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Image source: The Motley Fool. Wednesday, August 5, 2026 at 9:30 a.m. ET Global Head of Investor Relations - Karen King Chief Executive Officer - James Boyle Chief Financial Officer - Michael Drazin Operator: Good morning, and thank you for standing by. Welcome to Medline Second Quarter 2026 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would like to now hand the conference over to your first speaker today, Karen King. Karen King: Welcome to Medline's Second Quarter and Half Year 2026 Earnings Conference Call. This morning, we issued our earnings release and shared supplemental materials. Joining me on today's call are Jim Boyle, our Chief Executive Officer; and Mike Drazin, our Chief Financial Officer. During today's call, we may make forward-looking statements regarding our expectations for the future including our business plans, strategy and investments and expected timing and impact. These statements are based on how we see things today, and actual results may differ materially due to risks and uncertainties. Please see the cautionary statements and risk factors contained in our earnings release, which accompany these remarks as well as our most recent 10-K and other SEC filings for more information regarding these risks and uncertainties. We may also reference non-GAAP financial measures, which exclude certain items from our financial results calculated in accordance with GAAP. You can find a discussion of our non-GAAP financial measures and reconciliations to the comparable GAAP measures in the earnings release and the disclosures and non-GAAP reconciliations that accompany these remarks, which are available on our website at ir.medline.com under Quarterly Results. With that, I will now turn the call over to our CEO, Jim Boyle. James Boyle: Thank you, Karen, and thank you all for joining Medline's second quarter earnings call. I'll begin with a brief performance update. Mike will review our financial results and outlook, and I'll return with closing remarks before opening up the call for questions. Medline delivered strong top line growth of 12% in the second quarter, reflecting positive momentum across our business. Medline Brand grew 7% for the quarter, including the impact of an IEEPA tariff price refund to customers. Supply Chain Solutions exceeded our expectations, growing 16%, driven by new customer signings and growth within existing customers. This segment remains central to our long-term strategy because it strengthens customer relationships and creates opportunities to deliver savings and value over time through conversion to higher-margin Medline Brand products. We are pleased with the continued momentum across the business and are raising our fiscal year organic sales outlook to reflect stronger demand and solid execution by our team. Adjusted EBITDA increased 13% year-over-year to $1.1 billion as strong sales growth was partially offset by higher cost of goods sold, increased operational expenses and net tariff related impacts. This includes a net benefit of $243 million from IEEPA tariff refund. As we look to the second half of the year, several external and internal factors have led us to moderate our adjusted EBITDA outlook. Our outlook reflects several headwinds, including the Middle East conflict, the Tracy warehouse fire, growth-related operational investments, quality remediation efforts and softness in our retail business. Mike will walk through the details, but we believe these investments will strengthen the business and position Medline to capture the significant growth opportunities that we see ahead. I will turn now to several key developments during the quarter. First, we secured multiple new prime vendor and customer partnerships across several channels, including acute care, physician office, lab, skilled nursing, senior living, home health and hospice. Through the first half of the year, we achieved more than $650 million in total new customer signings, representing over 65% of our annual goal of $1 billion. Among those wins, we announced our expanded presence in the Upper Midwest, including a new prime vendor agreement with Allina Health. This agreement expands our existing relationship across their acute care and physician office settings. While new signings vary quarter-to-quarter, these wins underscore the opportunity we have to gain share across the continuum of care. Second, I'm incredibly proud of our employees who demonstrate agility, grit and determination in responding to the mid-June fire at our Tracy, California distribution center. 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. Our team responded quickly to the fire by leveraging our outsized inventory position, broad distribution network and MedTrans transportation fleet to continue delivering products and minimize customer disruption. Employees at our Tracy DC went above and beyond to support the effort and quickly transitioned to nearby Medline site over the first few weeks. Within a month, we secured 1.6 million square feet across 2 distribution centers, expanding our customer-facing Northern California footprint by 45%. We have already taken occupancy of the new Tracy distribution center, which we expect to begin serving customers out of in the fourth quarter and plan to occupy our new Stockton facility in January 2027. Together, these facilities will restore capacity and support customers across Northern California. What our teams have accomplished in such a short period of time is truly remarkable, and Medline is stronger because of their efforts. I also want to thank our customers for their continued trust and our suppliers for helping us maintain continuity as we build an even stronger network going forward. Next, in addition to our Northern California expansion, we announced plans to open a new 1 million square foot distribution center in Southern California to enhance the flexibility and resiliency of our supply chain and reinforce our commitment to health care providers across the state. With this announcement and our Northern California expansion, our California footprint is expected to reach nearly 5 million square feet by mid-2027 and to have many of the same automation technologies already in use at other Medline facilities. This is about more than scale. It reinforces resiliency and redundancy across our network and reflects our dedication to anticipating customer needs, supporting future growth and investing ahead of demand. Finally, as I mentioned last quarter, our goal as a vertically integrated manufacturer and distributor of medical surgical products is to operate the broadest and most robust supply chain in the industry. Achieving that requires continued investment along with rigorous supply chain, quality and regulatory discipline. Patient safety and product quality remain our highest priority. We continue to undertake remediation activities, strengthen our quality organization, enhance our manufacturing processes and work to reintroduce recalled products to market. For the past couple of months, we have proactively engaged with the FDA to discuss and launch our global quality action plan. To further strengthen our quality organization, we are investing in people, processes and technology and accelerating these initiatives to support growth and better position Medline for future demand. 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. Our updated guidance reflects our current expectations of these investments and remediation efforts. Overall, I am pleased with our commercial execution this quarter. Our top line momentum strengthens our confidence in the opportunities ahead. Prime vendor signings are tracking ahead of the pace needed to reach our $1 billion annual signings goal, and the team showed tremendous resolve in continuing to serve customers despite the Tracy fire. While we are encouraged by our commercial momentum, we are not satisfied with the margin challenges we are currently facing, and we are focused on addressing them. We believe continued execution of our growth strategy, along with disciplined cost savings initiatives to address incremental cost pressures will position us to return to our long-term objective of growing earnings at or above the rate of sales growth. With that, I will turn the call over to Mike for a deeper look at the financials and an update on our 2026 outlook. Michael Drazin: Thank you, Jim, and good morning, everyone. Before walking through the results, I want to thank our employees, particularly the Tracy teams, distribution team members across the network and everyone who supported our California customers for their extraordinary effort and commitment this quarter. As I discuss our performance, I'd highlight that our results include several notable items this quarter, including IEEPA tariff refunds and impacts related to the Tracy fire. Looking through these items, underlying performance was strong. Second quarter net sales increased 12% year-over-year to $7.7 billion, driven primarily by organic growth, minimal foreign currency impact. The customer repayments tied to IEEPA tariff refunds reduced growth by approximately 1 percentage point. For the first half, net sales were $15 billion, up 11% year-over-year. The Medline Brand segment delivered second quarter net sales of $3.5 billion, up 7%. The customer repayments tied to IEEPA tariff refunds reduced growth by approximately 3 percentage points. For the first half, net sales were $7 billion, up 6% year-over-year. Turning to Medline Brand sales by product category. Surgical solutions generated second quarter net sales of $1.6 billion, up 9%. The customer repayments tied to IEEPA tariff refunds reduced growth by approximately 3 percentage points. The strong growth was due to continued strength in surgical kitting, one of our largest product divisions, and the operating room. We continue to gain share by delivering differentiated solutions, onboarding new kitting programs and helping customers improve efficiency in existing programs. These kits provide deeper insights into facility needs in the operating room and create a forum to discuss product conversions, providing opportunity to drive additional Medline Brand growth. First half net sales were $3.2 billion, up 8%. Front line care net sales were $1.7 billion in the second quarter, up 4%. The customer repayments associated with IEEPA tariff refunds reduced growth by approximately 3 percentage points. Strong demand across multiple product divisions, especially in exam gloves and personal care, was partially offset by unplanned retail channel softness. Unlike our prime vendor business, which is based on long-term contracts, retail is a shorter demand cycle business that sells products directly to consumers through major retailers. While retail represents less than 2% of our overall sales, it is almost entirely Medline Brand, creating a disproportionate headwind to growth and profitability. To better support this channel and improve competitiveness, we have realigned our sales organization around retail customers and their specific needs. For the first half of 2026, front line care