Medline Q3 Sales Rise 10.4% as 2026 Organic Growth Outlook Increases

Medline reported a 10.4% increase in third-quarter net sales to $7.9 billion, supported by double-digit growth in Supply Chain Solutions and continued customer expansion. The medical-products company also increased its 2026 organic sales growth guidance to 10.0% to 10.5% from 8.5% to 9.5%, while maintaining its adjusted EBITDA outlook.

Organic sales rose 10.5% in the quarter. Adjusted EBITDA increased 11.8% to $960 million, primarily reflecting higher sales and net benefits from refunds of tariffs imposed under the International Emergency Economic Powers Act, or IEEPA. Those gains were partly offset by higher operating expenses and customer mix.

Medline recognized $70 million of tariff refunds as a reduction in cost of goods sold during the quarter. Together with an $11 million net-sales benefit related to adjustments in customer repayment amounts, the refunds contributed a net $81 million benefit to third-quarter net income and adjusted EBITDA.

Supply Chain Growth Outpaces Brand Sales

Supply Chain Solutions revenue increased 13.9% to $4.2 billion, driven mainly by higher Prime Vendor sales, including new customer implementations and growth from existing customers. However, the segment’s adjusted EBITDA fell 10.2% to $184 million as customer mix and higher operating expenses more than offset sales growth and increased vendor funding.

Medline Brand revenue rose 6.6% to $3.6 billion, while segment adjusted EBITDA increased 14.9% to $943 million. Surgical Solutions sales grew 7.9% on continued momentum in kitting and operating-room products, Front Line Care advanced 4.4% on demand for exam gloves and personal-care products, and Lab & Diagnostics rose 13.8%, led by laboratory products.

By channel, U.S. acute-care sales increased 12.1% to $5.5 billion. U.S. non-acute revenue grew 6.3% to $1.9 billion, while international sales rose 8.1% to $500 million.

Medline said total new customer signings remained on track toward its $1 billion annual goal. The company also launched its first Prime Vendor partnership in Canada and advanced distribution-center projects in California, Texas and Michigan, alongside related technology investments.

Year-to-Date Sales Reach $22.9 Billion

For the first nine months of 2026, net sales rose 10.9% to $22.9 billion and organic sales increased 10.7%. Adjusted EBITDA grew 5.0% to $2.8 billion, as higher sales and net tariff-refund benefits outweighed part of the pressure from operating expenses, tariffs, cost of goods sold, and customer and segment mix.

Supply Chain Solutions generated year-to-date sales of $12.2 billion, up 15.1%, but segment adjusted EBITDA declined 2.2% to $575 million. Medline Brand sales increased 6.5% to $10.6 billion, with segment adjusted EBITDA rising 9.2% to $2.8 billion.

The company generated $1.8 billion of free cash flow through the third quarter and ended the period with $3.6 billion in cash and short-term investments. Net capital expenditures were $348 million, and net leverage stood at 2.5 times. Medline completed a $750 million term-loan prepayment in October and authorized a share-repurchase program of up to $1 billion.

2026 Guidance and Initial 2027 Framework

Medline maintained its 2026 adjusted EBITDA guidance at $3.3 billion to $3.4 billion. That outlook excludes the benefit of tariff refunds. The company expects net capital expenditures of $500 million to $600 million, net interest expense of $475 million to $525 million, tax distributions of $250 million to $300 million and a GAAP tax rate of 17% to 19%.

For 2027, management provided an initial framework calling for high-single-digit net sales growth and low- to mid-single-digit adjusted EBITDA growth. Expected earnings drivers include existing-customer growth, new customer implementations, pricing, conversion from third-party products to Medline Brand offerings, tariff favorability at current rates, and productivity initiatives.

Margin pressures identified by the company include inflation in diesel, raw materials and finished goods; investments in capacity, automation and other capabilities; and spending under its Global Quality Action Plan. Medline said it continued to invest in people, processes and technology while remediating affected products.

Tariffs remain another source of uncertainty. Medline recorded $277 million of net tariff costs through the third quarter and expects about $350 million for the full year, based on tariff rates generally consistent with those in place before the IEEPA tariffs. The company said changes in tariff rates were not expected to materially affect 2026 results, with any impact primarily expected in 2027. Its forward-looking targets remain subject to operational, cost and broader business risks.