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    WST
    Earnings call· Jun 2026(Q2 FY26)

    WEST PHARMACEUTICAL SERVICES INC WST

    Jul 23, 2026 Source

    Executive summary

    West Pharmaceutical Services Q2 FY26 — Strong Organic Growth and Raised Full-Year Guidance

    West Pharmaceutical Services reported strong Q2 FY26 results, exceeding top and bottom-line expectations with 13% organic revenue growth and 29% adjusted EPS growth, driven by robust performance in Proprietary Products, particularly Biologics and HVP components. The company raised its full-year organic revenue guidance and reaffirmed adjusted EPS guidance, reflecting continued momentum and operational excellence, despite facing headwinds from a cyber incident and currency fluctuations. Management highlighted multi-year opportunities in HVP upgrades and GLP-1 therapies, while also navigating a leadership transition.

    Highlights

    6

    • Revenues of $872 million were up 13% organically, exceeding expectations.

    • Adjusted EPS of $2.37 was up 29% compared to prior year, exceeding expectations.

    • Proprietary Products segment delivered 16% organic growth, led by Biologics up 29%.

    • HVP components, accounting for 49% of total revenue, grew 18% organically.

    • Full-year organic revenue guidance raised to 10%-11% (from 7%-9%) and adjusted EPS guidance reaffirmed at $8.85-$9.05 (representing 21%-24% YoY growth).

    • Asia Pacific led geographic performance with 27% organic growth.

    Concerns

    4

    • West Vantage segment grew only 0.8% organically, impacted by a cyber incident, pushing some revenues to the second half.

    • Operating cash flow of $124 million was down year-on-year due to higher accounts receivable from cyber incident recovery timing.

    • Full-year guidance now assumes a 1 percentage point tailwind from currency, down from a prior assumption of 2 percentage points.

    • Q3 FY26 West Vantage is expected to decline as it represents the first quarter of a CGM contract exiting, marking a trough for the segment.

    Guidance & targets

    19
    CategoryTargetConfidence
    Full-year 2026 Organic Revenue Growth
    10% to 11%
    high materiality
    High
    Full-year 2026 Adjusted EPS
    $8.85 to $9.05
    high materiality
    High
    Full-year 2026 Reported Revenue Growth
    8.8% to 10%
    medium materiality
    High
    Full-year 2026 FX Impact on Revenue
    1 percentage point tailwind
    medium materiality
    High
    Full-year 2026 Total HVP Components Organic Growth
    high teens
    high materiality
    High
    Full-year 2026 GLP-1 HVP Components Organic Growth
    high teens
    high materiality
    High
    Full-year 2026 Non-GLP-1 HVP Components Organic Growth
    high teens
    high materiality
    High
    Full-year 2026 Operating Margin Expansion
    over 200 basis points
    high materiality
    High
    Full-year 2026 Net Interest Income
    $8 million
    low materiality
    High
    Full-year 2026 Effective Tax Rate
    slightly lower than 19%
    low materiality
    High
    Full-year 2026 Diluted Shares Outstanding
    roughly 71.5 million
    low materiality
    High
    Q3 2026 Revenue
    $820 million to $835 million
    medium materiality
    High
    Q3 2026 Reported Revenue Growth
    1.9% to 3.8%
    medium materiality
    High
    Q3 2026 Organic Revenue Growth
    7% to 8.9%
    medium materiality
    High
    Q3 2026 FX Impact on Revenue
    110 basis point headwind
    low materiality
    High
    Q3 2026 Proprietary Segment Growth
    low double digits
    medium materiality
    High
    Q3 2026 West Vantage Performance
    decline
    medium materiality
    High
    Q3 2026 Adjusted Diluted EPS
    $2.14 to $2.24
    high materiality
    High
    Full-year 2026 Capital Expenditures
    $250 million to $275 million
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Proprietary Products
    Strong performance driven by Biologics market group and HVP components, with significant contributions from GLP-1s and HVP upgrades. HVP Delivery Devices also showed strong growth, while Standard Products were up slightly.
    Biologics market group organic growth: 29%HVP components organic growth: 18.4%HVP components revenue: $424 millionHVP components as % of total company revenues: 49%Non-GLP-1 HVP components organic growth: high teensGLP-1 HVP components organic growth: high teensHVP Delivery Devices organic growth: 29%HVP Delivery Devices revenue: $131 millionStandard Products organic growth: 0.7%Standard Products revenue: $167 millionStandard Products as % of total company revenues: 19%
    		$722 million15.5% organic——
    West Vantage
    Segment performance was impacted by the cyber incident, which pushed some revenues into the second half of the year. This resulted in a mid-single-digit impact to growth in the quarter. Q3 is expected to be a trough due to a CGM contract exit.
    		$150 million0.8% organic——
    Asia Pacific
    Led geographic growth, driven primarily by China, India, and South Korea. The largest growth engine in the region is GLP-1 biosimilars, with increasing CDMO work, particularly out of South Korea.
    		—27% organic——

    Operational metrics

    27
    Revenue
    $872 millionup 13.8% reported, up 12.7% organic
    Q2 FY26

    Exceeded expectations on the top line.

