Johnson & Johnson on Tuesday lifted its 2025 revenue guidance after posting stronger-than-expected third-quarter earnings and revealed plans to spin off its orthopedics business into a standalone company, its second major separation in two years.
The New Jersey-based healthcare conglomerate said it now expects product revenue between $93.5 billion and $93.9 billion, up roughly $300 million from its previous forecast.
The new range also sits above analysts’ consensus estimate of $93.4 billion, according to data from LSEG.
Shares of J&J rose about 2% in premarket trading following the announcement but fell later, and were in the red by 0.48% right before open.
DePuy Synthes to become an independent company
J&J said it plans to separate its orthopedics business, DePuy Synthes, into an independent company over the next 18 to 24 months.
The unit, which makes hip, knee, and shoulder implants, surgical tools, and trauma products, generated $9.2 billion in 2024—around 10% of J&J’s total sales.
Chief Financial Officer Joe Wolk said the company is exploring several options for the separation, with a primary focus on a tax-free spinoff structure.
“While the orthopedics business remains profitable, the next phase of innovation in the field is probably in better hands somewhere else,” Wolk said.
The move follows J&J’s 2023 spin-off of its $15 billion consumer health arm into Kenvue, which marked a major step in its strategy to streamline operations and focus on high-margin areas such as oncology, immunology, cardiovascular devices, and surgery.
Solid third-quarter performance drives optimism
J&J reported third-quarter sales of $23.99 billion, narrowly topping analyst expectations of $23.75 billion.
Adjusted earnings came in at $2.80 per share, ahead of the $2.76 consensus forecast.
Pharmaceutical revenue grew 6.8% year-on-year to $15.56 billion, led by gains in oncology and immunology treatments.
Blood cancer therapy Darzalex brought in $3.67 billion in quarterly revenue, while Tremfya—a treatment for plaque psoriasis, psoriatic arthritis, and Crohn’s disease—jumped 41% to $1.42 billion.
The company has identified Tremfya as a potential $10 billion product as it seeks to offset declining sales from Stelara, which faces generic competition following recent patent expirations.
Medical devices show resilience
J&J’s medical device division posted a 6.8% rise in sales to $8.43 billion, supported by strong performances in electrophysiology and cardiovascular products from Abiomed and Shockwave.
Its surgical vision and wound-closure segments also contributed to growth.
Analysts said the spinoff and earnings beat highlight J&J’s renewed focus on innovation-driven areas.
The move is expected to allow both companies to sharpen strategic focus—DePuy Synthes on precision orthopedics and Johnson & Johnson on its core pharmaceutical and medtech growth engines.
As J&J prepares for another structural shift, investors appear optimistic that the company’s reorganization and product pipeline could strengthen its position in a rapidly evolving healthcare landscape.
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