01—Abstract
Summary
Summary of the 10-Q filed May 6, 2026. Cited figures are marked; the original filing is the authoritative source.
Medline Inc. reported solid revenue growth of 10.7% for the quarter ended March 28, 2026, reaching $7.35 billiona, driven primarily by increased volumes across its U.S. operations, particularly within the acute care segment.
Despite this top-line expansion, net income saw a decline of 25.8% to $239 millionb, largely due to a significant increase in Cost of Goods Sold (up 14.3%) and Selling, General, and Administrative (SG&A) expenses (up 14.8%). Higher import costs related to tariffs and increased compensation and distribution expenses were key drivers for the rise in operating costs. The company also experienced a substantial decrease in interest expense, down 35.2% to $136 million, following the repayment of significant debt portions using IPO proceeds in the prior year, which positively impacted profitability.
The balance sheet remains strong with $2.24 billionc in cash and cash equivalents and $946 million in available liquidity under its revolving credit facility. The company continues to manage its financial obligations, with a total indebtedness of $12.76 billion as of the quarter's end.
02—Key points
Key Highlights
- Net sales increased by 10.7% to $7.35 billion, driven by volume growth, especially in the U.S. acute care segment.
- Net income decreased by 25.8% to $239 million due to higher cost of goods sold and SG&A expenses.
- Cost of Goods Sold increased by 14.3% to $5.51 billion, impacted by higher import costs due to tariffs.
- SG&A expenses rose by 14.8% to $1.23 billion, driven by higher compensation, benefits, and distribution costs.
- Interest expense, net, decreased significantly by 35.2% to $136 million due to prior debt repayments and lower variable rates.
- The company maintained a strong liquidity position with $2.24 billion in cash and cash equivalents and $946 million in revolving credit facility availability.
- Medline Brand segment sales grew 6.2% to $3.47 billion, but Segment Adjusted EBITDA declined 7.8% due to higher costs.
- Supply Chain Solutions segment sales grew 15.0% to $3.89 billion, with Segment Adjusted EBITDA increasing modestly by 2.7%.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Medline kept $0.03.
- Revenue$7.35B100.0%
- Cost of revenue−$5.51B75.0%
- Gross profit$1.84B25.0%
- Operating costs−$1.42B19.3%
- Operating income$422.0M5.7%
- Interest, other & tax−$183.0M2.5%
- Net income$239.0M3.3%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed May 6, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $7.35B$6.64B | +10.7% |
| Cost of Revenue | $5.51B$4.82B | +14.3% |
| Gross Profit | $1.84B$1.82B | +0.9% |
| SG&A Expenses | $1.23B$1.07B | +14.8% |
| Operating Expenses | $1.42B$1.25B | +13.2% |
| Operating Income | $422.00M$571.00M | −26.1% |
| Net Income | $239.00M$319.00M | −25.1% |
| EPS (Basic) | $0.16— | — |
| EPS (Diluted) | $0.16— | — |
| Shares Outstanding (Basic) | 819.08M— | — |
| Shares Outstanding (Diluted) | 824.84M— | — |
05—Questions
Frequently Asked Questions
What drove the increase in Medline's net sales this quarter?
Medline's net sales increased by 10.7% to $7.35 billion primarily due to organic growth driven by higher volumes, particularly in its U.S. operations and the acute care business segment. Prime Vendor net sales also saw significant growth.
Why did Medline's net income decrease despite strong sales growth?
Net income decreased by 25.8% to $239 million primarily because the Cost of Goods Sold (up 14.3%) and Selling, General, and Administrative (SG&A) expenses (up 14.8%) increased at a faster pace than net sales. Higher import costs due to tariffs and increased compensation and distribution expenses were key factors impacting profitability.
How has the company's debt situation evolved?
Interest expense, net, decreased by 35.2% to $136 million. This reduction is attributed to the repayment of Euro Term and Dollar Term loans using IPO proceeds in the prior year and lower variable interest rates on its remaining debt. Total indebtedness remains significant at $12.76 billion.
What is the Tax Receivable Agreement (TRA) liability and how is it impacting the financials?
The Tax Receivable Agreement liability stood at $4.02 billion as of March 28, 2026, an increase from $3.54 billion at the end of the prior year. This liability reflects future potential payments to pre-IPO owners for tax benefits, and its changes are recognized in the income statement, impacting net income. The TRA liability increased by $479 million during the quarter, largely due to the March 2026 Resale Offering.
06—Continue