DePuy Synthes Spinoff
Johnson & Johnson (JNJ) is slimming down again by getting back on the spinoff treadmill. The company announced last week that it plans to separate its orthopaedics division into a standalone company under the revived name DePuy Synthes, according to its press release. Unlike many spinoff announcements, the DePuy Synthes spinoff comes as a surprise, having not been agitated for nor rumored.
If the name sounds familiar, that’s because it should — J&J bought Synthes in 2012 and merged it with its existing DePuy orthopaedics line, a brand that’s been around since the 1890s (and yes, the same DePuy that was at the center of a few memorable hip-implant recalls). Of course the combination sounds like the name of a mildly WASPy romantic rival in a formulaic novel, but at least it has a history. Now J&J plans to send that legacy business off on its own, with the separation expected to close within 18 to 24 months, pending approvals(and the governement shutdown ending).
Orthopaedics or Orthopedics
Some may have noted the company has chosen to spell the word as ‘Orthopaedics’, While this is usually the preferred British spelling, with ‘Orthopedics’ usually being the preferred American spelling, ‘Orthopaedics’ tends to also be used in America in academic and other high-falutin settings. And Wall Street is nothing if not high-falutin.
Can The DePuy Synthes Spinoff Shine In Its Own Spotlight?
J&J’s orthopaedics segment generated roughly $9.2 billion in 2024 revenue, about 10 percent of total sales, large in absolute terms, but a small piece of J&J’s overall business. Orthopaedics has lagged in comparison to the company’s faster-growing pharmaceuticals and MedTech divisions. As J&J explains, the separation will let each business “focus on its unique priorities,” which usually translates to “the core business wants to grow faster without the anchor of slower divisions.”
The move follows a strong quarter for J&J — Reuters noted the company raised its full-year forecast after reporting better-than-expected results. But there’s a whiff of déjà vu: J&J made the same argument two years ago when it announced the spinoff of its consumer-health unit, Kenvue(KVUE), which has struggled as an independent company.
Déjà Vu All Over Again: From Band-Aids to Bone Screws
Remember Kenvue? That was the 2023 spinoff that took Band-Aid, Tylenol, Neutrogena, and the rest of J&J’s consumer staples with it — a separation that was supposed to “unlock value” and streamline the parent’s focus. Instead, it mostly unlocked a new ticker symbol and a decline in value.
Now comes a similar play, only with titanium hips instead of Tylenol. “DePuy Synthes” may sound fresh, but it’s a recycled brand with a mixed reputation. Investors familiar with the company’s past legal issues might not find the nostalgia comforting. On the other hand, in orthopaedics, brand recognition still matters — and DePuy remains a known name among surgeons and hospitals.
From Kenvue to DePuy Synthes: J&J’s Ongoing Portfolio Diet
For J&J, the logic is clear — slim down, sharpen focus, and hope the market rewards it. Kenvue took the toothpaste and baby powder; now DePuy Synthes will take the orthopaedic implants. What remains is the high-margin engine: oncology, immunology, neuroscience, and MedTech.
Still, there’s a limit to how many times one company can reinvent itself through separation. Investors may soon start asking whether J&J’s portfolio is truly “optimized” — or just perpetually in need of another spinoff.
Disclosure: The author holds no position in any stock mentioned.