    Adjusted EPS
    $2.37up 29%
    Q2 FY26

    Exceeded expectations on the bottom line.

    Price contribution to revenue growth
    4 percentage pointsacceleration Q1 to Q2
    Q2 FY26

    Above the 2% to 3% corridor, reflecting efforts to capture value and offset costs.

    Gross margin
    37.7%up 200 bps YoY
    Q2 FY26

    Strong proprietary performance more than made up for a dip in West Vantage gross margin due to the cyber incident.

    Adjusted operating margin
    22.6%up 230 bps YoY
    Q2 FY26

    Benefited from improved below the line performance.

    Effective tax rate
    17.9%better-than-expected
    Q2 FY26

    Contributed to improved below the line performance.

    Diluted shares outstanding
    71.3 million
    Q2 FY26

    As of Q2 FY26.

    Capital expenditures
    $43 milliondown $75 million in the prior year
    Q2 FY26

    Company continues to improve capital spending efficiency, focusing on growth and increased financial returns.

    Share repurchase program
    $157 million
    Q2 FY26

    Part of the ongoing $1 billion share repurchase program.

    Dividends paid
    $16 million
    Q2 FY26

    Paid out in Q2 FY26.

    Share repurchase program (H1)
    $454 million
    H1 FY26

    Total repurchases in the first half of the year.

    Dividends paid (H1)
    $32 million
    H1 FY26

    Total dividends paid in the first half of the year.

    Biologics market group organic growth
    29%
    Q2 FY26

    Led the Proprietary Products segment's strong performance.

    HVP components organic growth
    18%
    Q2 FY26

    Driven by GLP-1s, HVP upgrades including Annex 1, and overall improving performance in biologic revenues.

    HVP components as % of total company revenues
    49%up from 46% in prior year quarter
    Q2 FY26

    Reflects the increasing contribution of high-value components.

    Non-GLP-1 HVP components organic growth
    high teens
    Q2 FY26

    Exceeded expectations and were the largest contributors to outperformance in the quarter.

    GLP-1 HVP components organic growth
    high teens
    Q2 FY26

    Slightly better than expected, with continued double-digit growth expected throughout the rest of the year.

    New drug approvals (large drug molecules)
    75%up significantly from prior years
    2025

    Approximately 75% of new drug approvals in 2025 are large drug molecules, indicating a growing market for West's high-quality components.

    Win rates for new biologic molecules
    over 90%
    Q2 FY26

    West continues to have strong win rates for new molecules, which tend to use the highest quality components like FluroTec and NovaPure.

    Annex 1 related projects
    just shy of 800up 50% from same time period last year
    Q2 FY26

    Reflects increasing customer upgrades to HVP components with additional finishing processes, driving revenue and margin performance.

    Annex 1 mix shift revenue growth target
    200 basis points
    2026

    Expected contribution from the mix shift to HVP components due to Annex 1 and other upgrades.

    SmartDose 3.5 ml revenues
    $55 million
    H2 FY25

    Generated in the second half of last year; these revenues are excluded when calculating organic growth for the current year due to divestiture.

    Non-SmartDose 3.5 HVP delivery devices organic growth
    double digits
    Q2 FY26

    Represents more than half of HVP delivery device revenues, led by self-dose and Crystal Zenith.

    SmartDose 3.5 ml Q3 FY25 revenues
    $30 million
    Q3 FY25

    Portion of the H2 FY25 SmartDose sales that impacts Q3 FY26 organic sales guidance due to divestiture.

    West Vantage cyber incident impact on growth
    mid-single-digit
    Q2 FY26

    Estimated impact to growth in Q2, expected to be made up in the remainder of the year.

    West Vantage drug handling revenue
    $20 million
    FY26

    On track for this revenue, mostly back-half loaded with a real step up in Q4, from first commercial batches earlier this year.

    Eschweiler productivity improvement
    double-digit
    H1 FY26

    Significant improvement in productivity and throughput, which was a key catalyst for recovery from the cyber event.

    Industry KPIs

    5
    MetricValueDetails
    Revenue EPS guidanceRevenue: $3.345B-$3.38B (organic growth 10%-11%); Adjusted EPS: $8.85-$9.05USD
    China revenue exposure27%%
    Pricing price realization4 percentage points%
    M a contribution synergies50 basis pointsbps
    Segment organic revenue growthProprietary Products: 15.5%; West Vantage: 0.8%%

    Product announcements

    1
    ProductTypeDetails
    SmartDose 3.5 ml on-body delivery systemdiscontinuation

    Deals & partnerships

    2
    DaikyoRenewal of existing strategic agreement for primary containment solutions.More than 50 years (existing partnership)

    Renewal of existing agreements with strategic partner Daikyo, continuing a partnership that has been in place for over 50 years.

    Unnamed buyerSale and transfer of manufacturing and supply rights for SmartDose 3.5 ml on-body delivery system and associated facilities.

    The company completed the sale and transfer of the manufacturing and supply rights for SmartDose 3.5 ml on-body delivery system and associated facilities as planned on July 1.

