Medline Inc.

What they do

Medline manufactures and distributes approximately 335,000 med-surg products, including surgical and procedural kits, gloves and protective apparel, urological and incontinence care, wound care, and consumable lab and diagnostics products. It operates two reportable segments, Medline Brand and Supply Chain Solutions, and distributes through a global distribution network and its own MedTrans truck fleet. The company also acts as Prime Vendor under multi-year agreements, typically five-year terms, in which customers commit the vast majority of their med-surg purchasing to Medline.

Revenue drivers

• Medline Brand — Approximately 190,000 owned-brand med-surg products as of December 31, 2025, organized into Front Line Care, Surgical Solutions, and Laboratory and Diagnostics; this segment recorded the IEEPA tariff refund benefits and customer repayments.
• Supply Chain Solutions — Approximately 145,000 med-surg products sourced from over 1,300 third-party suppliers, plus supply chain services such as consulting, outsourced warehouse and technology management, third-party logistics, inventory rationalization, and route planning.
• Prime Vendor model — Multi-year distribution agreements, typically five-year terms, under which customers use Medline for the vast majority of their med-surg needs; management states these agreements have been and are expected to continue to be a key contributor to growth.
• Existing customer growth and new signings — Second quarter 2026 sales growth was driven primarily by existing customer growth and implementation of new customer signings from 2025; the company says it secured over 65% of its annual goal in total new customer signings in the first half of 2026.

Recent performance

Second quarter 2026 net sales rose 11.6% to $7.7 billion, with Organic Sales up 11.5%, while net income fell 58.3% to $139 million. First six months 2026 net sales rose 11.1% to $15.0 billion, Organic Sales rose 10.8%, and net income fell 42.3% to $378 million. Second quarter Adjusted EBITDA rose 13.4% to $1,060 million; first six months Adjusted EBITDA rose 1.9% to $1.84 billion. Results included $89 million of IEEPA tariff customer repayments in net sales and $243 million of net IEEPA tariff refund benefits in net income and Adjusted EBITDA. Net income declines were primarily driven by $336 million of losses from the June 11, 2026 fire at the Tracy, California distribution center, before expected insurance recoveries, plus higher operating expenses and higher cost of goods sold including tariffs.

Strategy

Medline is pursuing top-line growth through existing customer expansion and implementation of new customer signings, and reports securing over 65% of its annual new customer signing goal in the first half of 2026. It is investing in strategic initiatives to strengthen market position, and is managing tariff exposure through levers including reallocating production, using its supplier base, optimizing procurement and manufacturing footprint, and price increases where needed. It pursued IEEPA tariff refunds through CBP's CAPE portal and other mechanisms, expecting total claims of approximately $507 million. Following the Tracy fire, it entered leases for two Northern California distribution centers totaling more than 1.6 million square feet, including a Tracy facility for near-term occupancy and a Stockton facility expected available in January 2027.

Risks

• Tariff and trade policy — The net impact to income before taxes from tariffs was approximately $110 million in the second quarter and $230 million in the first six months of 2026, before tariff refund recoveries and customer repayments.
• Distribution center fire — The June 11, 2026 fire at the Tracy, California distribution center caused estimated incurred losses of $336 million, and as of June 27, 2026 no insurance recoveries had been recorded while discussions with insurers continue.
• Foreign sourcing concentration — Medline imports a significant percentage of Medline Brand products from outside the United States, including 5% of cost of goods sold from China for the year ended December 31, 2025.
• Geopolitical and supply chain disruption — Ongoing geopolitical conflicts, including in the Middle East, have resulted in and could continue to result in energy supply disruption, higher global energy prices, inflationary pressure, and global supply chain disruption.

Outlook

Management updated full year 2026 Organic Sales guidance to 9.0% to 10.0% and Adjusted EBITDA guidance to $3.3 billion to $3.4 billion. The Organic Sales outlook includes IEEPA tariff customer repayments, while the Adjusted EBITDA outlook does not include the benefit of IEEPA tariff refunds. The company states the ultimate amount and timing of IEEPA tariff refunds not yet received are subject to eligibility requirements, regulatory review, administrative processing, and other limitations, and that it may incur additional losses related to the Tracy fire.