net sales were $3.3 billion, up 5%. Lab and diagnostics generated second quarter net sales of $248 million, up 12%, driven by new customer implementations and existing customer demand. Many of our new prime vendor agreements are multichannel, including lab, driving strong core acute care lab growth. First half net sales were $541 million, up 6%. The Supply Chain Solutions segment delivered second quarter net sales of $4.1 billion, up 16%, supported by new customer implementations and growth with existing customers. First half net sales were $8 billion, up 16%, expanding the opportunity for Medline Brand conversion. Moving to sales by channel. U.S. acute care net sales grew 15% year-over-year to $5.4 billion, driven by new prime vendor customers and existing customer growth. The customer repayments tied to IEEPA tariff refunds reduced growth by approximately 1 percentage point. For the first half, acute care net sales were $10.5 billion, up 13% year-over-year. U.S. non-acute care net sales grew 4% year-over-year to $1.7 billion. The customer repayments tied to IEEPA tariff refunds reduced growth by approximately 2 percentage points. Growth was primarily driven by existing customers and new customer signings in physician office and post-acute channels, including skilled nursing, long-term care and home health, partially offset by retail softness. For the first half, non-acute net sales were $3.5 billion, up 5% year-over-year. International net sales grew 9% to $533 million in the second quarter and 10% to $1 billion in the first half, driven by volume growth in Canada and Europe. Turning to adjusted EBITDA. Second quarter results were $1.1 billion, up 13% year-over-year. This includes $243 million of net IEEPA tariff refund benefits. Without giving effect of these benefits, higher net sales volumes were partially offset by increased operating costs, including head count to support sales growth and higher cost of goods sold, including the impact of tariff costs. Adjusted EBITDA margin increased 20 basis points to 13.8%. Expenses from the Tracy distribution center fire are excluded from adjusted EBITDA, but reduced net income by $336 million, primarily reflecting inventory and fixed asset losses and other related costs. We believe we have sufficient insurance coverage and expect future recoveries related to property, inventory and general liability. Moving to free cash flow and the balance sheet. We generated strong free cash flow of $920 million in the first 6 months of the year, as in the past, working capital was a usage. This reflected the IEEPA tariff refund receivable and higher trade accounts receivable from sales growth. CapEx for the first 6 months was $207 million, reflecting investments in distribution center enhancements and automation as well as capacity expansion of our Mexico kitting facility. Cash and cash equivalents were $2.3 billion and short-term investments were $350 million, reducing net leverage to 2.9x. We are pleased to have reached our long-term leverage goal of less than 3x, providing flexibility as we continue investing in growth. Let me now transition to our updated 2026 guidance. Given strong demand, continued commercial execution and broad-based momentum, we are raising our full year organic sales guidance for the second time this year to 9% to 10% from our previous range of 8.5% to 9.5%. This guidance includes the $89 million of IEEPA tariff refunds we plan to provide to our customers. The higher outlook reinforces our confidence in our business model, resilient health care demand and our ability to continue gaining share. At the same time, we are lowering our full year adjusted EBITDA outlook to $3.3 billion to $3.4 billion from $3.5 billion to $3.6 billion. The revised outlook does not reflect IEEPA tariff refund received or expected but includes several other internal and external factors. Externally, we are seeing slightly higher-than-expected inflationary pressure related to the Middle East conflict as discussed on our Q1 earnings call as well as costs related to Tracy fire. Internally, the outlook reflects increased operational investments to support customer demand, the quality investments Jim discussed earlier and softness in our retail channel. In total, we estimate that roughly half of the incremental earnings impact from these factors is transitory, roughly half is more permanent and will become part of our future cost base. I'll walk through this component shortly, but first, let me update you on our tariff cost assumptions. As discussed on our last earnings call, the lower tariff rate from Section 122 tariffs in February through July of this year created favorability versus our prior guidance. Section 122 tariffs have now been replaced by Section 301 forced-labor tariffs. Based on this, we now estimate full year 2026 net tariff impacts of approximately $350 million, down $140 million from the $490 million we provided during our fourth quarter earnings call last February. Given our significant inventory on hand, any tariff rate changes from this point forward are expected to have an immaterial impact on our financial results in 2026 and to primarily affect 2027. Now moving to the drivers of the adjusted EBITDA guidance change. Starting with the Middle East conflict, consistent with our discussion during our Q1 earnings call, most of the inflationary pressures, including fuel and product costs are offset by the tariff benefit I just mentioned. Consistent with our long-standing practice of supporting long-term customer relationships, we have chosen to absorb these costs at this time rather than broadly pass them on to our customers, an approach that has served both Medline and our customers well over time. As I mentioned earlier, our first half results include $336 million of costs related to the Tracy fire. These costs are excluded from our adjusted EBITDA and therefore, not included in our guidance. In the second half of 2026, we currently expect to incur an additional $50 million to $100 million of Tracy-related costs. A portion of these costs such as cleanup costs, product rerouting and airfreight will be excluded from adjusted EBITDA. Other costs, including lease expenses and labor inefficiencies as we operate without automation will remain in our base. Consistent with our Q1 earnings call, some operational costs are expected to be offset by tariff benefits. However, since last quarter, these costs have increased as we invest in staffing, technology and scaling efforts to meet faster-than-anticipated demand growth. While these investments are creating near-term inefficiencies, they position Medline to become more efficient over time as our team ramps and new technology is optimized. As Jim mentioned in his opening remarks, we discussed our global quality action plan with the FDA. We have identified and quantified expected remediation costs, which include enhancements in our quality organization and investments in our manufacturing network. In addition, a portion of the impact relates to products that were taken off the market due to recalls and/or FDA inspection findings. Based on our latest assessment, some of those products, including our CHG wipes, manufactured at our Waukegan facility are taking slightly longer than originally expected to complete the necessary work to bring back online, which results in earnings loss. The final component is related to the unplanned retail channel softness we discussed earlier. This is impacting front line care and U.S. non-acute sales and margins. While we are taking steps to improve retail, we expect it to remain a headwind through the balance of the year. To help frame the impact of this overall reduction in adjusted EBITDA guidance, the external factors, including the Middle East and the Tracy fire account for approximately 25%, with the internal factors, including operational investment, quality remediation efforts and softness in retail remaining 75%. We will provide our 2027 outlook during our Q4 and full year 2026 call in the first quarter of 2027. However, the fundamental drivers of earnings growth remain the same and include sales volume growth, Medline Brand conversion, approximately $5 billion of conversion opportunity, leveraging our scale to drive savings in sourcing, manufacturing and distribution and operational efficiency initiatives. We continue to monitor the impact of our business from both the Middle East conflict and tariff rates, and we'll execute on the playbook we have discussed previously to mitigate the impact to our customers and to Medline. Finally, we remain focused on disciplined execution of enterprise-wide productivity and cost savings initiatives designed to offset incremental cost pressures that will enable us to mitigate the additional costs we are incurring to achieve our long-term objective of delivering sustainable and strong earnings growth at or greater than sales growth over time. If you look at quarterly cadence for the remainder of the year, the third quarter of 2026 has 63 days, 1 fewer than Q2, while the fourth quarter 2026 has 66 days, 1 more than Q4 2025. As a result, we expect sequential sales to be relatively flat in Q3 before increasing in Q4 due to the seasonality and days. Adjusted EBITDA is expected to increase sequentially each quarter with the strongest contribution in Q4. With respect to the $200 million of incremental costs, we expect approximately 1/3 to be incurred in Q3 and the remaining 2/3 in Q4. Turning to the rest of our outlook assumptions. All of the ranges remain consistent with our prior outlook, with the exception of tax distributions, which we have narrowed to $250 million to $300 million, the bottom end of the guidance range, reflecting sponsor sale activities in the first half of the year. And CapEx, which we updated to a range of $500 million to $600 million to account for the Tracy fire. While we anticipate receiving insurance coverage from the incremental $100 million in capital, the timing of recovery is uncertain. In summary, we delivered strong top line performance with double-digit sales growth in both the second quarter and first half, demonstrating broad-based momentum across the business and continued commercial execution. Our organic growth-driven strategy continues to deliver results and create significant opportunity ahead. This performance supports our decision to raise full year organic sales guidance for the second time this year. In spite of the near-term pressures we are managing, we remain confident in the underlying long-term earnings power of the business. While we are absorbing higher costs in certain areas that create near-term margin pressure, they support the priorities that matter most to our customers: reliability, quality, service and scale. We believe these investments strengthen Medline's competitive position and support long-term value creation. I'll now turn it back to Jim for closing remarks. James Boyle: Thanks, Mike. In closing, we are encouraged with the top line momentum we continue to see across the business. We are executing with discipline and investing decisively to support our growing customer base. Medline is well positioned for durable long-term growth, supported by a deep commitment to our customers, industry-leading scale, a resilient, profitable business model, a healthy balance sheet and a compelling long-term opportunity. We remain highly confident in our market position and ability to create sustainable shareholder value by delivering the service, value, reliability and quality our customers expect that continues to differentiate Medline in the marketplace. Thank you for joining us. We will now open the call up for questions. Operator: [Operator Instructions] Our first question comes from the line of Michael Cherny from Leerink Partners. Michael Cherny: Mike, I want to dive a little bit into some of these expenses and whatnot that you discussed relative to the future baseline thought process. A lot of it, clearly, as we can hear, is tied towards outperforming on new business. So as you think philosophically about your pathway forward for share gains over time, is the general philosophy that the idea of overspending, if you want to use it, that relative to your baseline is part of the pathway forward for how you plan to drive new business? And I guess along those lines, what are the market conditions that you need to see? I'm not trying to get to '27 guidance, but the changes that you need to see to get back towards that EBITDA leverage above revenue growth. Michael Drazin: Yes. Thanks, Michael. So yes, the answer is actually, yes. 