Medline (NASDAQ:MDLN) reported second-quarter 2026 net sales growth of 12% to $7.7 billion, supported by demand across its medical-surgical product and supply-chain businesses, while raising its full-year organic sales outlook. The company also lowered its adjusted EBITDA guidance, citing operational investments, quality remediation efforts, retail weakness, Middle East-related inflation and costs associated with a June fire at its Tracy, California distribution center.
Chief Executive Officer Jim Boyle said Medline Brand sales grew 7% during the quarter, including the effect of customer repayments tied to IEEPA tariff refunds, while Supply Chain Solutions sales rose 16% on new customer implementations and growth among existing customers. He said the supply-chain segment remains important to Medline’s strategy because it can create opportunities to convert customer spending toward higher-margin Medline Brand products.
Sales Growth Led by Acute Care and Supply Chain Solutions
Medline Brand generated $3.5 billion in second-quarter sales, up 7% from a year earlier. Customer repayments associated with IEEPA tariff refunds reduced segment growth by about three percentage points, according to Chief Financial Officer Mike Drazin.
- Surgical Solutions sales increased 9% to $1.6 billion, driven by surgical kitting and operating-room demand.
- Frontline Care sales rose 4% to $1.7 billion, with demand for exam gloves and personal-care products partly offset by unexpected weakness in retail.
- Lab and Diagnostics sales climbed 12% to $248 million, helped by new customer implementations and existing customer demand.
- Supply Chain Solutions sales increased 16% to $4.1 billion, supported by new customer implementations and growth with existing clients.
By channel, U.S. acute-care sales rose 15% to $5.4 billion, while U.S. non-acute sales increased 4% to $1.7 billion. International sales grew 9% to $533 million, driven by volume growth in Canada and Europe.
Boyle said new customer signings totaled more than $650 million through the first half of the year, exceeding 65% of Medline’s $1 billion annual target. He cited an expanded agreement with Allina Health in the Upper Midwest that extends Medline’s existing relationship across acute-care and physician-office settings. Boyle said the company is confident it can meet or exceed its annual signing target.
Tariff Refunds Lifted Reported EBITDA
Second-quarter adjusted EBITDA increased 13% year over year to $1.1 billion, including a $243 million net benefit from IEEPA tariff refunds. Adjusted EBITDA margin rose 20 basis points to 13.8%.
Drazin said the company’s underlying adjusted EBITDA, excluding the tariff-refund benefit, was $817 million. Higher sales volumes were partly offset by increased cost of goods sold, tariff costs and operating expenses, including headcount added to support growth.
Medline said it has $507 million in total tariff refunds available. It has accrued roughly $90 million of customer repayments related to those refunds and expects to make the payments later this year. The company said it has communicated its intention to provide the payments to customers but has not yet quantified individual amounts.
For the first six months of 2026, Medline generated $920 million in free cash flow. Cash and cash equivalents were $2.3 billion, with an additional $350 million of short-term investments. Net leverage declined to 2.9 times, reaching the company’s stated long-term goal of below three times.
Fire Response and California Network Expansion
A mid-June fire at Medline’s Tracy distribution center reduced net income by $336 million in the first half, primarily due to inventory and fixed-asset losses and related costs. Those expenses were excluded from adjusted EBITDA. The company said it expects insurance recoveries related to property, inventory and general liability.
Boyle said Medline used its inventory position, broader distribution network and MedTrans transportation fleet to limit customer disruption following the fire. Within a month, it secured 1.6 million square feet across two distribution centers, expanding its customer-facing Northern California footprint by 45%.
Medline has taken occupancy of a new Tracy distribution center that it expects to begin serving customers from in the fourth quarter. A new Stockton facility is expected to be occupied in January 2027. The company also announced plans for a 1 million-square-foot Southern California distribution center. Its California footprint is expected to reach nearly 5 million square feet by mid-2027.
Guidance Raised for Sales, Lowered for EBITDA
Medline raised its full-year organic sales growth outlook to 9% to 10%, from 8.5% to 9.5%. The outlook includes $89 million in IEEPA tariff refunds that Medline plans to provide to customers.
However, the company lowered full-year adjusted EBITDA guidance to $3.3 billion to $3.4 billion, from $3.5 billion to $3.6 billion. The revised outlook excludes IEEPA tariff refunds but includes external and internal pressures.
Drazin said Medline estimates that about one-quarter of the incremental earnings pressure comes from external factors, including the Middle East conflict and the Tracy fire, while about three-quarters stems from operational investments, quality remediation and retail weakness. About half of the overall impact is expected to be transitory, while the other half is expected to become part of Medline’s future cost base.
The company expects $50 million to $100 million of additional Tracy-related costs in the second half. Some costs, including cleanup, product rerouting and air freight, are expected to be excluded from adjusted EBITDA, while lease expenses and labor inefficiencies associated with operating without automation will remain in the company’s cost base.
Medline also said it is accelerating investments in its quality organization, manufacturing processes and global quality action plan following discussions with the Food and Drug Administration. Some recalled products, including CHG wipes manufactured at its Waukegan facility, are taking longer than expected to return to market.
Boyle said Medline is pursuing enterprise-wide cost-savings initiatives and could consider pricing actions when cost conditions become clearer. For now, he said the company is focused on absorbing certain costs, supporting customers and gaining market share.
About Medline (NASDAQ:MDLN)
Medline (NASDAQ: MDLN) is a healthcare products and services company that manufactures, sources and distributes a wide range of medical supplies and equipment for healthcare providers. Its product portfolio spans clinical consumables and personal protective equipment, surgical and procedural supplies, wound care and incontinence products, diagnostic and laboratory supplies, and select durable medical equipment. Medline supports care settings that include hospitals, health systems, long-term care facilities, ambulatory clinics and home health providers.
In addition to product manufacturing and distribution, Medline provides supply‑chain and logistics services designed to help healthcare customers manage inventory, reduce costs and streamline operations.
