Skip to content
    MDLN
    Earnings call· Mar 2026(Q1 FY26)

    Medline Q1 FY26 earnings call MDLN

    May 6, 2026 Source

    Executive summary

    Medline Q1 FY26 — Strong Sales Growth and Strategic Investments

    Medline delivered a strong start to the year with double-digit sales growth, driven by new customer implementations and existing customer demand, leading to an upward revision of full-year organic sales guidance. Despite anticipated cost pressures from tariffs and geopolitical factors, the company maintains its EBITDA outlook, focusing on strategic investments in supply chain technology and operational efficiency to navigate challenges and capitalize on long-term growth opportunities.

    Highlights

    5

    • Achieved 11% top-line growth in Q1 FY26, driven by strong performance in Supply Chain Solutions.

    • Raised full-year 2026 organic sales growth guidance to 8.5%-9.5% from 8%-9%.

    • Secured first prime vendor customer in Canada with Mohawk Medby Corporation, serving 9 acute member hospitals.

    • Expanded automation with Symbiotic partnership for AI-powered robotics and PicPac Pro for fulfillment in Montgomery, NY.

    • Successfully rolled out Empower, an AI-enabled digital supply chain control tower, to 10 pilot customers with plans for broader expansion.

    Concerns

    4

    • Adjusted EBITDA declined 11% to $776 million in Q1 FY26 due to higher costs.

    • Experienced $85 million in incremental tariffs ($120 million net impact) in Q1 FY26, impacting adjusted EBITDA margin by 250 basis points.

    • Anticipates headwinds from rising oil prices due to the Middle East conflict, impacting petroleum-based product costs.

    • One less business day in Q1 FY26 created a headwind of approximately 2 percentage points to sales growth.

    Guidance & targets

    9
    CategoryTargetConfidence
    Full-year 2026 organic sales growth
    8.5% to 9.5%
    high materiality
    High
    Full-year 2026 adjusted EBITDA
    $3.5 billion to $3.6 billion
    high materiality
    Medium
    New prime vendor signings
    $1 billion
    medium materiality
    High
    Tariff rate assumption
    Current 10% rate to expire midyear, return to higher rates
    high materiality
    Medium
    Middle East conflict impact on P&L
    Bigger impact in Q2, overall immaterial
    medium materiality
    Medium
    Inflationary costs (petroleum-based) in P&L
    Late Q2 or early Q3
    medium materiality
    Medium
    Sequential adjusted EBITDA growth
    Expected in H2 2026
    medium materiality
    Medium
    Revenue realization from 2025 new customer signings
    65% in 2026
    medium materiality
    High
    Revenue realization from 2025 new customer signings
    Rest in 2027
    medium materiality
    High

    Segment performance

    8
    SegmentRevenueYoYQoQMargin
    Medline Brand
    Led by strong growth in Surgical Solutions and robust demand in Front Line Care, with double-digit core lab growth offset by softer respiratory virus testing in Lab and Diagnostics.
    Adjusted for days growth: 8%
    		$3.5 billion6%——
    Surgical Solutions (Medline Brand)
    Led by continued strong growth in surgical kitting.
    		$1.6 billion7%——
    Front Line Care (Medline Brand)
    Driven by robust demand across multiple product divisions, including exam gloves and personal care.
    		$1.6 billion6%——
    Lab and Diagnostics (Medline Brand)
    Double-digit core lab growth was offset by seasonality related to softer respiratory virus testing.
    Core lab growth: double-digit
    		$293 million1%——
    Supply Chain Solutions
    Benefited from new customer implementations and existing customer growth, increasing pipeline for future Medline brand conversion opportunities.
    Adjusted for days growth: 17%
    		$3.9 billion15%——
    U.S. Acute Care (Channel)
    Driven by growth with new Primato customers and solid same-store sales growth.
    		$5.1 billion12%——
    U.S. Non-Acute (Channel)
    Supported by strong existing customer growth and new customer hirings in post-acute, surgery centers and physician offices, impacted by softer respiratory season.
    		$1.7 billion7%——
    International (Channel)
    Due to foreign currency and volume growth in Canada and Europe.
    		$495 million10%——

    Operational metrics

    28
    Overall sales growth
    11%
    Q1 FY26

    Top line growth for the quarter.

    Overall sales growth
    13%
    Q1 FY26

    Top line growth adjusted for 1 less business day in the quarter.

    Adjusted EBITDA
    $776 milliondown 11% YoY
    Q1 FY26

    Reflecting robust sales offset by anticipated higher cost of goods sold and operational investments.

    Adjusted EBITDA margin
    11%down 250 bps
    Q1 FY26

    Primarily due to higher costs, including incremental tariffs and continued investments.