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. And so if you go back in the history of the performance of the business, we would invest in things like new distribution centers, new manufacturing sites. We'd add additional sales team members to support the growth of the future. And that's no different than what we're doing here today in areas like operations and quality as we called out. I think, overall, for our business, we're very happy with our underlying performance of the business, delivering top line sales growth in the second quarter of 11.6% on a reported basis, but really 13% if you exclude the tariff, IEEPA refund customer repayment, is really, really solid performance. So overall, the underlying performance of the business is strong and remains strong, and we expect to see that continue as we head out into the rest of the year given our -- overall raising our sales guidance. From the standpoint of the future of the business, I think we need to see continued execution of our overall performance relative to things like operational investments and our quality remediation efforts. We continue to see continued signings -- new signings, and we're proud about the signings we've had so far this year of over $659 million to date. So those are the types of things that we need to continue to see, but we are seeing in our business that suggests that our overall performance will be strong going into the future period of time. I want to take a minute before we go to the next question, just to clarify one thing that I think is causing a little bit of confusion for people. And that's -- so if you think about how we've approached this, we took a conservative approach to how we handle the tariff refunds in our guidance. Most importantly, we wanted to maintain transparency in our results. And so if you think about what we've done, we've excluded from our adjusted EBITDA guidance the net tariff refunds of $243 million to show you the true underlying performance of the business. So we took down our EBITDA guidance to $3.3 billion to $3.4 billion, our original guidance did not include this $243 million of tariff refunds. In addition, on the revenue side, we kept the $89 million of customer repayment in our sales guidance, just to maintain simplicity in how we show the numbers. And even with that $89 million in our sales guidance, we were still able to raise our overall sales growth to 9% to 10% for the year. Operator: Our next question comes from Elizabeth Anderson from Evercore ISI. Elizabeth Anderson: I appreciate the clarification that you just gave, Mike. And I realize a lot of these factors are not necessarily entirely in your control. But as we kind of think about this new guidance and being kind of like the new baseline, can you help people understand the level of conservatism that you've baked in about some of these like longer-term macro factors like oil and shipping and those kind of items. Michael Drazin: Yes. So the external factors that we think about are the Middle East and the Tracy fire. On the Middle East side, just to give you a number, we have a $70 million of estimated or expected impact for 2026 in our overall guide. That is inclusive of, as I talked about before, both the diesel fuel cost to fuel our transportation from our MedTrans fleet and third-party trailers. In addition, it also includes a lot of the product and raw material costs that we're purchasing. So overall, we've assumed roughly diesel prices around $5 in that guide. And we've essentially used our costs of our raw materials and finished goods as of roughly 2 weeks ago. So that's the $70 million in the Middle East. As it relates to the tariffs that we talked about, we have assumed that tariff rates do not change essentially for the rest of the year. If tariff rates were to change at this point in time, it would be a very immaterial impact to our overall results. So it would impact 2027. Operator: Our next question comes from Sean Dodge from BMO Capital Markets. Sean Dodge: Yes. Maybe just kind of staying on the guidance and just to clarify, last quarter, you talked about increasing the operational investments to support customer demand. It sounds like you're stepping those up even more now. Is that right? And how much is the step-up related to those? And then just any examples of what these new investments are? And if I'm hearing right, it sounds like we should be thinking about these being kind of more of the kind of the inclusive of the run or additive to the run rate? Michael Drazin: Yes. So the operations investments that we're making are not new. We talked about them last quarter. We had -- as we talked about bringing this $2.4 billion of new business online, we had to invest in additional people to support that. If you think about the investments we made, we invested in people to support the new customer signings plus existing customer growth as well. And the example we gave last quarter was, as we saw these new customers signings come online, we saw it happening in a couple of DCs where we didn't have automation and we had inefficiencies. And so you're seeing inefficient labor at the moment. But what we're doing is we're making investments in our auto-stores in those facilities. And we're also expanding our network capacity by adding new distribution centers. Jim talked about it previously, we were adding a DC in Texas, we're adding a DC in California. We're also talking about adding a couple of more DCs in the Midwest to help support this current growth. So 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. James Boyle: You also have to remember that when we add -- think about the $2.4 billion we're adding, we're adding the labor burden in advance of the revenue realization. So in some cases, we're adding it 3 to 6 months. So this year, because we had such an outsized growth last year, that's being realized this year from a prime vendor perspective, we're seeing an outsized pre-add of labor in advance of the distribution. So that's weighing the number down as well. Operator: Our next question comes from the line of Daniel Grosslight with Citi. Unknown Analyst: This is [ Brendan ] on for Daniel. Just a quick question on the overall tariff refund. You guys accrued around $89 million this quarter. I'm curious just what's overall like customer response to that and whether all repayments have been accounted for? And if there are potential for additional payments to be made in the future and if they will receive the same accounting measures? Michael Drazin: Yes. So as we've called out, the total tariff refund that's available to us is $507 million. We recorded in our financials for the first half of this year a net tariff benefit of $240 million. That is basically $330 million of phase 1 tariffs that have -- what we believe we are going to collect or have collected, net of the $90 million roughly of customer repayments. That $90 million of customer repayment is for the full amount of the $507 million of tariffs. We expect to receive all of that over time. We have not yet made that payment. We booked that as an accrual on our balance sheet as of today. Our expectation is to make that payment to our customers in the latter part of this year. And we have communicated that we are making this payment to our customers. We've not yet quantified that for them individually, but we're going to do so in the coming months. James Boyle: Yes. You have to remember, we absorbed the vast majority of that $500 million. The only thing we pass through to the customers is the $89 million, and that's the full accounting of the prices. That's why it's fully accounted for. Operator: Our next call comes from Pito Chickering from Deutsche Bank. Pito Chickering: I just wanted to sort of dig back into that $200 million of inflationary pressure. You said 1/4 of it is external, 3/4 of it is internal, and [ 1/3 ] of the impact is in 3Q and 2/3 is in the fourth quarter. Can you just help us think about the internal and external pressures as we use fourth quarter as the launch pad for 2027? So which continue into next year and at what pace, which ones fade away? Michael Drazin: Yes. So if you think about, 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. And if you think about what the drivers of that are, obviously, we believe the Middle East is a bit transitory. The fire -- Tracy fire impact is transitory and will have some impact rolling in '27, but over time, will subside as we stand up the new distribution center in Tracy and Stockton and add automation to those facilities. Obviously, the operational investments and some of the quality investments will be more permanent in nature and will roll into our base in 2027. Some of the product-related costs as it relates to quality, we're not -- so as we talked about before, we took the time to delay a little bit to going live with a couple of products. We'll go back live in 2027. So those are more temporary or transitory in nature. And then lastly, on the retail side of the house, those are probably more permanent in the short term. But as Jim mentioned, we do expect to -- we have realigned our organization to go after that business and make sure we drive growth again in that market. Operator: Our next call comes from Steven from Mizuho Securities. Steven Valiquette: It's Steven Valiquette from Mizuho. Just a quick financial question here. This may be pretty obvious, but I guess just to confirm, the EBITDA -- the adjusted EBITDA in the June quarter of the $1.060 billion, I mean, I'm assuming it includes the $243 million benefit from tariff refund. But when thinking about trying to model out for the full year, should we think of that as $817 million, I think, in trying to arrive at EBITDA