Medline Inc.
MDLN · Nasdaq
Sep 2026
Next quarter
Reports Nov 4, 2026.
Consensus is $0.32 EPS for Sep 2026 across 6 estimates, ranging $0.30 to $0.33.
MDLN Jun 2026
- 56.67%
- -5.88%
- $0.30
- $0.47
- —
- $7.68B
Reported results
- $7.68B
- 28.82%
- $395.00M
- 5.14%
- $139.00M
- $0.07
Highlights
- Top line: Second-quarter net sales rose 11.6% year over year to $7.685 billion, including $89 million of tariff-related customer repayments; organic sales increased 11.5%.
- Adjusted earnings: Adjusted EBITDA increased 13.4% to $1.060 billion, while adjusted diluted EPS was $0.50; the supplied consensus EPS was $0.30 and reported EPS was $0.47, a 56.67% surprise.
- GAAP earnings: Net income fell 58.3% to $139 million, or $0.07 diluted EPS, as a $336 million Tracy distribution-center fire loss and higher expenses overwhelmed operating growth.
- Tariff refunds: Medline recognized $243 million of net IEEPA tariff benefits, comprising $332 million of cost-of-goods-sold relief less $89 million of expected customer repayments; the benefit was concentrated in Medline Brand.
- Segment split: Supply Chain Solutions sales grew 16.3% to $4.145 billion, but segment EBITDA rose only 1.5% to $204 million and margin fell to 4.9%; Medline Brand sales rose 6.6% to $3.540 billion and EBITDA rose 19.9% to $1.067 billion.
- Demand: U.S. Prime Vendor sales increased 18.3% to $5.226 billion, and management said it secured more than 65% of its full-year new-customer-signing goal during the first half.
- Guidance: Full-year organic sales growth guidance increased to 9.0%-10.0% from 8.5%-9.5%, but adjusted EBITDA guidance fell to $3.3-$3.4 billion from $3.5-$3.6 billion because of inflation, investment, quality remediation and retail softness.
- Cash and leverage: First-half operating cash flow was $1.127 billion and free cash flow was $920 million after $207 million of capital expenditures; net debt was $10.073 billion and net leverage was 2.9x.
Analysis
Medline’s June 2026 quarter was a strong demand print underneath a sharp GAAP disruption. Sales of $7.685 billion increased 11.6% from $6.886 billion a year earlier and 4.6% from $7.35 billion in the prior quarter, while adjusted EBITDA rose 13.4% year over year to $1.060 billion. The supplied EPS result of $0.47 exceeded the $0.30 consensus by 56.67%; the release separately reports $0.07 of GAAP diluted EPS and $0.50 of adjusted diluted EPS. GAAP net income was $139 million, down from $333 million last year and $239 million in the prior quarter, while operating income was $395 million versus $642 million last year and $422 million in Q1.
The print was defined by volume-led Prime Vendor growth, a substantial tariff refund benefit and the June 11 Tracy distribution-center fire. Supply Chain Solutions drove sales growth but suffered margin dilution from lower-margin new customer mix and higher operating costs. The $243 million net IEEPA benefit supported adjusted results, whereas the fire created a $336 million loss before insurance recoveries. Accordingly, Medline raised its sales outlook but cut adjusted EBITDA guidance, signaling that demand remains healthy while inflation, remediation and operating investment are absorbing much of the benefit.
Volume-led growth
- Prime Vendor momentum: U.S. Prime Vendor sales increased 18.3% year over year to $5.226 billion in the quarter and 16.8% to $10.139 billion in the first half, driven by existing-customer expansion and implementations of 2025 signings.
- Care settings: U.S. acute-care sales rose 14.7% to $5.407 billion, while non-acute sales increased 3.7% to $1.745 billion. International sales grew 9.4% to $533 million.
- New customers: Management said first-half signings exceeded 65% of the full-year goal, supporting the higher organic-sales outlook and pointing to continued share gains through the Prime Vendor model.
Segment margin split
- Medline Brand: Sales increased 6.6% to $3.540 billion and segment adjusted EBITDA rose 19.9% to $1.067 billion. Margin expanded to 30.1% from 26.8%, helped by tariff refunds and sales growth, partly offset by tariffs and headcount investment.
- Supply Chain Solutions: Sales grew 16.3% to $4.145 billion, including 19.6% growth in Prime Vendor sales, but adjusted EBITDA increased only 1.5% to $204 million. Margin declined to 4.9% from 5.6% as new relationships carried lower margins and operating costs rose.
- Product categories: Surgical Solutions sales rose 8.7% to $1.640 billion, Front Line Care increased 3.8% to $1.652 billion and Laboratory and Diagnostics grew 12.2% to $248 million.
Tariff refund benefit
- One-time support: The company recognized $332 million of IEEPA tariff refunds as a reduction of cost of goods sold and accrued $89 million of customer repayments as a reduction of sales, producing a $243 million net benefit to net income and adjusted EBITDA.
- Remaining claims: Medline expects total IEEPA refund claims of approximately $507 million. By June 27, CBP had accepted $332 million, of which $53 million had been received and $279 million was recorded as a receivable; the company said it had received most of that receivable by the filing date.
- Underlying pressure: Before refund recoveries, tariffs reduced pretax income by approximately $110 million in the quarter and $230 million in the first half, showing that the reported margin improvement does not represent a clean run-rate trend.
Tracy fire disruption
- Financial hit: The June 11 fire destroyed the Tracy, California distribution center and produced an estimated $336 million loss, including $204 million of inventory, $116 million of fixed assets and $16 million of other costs.
- No recovery recorded: Insurance discussions were ongoing at quarter-end, so no recovery had been recognized. Medline expects future insurance recoveries but said their timing and amount remain uncertain.
- Continuity actions: The company leased more than 1.6 million square feet across two Northern California distribution centers. A Tracy facility began operating in July, while a Stockton facility is expected to be available in January 2027; additional costs remain possible.
Guidance and remediation
- Sales raised: Full-year organic sales growth guidance moved to 9.0%-10.0% from 8.5%-9.5%, reflecting strong existing and new-customer demand. The outlook includes tariff-related customer repayments.
- EBITDA lowered: Adjusted EBITDA guidance fell to $3.3-$3.4 billion from $3.5-$3.6 billion. Management cited Middle East-related inflation, increased operational investment, quality remediation and retail-channel softness; the outlook excludes IEEPA refund benefits.
- Quality costs: Medline had three unresolved FDA warning letters covering quality-system and current Good Manufacturing Practice matters. It expects increased quality-organization and remediation costs in the second half of 2026.
Cash flow and debt
- Cash generation: First-half operating cash flow increased 28.2% to $1.127 billion and free cash flow rose 37.1% to $920 million, after $207 million of capital expenditures focused on distribution-center automation and manufacturing facilities.
- Liquidity: At June 27, Medline held $2.327 billion of cash and $350 million of short-term investments, with $946 million available under its $1.0 billion revolving credit facility.
- Refinancing: Total debt was $12.750 billion and net debt was $10.073 billion. May refinancing activity issued $1.25 billion of 2031 notes and $750 million of 2033 notes, alongside a $2.75 billion term loan, extending maturities and refinancing earlier debt.
- Ownership and taxes: The tax receivable agreement liability increased to $4.404 billion from $3.542 billion at year-end after secondary-offering-related exchanges; distributions to noncontrolling interests were $123 million in the first half.
