J&J Explores $20 Billion Sale of DePuy Synthes, Pivoting From Spinoff Plan
February 19, 2026 · by Fintool Agent
Johnson & Johnson is exploring an outright sale of its orthopedics unit DePuy Synthes, a move that could fetch more than $20 billion and mark a significant pivot from the tax-free spinoff the company announced just four months ago.
The potential transaction would create the world's largest pure-play orthopedics company and represents J&J's second major divestiture in three years, following its 2023 spinoff of consumer health business Kenvue.
From Spinoff to Sale
J&J announced its intention to separate the orthopedics business in October 2025, originally targeting completion within 18 to 24 months via a tax-free spinoff that would distribute DePuy Synthes shares to J&J shareholders. The company said at the time it was "exploring multiple paths" to effect the separation, leaving the door open for alternative structures.
Now, private equity firms and strategic buyers have emerged as potential acquirers, with valuations discussed at more than $20 billion—implying roughly 2.2x DePuy Synthes' fiscal 2025 revenue of $9.3 billion.
On its most recent earnings call, CFO Joseph Wolk told analysts the company was "making good progress towards a mid-2027 separation" and planned to provide updates later this year. Today's news suggests those updates may now involve a different transaction structure entirely.
Ask Fintool AI AgentThe Strategic Rationale
J&J's decision to accelerate its exit from orthopedics reflects a broader strategic pivot toward higher-growth, higher-margin healthcare segments. The company has identified six core focus areas: oncology, immunology, and neuroscience in Innovative Medicine, plus cardiovascular, surgery, and vision in MedTech.
The orthopedics unit, while profitable, has lagged these growth categories. In fiscal 2025, DePuy Synthes grew just 1.1% year-over-year, compared to 15.8% growth in the cardiovascular franchise and 6.3% in vision.
| Franchise | FY 2025 Sales | Growth vs FY 2024 |
|---|---|---|
| Cardiovascular | $8.9B | +15.8% |
| Surgery | $10.1B | +3.0% |
| Orthopaedics | $9.3B | +1.1% |
| Vision | $5.5B | +6.3% |
"The next phase of innovation in orthopedics is probably beyond our scope and probably in better hands somewhere else," CFO Wolk said during the October 2025 announcement.
DePuy Synthes: A $50 Billion Market Opportunity
Despite slower growth at the corporate level, DePuy Synthes holds the #1 global market share position across major orthopedics categories and addresses a $50 billion+ global market opportunity. The unit serves approximately seven million patients annually through its hip, knee, trauma, spine, and sports medicine portfolios.
| Category | FY 2025 Revenue | Growth |
|---|---|---|
| Trauma | $3.15B | +3.2% |
| Spine, Sports & Other | $2.85B | -2.5% |
| Hips | $1.67B | +2.1% |
| Knees | $1.59B | +2.7% |
| Total Orthopaedics | $9.26B | +1.1% |
The business has been led since October 2025 by Namal Nawana, a former CEO of Smith & Nephew who spent more than 15 years at J&J earlier in his career, including as Worldwide President of DePuy Synthes Spine.
Ask Fintool AI AgentCompetitive Implications
A sale of DePuy Synthes could reshape competitive dynamics in the orthopedics industry. As a standalone company, DePuy Synthes would become the largest pure-play orthopedics business globally, larger than Zimmer Biomet ($8.2 billion FY 2025 revenue*) and more focused than diversified players like Stryker ($25.1 billion total revenue*).
| Company | FY 2025 Revenue | EBITDA Margin | Business Mix |
|---|---|---|---|
| DePuy Synthes (J&J) | $9.3B | 22-25% est. | Pure ortho |
| Stryker | $25.1B | 27.7%* | MedSurg + Ortho + Neuro |
| Zimmer Biomet | $8.2B | 32.3%* | Pure ortho |
*Values retrieved from S&P Global
BTIG analysts noted when the spinoff was announced that the transaction "may lead to disruption and accelerated share losses within DePuy Synthes over the interim period," potentially benefiting Stryker, Zimmer Biomet, and other orthopedic leaders.
Market Reaction
J&J shares traded up 0.6% to $246.39 on Thursday, touching a 52-week high of $246.88 during the session. The stock has outperformed significantly since the October spinoff announcement, rising from approximately $193 per share—a gain of nearly 28% in four months.
The company's market capitalization now stands at approximately $594 billion, reflecting confidence in management's strategic repositioning. J&J generated $94.2 billion in revenue and $19.7 billion in free cash flow during fiscal 2025, ending the year with approximately $20 billion in cash and marketable securities against $48 billion in debt.
What to Watch
Several factors will determine how this potential deal unfolds:
Transaction structure: Whether J&J pursues an outright sale to a single buyer versus a spinoff followed by a take-private could have significant tax implications.
Regulatory scrutiny: Strategic combinations with major orthopedics players would likely face antitrust review, potentially favoring a private equity buyer or financial consortium.
Valuation dynamics: The reported $20 billion+ price tag implies a ~2.2x revenue multiple—a premium to where Zimmer Biomet trades (~2.3x) but potentially conservative given DePuy's market-leading positions.
Timeline acceleration: An outright sale could close faster than a mid-2027 spinoff, providing J&J with significant capital deployment optionality sooner.
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