Medline (NASDAQ:MDLN) outlined strong top-line growth in 2025 and issued 2026 guidance that reflects continued momentum from new customer wins alongside ongoing tariff pressure, during the company’s fourth-quarter and full-year 2025 earnings call—its first as a public company following an IPO last December.
2025 milestones: new signings, automation, and IPO
CEO Jim Boyle characterized 2025 as a “milestone year,” pointing to $2.4 billion in total new customer signings across both Prime Vendor and non-Prime Vendor arrangements. Boyle highlighted major wins including the U.S. Department of Veterans Affairs and a large faith-based integrated delivery network that consolidated from five distributors to Medline to support care across acute, physician office, ambulatory surgery, home health, and lab settings.
On the product side, Boyle highlighted expansion of Medline’s brand portfolio (about 190,000 products) and cited the ComfortTemp Patient Warming System as an example of new innovation. He also reiterated plans for a broader rollout of Mpower, an AI-based digital supply chain “control tower” collaboration with Microsoft, with broader customer rollout expected to begin mid-year after pilots with multiple health systems.
The company ended the year following an IPO that raised more than $7 billion, which management said improved the balance sheet and increased financial flexibility.
Fourth-quarter and full-year results: sales growth with margin pressure
CFO Mike Drazin reported fourth-quarter net sales of $7.8 billion, up 15% year over year, noting the quarter benefited from one additional business day (an estimated 180 basis point benefit). Full-year net sales were $28.4 billion, up 12% (11% organic), with acquisitions contributing about one percentage point. The full year had one fewer business day than 2024, which Drazin said created an estimated 40 basis point headwind.
By segment, Medline Brand fourth-quarter net sales were $3.7 billion (up 12%), and full-year sales were $13.7 billion (up 10%). Within Medline Brand:
- Surgical Solutions: Q4 sales of $1.7 billion (up 12%); full-year sales of $6.2 billion (up 13%), aided by surgical kitting and a three-point contribution from the MicroTech Surgical Solutions acquisition, which the company lapped in Q3 2025.
- Frontline Care: Q4 sales of $1.8 billion (up 11%); full-year sales of $6.5 billion (up 7%), with growth in ReadyCare, Wound Care (including Medline brand conversions), and Personal Care home medical equipment. Drazin noted a one-point contribution from the Coloplast Skincare acquisition, which was lapped in Q4 2025.
- Lab and Diagnostics: Q4 sales of $289 million (up 12%); full-year sales of $1 billion (up 9%). Drazin said 2025 was one of the company’s largest years of lab signings.
Supply Chain Solutions delivered fourth-quarter sales of $4.1 billion (up 18%) and full-year sales of $14.7 billion (up 13%), driven by new customer implementations and growth with existing customers.
By channel, Drazin said U.S. Acute Care grew 16% in Q4 to $5.3 billion and 12% for the year to $19.5 billion, driven by new Prime Vendor customers and same-store sales growth tied to utilization and procedure volumes. U.S. Non-Acute grew 12% in Q4 to $1.9 billion and 11% for the year to $7.0 billion, supported by growth in post-acute and other non-acute sites of care. International grew 12% in Q4 to $537 million and 11% for the year to $2.0 billion, driven by Canada and Europe.
Adjusted EBITDA was $805 million in Q4, roughly flat year over year, while margin declined 160 basis points to 10%. Full-year adjusted EBITDA rose 3% to $3.5 billion, with margin down 100 basis points to 12.2%. Management attributed the margin pressure to higher costs, including tariffs, and increased investment in headcount and capacity to support growth.
Tariffs: mitigation efforts and shifting timing
Tariffs were a recurring topic. Drazin said Medline’s 2025 net tariff impact totaled approximately $290 million, weighted toward the second half, and below the $325 million previously projected due to inventory timing. He said the company’s mitigation efforts included shifting production across sourcing partners, optimizing internal manufacturing, and leveraging exemptions such as USMCA and Nairobi. Drazin also noted the company implemented a tariff-specific price increase in August 2025.
For 2026, adjusted EBITDA guidance includes an incremental $200 million tariff headwind based on tariff policy prior to a recent Supreme Court decision related to IEEPA. Drazin said the company is evaluating the ruling and noted that new tariff rates have been implemented, with the potential for additional tariff actions. He added that Medline does not intend to react immediately, instead assessing the situation to determine the best course for customers and the company.
In the Q&A, management said a $35 million tariff expense shifted from 2025 into 2026 due to inventory capitalization, but that lower China and India rates (under the prior regime) provided a roughly $30 million to $35 million offset. Drazin said the company estimates the annualized net impact of tariffs after planned mitigation strategies at approximately $490 million. He also said the majority of the 2026 tariff burden is expected in the first half of the year, normalizing in the back half.
Asked about the mechanics of tariff changes, Drazin said Medline carries more inventory than peers by design to support service levels, and described Medline Brand inventory as roughly “three-five months on hand.” He said higher-tariff inventory already on hand continues to flow through cost of goods sold for several months even if tariff rates change. Boyle also said the company plans to apply for refunds related to IEEPA tariffs.
Cash flow, leverage reduction, and investment plans
Drazin reported 2025 free cash flow of $1.3 billion, though he said it was impacted by a net payment for legal settlements in the second quarter and by higher tariffs. Full-year capital expenditures were $447 million, including expansion of Mexico kitting capacity and distribution center investments.
Year-end cash and cash equivalents were $1.9 billion, including $1.0 billion from IPO proceeds. Medline used $4.0 billion of IPO proceeds to pay down debt, reducing net leverage to 3.1x at year-end 2025 from 4.9x at year-end 2024.
Looking ahead, the company expects 2026 capex of approximately $500 million as it completes the Mexico kitting expansion, builds two new distribution centers in California and Texas, and continues investing in automation.
2026 outlook: organic growth and stable EBITDA range
Medline guided to 2026 organic sales growth of 8% to 9% and adjusted EBITDA of $3.5 billion to $3.6 billion. Drazin said the sales outlook depends on the timing of implementations from 2025 signings, additional signings in 2026, and same-store sales growth tied to utilization and procedure volumes. He told analysts the company expects same-store sales growth to remain strong but to moderate versus 2025.
Management provided additional modeling items, including expected net interest expense of $575 million to $625 million (assuming a 4.8% average interest rate), an effective tax rate of 17.5% to 19.5%, and tax distributions to non-controlling interest holders of $250 million to $350 million. Drazin also said the company will wait until 2027 to provide diluted EPS guidance, but estimated approximately 1.4 billion fully diluted shares outstanding for 2026 calculations.
On the customer environment, Boyle said hospital customers are focused on reimbursement stability, value, consolidation across the continuum of care, and resilient supply chain partners. He also said there had been “no change to date” in utilization early in 2026, though he described the company’s outlook as cautious given policy uncertainty and potential risks to community and rural health providers.
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.