for the full year within the $3.3 billion to $3.4 billion. I'm just thinking ahead here, there could be some confusion within the consensus numbers for EBITDA for the back half, if some people are treating it differently, et cetera. Hopefully, that question makes sense. Michael Drazin: Yes, it does. Thank you, Steven. That does make sense. So yes, we do -- the true performance -- the true underlying performance of the business in the second quarter for adjusted EBITDA was $817 million. That was a beat versus consensus. We're very proud of that result, given the strong performance in the quarter. But yes, for purposes of that $243 million, we are isolating that and calling that out separately. We don't think you should include that in our overall guidance number. We're not including our overall guidance numbers, so you should not include it in your consensus. James Boyle: Yes. We just -- we think it's responsible to be conservative in our approach and just guide based on the actual results of the business, not on a refund. Operator: Our next call comes from Matthew Taylor with Jefferies. Matthew Taylor: I actually wanted to ask one about the customer signings. So you said you're $650 million towards your $1 billion goal halfway through the year. Could you talk about the achievability of $1 billion or more this year, maybe giving an eye to the signings that could happen in the second half, if you have any visibility there, et cetera? And maybe just talk about the trends that you've seen so far this year? James Boyle: Yes, Matt, thanks for the question. First, we're pleased with the $650 million in the first quarter (sic) [ first half. ] We're ahead of pace to achieve the $1 billion, and we're confident that we're going to hit the $1 billion plus. I mean, that is the goal that we believe we can control. It's within the framework of what we have visibility to. And we do see a line of sight as it relates to what's available in the marketplace to achieve that goal. Just for context, that $650 million is made of a bunch of singles and doubles. Last year, we had several home runs. That's what actually led to the $2.4 billion. And each year, the signings makeup looks different, right, and they can be lumpy from quarter-to-quarter, which is part of the reason why we didn't give a number in the first quarter because if I would have said, we signed $50 million in prime vendor closings in the first quarter, everybody would say, "oh, no, what's going on with Medline." But if I would have said $500 million in the first quarter, you guys would have judged us on $2 billion. So we think it's important to give you a context mid-year, that $650 million gets us on track, actually ahead of pace of achieving it. And we feel confident we're headed in the right direction from that perspective. Operator: Our next call comes from David Larsen with BTIG. David Larsen: Can you talk a little bit about the Allina win and how much sort of incremental revenue that could be tied to that? What led to that win? And then just also with the IEEPA tariffs, was there a drag in 3Q '25, 4Q '25 and 1Q '26 related to the IEEPA tariffs that I guess are going to remain on the books, though the reverse sort of benefit will not be recognized as we progress through the rest of the year? James Boyle: I'll take Allina. I'll let Mike handle the IEEPA perspective. So Allina is a great win in the Upper Midwest. It is expanding our relationship across multiple classes of trade, acute care physician office and several others. We don't actually give kind of the numbers as it relates to each individual deal. It was a sizable deal. The next question would be, do we think something is going to change with the Sutter acquisition? The answer is no. We actually happen to be the prime vendor at Sutter Health as well. But I can just tell you, it is a -- it went live about 3 weeks ago and went live very, very well. We see them as a tremendous partner and an opportunity to expand the relationship even further over time. But it was a good win and it's something we're proud of. Michael Drazin: And on the tariff question, David, the IEEPA tariffs hit us in the second half of last year. And our peak quarter was really the fourth quarter as well as the first half of this year. So -- and this year, overall so far in 2026, we've seen about $230 million of total tariff headwinds in our results. Now to your question, as the IEEPA tariffs were ruled illegal and they put 122s in place. Essentially in the back half of this year, you're going to see our P&L being burdened by the 10% roughly rate, which is a benefit to what we called out in our guidance originally. So we originally called out $490 million of impact, which was including all IEEPA tariff impact. So now we're looking at $350 million at the new 10% rate. Operator: Our next caller is Kevin Caliendo with UBS. Kevin Caliendo: So I want to kind of go a little bit further on Pito's question. If we take the guidance for the second half of the year, adjust for the one-timers that you called out, the expenses that are -- some are going to be consistent, some are not. If we take that run rate, understanding there's some seasonality, adjust for those one-timers, is there any reason to not take that run rate, think about the new business wins and the sort of normalized growth and come up with sort of a number for '27. Is there any other headwinds or tailwinds we should be thinking about there as we sort of -- because I think that's where there's a lot of confusion as to what the real run rate is and how to think about what it should look like for next year. Like what's the baseline that we're operating off of. So any help there would be great. Michael Drazin: Yes, Kevin. So let me try to clarify that for you. So if you think about the overall impact of the business, on an annualized basis. 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, right, change and impact to the bottom line, right? And so ultimately, if you take that, you apply the same metrics, like 50% transitory, 50% permanent, that gives you a better perspective how to think about the run rate going forward into 2027. That being said, we've not stopped identifying cost savings opportunities in our business. And so we are looking at enterprise-wide cost savings initiatives to mitigate some portion of that burden that we're facing in our overall results. And so while I can't quantify for you what 2027 is going to look like. We obviously are doing our best to try to mitigate what we can. The other area that I would say is just uncertainty are the external factors like the Middle East and the tariffs. And so those 2 also have to play into the math, and we have to wait and see how those settle out. Operator: Our next call is from Brandon Vazquez from William Blair. Brandon Vazquez: I wanted to ask, there's a lot of moving pieces in the cost line here, there's Middle East, inflationary pressure, there's tariffs. In the past, you guys have kind of taken a thoughtful approach to pricing, and you're absorbing those prices now. But you, in the past, have eventually pushed pricing through to kind of offset some of these headwinds. So can you guys just level set us where you are today on kind of assessing what prices you can and can't push through? And then when you might think of doing another round of pricing increases to offset some of this? Because the -- I guess, the follow-up kind of question to all of this that investors are asking a lot is the Medline Brand margins are in the low 20 range now. It used to be mid-plus 20% range. Is there a pathway to get back there? And what's kind of the catalyst to expect to get there? James Boyle: Brandon, thanks for the question. And you're right, this is a play we've seen historically, right? This is not a new game. And right now, we don't act in times of uncertainty and chaos and crisis. And if you just look at the cost of oil and the cost of raw material over the last 6 months, they've gone up and down depending on what's going on with the Strait of Hormuz. Is it on -- is oil flowing through? Is it not flowing through? And we think in those times when we don't have visibility to certainty, it's better to absorb and take share than it is to take price that you ultimately have to pull back and give. And that's just a different philosophy than the competition in the marketplace. That said, as we've done historically, 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. And we do have levers and contract terms in our agreements that allow us to do that. So over time, if this is the new norm, will we push price increases through? The answer is yes. So we do have an avenue to get back to the margin profile you're describing. What we find in these moments is it's better to take share and have the margin lift kind of follow. And we did that during the pandemic. We've done it during multiple scenarios where we focus on feeling the pain and the burden at the same time as the customer, being in the boat with the customer, winning share in the marketplace and over time, pushing those price increases through where we could actually justify it to our customers. Operator: Our next question comes from Erin Wright with Morgan Stanley. Erin Wilson Wright: So can you speak a little bit more higher level just on overall utilization trends right now, remind us of how that fits into the growth algo, what sort of end market trends are you most levered to? And then you mentioned strength in the kitting business where you do have sizable share. I guess, how does that play into that? And then how do you think about just the health of your hospital customers as well more broadly in the current backdrop? James Boyle: Thanks, Erin. So 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. What we measure is volume or throughput of supplies. And I can tell you that the first 2 quarters, we've seen no slowness. As a matter of fact, part of the reason why we're raising our guidance is we've seen same-store sales outperform what we anticipated. And so do we have a little softness baked into the back half of the year based on what we are hearing from our customers and what they're saying to the Street? We do. However, our business model tends to benefit either way. And what I mean by that is when a person doesn't have access to insurance, they tend to not go to the primary care and they delay their need for health care until they actually have a higher acuity of care need and they end up in the emergency room or they end up in the med-surg floor or the ICU, which for that patient actually has a much higher utilization of supply. So even if the overall volume is down across the different care settings, the actual volume and utilization of supply either maintains or goes up because that patient actually ends up needing more than if they went to the doctor for pneumonia, right, or cold or something like that. So I will tell you, we have seen as it relates to what we measure, flow of goods, a lift, not a drop. But we are being conservative in how we look at the back half of the year tied out to what we're hearing from our customers. So there's a modest softness what we see in