Medline Raises 2026 Organic Sales Outlook After Third-Quarter Sales

The Tip Desk · November 11, 2026 · 3 min read

The med-surg distributor posted $7.9 billion of third-quarter net sales, 10.4% higher than a year earlier, and lifted full-year organic growth guidance to 10.0% to 10.5%.

Medline Inc. (MDLN), the largest provider of medical-surgical products and supply chain solutions, raised its full-year 2026 Organic Sales outlook to 10.0% to 10.5% from 9.0% to 10.0% after another quarter of double-digit net sales growth, and reaffirmed Adjusted EBITDA guidance of $3.3 billion to $3.4 billion.

Third-quarter net sales rose 10.4% to $7.9 billion from $7.1 billion a year earlier, with Organic Sales up 10.5%. That pace followed 11.6% net sales growth in the second quarter and 10.7% in the first. The company said the increase was primarily driven by existing customer growth and implementation of new customer signings from 2025, and included an $11 million increase related to an adjustment of customer repayment amounts.

Net income decreased 1.2% to $318 million from $322 million in the third quarter of 2025. The company attributed the decline primarily to increased inventory costs associated with inflation, higher operating expenses, and customer mix, partially offset by higher net sales and net IEEPA tariff refund benefits. Diluted earnings were $0.22 a share; Adjusted Diluted EPS was $0.44.

Adjusted EBITDA increased 11.8% to $960 million from $859 million a year earlier, after a 13.4% increase in the second quarter. The company said the third-quarter rise was primarily driven by higher net sales and net IEEPA tariff refund benefits, partially offset by higher operating expenses and customer mix. Following the U.S. Supreme Court’s February 2026 ruling that IEEPA tariffs were unauthorized, Medline recognized $81 million of net IEEPA tariff refund benefits in the three months ended September 26, 2026, compared with $243 million in the second quarter. Those amounts were recorded entirely within the Medline Brand segment and were included in net income and Adjusted EBITDA.

Gross margin compressed to 24.5% from 26.4% a year earlier as cost of goods sold rose 13.2% against 10.4% net sales growth. Operating margin compressed to 6.4% from 8.1%, and operating income fell 12.9% to $500 million.

The Medline Brand segment posted net sales of $3.6 billion, up 6.6%, with Adjusted EBITDA of $943 million and an Adjusted EBITDA margin of 25.9%. Supply Chain Solutions net sales rose 13.9% to $4.2 billion, while its Adjusted EBITDA fell 10.2% to $184 million and its Adjusted EBITDA margin compressed to 4.4% from 5.5%.

Other non-core charges in the third quarter included a $(20) million impact from the fire at the Tracy, California distribution center, net of insurance proceeds, $13 million of FDA remediation costs, and $13 million of Medline Brand bed recall and discontinuation costs.

For the nine months ended September 26, 2026, net sales increased 10.9% to $22.9 billion. Net income decreased 28.8% to $696 million, which the company said was primarily driven by higher operating expenses, net losses of $316 million related to the Tracy fire, higher cost of goods sold including the impact of tariffs, customer and segment mix, and increased inventory costs associated with inflation. Nine-month Adjusted EBITDA increased 5.0% to $2.8 billion. Net cash provided by operating activities was $2.2 billion; Free Cash Flow was $1.8 billion after $348 million of capital expenditures, primarily related to automation, new distribution centers and kitting capacity.

In October, the board authorized a $1 billion share repurchase program and the company prepaid $750 million of the 2033 Refinancing Term Loan Facility. The Adjusted EBITDA outlook does not reflect IEEPA tariff refunds, including $324 million of net tariff benefit through the first nine months of 2026.