Johnson & Johnson said Tuesday that it plans to spin out its orthopedics business, creating a standalone company that would compete with firms like Stryker and Zimmer Biomet.
The healthcare giant said the decision is intended to focus its medtech unit on higher-growth and higher-margin markets. The spinout, which will be called DePuy Synthes, is expected to happen in the next 18 to 24 months.
“This decision further sharpens our focus as a healthcare innovation leader and accelerates the shift of our medtech portfolio to areas of greatest unmet need and higher growth, which includes cardiovascular and robotic surgery,” CEO Joaquin Duato said on an earnings call.
Duato claimed that the spinout would be the largest, most comprehensive orthopedics company in the medical device space. The CEO added that the business will benefit from a more focused strategy and increased flexibility that would be obtained through a separation.
The ortho unit brought in approximately $9.2 billion in sales in fiscal year 2024, according to the announcement. Through the first nine months of 2025, J&J’s orthopedic business has generated $6.82 billion in revenue, a year-over-year decline of 0.3%. The unit did see a rebound in the third quarter after a slight decline in the second quarter, growing sales year over year by 3.8% to $2.27 billion.
“We’ve been on a journey over the last several years to really aggressively move our portfolio into higher-growth markets, and adding attractive assets such as Abiomed and [Shockwave Medical] in high-growth markets like cardiovascular are good examples,” Tim Schmid, J&J’s worldwide chairman of medtech, said on the call. “This decision to separate ortho is the next major step in that direction. Ortho is a great business but, frankly, one that participates … in lower-growth markets. This is all about shrinking to grow faster for medtech.”
CFO Joe Wolk told investors there would be updates throughout the process, adding that there would be nothing “newsworthy” to convey until mid-2026. After the spinout, J&J’s medtech unit will be made up of its cardiovascular, surgery and vision businesses.
J&J’s planned spinout is the second large separation announced in the medical device space this year. In May, Medtronic announced that it would spin out its diabetes business into a separate, standalone company.
Along with the spinout news, J&J announced that Namal Nawana would become the worldwide president of DePuy Synthes, effective immediately. Nawana will lead the business during and after the separation process.
Overall, J&J’s medtech unit reported third-quarter revenue of $8.43 billion, representing year-over-year growth of 6.8%. The company’s cardiovascular portfolio, which includes electrophysiology and J&J’s Abiomed and Shockwave acquisitions, grew sales by 12.6% in the quarter to $2.21 billion.
