West Pharmaceutical Services Q1 Earnings Call Highlights

West Pharmaceutical Services (NYSE:WST) reported first-quarter 2026 results that management said were well ahead of expectations, driven by strong demand for high-value products, improved manufacturing execution, and favorable mix. The company also raised its full-year 2026 outlook for both revenue growth and adjusted earnings per share.

First-quarter results beat expectations

President, CEO and Chairman Eric Green said the year started “with outstanding performance” in revenue and adjusted EPS. West posted first-quarter revenue of $845 million, up 21% on a reported basis and 15% organically. Adjusted operating margin was 21.4%, expanding 350 basis points year-over-year, and adjusted EPS was $2.13, up 47% compared with the prior year.

Senior Vice President and CFO Bob McMahon said results were broad-based, with “all segments” better than expected. Price contributed 3.5 percentage points of growth in the quarter, he added.

HVP components lead growth; GLP-1 and biologics demand remains strong

Green highlighted high-value product (HVP) components within the proprietary product segment as the company’s “key growth driver.” HVP components represent 48% of total company net sales, and grew 23% organically in the quarter. McMahon said the HVP components business delivered $409 million in revenue and grew 22.6% organically.

Management said growth was supported by both GLP-1 and non-GLP-1 demand. Green said GLP-1-related HVP components “grew significantly” and contributed 10% of total company sales, consistent with the prior quarter. While adoption of oral GLP-1 therapies is “still early days,” Green said West continues to see oral products expanding the overall market and reiterated confidence in long-term growth for both injectable and oral GLP-1 formats. He cited several factors that could support demand for GLP-1 elastomers, including expanded insurance coverage, FDA regulatory decisions on compounded GLP-1s, lower drug prices, and potential new indications and next-generation products.

Non-GLP-1 HVP components revenue increased “in the high teens,” according to Green and McMahon. On the Q&A, Green told Citi’s Patrick Donnelly the acceleration reflected increasing demand “particularly in biologics and biosimilars,” with most of the growth coming from already commercialized drugs. Green also pointed to ongoing HVP upgrades tied to Annex 1 and improvements in operational execution.

Biologics were described as West’s largest end market within HVP components and delivered 26% organic growth. Green said the company is seeing strong win rates, with “solid growth for NovaPure” as customers bring new biologics to market. He also said biosimilar launches are contributing, noting that biosimilars often expand therapy use and can support continued volume demand.

Annex 1 conversion and manufacturing initiatives support mix and margins

Management repeatedly emphasized Annex 1-related conversions as a multi-year tailwind. Green said the company is seeing strong conversion of Standard Products into HVP components, improving revenue and margin performance. He said Annex 1-related projects increased sequentially and were up 66% versus the first quarter of the prior year. West expects Annex 1 and HVP conversion to contribute 200 basis points to revenue growth in 2026.

Asked by Morgan Stanley’s Kallum Titchmarsh about the duration and size of the Annex 1 opportunity, Green said the company has identified “at least 6 billion units that are targeted to be converted” and characterized the company as still in the “early innings.” Green and McMahon also noted that while Annex 1 began as a Europe-focused regulatory driver, they are hearing more about expectations outside Europe, including the U.S. and Asia, and said global standardization efforts could become an additional accelerant.

Green also detailed an operational excellence effort aimed at increasing output across HVP components manufacturing sites, particularly in Europe. He cited three aspects:

• Accelerating onboarding of new employees in the second half of 2025 and temporarily redeploying workers across European sites
• Optimizing the global network and working with customers to qualify second manufacturing sites
• Transferring best practices across the global manufacturing footprint for ongoing enhancements

In response to KeyBanc’s Paul Knight, Green said customer qualification of multi-site manufacturing can take 6 to 12 months and that the company expects additional benefits into 2026 and 2027. Green later said learnings are being transferred to other sites, including Kinston and Jersey Shore, and McMahon said some of the improvement has been incorporated into the updated forecast.