    Medline brand adjusted EBITDA
    $765 milliondecreased $65 million
    Q1 FY26

    Impacted by higher import costs due to tariffs.

    Medline brand adjusted EBITDA margin
    22.1%declined 330 bps
    Q1 FY26

    Primarily as a result of higher import costs due to tariffs.

    Supply Chain Solutions adjusted EBITDA
    $187 millionincreased $5 million
    Q1 FY26

    Impacted by customer mix and operational costs to support customer demand.

    Supply Chain Solutions adjusted EBITDA margin
    4.8%declined 60 bps
    Q1 FY26

    Primarily as a result of customer mix and operational costs to support customer demand.

    Capital expenditure
    $96 million
    Q1 FY26

    Investments in distribution centers and manufacturing capacity.

    Cash and cash equivalents
    $2.2 billion
    Q1 FY26

    Balance at the end of the first quarter.

    New customer signings
    $2.4 billion
    FY25

    Total new customer signings delivered in 2025, fueling Q1 momentum.

    Medline brand products multi-sourced
    Nearly 90%up 10 percentage points from 5 years ago
    Current

    Reflects diversification of global supplier network.

    Customer complaint rate
    <1 per million units sold
    Current

    Well below Six Sigma base Farms, indicating high product quality and patient safety.

    Business days headwind
    1
    Q1 FY26

    One less business day versus Q1 FY25.

    Tariff impact (incremental)
    $85 million
    Q1 FY26

    Incremental tariffs contributing to higher cost of goods sold.

    Tariff impact (net)
    $120 million
    Q1 FY26

    Net impact of tariffs on costs.

    Fuel cost impact on COGS
    50 bps
    Current

    Exposure to fuel costs.

    Diesel price
    Above $5 a gallon
    Current

    Threshold for significant impact on P&L from Middle East conflict.

    Inventory days on hand
    80 days
    Current

    Overall inventory levels, with more on Medline brand side.

    Autostore robots
    2,100
    Current

    Number of robots in their automation network.

    Autostore throughput increase
    250%
    Current

    Efficiency gain from Autostore installations.

    Autostore labor burden reduction
    50%
    Current

    Labor efficiency gain from Autostore installations.

    Lab and diagnostics TAM
    $25 billion
    Current

    Total addressable market for lab and diagnostics.

    Lab and diagnostics Medline brand convertible activity
    30%
    Current

    Portion of lab and diagnostics business that is Medline brand convertible.

    Animal Health TAM
    $4 billion
    Current

    Total addressable market for animal health.

    Medline brand penetration for new customers
    Doubles from 10% to 20%
    First year

    Typical increase in Medline brand penetration with new customer conversions.

    Existing customer Medline brand penetration increase
    3% to 4%
    Consistent

    Consistent increase in Medline brand penetration with existing customers.

    Modern Healthcare Top 100 health systems
    ~50%
    Current

    Indicates significant market opportunity remaining.

    Industry KPIs

    3
    MetricValueDetails
    New product launch rampForestar warming
    Procedure volume growthsteady
    FCF conversion leverage guidance3.1xratio

    Product announcements

    3
    ProductTypeDetails
    PicPac Prolaunch
    Empowerexpansion
    Forestar warminglaunch

    Deals & partnerships

    5
    Mohawk Medby Corporation (MMC)prime vendor partnership

    Partnered to serve as prime vendor for 9 acute member hospitals in Southwestern Ontario, Canada. This is Medline's first prime vendor customer in Canada.

    Symbioticpartnership

    Partnership for an AI-powered robotic platform that automates picking, storage, and retrieval of bulk items for distribution. Medline is the first healthcare company to deploy Symbiotic, with piloting expected next year at their Ohio distribution center.

    Microsoftpartnership

    Partnership for the AI-enabled digital supply chain control tower, Empower.

    Sinclairacquisition

    Acquisition in the Canadian market, used to understand the digital space and build Medline brand convertible opportunities in the dental segment.

    Covetrus Vetco MWIpartnership

    Partnership for distribution platform in the animal health market, where Medline acts as a manufacturer of medical supplies.

    Risks & headwinds

    7
    Higher cost of goods soldQ1 FY26

    Adjusted EBITDA down 11% to $776 million; Adjusted EBITDA margin declined 250 bps to 11%

    Mitigation: Offset by robust sales, internal mitigation efforts, and anticipated tariff favorability in H2.

    Incremental tariffsQ1 FY26

    $85 million incremental, $120 million net impact

    Mitigation: Anticipate favorability from lower tariff rates in H2 2026; measured approach to price increases.

