Johnson & Johnson on Tuesday said 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 since 2023.
J&J’s orthopedics unit, which makes hip, knee, and shoulder implants, surgical instruments, and other products, generated around $9.2 billion last year, or about 10% of total revenue.
J&J in 2023 announced a two-year restructuring program for its orthopedics business, saying it planned to exit certain markets and stop selling some products, after having recently spun off its $15 billion consumer unit into Kenvue.
The company said it planned to focus on high-growth, high-margin areas as part of its separation plans, such as oncology, immunology, neuroscience, surgery, vision care, and cardiovascular.
J&J Chief Financial Officer Joe Wolk said the company was exploring multiple paths for the separation, with a primary focus on a tax-free spin-off, but remained open to other options.
While the orthopedics business was profitable, Wolk said J&J believes the next phase of innovation in orthopedics was “beyond our scope and probably in better hands somewhere else.”
Forecast raise, profit beat
J&J also raised its 2025 sales forecast by about $300 million and now expects product revenue of $93.5 billion to $93.9 billion, above analysts’ expectations of $93.4 billion, according to LSEG data.
Third-quarter sales of $23.99 billion edged past Wall Street expectations of $23.75 billion, according to LSEG data.
The drugs and medical device maker posted adjusted earnings of $2.80 per share versus analyst expectations of $2.76.
The company’s pharmaceuticals sales jumped 6.8% from a year ago to $15.56 billion, slightly outpacing analysts’ estimates of $15.42 billion.
J&J saw gains from its oncology products, including blood cancer treatment Darzalex, which brought in third-quarter sales of $3.67 billion, about in line with forecasts of $3.62 billion.
Its medical device sales also rose 6.8% to $8.43 billion, mainly driven by electrophysiology products.