Segment performance: Delivery devices, Standard Products, and West Vantage

HVP delivery devices, which account for 15% of company revenue, grew 28% organically in the quarter, Green said. McMahon reported revenue of $124 million, up 27.5% organically, driven by SmartDose 3.5 and strength in Crystal Zenith and SelfDose. On a follow-up question from Deutsche Bank’s Justin Bowers, McMahon said the device performance was “all volume,” with no incentive payments, and was “roughly split evenly” between SmartDose and non-SmartDose portions of the business.

Standard Products, representing 19% of the business, posted $161 million in revenue and grew 0.5% organically. Green described Standard Products as a funnel that converts to HVP over time.

The contract manufacturing segment has been rebranded as West Vantage and accounts for 18% of revenue. West Vantage delivered $151 million in revenue and grew 6.2% organically, driven in part by increased sales of self-injected devices for obesity and diabetes, McMahon said. Green said the company’s new Dublin West Vantage site is fully operational and producing commercial product, incorporating a drug handling business that he said is “more profitable and less capital intensive” than legacy contract manufacturing.

McMahon said West Vantage is expected to be roughly flat for the year, with the first half up and the second half slightly down due to the exit of a continuous glucose monitoring (CGM) contract, and he anticipated the third quarter to be the trough. He also said drug handling is expected to add about $20 million of incremental revenue in 2026, with most of that in the back half of the year, and that at peak it could be “probably three times that much” as it ramps through 2027. He said drug handling carries “at least twice” the gross margin of the business it is replacing.

On profitability, McMahon said gross margin was 35.1%, up 190 basis points year-over-year, primarily from favorable mix and pricing. He said commodity costs did not materially impact first-quarter results, while West Vantage gross margin was down slightly year-over-year as the Dublin facility ramps but improved sequentially as expected.

During the Q&A, McMahon said the company did not see any pull-forward ordering tied to the Middle East conflict and spike in oil prices. He said West has incorporated rising oil and commodity prices into its outlook and expects a net impact of “single-digit millions” after mitigation efforts, while noting operations and the supply chain have not been affected.

The company reported operating cash flow of $90 million and capital expenditures of $43 million in the quarter, down from $71 million a year earlier. McMahon said West remains on track for $250 million to $275 million of capex for the full year. West ended the quarter with $521 million in cash.

McMahon also said the board authorized a new $1 billion share repurchase program. In the first quarter, West repurchased 1.2 million shares for $298 million and paid $16 million in dividends.

Guidance raised; SmartDose transaction still expected mid-year

Based on first-quarter performance and “ongoing momentum,” Green said West raised full-year 2026 guidance. The company now expects organic revenue growth of 7% to 9%, up from its prior outlook of 5% to 7%. McMahon guided to full-year revenue of $3.295 billion to $3.35 billion and adjusted EPS of $8.40 to $8.75, which he said implies a 15% to 20% increase year-over-year.

For the second quarter, West expects revenue of $830 million to $850 million and adjusted diluted EPS of $2.05 to $2.12.

McMahon said the company still expects to close the SmartDose transaction mid-year and noted SmartDose generated $55 million of sales in the second half of 2025, which is factored into West’s growth calculations. He also said the company’s quarterly cadence and full-year conservatism reflect prudence early in the year and the anticipated roll-off of a CGM contract, which he called a $40 million headwind in the second half.

CEO succession timing discussed

During the Q&A, Green addressed his planned retirement and told analysts that West is “active in the market” searching for a successor. He said the company anticipates the next CEO will be appointed in the second half of the year.

About West Pharmaceutical Services (NYSE:WST)

West Pharmaceutical Services, Inc is a global developer and manufacturer of components, systems and services that enable the containment and delivery of injectable drugs. The company focuses on high-quality packaging and delivery solutions for the pharmaceutical and biotech industries, producing primary drug packaging components and specialized drug delivery devices used for vaccines, biologics and other injectable therapies. West is known for its elastomeric closures, seals and polymer components that maintain sterility and compatibility with sensitive drug formulations.

In addition to component manufacturing, West provides engineered delivery systems and support services across the product lifecycle.

Further Reading

• Five stocks we like better than West Pharmaceutical Services