    Middle East conflict impact on oil prices and input costsQ2 FY26 onwards

    Diesel above $5 a gallon; 50 bps of total COGS for domestic freight; cost increases from suppliers for petroleum-based products (gloves, resins, plastics)

    Mitigation: Evaluating impact, will run playbook for mitigation; tariff favorability expected to offset Middle East impact in H2.

    One less business dayQ1 FY26

    2 percentage points headwind to sales

    Softening of same-store sales growthH2 FY26

    Assumed in full year organic sales guidance

    Mitigation: Focus on share gains and new customer implementations; potential for higher acuity cases to balance overall market impact.

    Tariff rate volatilityLast year

    Last year, rates went from 30% to 145% and then back to 30% in a short timeframe.

    Mitigation: Measured approach to cost increases, internal mitigation efforts before passing costs to customers.

    Current 10% tariff rate expirationMid-year 2026

    Current 10% tariff rate will expire midyear (late July)

    Mitigation: Administration may use 232s or 301 to recreate previous higher rates; Medline submitted public comment statement.

    Q&A highlights

    8

    How much lead time will Medline give clients/manufacturers for price changes due to rising input costs, and how do tariff assumptions factor into reiterated EBITDA guidance?

    Medline has not determined price increases for Middle East conflict impacts, evaluating the situation. Historically, tariff-related price increases had 45-60 days notice, but they absorbed costs first. The reiterated EBITDA guidance accounts for Middle East conflict, investments, and tariff favorability.

    “We have not made a determination yet that we're going to raise prices as it relates to the Middle East comp it. We still continue to evaluate the impact to our business, how long this may last.”

    asked by Michael Cherny · answered by Michael Drazin

    2 min read7 chapters

    Detailed Narrative

    01

    Supply Chain Resilience and Diversification

    Medline emphasized strengthening its manufacturing and distribution footprint and maintaining robust inventory levels to navigate global complexities. Nearly 90% of Medline brand products are multi-sourced, marking a 10 percentage point increase from five years ago. This diversification strategy aims to enhance resilience against geopolitical uncertainty🌐 and supply chain disruption🌐s, ensuring product availability and quality for customers.

    02

    Strategic Technology Investments

    The company is deploying advanced technology to improve efficiency and scalability. This includes a partnership with Symbiotic for an AI-powered robotic platform to automate picking, storage, and retrieval of bulk items, with piloting expected next year at their Ohio distribution center. Additionally, Medline introduced PicPac Pro, an innovative automation fulfillment system in Montgomery, NY, designed to enhance speed, accuracy, and reliability for health plan customers.

    03

    Empower Rollout and Customer Impact

    Medline is expanding its AI-enabled digital supply chain control tower, Empower, developed in partnership with Microsoft. In Q1, the pilot program grew to 10 customers, who are reporting early benefits such as efficiency gains, improved inventory flow visibility, stronger supply and demand planning, and predictive insights to proactively manage disruptions. The company aims to expand the rollout in Q2 and offer Empower to most acute care customers by year-end.

    04

    Canadian Market Expansion

    Medline announced a significant milestone with its first prime vendor partnership in Canada, collaborating with Mohawk Medby Corporation (MMC). This partnership will serve 9 acute member hospitals in Southwestern Ontario, representing a substantial opportunity to demonstrate Medline's prime vendor model and potentially accelerate Medline brand conversions and future growth across the Canadian healthcare market.

    05

    Tariff and Cost Management Strategy

    The company faced $85 million in incremental tariffs in Q1 FY26, contributing to a 250 basis point decline in adjusted EBITDA margin. Management indicated a measured approach to cost increases, absorbing them initially and evaluating the situation before implementing price adjustments. This strategy, previously applied during past tariff impact🌐s, aims to maintain customer relationships and market share.

    06

    Utilization and Market Outlook

    Medline observed consistent healthcare utilization in Q1, with share gains driving growth. However, the company anticipates some softening in utilization during the second half of the year, attributed to potential reimbursement cuts and reduced access to insurance (e.g., ACA expiries). Despite this, they noted that reduced access to care for minor ailments could lead to higher acuity cases, potentially balancing the overall financial impact on the healthcare marketplace.

    07

    Dental and Animal Health Initiatives

    In the dental market, Medline is leveraging its Sinclair acquisition in Canada to build Medline brand convertible opportunities, aiming to replicate its successful U.S. model and drive accretive margin lift. For animal health, the company focuses on being a manufacturer of medical supplies, partnering with distributors like Covetrus Vetco MWI, and views it as a growing $4 billion total addressable market opportunity.

    AI-generated summary of the company’s earnings call. Not investment advice.