kind of the back half of the year, but we have not seen that in our business today. Operator: The next call comes from Michael Polark from Wolfe Research. Michael Polark: A question on the retail business. I heard 2% of total revenue, mostly Medline Brand, for sake of round numbers, $600 million of revenue. My question is margin profile on that revenue? Is it meaningfully higher than Medline Brands segment? Or should we use the segment? I'm trying to understand profit mix. Is it 4%? Or is it more than that? And then just why weak, why soft, what's the assessment? Is it execution? Or is it macro? Michael Drazin: I'll take the first question, Mike and Jim will take the second part of the question. So our retail business is less than 2% of our overall sales. Your number is close, maybe a little bit higher than where we're at. And if you think about the business, that business is pretty much all Medline Brands, so it runs at Medline Brand margin. So therefore, that's why we're taking the EBITDA down by a larger percentage relative to what you see on the overall mix of the business in the back half of the year just from the retail business. James Boyle: Yes. And really, the burden that we're feeling is a loss of a portion of a customer, candidly, just to a lack of our sales team understanding the needs of the customers and meeting them where they were. And so we actually lost a portion of the business that are a decent-sized retail customer. But I can tell you what we've done is we've redesigned the sales team, we've actually engaged with the customer, and we're working to earn that business back. The retail business tends to be much more volatile. It doesn't have the same contract terms and really the stickiness that we do in our base business, think about acute, non-acute, which means you can lose it fast and you can win it fast. So I can tell you, we're adjusting how we engage. We understand the needs of the business, and we're working towards winning that back. Operator: Your next call comes from Navann Ty at BNP Paribas. Navann Ty Dietschi: I have one more on the retail side. If you had seen weakness across retailers or focused on a certain type, and it sounds like the weakness was Medline specific. If you could confirm that? And my second question is on the investment. If you could discuss the continued investments across service levels in IT and AI, et cetera, and what metrics are you monitoring to slow down the investments. And sorry, if I missed it. Michael Drazin: So on your first question, Navann, that is correct. It's Medline specific. It's not the overall retail market. It's retail softness relative to our business, specifically in that one customer that Jim talked about. On your second question, we are continuing to make investments in our business to drive efficiencies across the entire organization. We are always looking for ways in which to drive productivity and throughput in our operations facilities. We're always looking at ways to drive efficiency in our manufacturing sites. We are making investments in AI to drive efficiencies, how we deliver service to our customers. And so that is part of what we are doing today, and we'll always do in our business to drive productivity for ourselves and for our customers. Operator: Our next caller is Jailendra Singh from Truist Securities. Jailendra Singh: I want to go back to large customer implementations, creating near-term margin pressure within Supply Chain Solutions. Is that all driven by the operational investments you're doing to bring these customers on board? Or is there something unique about these customers? Just trying to better understand if there's any change in terms of your general margin expansion framework you laid out last year in terms of starting point or pace of ramp? Any color would be helpful. James Boyle: Yes, Jailendra, thank you very much for the question. The answer is it's not a margin change. I mean, it's -- we had an outsized lift on kind of $2.4 billion. So we had a big growth. Remember, 90% day 1 is Supply Chain Solutions. And we burdened the business based on the throughput and the volume of the widget that we're selling. And the first year signings normally have a first year rebate and that first year rebate impacts the margin of Supply Chain Solutions more than it does Medline Brand because 90% of it is in the Supply Chain Solutions business. So when you think about the $2.4 billion with that first year rebate that goes away in the next year, you'll see a lift in the next year. Michael Drazin: So just to add to that, on the Supply Chain Solutions margin, we reported 4.9% adjusted EBITDA margin for the quarter. And I would tell you that's probably more in line with where we're going to land for the year. While we don't give guidance on our segments, I think now just given the -- both the year 1 rebates plus the operational investments that we called out earlier in the business, we're looking at more like 4.9% to 5% adjusted EBITDA for that business. Operator: Our next call comes from Eric Coldwell with Baird. Eric Coldwell: Just a quick one in the slides and in the commentary, I think you mentioned what you call notable wins in physician and lab market. Was hoping for some color on what's driving those wins, where it's coming from? Is it affiliated with existing customers, maybe doing expansions in existing customers? And then also, if you would, an update on the lab market specifically after the Q1 seasonal and low illness season items, just give us some better sense on how that snapped back? James Boyle: Yes. So when you think about the wins, both in the physician office and in the lab market, it was a combination of both. It was expanding relationships with existing acute prime vendors where we didn't have those secondary classes of trade, where we were able to pick up the physician office business or pick up the lab business in those existing customers and some large independent physician office networks, specifically -- and some lab wins in customers where we are not the prime vendor, which is a beautiful thing because whenever you can be a prime vendor in the lab, it gives us an opportunity to actually win the rest of the business, no differently than when we're a prime vendor for the acute care business, it gives us the opportunity to win that secondary and tertiary markets that they own, so think about surgery centers, physician office labs. So it is a part of our playbook is both to win, just literally brand-new things -- brand-new store sales and to grow same-store sales within their existing network. So we saw a blend of both of those things. 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, specifically our core business grew significantly. I mean we ended up growing nicely in acute care, especially. I mean that's where we saw a really nice lift in the lab business. So we're very happy with the results this quarter. Operator: Our next call comes from Andrew Obin from Bank of America. Andrew Obin: Just a question. You were talking about prime vendor wins and I'm a customer of NYU Langone. I think you press released a win there. You said that here today, signings have been more singles and doubles, to use your analogy. But are there some potential home runs in the pipeline? And just a follow-up question. Are any of your competitors also passing through IEEPA funds? And is this a differentiator for you that allows you to win these orders? James Boyle: A couple of things. There are absolutely more home runs in the marketplace and opportunities for us to win. They tend to be boulders, you move them a little slower than you move some of the singles and doubles and triples, if you will. And they take a little bit longer time to actually kind of build really that cadence of understanding of the opportunity we can drive in order to win the business. It's important to understand most of the wins we won in acute care were not through an RFP or a bid cycle. We won them because the customer chose to leave the competitor. And so from a prime vendor perspective, I just -- we don't have a giant win. Last year, we had CommonSpirit. That would be -- that, in my opinion, is a home run. It's a large customer that we won. And then second -- what was the second part of the question? Andrew Obin: Do your customers -- do your competitors sort of passing through IEEPA refunds? James Boyle: Thank you. Sorry about that. The answer is we don't comment on what they're doing. What -- I think we're doing things -- candidly, what we believe is we have to be transparent, fair and do the right thing every time. And I think that's a different approach than the market takes, but I can't tell you exactly what they're doing. What I can tell you is this is the right thing to do for our business. Operator: Our next call comes from Charles Rhyee from TD Cowen. Charles Rhyee: Maybe just going back a little bit on sort of your estimates for the impacts from the Middle East here. Understanding that a lot of it is out of your control, but just trying to understand a little bit your thought process. You sized it at sort of right now, input costs at $70 million. Obviously, a lot of back and forth going on right now at a -- obviously, at a macro level here. Can you give us a little bit more thoughts on your thought process on how you are trying to figure out what sort of a new norm is? Because obviously, when you think about the current administration and sort of the back and forth. It seems like it's changing all the time. Just curious how you are trying to put some -- I can't even say guardrails, but some rails around sort of this -- sizing this impact. Anything there additional would be helpful. Michael Drazin: Yes. So Charles, 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. That's the vast majority of the cost. The smaller portion are the cost of fuel, diesel and the inbound freight costs, fuel surcharges we pay. So obviously, we're doing our best to negotiate and work with our suppliers to understand the potential impacts on all these raw material costs. We're identifying ways in which to mitigate those costs through actions. We're leveraging our broad sourcing relationships across the globe to do that, ultimately moving production around where we can. And we'll continue to monitor the situation. It is a fluid situation. And so we can't sit here and tell you where we're going to land. But ultimately, we'll just keep on running the playbook we've run all along and leverage our broad scale relationships, leveraging our footprint to drive as much cost savings as we can to mitigate the impact to our business. Charles Rhyee: And I think last quarter, you mentioned that you would start to see some input costs rise. Is that very broad-based now? Or is that still sort of selective depending on sort of your suppliers? Or maybe what's happening for -- up the supply chain in terms of what your suppliers are feeling in terms of their input costs? Michael Drazin: Yes. I mean I think there's a ton of different input costs that we have to deal with, for example, on exam gloves we deal with the NBR as an example, or with resins, we deal with polypropylene and polyethylene. So it depends on the individual raw material that we're talking about, but we're seeing sort of this, I would call it, a whipsaw effect where one week, it's going up and the next week, it's going down. So we're trying to -- not trying to react to the weekly uncertainty and sort of stay calm and balanced throughout this approach and try to work with them on a more long-term basis, which is how we've always operated. It's not about today, it's about the future and how we work with them to make sure we provide the right level of supply, the best quality at the best cost, the things that we're ultimately focused on. Operator: This concludes the question-and-answer session. I'd like to turn it over to CEO, Jim Boyle, for closing remarks. James Boyle: Thank you. Thank you all for joining the call. We are pleased with our second quarter results and the lift in revenue guidance for the back half of the year. We are implementing enterprise-wide cost savings initiatives to address the margin headwinds, and we're committed to delivering long-term value for our shareholders. Thank you all very much for joining the call, and I hope you have a great week. