Aug 5, 2026 earnings call — Sales outlook raised amid tariff refunds
Medline raised full-year organic sales guidance to 9% to 10% and reported Q2 net sales of $7.7 billion.
Revenue $7.7B (est $7.5B) · EPS $0.50 (est $0.35)
Key quotes
"Their resilience is core to who we are and guide the commitments we make every day to our customers and to one another to make health care run better."
"Second quarter results were $1.1 billion, up 13% year-over-year. This includes $243 million of net IEEPA tariff refund benefits."
"As part of this work, we have also modified our complaint review process, which we expect will increase medical device reporting or MDR submissions in the second half of the year."
Analyst Q&A 17
Spending to win new customers
Q (Michael Cherny · Leerink Partners): Analyst asked if company will overspend versus baseline to win market share and what market conditions are needed to regain EBITDA leverage above revenue growth.
A: Management said yes — they have long invested ahead of growth and are doing so now in operations and quality. They pointed to strong sales growth and $659 million of new signings so far as signs this approach is working. They clarified how they treated tariff refunds in guidance.
"If you think about our business, we've been intentional for many, many years of investing in our business for growth ahead of the growth." — Michael Drazin (CFO)
How conservative is new guide
Q (Elizabeth Anderson · Evercore): Analyst asked how conservative the new baseline is on macro factors like oil and shipping, and what assumptions were used.
A: Management quantified a $70 million estimated impact for 2026 from the Middle East, including diesel fuel and product/raw material costs, and said they assumed diesel prices around $5. They also said tariff rates were assumed not to change for the rest of the year and any change would be immaterial to 2026.
"We have a $70 million of estimated or expected impact for 2026 in our overall guide." — Michael Drazin (CFO)
Operations investments and timing
Q (Sean Dodge · BMO): Analyst wanted confirmation on stepping up operational investments, how much, examples, and whether costs are run-rate or additive.
A: Management said these investments are continuations from last quarter to support new signings, including hiring people, adding auto-stores, and adding distribution centers in Texas, California and the Midwest. They said inefficiencies now should subside as automation and new DCs come online and that labor is often added 3 to 6 months before revenue.
"As we add new distribution centers, as we add automation, we expect to see those inefficiencies subside and ultimately see some savings in our business." — Michael Drazin (CFO)
Tariff refund accounting and timing
Q (Citi): Analyst asked about the $89 million accrual, customer responses, whether repayments are fully accounted, and if more are possible.
A: Management said total available refund is $507 million and they recorded a net $240 million benefit year-to-date, reflecting $330 million they expect to collect net of roughly $90 million customer repayments. They expect to make the customer payments in the latter part of this year and will quantify individual amounts soon.
"We expect to receive all of that over time." — Michael Drazin (CFO)
Which cost pressures are temporary
Q (Pito Chickering · Deutsche Bank): Analyst asked which of the $200 million inflationary pressures are transitory versus permanent and which will carry into 2027.
A: Management said roughly half the cost impact is transitory and half permanent. They called the Middle East and the Tracy fire impacts more transitory, while operational and quality investments are more permanent and will roll into 2027.
"We roughly have estimated about half of the cost or the impact to margin is transitory and about half of it is really permanent and will roll into our base overall." — Michael Drazin (CFO)
How tariff refund shows in Q2 EBITDA
Q (Steven Valiquette · Mizuho): Analyst asked whether the $1.060 billion adjusted EBITDA in June includes the $243 million tariff benefit and how to model the true performance.
A: Management confirmed the true underlying adjusted EBITDA for the quarter was $817 million and that the $243 million tariff benefit is being isolated and should not be included in guidance or consensus modeling. They said they are guiding based on actual business results, not the refund.
"So yes, we do -- the true performance -- the true underlying performance of the business in the second quarter for adjusted EBITDA was $817 million." — Michael Drazin (CFO)
Ability to hit $1 billion signings
Q (Matthew Taylor · Jefferies): Analyst asked if $1 billion of signings this year is achievable given $650 million signed so far and trends for H2.
A: Management said they are pleased with $650 million in the first half, are ahead of pace and confident they will hit $1 billion-plus because they see availability in the marketplace. They noted signings can be lumpy and this year's mix has been singles and doubles rather than last year's home runs.
"We're ahead of pace to achieve the $1 billion, and we're confident that we're going to hit the $1 billion plus." — James Boyle (CEO)
Allina deal and IEEPA tariff timing
Q (David Larsen · BTIG): Analyst asked revenue impact and drivers of the Allina win and whether earlier quarters were dragged by IEEPA tariffs.
A: Management said the Allina win expands relationships across multiple care settings, went live well about 3 weeks ago, and they do not disclose deal dollar amounts. On tariffs, they said IEEPA hit in second half of last year with peaks in Q4 and H1 2026 and that the prior $490 million impact estimate is now about $350 million at the newer roughly 10% rate.
"The IEEPA tariffs hit us in the second half of last year." — Michael Drazin (CFO)
Using H2 run rate to model 2027
Q (Kevin Caliendo · UBS): Analyst asked if H2 run rate, adjusted for one-timers and seasonality, is a reasonable baseline for 2027 and what other headwinds/tailwinds to consider.
