NEW BRUNSWICK: Johnson & Johnson said Tuesday it plans to separate its orthopedics business into a standalone company named DePuy Synthes within the next 18 to 24 months, marking its second major spinoff in two years.
The move comes as the health-care conglomerate raised its 2025 product revenue forecast to a range of $93.5 billion to $93.9 billion, about $300 million higher than its previous guidance and above Wall Street expectations of $93.4 billion, according to LSEG data.
J&J’s orthopedics division, which manufactures hip, knee and shoulder implants, surgical instruments and related products, generated approximately $9.2 billion in revenue last year, accounting for roughly 10% of the company’s total sales.
The company said the separation aligns with its strategic focus on high-growth, high-margin areas including oncology, immunology, neuroscience, surgery, vision care and cardiovascular products.
J&J Chief Financial Officer Joe Wolk said the company is evaluating multiple paths for the separation, with a tax-free spin-off as the preferred option. “While the orthopedics business remains profitable, we believe the next phase of innovation is beyond our scope and probably in better hands somewhere else,” Wolk said.
The announcement follows J&J’s 2023 decision to restructure its orthopedics unit, including market exits and product discontinuations. It also comes after the company spun off its $15 billion consumer health division into Kenvue last year.
J.P. Morgan analysts estimate the orthopedics business represents about 30% of J&J’s MedTech segment and has underperformed relative to other units. They said the planned spin-off “should create a faster-growing J&J over time.”