersigned in a signed writing delivered to the foregoing attorney-in-fact and agent.

IN WITNESS WHEREOF the undersigned has caused this Power of Attorney to be executed this 28th day of April, 2008.

/s/ Daniel J. Donoghue

Daniel J. Donoghue

STATE OF ILLINOIS	)
	) SS.
COUNTY OF COOK	)

I, Kareema M. Cruz, a Notary Public in and for the County of Cook, State of Illinois, DO HEREBY CERTIFY that Daniel J. Donoghue, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that he signed and delivered the said instrument as his own free and voluntary act, for the uses and purposes therein set forth.

Given under my hand and notarial seal, this 28th day of April, 2008.

/s/ Kareema M. Cruz

Notary Public

EX-5

EXHIBIT 5

POWER OF ATTORNEY

The undersigned, Michael R. Murphy, hereby appoints Mark Buckley his true and lawful attorney-in-fact and agent, with full power to execute and file with the United States Securities and Exchange Commission and any stock exchange or similar authority, for and on his behalf in any and all capacities, any and all reports required to be filed pursuant to Section 13 of the Securities Exchange Act of 1934 and the rules thereunder on Schedule 13D or 13G, any and all amendments to such reports, with all exhibits, and any other forms or documents as may be necessary in connection with the filing of such reports with the United States Securities and Exchange Commission and any stock exchange or similar authority, granting unto said attorney full power and authority to do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable to complete, as fully as the undersigned might or could do in person.

This Power of Attorney shall remain in full force and effect until revoked by the undersigned in a signed writing delivered to the foregoing attorney-in-fact and agent.

IN WITNESS WHEREOF the undersigned has caused this Power of Attorney to be executed this 28th day of April, 2008.

/s/ Michael R. Murphy

Michael R. Murphy

STATE OF ILLINOIS	)
	) SS.
COUNTY OF COOK	)

I, Kareema M. Cruz, a Notary Public in and for the County of Cook, State of Illinois, DO HEREBY CERTIFY that Michael R. Murphy, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that he signed and delivered the said instrument as his own free and voluntary act, for the uses and purposes therein set forth.

Given under my hand and notarial seal, this 28th day of April, 2008.

/s/ Kareema M. Cruz

Notary Public