West Pharmaceutical Services (NYSE:WST) said it ended 2025 with fourth-quarter results above its own expectations, citing strong demand for high-value product (HVP) components, continued progress on Annex 1-driven upgrades, and ongoing growth tied to GLP-1 therapies. Management also introduced initial fiscal 2026 guidance calling for 5% to 7% organic revenue growth and double-digit earnings growth at the midpoint.
Fourth-quarter results topped expectations
CEO Eric Green said West delivered “another solid quarter,” with revenue, adjusted EPS, and cash flow all ahead of internal expectations. Fourth-quarter revenue was $805 million, up 7.5% on a reported basis and 3.3% organically. CFO Bob McMahon noted that fourth-quarter 2024 included a $25 million nonrecurring incentive fee that reduced organic growth in the comparison period by 360 basis points.
McMahon said gross margin was 37.8%, up 130 basis points from a year earlier, driven by HVP component mix and better-than-expected performance in delivery devices outside SmartDose. Adjusted operating margin dipped 30 basis points year over year as the company increased R&D investment and recorded higher incentive compensation.
HVP components drove growth; supply remained tight
Management repeatedly emphasized that HVP components remain West’s primary growth and profitability engine. Green said HVP components represent 48% of company net sales and grew over 15% in the fourth quarter and 9% for the full year. McMahon put fourth-quarter HVP component revenue at $390 million, with 15.1% organic growth, driven by GLP-1 demand, HVP upgrades including Annex 1, and improving biologics performance.
Executives also said demand outside GLP-1 is improving but is constrained by capacity, particularly in Europe. Green said the company continued expanding labor and equipment capacity and felt “really good about the order book” heading into 2026. McMahon said West would not quantify the supply-demand gap, but described capacity growth as substantial quarter-to-quarter while demand was growing faster.
Annex 1 upgrades seen as multi-year runway
West reiterated that the European Annex 1 regulatory framework is a key driver of HVP conversion. Green described the opportunity as “currently 6 billion West components to be upgraded” for on-market injectable medicines. The company has initiated over 700 Annex 1 projects, with over half completed and “now generating revenues,” which management said represents less than 15% of the 6 billion component opportunity.
In the fourth quarter, West completed 65 Annex 1 projects and had 325 underway, with more in the pipeline. Green said these upgrades should contribute to additional growth in 2026 and beyond, while McMahon added that customers increasingly want to standardize components across their manufacturing networks as regulatory scrutiny expands beyond Europe.
GLP-1 outlook: continued growth expected alongside oral formats
Management addressed investor questions about the impact of oral GLP-1 launches, arguing that oral products will expand the market rather than replace injectables. Green pointed to publicly available remarks from two leading GLP-1 manufacturers indicating that most oral users are new to the category and that additional injectable launches are expected.
Green said West expects GLP-1 elastomer growth in 2026 and beyond, citing low patient penetration, expanding market access, clinical evidence favoring injectables, and a broadening pipeline that includes new combination molecules and potential new indications such as MASH, sleep apnea, chronic kidney disease, heart failure, pediatric obesity, and cardiovascular risk reduction. He noted that five of the six listed indications are treated exclusively by injectables, based on the company’s remarks.
In guidance assumptions, McMahon said West is taking a conservative stance on GLP-1 growth. At the midpoint of 2026 guidance, the company assumes GLP-1-related HVP component growth of roughly 10%, contributing about 1 point of total company growth, while non-GLP-1 HVP components contribute roughly 4 points. In Q&A, management said GLP-1s grew in excess of 50% in 2025, while non-GLP-1 HVP was roughly flat for the full year, improving to mid-single-digit growth in the second half.
Asked directly whether customer behavior had changed as orals entered the market, McMahon said West had not seen changes and characterized the GLP-1 guidance assumption as “a very conservative start.”
2026 guidance, portfolio actions, and cash flow priorities
For fiscal 2026, West guided to revenue of $3.215 billion to $3.275 billion, implying 5% to 7% organic growth. Adjusted diluted EPS is expected to be $7.85 to $8.20. The company guided to first-quarter 2026 revenue of $770 million to $790 million (5% to 7% organic growth) and adjusted EPS of $1.65 to $1.70.
McMahon said the outlook assumes the tariff landscape remains at current levels and that West has “effectively covered that impact.” The company also assumes it will close the previously announced SmartDose 3.5 mL business sale mid-year. McMahon noted SmartDose generated $55 million in sales in the second half of 2025, and the company adjusted its 2026 organic growth framework to account for those revenues.
On capital allocation, Green said West’s first priority remains organic investment, especially in HVP components. He added the company may consider bolt-on technologies that enhance differentiation and accelerate HVP components, provided they are accretive. McMahon said returning cash to shareholders is “actively” being discussed and characterized it as potential upside to the plan.
West also highlighted cash generation and a pullback in capital spending. For 2025, operating cash flow was $755 million (up 15.5%), capital expenditures were $286 million (down $91 million year over year), and free cash flow was $469 million (up 70%). The company ended the year with $791 million in cash and expects 2026 capex of $250 million to $275 million, returning toward its 6% to 8% of sales framework.
Within contract manufacturing, management said commercialization of drug handling operations in Dublin began earlier this month and is expected to ramp through 2026 and into 2027. McMahon guided to contract manufacturing revenue being roughly flat in 2026, including about $20 million of drug handling revenue, offset by the exit of a CGM contract beginning in July. The segment’s fourth-quarter results were also impacted by a temporary disruption from a burst water main at an Arizona facility; the company said the site is back online and profitability should return to mid-to-high teens in the first quarter.
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.