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Before you buy stock in Medline, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Medline wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Medline. The Motley Fool has a disclosure policy. Medline (MDLN) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in Medline? Here are five stocks we like better. Medline reported strong second-quarter growth, with net sales up 12% to $7.7 billion, led by a 16% increase in Supply Chain Solutions and a 15% increase in U.S. acute-care sales. The company raised its full-year organic sales growth outlook to 9%-10%. Adjusted EBITDA rose 13% to $1.1 billion, boosted by a $243 million tariff-refund benefit, but underlying profitability faced higher costs, quality remediation, retail weakness and operational investments. Medline lowered full-year adjusted EBITDA guidance to $3.3 billion-$3.4 billion from $3.5 billion-$3.6 billion. A June fire at the Tracy, California, distribution center reduced first-half net income by $336 million, though Medline limited customer disruption and is expanding its California distribution network. The company expects an additional $50 million-$100 million in Tracy-related costs during the second half. A Fresh IPO That Long-Term Investors Shouldn’t Ignore Medline (NASDAQ:MDLN) reported second-quarter 2026 net sales growth of 12% to $7.7 billion, supported by demand across its medical-surgical product and supply-chain businesses, while raising its full-year organic sales outlook. The company also lowered its adjusted EBITDA guidance, citing operational investments, quality remediation efforts, retail weakness, Middle East-related inflation and costs associated with a June fire at its Tracy, California distribution center. Chief Executive Officer Jim Boyle said Medline Brand sales grew 7% during the quarter, including the effect of customer repayments tied to IEEPA tariff refunds, while Supply Chain Solutions sales rose 16% on new customer implementations and growth among existing customers. He said the supply-chain segment remains important to Medline’s strategy because it can create opportunities to convert customer spending toward higher-margin Medline Brand products. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control “We are pleased with the continued momentum across the business and are raising our fiscal year organic sales outlook to reflect stronger demand and solid execution by our team,” Boyle said. Medline Brand generated $3.5 billion in second-quarter sales, up 7% from a year earlier. Customer repayments associated with IEEPA tariff refunds reduced segment growth by about three percentage points, according to Chief Financial Officer Mike Drazin. Surgical Solutions sales increased 9% to $1.6 billion, driven by surgical kitting and operating-room demand. Frontline Care sales rose 4% to $1.7 billion, with demand for exam gloves and personal-care products partly offset by unexpected weakness in retail. Lab and Diagnostics sales climbed 12% to $248 million, helped by new customer implementations and existing customer demand. Supply Chain Solutions sales increased 16% to $4.1 billion, supported by new customer implementations and growth with existing clients. → 3 Drone Stocks That Should Soar After the Summer Slump By channel, U.S. acute-care sales rose 15% to $5.4 billion, while U.S. non-acute sales increased 4% to $1.7 billion. International sales grew 9% to $533 million, driven by volume growth in Canada and Europe. Boyle said new customer signings totaled more than $650 million through the first half of the year, exceeding 65% of Medline’s $1 billion annual target. He cited an expanded agreement with Allina Health in the Upper Midwest that extends Medline’s existing relationship across acute-care and physician-office settings. Boyle said the company is confident it can meet or exceed its annual signing target. → The Bitcoin Comeback May Already Be Underway—2 ETFs for Exposure Second-quarter adjusted EBITDA increased 13% year over year to $1.1 billion, including a $243 million net benefit from IEEPA tariff refunds. Adjusted EBITDA margin rose 20 basis points to 13.8%. Drazin said the company’s underlying adjusted EBITDA, excluding the tariff-refund benefit, was $817 million. Higher sales volumes were partly offset by increased cost of goods sold, tariff costs and operating expenses, including headcount added to support growth. Medline said it has $507 million in total tariff refunds available. It has accrued roughly $90 million of customer repayments related to those refunds and expects to make the payments later this year. The company said it has communicated its intention to provide the payments to customers but has not yet quantified individual amounts. For the first six months of 2026, Medline generated $920 million in free cash flow. Cash and cash equivalents were $2.3 billion, with an additional $350 million of short-term investments. Net leverage declined to 2.9 times, reaching the company’s stated long-term goal of below three times. A mid-June fire at Medline’s Tracy distribution center reduced net income by $336 million in the first half, primarily due to inventory and fixed-asset losses and related costs. Those expenses were excluded from adjusted EBITDA. The company said it expects insurance recoveries related to property, inventory and general liability. Boyle said Medline used its inventory position, broader distribution network and MedTrans transportation fleet to limit customer disruption following the fire. Within a month, it secured 1.6 million square feet across two distribution centers, expanding its customer-facing Northern California footprint by 45%. Medline has taken occupancy of a new Tracy distribution center that it expects to begin serving customers from in the fourth quarter. A new Stockton facility is expected to be occupied in January 2027. The company also announced plans for a 1 million-square-foot Southern California distribution center. Its California footprint is expected to reach nearly 5 million square feet by mid-2027. Medline raised its full-year organic sales growth outlook to 9% to 10%, from 8.5% to 9.5%. The outlook includes $89 million in IEEPA tariff refunds that Medline plans to provide to customers. However, the company lowered full-year adjusted EBITDA guidance to $3.3 billion to $3.4 billion, from $3.5 billion to $3.6 billion. The revised outlook excludes IEEPA tariff refunds but includes external and internal pressures. Drazin said Medline estimates that about one-quarter of the incremental earnings pressure comes from external factors, including the Middle East conflict and the Tracy fire, while about three-quarters stems from operational investments, quality remediation and retail weakness. About half of the overall impact is expected to be transitory, while the other half is expected to become part of Medline’s future cost base. The company expects $50 million to $100 million of additional Tracy-related costs in the second half. Some costs, including cleanup, product rerouting and air freight, are expected to be excluded from adjusted EBITDA, while lease expenses and labor inefficiencies associated with operating without automation will remain in the company’s cost base. Medline also said it is accelerating investments in its quality organization, manufacturing processes and global quality action plan following discussions with the Food and Drug Administration. Some recalled products, including CHG wipes manufactured at its Waukegan facility, are taking longer than expected to return to market. Boyle said Medline is pursuing enterprise-wide cost-savings initiatives and could consider pricing actions when cost conditions become clearer. For now, he said the company is focused on absorbing certain costs, supporting customers and gaining market share. Medline (NASDAQ: MDLN) is a healthcare products and services company that manufactures, sources and distributes a wide range of medical supplies and equipment for healthcare providers. Its product portfolio spans clinical consumables and personal protective equipment, surgical and procedural supplies, wound care and incontinence products, diagnostic and laboratory supplies, and select durable medical equipment. Medline supports care settings that include hospitals, health systems, long-term care facilities, ambulatory clinics and home health providers. In addition to product manufacturing and distribution, Medline provides supply‑chain and logistics services designed to help healthcare customers manage inventory, reduce costs and streamline operations. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Medline Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

