West Pharmaceutical Services NYSE: WST reported third-quarter results that exceeded its expectations, driven by continued demand for high-value product components, including those used in GLP-1 therapies and biologics. The company raised its full-year revenue and adjusted earnings outlook following the quarter.
Revenue for the third quarter totaled $874 million, up 8.7% on a reported basis and 11.9% organically from the prior-year period. Adjusted diluted earnings per share rose 36% year over year to $2.66. CEO Michel Lagarde, who joined the company two months ago, said the results reflected strong execution across West’s operations and product portfolio.
“Our end markets remain strong,” Lagarde said. “Our position as the leader is firm, and we will continue to step up our performance to exceed our customers’ expectations.”
Proprietary Products Drive Growth
West’s Proprietary Products segment posted 16.6% organic revenue growth during the quarter. Within the segment, high-value product, or HVP, Components revenue reached $467 million and grew 20% organically. The business represented 53% of total company revenue during the quarter, according to CFO Bob McMahon.
McMahon attributed the HVP Components performance to broad-based biologics growth, continued GLP-1 demand and a favorable shift toward higher-value products. Growth outside GLP-1 products was in the high teens organically, he said.
GLP-1-related HVP revenue grew well into the 30% range organically and represented just under 12% of West’s total quarterly revenue. Management said it did not see one-time factors behind that growth and remains optimistic about the category’s longer-term prospects, citing adoption of existing products, possible uses in additional therapeutic categories, next-generation molecules and expanding access through generics in some markets.
“We think it’s a durable growth driver for us in the years to come,” Lagarde said during the question-and-answer session.
HVP Delivery Devices generated $99 million in quarterly revenue. Revenue was flat on a reported basis but rose 26% organically after excluding currency effects and the impact of the SmartDose 3.5 divestiture. Crystal Zenith and Administration Systems contributed to growth.
West recorded $12 million in SmartDose 3.5 revenue during the third quarter, compared with $30 million in the prior-year quarter. The company said SmartDose 3.5 generated $100 million of revenue during the first nine months of 2026, including $46 million in the first quarter, $42 million in the second quarter and $12 million in the third quarter. With the transaction closed and no additional SmartDose 3.5 product revenue expected, West said the divestiture will create an approximately 290-basis-point headwind to reported growth next year.
Standard Products revenue was $163 million, up 3% organically.
West Vantage Declines as Portfolio Shifts
West Vantage generated $146 million in revenue, declining 6.6% organically. The decline was better than management expected, as the company fully recovered revenue deferred by a cyber incident during the third quarter rather than across the third and fourth quarters.
The segment is transitioning away from legacy programs and toward higher-value drug-handling offerings. Management said new-program sales were more than offset by the roll-off of a continuous glucose monitoring program that began affecting results during the quarter. Lagarde said the strategy was progressing as expected, with higher-value contracts ramping while legacy programs are phased out.
Geographically, Asia-Pacific grew 42%, led by India and China. The region represented 11% of total company revenue. The Americas grew 12%, while Europe, the Middle East and Africa grew 6% as Proprietary Products growth was partly offset by the West Vantage program roll-off.
Margins Expand and Capital Investment Continues
Total company gross margin rose 310 basis points year over year to 39.7%, while adjusted operating margin increased 420 basis points to 25.3%. McMahon said the improvement reflected stronger Proprietary Products sales, favorable mix toward HVP Components, price contribution and leverage of selling, general and administrative expenses.
Price contributed slightly more than four percentage points to third-quarter growth. Lagarde said West’s long-term planning assumption for price remains 2% to 3%, despite the higher contribution this year.
Free cash flow for the first nine months of 2026 totaled $278 million, down about 5% from the same period in 2025. The decrease was primarily related to higher accounts receivable and inventory, partly offset by lower capital expenditures.
The company now expects full-year capital expenditures of $215 million to $220 million, at the low end of its targeted range of 6% to 8% of revenue. West is beginning a new round of investments to expand HVP finishing capacity in Europe and the U.S. Lagarde said the projects will be added to the existing manufacturing footprint and should take about 18 to 24 months to provide a meaningful contribution.
West also increased and renewed its revolving credit facility to $750 million for five years. During the first nine months of the year, the company paid $47 million in dividends and repurchased more than 2.4 million shares for $685 million. It announced its 34th consecutive annual dividend increase, raising the dividend 18% during the quarter.
Full-Year Outlook Raised
West raised its 2026 revenue outlook to $3.41 billion to $3.42 billion, from a prior range of $3.345 billion to $3.38 billion. The updated forecast implies organic revenue growth of 11.3% to 11.6%, compared with the prior outlook of 10% to 11%.
- Fourth-quarter revenue is projected at $820 million to $830 million.
- Fourth-quarter organic revenue growth is expected to be 6% to 7%.
- Full-year adjusted EPS is forecast at $9.38 to $9.48, up from prior guidance of $8.85 to $9.05.
- The company expects adjusted EPS growth of 29% to 30% for the full year.
- Full-year operating margin is expected to expand by nearly 300 basis points.
Management said fourth-quarter growth should again be led by double-digit growth in HVP Components, though the forecast accounts for a stronger U.S. dollar and the third-quarter West Vantage revenue recovery.
Lagarde said his priorities include strengthening strategic relationships with customers and increasing the impact of continuous-improvement efforts through automation, digitization and operational efficiency. He also said West’s focus will remain on its organic growth opportunities, while maintaining a high threshold for potential acquisitions.
About West Pharmaceutical Services (NYSE:WST)
West Pharmaceutical Services, Inc develops and manufactures components and delivery systems used in the administration and packaging of injectable medicines and other healthcare products. Its offerings include elastomer closures, seals, syringe components, drug-delivery systems, and other specialized packaging components designed to support the safety, quality, and performance of pharmaceutical products.
The company also provides contract-manufacturing services for pharmaceutical, biotechnology, and medical-device customers.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider West Pharmaceutical Services, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and West Pharmaceutical Services wasn't on the list.
While West Pharmaceutical Services currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
The AI boom is creating opportunities across semiconductors, cloud computing, enterprise software, infrastructure, cybersecurity, and automation.
Inside this report, you’ll find 10 companies positioned to benefit as artificial intelligence moves from hype to real-world deployment and becomes a core growth driver for corporate America.
Get This Free Report
Continue following MarketBeat
Add MarketBeat as your preferred source on Google to see our latest stories in your feed.
