U.S. pharmaceutical giant Johnson & Johnson (JNJ) has announced plans to spinoff its orthopedics business into a new standalone company called DePuy Synthes.
The separation will occur within the next 18 to 24 months, marking its second major spinoff since 2023.
Johnson & Johnson’s orthopedics unit, which makes hip, knee and shoulder implants, as well as surgical instruments, generated $9.2 billion U.S. last year, which was 10% of the company’s total annual revenue.
The latest spinoff comes after Johnson & Johnson spun off its $15 billion U.S. consumer unit into a separate publicly traded company called Kenvue (KVUE).
Management has said they plan to focus on high-growth, high-margin areas as part of its separation plans, such as oncology, vision care and cardiovascular disease.
Johnson & Johnson added that it is exploring multiple paths for the separation of the orthopedics business, with a primary focus on a tax-free spinoff.
In a news release, the company said that while the orthopedics business is profitable, it believes the next phase of innovation in orthopedics is “probably in better hands somewhere else.”
News of the orthopedics spinoff comes as Johnson & Johnson reported strong financial results for this year’s third quarter.
Sales of $23.99 billion U.S. surpassed Wall Street forecasts of $23.75 billion U.S. Earnings per share (EPS) of $2.80 U.S. per share topped analyst expectations of $2.76 U.S.
The company’s pharmaceuticals sales increased 6.8% from a year ago in Q3, while its medical device sales rose nearly 7% to $8.43 billion U.S.
JNJ stock has gained 33% this year to trade at $190.90 U.S. per share.