    Risks & headwinds

    5
    Cyber incident impact on West Vantage segmentQ2 FY26

    mid-single-digit impact to West Vantage growth in Q2 FY26

    Mitigation: Expected to be made up in the remainder of the year; strong operational excellence initiatives helped recovery.

    Foreign exchange headwindFull-year 2026, Q3 2026

    Full-year guidance assumes 1 percentage point tailwind from currency, down from prior 2 percentage points; Q3 guidance anticipates 110 basis point headwind.

    Inflationary pressureOngoing

    Higher oil and commodity prices

    Mitigation: Working hard to offset costs through various means; price acceleration (4 points of growth in Q2) helps offset.

    SmartDose 3.5 ml divestiture impact on reported growthFull-year 2026, Q3 2026

    SmartDose 3.5 generated $55 million in revenue in H2 FY25, $30 million in Q3 FY25; these revenues are excluded when calculating organic growth for the year and impact Q3 reported growth.

    West Vantage segment decline due to CGM contract exitQ3 FY26

    Q3 represents the first quarter of the CGM contract exiting.

    Mitigation: Expect improved performance in Q4 as we continue to ramp up our drug handling business.

    What to watch in Q3 FY26

    5

    Operating cash flow normalization

    Remainder of the year
    Current$124 million (down YoY)
    TargetNormalization

    Why it matters

    Operating cash flow was down due to higher accounts receivable from cyber incident recovery timing; normalization indicates successful recovery and working capital management.

    We expect this to normalize in the remainder of the year.

    Q&A highlights

    6

    What are the underlying drivers of the strong, better-than-expected growth in non-GLP-1 HVP components, and how sustainable is it?

    Eric Green attributed the growth to three areas: biologics and biosimilars (90%+ win rates for new molecules, strong pipeline, new launches, existing molecule expansion), Annex 1 and other HVP upgrades (nearly 800 projects, 50% YoY increase, higher ASPs/margins, leveraging existing assets, expanding beyond Europe), and operational excellence. Bob McMahon added that Annex 1 has a long runway, with early innings of EU conversion and spillover to the U.S., and potential for acceleration beyond the 200 bps target.

    “We have just shy of 800 total projects in hand and that's up 50% from the same time period last year.”

    asked by Michael Ryskin · answered by Eric Green

    2 min read6 chapters

    Detailed Narrative

    01

    Non-GLP-1 HVP Components Outperformance

    The non-GLP-1 HVP components business significantly exceeded expectations, driven by strong performance in biologics and biosimilars, where West maintains over 90% win rates for new molecules. This segment benefits from new launches, expansion of existing molecules, and biosimilar growth, particularly utilizing high-end products like NovaPure and FluroTec. Management highlighted these as long-term macro trends that West is well-positioned to capitalize on.

    02

    Annex 1 and HVP Upgrades Driving Mix Shift

    A key growth driver is the positive mix shift towards HVP upgrades, including Annex 1 related projects. The company has nearly 800 such projects in hand, a 50% increase year-over-year, leading to higher average selling prices (ASPs) and margin accretion without incremental volume. This trend, initially spurred by European regulations, is now seeing interest from the U.S. and other geographies, indicating a multi-year opportunity for converting existing core products to HVP with additional finishing processes like Envision inspection.

    03

    GLP-1 Market Dynamics and Generic Expansion

    GLP-1 HVP component revenues increased in the high teens, slightly better than anticipated. Management expects continued growth in both oral and injectable GLP-1 formats, benefiting from expanding market access (e.g., Medicare in the U.S.) and a robust clinical pipeline of next-generation molecules. The company is also participating in generic GLP-1 rollouts globally, particularly in Asia, and expects new GLP-1 product launches for indications beyond diabetes and obesity.

    04

    HVP Delivery Devices Portfolio Evolution

    The HVP Delivery Devices segment grew 29% organically, with stronger-than-anticipated SmartDose 3.5 revenues ahead of its July 1 divestiture. The remaining portfolio, representing over half of segment revenues, grew double digits, led by self-dose and Crystal Zenith technologies. This segment is focused on self-injection and high-end biologics, with an attractive margin profile expected post-divestiture.

    05

    Geographic Strength and Operational Excellence

    Asia Pacific demonstrated exceptional organic growth of 27%, primarily driven by China, India, and South Korea, with GLP-1 biosimilars being a significant contributor. The company also highlighted operational excellence initiatives, particularly at its Eschweiler plant, which achieved double-digit productivity improvements in the first half of the year, enabling a strong recovery from the cyber incident and setting a precedent for other HVP sites.

    06

    West Vantage Performance and Strategic Partnerships

    The West Vantage segment was impacted by the cyber incident, leading to a modest 0.8% organic growth, with some revenues deferred to the second half. The segment expects a trough in Q3 due to a CGM contract exit but anticipates improved performance in Q4 as its drug handling business ramps up. West also announced the renewal of its long-standing strategic partnership with Daikyo, which has been in place for over 50 years.

    AI-generated summary of the company’s earnings call. Not investment advice.