This article first appeared on GuruFocus. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Medline Inc (NASDAQ:MDLN) delivered strong top-line growth of 12% in Q2 2026, with organic sales growth of 13% excluding tariff refund impacts. The company raised its full-year organic sales guidance for the second time this year to 9%-10%, reflecting robust demand and commercial execution. Supply Chain Solutions segment grew 16%, driven by new customer signings and expansion within existing accounts, supporting long-term growth strategy. Medline Inc (NASDAQ:MDLN) achieved over $650 million in new customer signings in the first half, exceeding 65% of its $1 billion annual goal, with a strong pipeline of future wins. The company demonstrated resilience in responding to the Tracy warehouse fire, securing 1.6 million square feet of new distribution space and expanding its Northern California footprint by 45% within a month. Free cash flow was strong at $920 million for the first half, and leverage improved to 2.9 times, below the long-term target of 3 times. Medline Inc (NASDAQ:MDLN) received a net $243 million benefit from IEPA tariff refunds, which was excluded from adjusted EBITDA guidance to provide transparency on underlying performance. Medline Inc (NASDAQ:MDLN) lowered its full-year adjusted EBITDA guidance to $3.3-$3.4 billion from $3.5-$3.6 billion, citing multiple headwinds. The company faces increased inflationary pressures from the Middle East conflict, including higher fuel and product costs, which it is absorbing rather than passing on to customers. Operational investments to support faster-than-anticipated demand growth are creating near-term inefficiencies, with about half of the incremental costs expected to be permanent. Quality remediation efforts, including delays in reintroducing recalled products like CHG wipes, are impacting earnings and are expected to continue into 2027. Unplanned softness in the retail channel, which is almost entirely Medline brand, is creating a disproportionate headwind to growth and profitability. The Tracy warehouse fire resulted in $336 million in costs excluded from adjusted EBITDA, with additional $50-$100 million expected in the second half, including some costs that will remain in the base. Medline Inc (NASDAQ:MDLN) expects sequential sales to be relatively flat in Q3 due to fewer selling days, and the company is not satisfied with current margin challenges. Warning! GuruFocus has detected 3 Warning Sign with MDLN. Is MDLN fairly valued? Test your thesis with our free DCF calculator. Q: Can you clarify the adjusted EBITDA guidance reduction and how much of the impact is transitory versus permanent, and how should we think about the run rate going into 2027?A: Mike Drazen (CFO): We estimate roughly half of the incremental earnings impact is transitory and half is more permanent. The Middle East conflict and Tracy Fire impacts are transitory, while operational and quality investments will roll into our 2027 base. We are implementing enterprise-wide cost savings initiatives to mitigate the burden. External factors account for approximately 25% of the reduction, with internal factors (operational investment, quality remediation, retail softness) accounting for 75%. Q: Can you explain the $200 million of inflationary pressure and how it breaks down between internal and external factors, and what the quarterly cadence looks like?A: Mike Drazen (CFO): We expect approximately one-third of the $200 million incremental costs to be incurred in Q3 and the remaining two-thirds in Q4. The Middle East conflict accounts for about $70 million of impact, assuming diesel prices around $5 and current raw material costs. We've assumed tariff rates remain unchanged for the rest of the year, as any changes would primarily impact 2027. Q: Is the philosophy of overspending relative to baseline part of your pathway to drive new business, and what market conditions are needed to return to EBITDA leverage above revenue growth?A: Jim Boyle (CEO) and Mike Drazen (CFO): Yes, we've been intentional for years about investing ahead of growth in areas like distribution centers, manufacturing sites, and sales teams. We're very happy with underlying performance, delivering 13% organic growth excluding tariff refunds. We need continued execution on operational investments, quality initiatives, and new customer signings (over $650 million year-to-date) to return to our long-term objective of earnings growth at or above sales growth. Q: Can you clarify the tariff refund accounting and whether the $243 million benefit is included in adjusted EBITDA guidance?A: Mike Drazen (CFO): The $243 million net tariff refund benefit is excluded from our adjusted EBITDA guidance to show true underlying performance. The underlying Q2 adjusted EBITDA was $817 million, which beat consensus. We kept the $89 million customer repayments in sales guidance for simplicity, and even with that, we raised organic sales growth to 9%-10%. We took a conservative approach to maintain transparency. Q: What is the customer response to the IEPA tariff refunds, and have all repayments been accounted for?A: Mike Drazen (CFO): The total tariff refund available is $507 million. We recorded a net tariff benefit of $240 million in the first half, which is $330 million of phase one tariffs net of roughly $90 million of customer repayments. We expect to receive all of it over time and will make the customer payment in the latter part of this year. We absorbed the vast majority of the $500 million, passing through only the $89 million to customers. Q: Can you discuss the achievability of the $1 billion customer signings goal and the trends seen so far this year?A: Jim Boyle (CEO): We're pleased with the $650 million in signings through the first half, which puts us ahead of pace to achieve the billion-dollar goal. We're confident we'll hit $1 billion plus. This year's signings are more "singles and doubles" compared to last year's "home runs" that led to the $2.4 billion. Signings can be lumpy quarter to quarter, but we have line of sight to what's available in the marketplace. Q: Can you talk about the Allina Health win and the potential incremental revenue, and was there a drag from IEPA tariffs in prior quarters?A: Jim Boyle (CEO) and Mike Drazen (CFO): Allina is a great win expanding our relationship across acute care, physician office, and other classes of trade. We don't disclose individual deal numbers, but it was sizable and went live about three weeks ago. On tariffs, the IEPA tariffs hit us in the second half of last year with the peak in Q4 and first half of this year. We've seen about $230 million of total tariff headwind in 2026, but with the new 10% rate, we're now looking at $350 million impact versus the original $490 million estimate. Q: Can you help us understand the level of conservatism baked into guidance regarding longer-term macro factors like oil and shipping?A: Mike Drazen (CFO): On the Middle East, we have a $70 million estimated impact for 2026, including diesel fuel costs and product/raw material costs. We've assumed diesel prices around $5 and used costs as of roughly two weeks ago. On tariffs, we've assumed rates don't change for the rest of the year. If they were to change, it would be immaterial to 2026 results but would impact 2027. Q: Are the operational investments to support customer demand being stepped up, and should we think of these as additive to the run rate?A: Mike Drazen (CFO): The operational investments are not newwe discussed them last quarter. As we bring $2.4 billion of new business online, we've invested in additional people and are seeing inefficient labor without automation. We're investing in auto stores, expanding network capacity with new DCs in Texas, California, and the Midwest. We're adding labor burden three to six months in advance of revenue realization, which is weighing on numbers this year. Q: Can you discuss the retail business weaknessis it execution or macro, and what's the margin profile?A: Jim Boyle (CEO) and Mike Drazen (CFO): The retail business is less than 2% of overall sales and runs at Medline brand margins. The weakness is Medline-specificwe lost a portion of business at a decent-sized retail customer due to our sales team not understanding customer needs. We've redesigned the sales team and are working to earn that business back. Retail is more volatile without the same contract stickiness as our base business, so it can be lost and won quickly. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Second quarter net sales of $7.7 billion, an increase of 11.6% Second quarter net income of $139 million, a decrease of 58.3% Second quarter Adjusted EBITDA1 of $1.1 billion, an increase of 13.4% First six months net sales of $15.0 billion, an increase of 11.1% First six months net income of $378 million, a decrease of 42.3% First six months Adjusted EBITDA1 of $1.8 billion, an increase of 1.9% Updating full year 2026 Organic Sales2 guidance to 9.0% to 10.0% and Adjusted EBITDA2 guidance to $3.3 billion to $3.4 billion Second quarter and first six months net sales included $89 million of IEEPA tariff customer repayments Second quarter and first six months net income and Adjusted EBITDA1 included $243 million of net IEEPA tariff refund benefits The full year 2026 Organic Sales2 outlook reflects IEEPA tariff customer repayments and the Adjusted EBITDA2 outlook does not reflect the benefit of IEEPA tariff refunds NORTHFIELD, Ill., Aug. 05, 2026 (GLOBE NEWSWIRE) -- Medline Inc. (“Medline” or the “Company”) (Nasdaq: MDLN), the largest provider of medical-surgical (“med-surg”) products and supply chain solutions serving all points of care3, today reported its operating results for the three and six months ended June 27, 2026. “Our second quarter results reflect strong execution of our growth strategy, and the operational resilience of our team,” said Jim Boyle, chief executive officer of Medline. “We delivered robust top-line growth in the quarter, secured over 65% of our annual goal in total new customer signings4 during the first half of 2026, and moved swiftly to minimize disruption from the fire at our Tracy, California distribution center, demonstrating an unwavering commitment to our customers. At the same time, we are effectively managing a dynamic external environment while investing in strategic initiatives to strengthen our market position and support long-term shareholder value creation.” IEEPA Tariff Refunds and Related Customer Repayments Following the U.S. Supreme Court’s February 2026 ruling that IEEPA tariffs were unauthorized, the Company recognized $243 million of net IEEPA tariff refund benefits during the three and six months ended June 27, 2026, reflecting $332 million of tariff refunds as a reduction of cost of goods sold, partially offset by $89 million of accrued customer repayments associated with IEEPA tariff refunds as a reduction of net sales. These amounts were recorded entirely within the Medline Brand segment and were included in net income and Adjusted EBITDA1. Second Quarter 2026 Results Second quarter 2026 net sales increased 11.6% to $7.7 billion, compared to $6.9 billion in the second quarter 2025, with Organic Sales1 increasing 11.5%. This was primarily driven by existing customer growth and implementation of new customer signings from 2025. This includes $89 million of accrued customer repayments associated with IEEPA tariff refunds. Second quarter 2026 net income decreased 58.3% to $139 million, compared to $333 million in the second quarter 2025, primarily driven by losses of $336 million related to the fire at the Company’s distribution center in Tracy, California, before expected insurance recoveries, higher operating expenses and higher cost of goods sold including the impact of tariffs. This was partially offset by higher net sales and net IEEPA tariff refund benefits. Second quarter 2026 Adjusted EBITDA1 increased 13.4% to $1,060 million, compared to $935 million in the second quarter 2025, primarily driven by higher net sales and net IEEPA tariff refund benefits, partially offset by higher operating expenses and higher cost of goods sold including the impact of tariffs. Second quarter 2026 diluted earnings per share and Adjusted Diluted EPS1 were $0.07 and $0.50, respectively. First Six Months 2026 Results First six months 2026 net sales increased 11.1% to $15.0 billion, compared to $13.5 billion in the 2025 period, with Organic Sales1 increasing 10.8%. This was primarily driven by existing customer growth and implementation of new customer signings from 2025. This includes $89 million of accrued customer repayments associated with IEEPA tariff refunds. First six months 2026 net income decreased 42.3% to $378 million, compared to $655 million in the first six months 2025, primarily driven by losses of $336 million related to the fire at the Company’s distribution center in Tracy, California, before expected insurance recoveries, higher operating expenses and higher cost of goods sold including the impact of tariffs. This was partially offset by higher net sales and net IEEPA tariff refund benefits. First six months 2026 Adjusted EBITDA1 increased 1.9% to $1.84 billion, compared to $1.80 billion in the first six months 2025, primarily driven by higher net sales and net IEEPA tariff refund benefits, partially offset by higher operating expenses and higher cost of goods sold including the impact of tariffs. First six months 2026 diluted earnings per share and Adjusted Diluted EPS1 were $0.23 and $0.83, respectively. Net cash provided by operating activities for the first six months 2026 was $1.1 billion, driven by net income, excluding the impact of non-cash items, partially offset by changes in working capital. Free Cash Flow1 for the first six months 2026 was $920 million, driven by net cash provided by operating activities, partially offset by $207 million of capital expenditures, primarily related to continued enhancements and automation in the Company’s distribution centers and investments in its kitting manufacturing facilities. 