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J&J to consider sale of Ortho Clinical Diagnostics

by Jonathan Marino  |  Published January 22, 2013 at 4:26 PM
Johnson & Johnson has kicked off 2013 by putting a piece of its medical device business in play.

On a day in which the healthcare conglomerate announced its fourth-quarter earnings and guidance for 2013, New Brunswick, N.J.-based J&J said it has begun a process to evaluate strategic options for its Ortho Clinical Diagnostics business.

J&J said that it would evaluate all options, including a possible divestiture, if it determines that the business has greater potential "as part of another organization whose focus is more closely aligned with its core strengths" or, by comparison, if the unit is better off as a standalone company.

J&J cautioned that it isn't certain at this time that it will make a deal at all.

The OCD business is based in Raritan, N.J., and brought in $2.07 billion in sales last year from products such as diagnostic tests and blood screening supplies. That figure represents a 4.4% drop from the roughly $2.16 billion the segment posted in 2011, the company reported Tuesday, Jan. 22.

The unit is part of J&J's Medical Devices & Diagnostics operation, one of its three main business lines along with its consumer health division and its pharmaceuticals segment. The MD&D unit brought in about $27.4 billion of J&J's $67.2 billion in revenue in 2012 and is the largest medical technology entity in the world. That business took a sizable leap in 2011 when the company agreed to pay $21.3 billion for Swiss medical device maker Synthes Inc. in what is the largest deal in J&J's history.

In addition, J&J reported its 2012 results and issued guidance for its 2013 earnings. The company posted $10.9 billion in net income and $3.86 in earnings per share on $67.2 billion in revenue last year. It also expects between $5.35 and $5.45 in earnings per share for 2013, which is below consensus analyst estimates, according to a research note from Leerink Swann LLC's Danielle Antalffy.

J&J's stock traded at $72.76 per share Tuesday, down slightly from a $73.23 per share close on Jan. 18.

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Tags: Johnson & Johnson | Ortho Clinical Diagnostics | Synthes Inc.

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Jonathan Marino

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