Johnson & Johnson to Spin Off Orthopedics Business as DePuy Synthes, Raises Full YR Sales Forecast

Johnson & Johnson (NYSE: JNJ) announced plans to separate its orthopedics business into an independent company under the DePuy Synthes name within the next 18 to 24 months, marking its second major corporate spinoff in two years. The company also raised its 2025 full-year sales forecast following quarterly results that exceeded Wall Street expectations.

The orthopedics division, which manufactures hip, knee, and shoulder implants, surgical instruments, and other orthopedic devices, generated approximately $9.2 billion in revenue in 2024, accounting for about 10% of Johnson & Johnson’s total sales.

Chief Financial Officer Joe Wolk said the company is exploring multiple paths for the separation, including a tax-free spin-off, while remaining open to alternative structures. “The next phase of innovation in orthopedics is beyond our scope and probably in better hands somewhere else,” Wolk said. Johnson & Johnson reported third-quarter revenue of $23.99 billion, surpassing analyst expectations of $23.75 billion, according to LSEG data. Adjusted earnings were $2.80 per share, compared with consensus estimates of $2.76.

The company now projects full-year 2025 product revenue between $93.5 billion and $93.9 billion, roughly $300 million above its prior guidance and exceeding analyst expectations of $93.4 billion. Earnings per share guidance remains unchanged at $10.80 to $10.90.

Sales from the pharmaceutical division rose 6.8% year-over-year to $15.56 billion, led by oncology products including Darzalex, which posted $3.67 billion in quarterly sales. The medical device segment also advanced 6.8% to $8.43 billion, driven by growth in electrophysiology products.J.P. Morgan analysts said the spin-off will allow Johnson & Johnson to concentrate on higher-growth, higher-margin areas including oncology, immunology, neuroscience, cardiovascular, surgery, and vision care. They added that separating the orthopedics business which represents about 30% of J&J’s MedTech segment “should create a faster-growing J&J over time.”

The move follows the 2023 spin-off of Kenvue, J&J’s former consumer health division, and aligns with the company’s ongoing strategy to streamline operations and strengthen its innovative medicine and medical technology businesses. J&J CEO Joaquin Duato said in a statement, “We delivered another strong performance in the third quarter fueled by the depth and strength of our portfolio and significant progress across our pipeline.”

Shares of Johnson & Johnson were marginally higher in premarket trading following the announcement and have gained 32% year-to-date, compared with a 3% rise in the broader S&P Healthcare Index. Analysts said investors largely welcomed the update, though recent stock performance may limit near-term upside.

About Johnson & Johnson

Johnson & Johnson (NYSE: JNJ) is a global healthcare company engaged in the research, development, manufacture, and sale of pharmaceutical, medical technology, and consumer health products. Headquartered in New Brunswick, New Jersey, J&J serves customers in more than 60 countries and focuses on advancing innovation in medicine and medical devices.

At the time of publishing, Stocks.News holds positions in Johnson and Johnson as mentioned in the article.