A: Management said excluding a $140 million tariff benefit, total impact is about $340 million and applying their 50/50 transitory/permanent view helps think about the 2027 run rate. They also said they continue to seek enterprise cost savings and that external uncertainties like Middle East and tariffs must be watched and could affect the math.
"If you exclude the $140 million of the tariff benefit that we talked about a minute ago, you're really looking at about $340 million of overall impact." — Michael Drazin (CFO)
Passing costs to customers via price
Q (Brandon Vazquez · William Blair): Analyst asked whether the company plans to push pricing to offset headwinds and if Medline Brand margins can return to prior levels.
A: Management said they prefer to absorb costs during uncertainty to take share, but pricing is an option once they understand true costs and can justify increases under contract terms. They said if higher costs are the new norm, they will push price increases over time and have levers to restore margin profile.
"Price is an option. And when we feel like we're at a place where we understand what the true cost impact are, we understand the burden on the business, we will push price increases through." — James Boyle (CEO)
Utilization and hospital health
Q (Erin Wilson Wright · Morgan Stanley): Asked about utilization trends, which markets they are levered to, kitting strength, and health of hospital customers.
A: Management said they measure supply throughput, not patient volume, and have seen no slowness in the first two quarters with same-store sales outperforming expectations. They noted a modest softness baked into H2 from customer conversations but overall supply utilization has lifted, since delayed care can increase acuity and supply use.
"When you think about kind of flow, we don't measure patient volume, which I think is what you're hearing a lot from a lot of the kind of the providers in the network and concerns around the OBBBA and the Affordable Care Act and the lack of patients flowing into the market." — James Boyle (CEO)
Retail business margins and weakness cause
Q (Michael Polark · Wolfe): Analyst asked about the retail segment margin profile versus Medline Brand and reasons for weakness.
A: Management said retail is under 2% of sales and is mostly Medline Brand, so it runs at Medline Brand margin and explains a larger EBITDA hit. They said weakness was partly loss of a portion of one sizable retail customer due to sales execution, and they have redesigned the sales team and are working to win the business back.
"That business is pretty much all Medline Brands, so it runs at Medline Brand margin." — Michael Drazin (CFO)
Retail weakness and AI/IT investments
Q (Navann Ty Dietschi · BNP Paribas): Asked if retail weakness is specific to Medline and about continued investments in IT and AI and metrics to slow investments.
A: Management confirmed the retail softness was Medline specific tied to that customer. They said they continue to invest across operations, manufacturing and AI to drive productivity and service, and will keep doing so to improve efficiency for themselves and customers.
"We are making investments in AI to drive efficiencies, how we deliver service to our customers." — Michael Drazin (CFO)
Supply Chain Solutions margin pressure
Q (Jailendra Singh · Truist): Analyst asked if near-term margin pressure in Supply Chain Solutions is all from operational investments for implementations or if customers are different, and whether margin ramp pace changed.
A: Management said the pressure is driven by large signings that carry first-year rebates and by pre-added labor to support $2.4 billion of new business, not a structural margin change. They reported a 4.9% adjusted EBITDA margin for the quarter and expect Supply Chain Solutions around 4.9% to 5% for the business given year-one rebates and operational investments.
"We reported 4.9% adjusted EBITDA margin for the quarter." — Michael Drazin (CFO)
Physician and lab wins and lab seasonality
Q (Eric Coldwell · Baird): Analyst asked what's driving physician and lab wins and how lab demand recovered after Q1 seasonality.
A: Management said wins came from expanding relationships with existing acute prime customers and new independent physician networks, and being prime vendor in labs helps win more business. They noted Q1 had seasonal drag but Q2 saw a nice uplift, especially in acute care, and core lab business grew significantly.
"From a lab perspective, you think about the first quarter did have a drag because of seasonality, and we saw a very nice uplift in the second quarter." — James Boyle (CEO)
Home run opportunities and competitors' refund handling
Q (Andrew Obin · BofA): Analyst asked if there are potential large 'home run' deals in the pipeline and whether competitors are passing through IEEPA refunds, making Medline's approach a differentiator.
A: Management said there are potential home runs but they take longer and many wins came from customers leaving competitors rather than RFPs; CommonSpirit was cited as a past home run. They declined to comment on competitors' actions but said Medline aims to be transparent and do the right thing, implying that approach is different.
"There are absolutely more home runs in the marketplace and opportunities for us to win." — James Boyle (CEO)
Sizing Middle East cost impact
Q (Charles Rhyee · TD Cowen): Analyst asked how they sized $70 million impact from the Middle East and how they decide a new normal amid volatility.
A: Management said the $70 million is mainly product, raw material and finished goods costs they buy for manufacturing, with a smaller portion from diesel and inbound freight. They said they negotiate with suppliers, leverage global sourcing and can move production to mitigate costs, and they are monitoring a fluid situation rather than reacting weekly swings.
"The $70 million is primarily made up of product costs, raw materials and finished goods that we source or that we buy in order to manufacture our own finished goods." — Michael Drazin (CFO)