10-QPeriod: Q2 FY2026

Medline Inc. Quarterly Report for Q2 Ended Jun 27, 2026

Filed August 5, 2026For Securities:MDLN

Summary

Medline Inc. (MDLN) reported its second-quarter 2026 financial results, demonstrating robust top-line growth alongside significant operational events and strategic financial activities. The company saw a notable increase in net sales, driven by higher volumes across both its Medline Brand and Supply Chain Solutions segments. This growth was partially impacted by customer repayments related to tariff refunds, which reduced reported net sales. Operationally, Medline faced a significant challenge with a fire at its Tracy, California distribution center, resulting in an estimated $336 million loss. The company has initiated insurance discussions and secured new lease agreements to mitigate disruptions. Financially, Medline executed several debt refinancing transactions in May 2026, leading to lower interest expenses. The company also reported a substantial increase in its Tax Receivable Agreement (TRA) liability, primarily due to secondary offerings and unit exchanges. Investors should note the strong sales performance, the ongoing efforts to manage the impact of the distribution center fire, and the significant debt restructuring. The increase in the TRA liability is a key financial item to monitor, reflecting expected future tax benefits. Despite operational challenges, the company's liquidity remains strong, supported by cash reserves and its revolving credit facility.

Key Highlights

  • 1Net sales increased by 11.6% year-over-year for the three months ended June 27, 2026, reaching $7.7 billion, driven by volume growth in both Medline Brand and Supply Chain Solutions segments.
  • 2A fire at the Tracy, California distribution center resulted in an estimated loss of $336 million, recorded in Other Operating Expenses, with insurance recovery discussions ongoing.
  • 3Medline completed significant debt refinancing transactions in May 2026, including issuing new notes and amending credit facilities, leading to a decrease in interest expense.
  • 4The Tax Receivable Agreement (TRA) liability increased significantly to $4.4 billion as of June 27, 2026, driven by secondary offerings and unit exchanges, indicating expected future tax benefits.
  • 5Gross profit margin improved to 28.8% for the three months ended June 27, 2026, from 27.7% in the prior year, primarily due to net tariff refunds.
  • 6Selling, General, and Administrative (SG&A) expenses increased by 20.7% for the three months ended June 27, 2026, largely due to higher compensation and benefit expenses and increased distribution costs.
  • 7The company maintains strong liquidity, with $2.3 billion in cash and cash equivalents and $946 million available under its revolving credit facility as of June 27, 2026.

Frequently Asked Questions

The fire at the Tracy, California distribution center on June 11, 2026, resulted in an estimated loss of $336 million, comprising $204 million for inventory, $116 million for fixed assets, and $16 million for other expenses. These losses were recorded in Other Operating Expenses for the three and six months ended June 27, 2026. Discussions with insurers are ongoing, and no insurance recoveries have been recorded yet. The company has secured new lease agreements to mitigate service disruptions.

Medline executed significant debt refinancing in May 2026. This included issuing new senior secured notes (2031 and 2033) and refinancing a term loan facility. These actions, along with prior IPO-related debt repayments, led to a substantial decrease in interest expense. For the three months ended June 27, 2026, interest expense, net, decreased by 46.6% to $119 million, and for the six months ended June 27, 2026, it decreased by 41.1% to $255 million, compared to the prior year periods.

The Tax Receivable Agreement (TRA) liability represents a payment obligation by Medline Inc. to certain pre-IPO owners for a portion of the tax benefits Medline realizes from increases in tax basis arising from their exchanges of units. The TRA liability increased to $4.4 billion as of June 27, 2026, up from $3.5 billion at the end of 2025. This increase was primarily driven by two secondary offerings (March and May 2026) and other exchanges of units by existing unitholders, which are expected to generate future tax benefits for the company.

Medline received and had accepted claims for approximately $332 million in IEEPA tariff refunds during the first six months of 2026. These refunds were recognized as a reduction in Cost of Goods Sold. Concurrently, the company recorded approximately $89 million as a reduction of Net Sales for estimated customer repayments associated with these tariff refunds. These transactions positively impacted gross profit margin in the Medline Brand segment.