2026 GuidanceThe Company is updating its full year 2026 outlook for Organic Sales2 growth to 9.0% to 10.0%, compared to its previous outlook of 8.5% to 9.5%, reflecting strong existing and new customer demand. The Company updated its Adjusted EBITDA2 outlook to $3.3 billion to $3.4 billion, compared to its previous outlook of $3.5 to $3.6 billion, primarily reflecting higher than expected inflationary pressure from the Middle East conflict, increased operational investments to support customer demand, quality remediation efforts, and retail channel softness. The Organic Sales2 reflects IEEPA tariff customer repayments and the Adjusted EBITDA2 outlook does not reflect the benefit of IEEPA tariff refunds. Webcast and Conference Call InstructionsThe Company will host a live conference call and question and answer session with investors and analysts on August 5, 2026, at 8:30 a.m. CT / 9:30 a.m. ET to discuss its second quarter and first six months 2026 earnings results. The webcast can be accessed through Medline’s Investor Relations website at ir.medline.com. A replay of the call will be available following the event through the same website. End Notes and Use of Non-GAAP Financial Measures Certain amounts and percentages presented in this press release have a rounding element. As a result, the sum of the components may not equal the totals due to rounding. Forward Looking StatementsThis press release contains forward-looking statements. Forward-looking statements include all statements that are not historical facts. Words such as “anticipate,” “assume,” “believe” “contemplate,” “continue,” “could,” “estimate,” “expect,” “foreseeable,” “intend,” “may,” “plan,” “potentially,” “predict,” “project,” “seek,” “should,” “will,” or “would,” or similar conditional or future expressions are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements related to the Company’s industry, business strategy, costs, and cost savings, goals and expectations, market position, future operations, margins, profitability, annual guidance, and other financial and operating information. The forward-looking statements are based on management’s current expectations and are subject to various risks, uncertainties, and changes in circumstances, many of which are beyond the Company’s control, that could cause actual results to differ materially. Factors that may cause actual results to differ from expected results include, but are not limited to inherent risks in the Company’s global operations; the Company’s ability to derive fully the anticipated benefits from its existing or future acquisitions, joint ventures, investments, dispositions, or other strategic transactions; consolidation in the healthcare industry; competition and accelerating pricing pressure and changes in technology; changes to the U.S. and global healthcare environments; increases in shipping costs or service issues with the Company’s third-party shippers; significant challenges or delays in the Company’s sourcing of new products and technologies; the Company’s concentration in and dependence on certain healthcare provider customers and Group Purchasing Organizations; the Company’s dependence on the proper functioning of its critical facilities and distribution networks, and the impact of events outside its control, including fires and other disruptions affecting such facilities or networks, such as the Tracy facility fire; quality problems, recalls, product liability claims, and regulatory actions by the U.S. Food and Drug Administration; the Company’s failure to establish and maintain Prime Vendor relationships; increased pressure to maintain or decrease the price of the Company’s goods and services; failure by or loss of a third-party manufacturer or supplier or other manufacturing or supply-related impacts; the Company’s reliance on the proper function, security, and availability of its information technology systems and data, as well as those of third parties throughout its global supply chain and the impact of a breach, cyber-attack, or other disruption to these systems or data; the Company’s ability to comply with extensive and complex laws and governmental regulations and the cost of any adverse regulatory action; the Company’s compliance with complex and rapidly evolving data privacy, security and data protection laws and regulations; the Company’s use or its third-party service providers’ or business partners’ use of artificial intelligence, automated decision-making and machine learning technologies and the evolving regulatory framework in this area; the Company’s ability to comply with laws and regulations relating to reimbursement of healthcare goods and services; uncertain global and domestic macro-economic and political conditions, including as a result of global geopolitical conflicts and tensions, such as the ongoing conflicts in Ukraine and the Middle East; the Company’s substantial indebtedness, its ability to satisfy its debt obligations, and the significant operating and financial restrictions on the Company’s subsidiaries imposed by the Company’s debt agreements; the dual class structure of the Company’s common stock; the volatility of the market price of the Company’s Class A common stock; and other factors. The Company disclaims any intent or obligation to update, revise, or withdraw any forward-looking statement in this press release, except as required by applicable law or regulation. The Company uses its investor relations website at ir.medline.com, press releases, public conference calls and webcasts, and social media as routine channels of distribution to communicate important, and often material, information about Medline to investors and the public, including information about its financial performance and results, analyst and investor presentations, investor days, products, solutions, sustainability initiatives, and corporate governance practices. You are encouraged to follow these channels, in addition to our SEC filings, for timely information about the Company. The information on the Company’s websites is not part of this press release and is not incorporated by reference into any filings the Company makes with the SEC. Non-GAAP Financial MeasuresThe non-GAAP financial measures provided in this press release should be viewed in addition to, and not as an alternative for, results prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). To supplement the financial information provided, the Company has presented Organic Sales, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Diluted EPS, Free Cash Flow, and Net Leverage, which are considered non-GAAP financial measures. The non-GAAP financial measures presented may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define these non-GAAP financial measures in the same way. These measures are not substitutes for their comparable GAAP financial measures, such as net income/(loss), net income margin, diluted earnings per share,  net cash from operating activities, net sales, or other measures prescribed by GAAP, and there are limitations to using non-GAAP financial measures. Management uses these non-GAAP financial measures to assist in comparing the Company’s performance on a consistent basis for purposes of business decision making by removing the impact of certain items that management believes do not directly reflect the Company’s ongoing operating performance. The Company believes Organic Sales, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Diluted EPS provide important comparability of ongoing operating performance, allowing investors and management to assess the Company’s operating performance on a consistent basis. The Company believes Free Cash Flow and Net Leverage provide a measure of the Company’s core operating performance, the cash-generating capabilities of the Company’s business operations, and are factors used in determining the Company’s borrowing capacity and the amount of cash available for debt repayments, acquisitions, and other corporate purposes. Management believes that presenting the Company’s non-GAAP financial measures is useful to investors because it (i) provides investors with meaningful supplemental information regarding financial performance by excluding certain items that we do not consider indicative of our ongoing operating performance, (ii) permits investors to view performance using the same tools that management uses to budget, make operating and strategic decisions, and evaluate historical performance, and (iii) otherwise provides supplemental information that may be useful to investors in evaluating the Company’s results. The Company believes that the presentation of these non-GAAP financial measures, when considered together with the corresponding GAAP financial measures and the reconciliations to those measures, provides investors with additional understanding of the factors and trends affecting the Company’s business than could be obtained absent these disclosures. DefinitionsOrganic Sales is defined as net sales excluding, when they occur, the impact of acquisitions, divestitures, and changes in foreign exchange rates from the net sales changes. The changes in foreign currency exchange rates from the net sales changes are calculated by translating current period GAAP results at the prior period foreign currency exchange rates and comparing these amounts to the current period GAAP results at the current period foreign currency exchange rates. Adjusted EBITDA is defined as net income (loss) adjusted for (i) interest expense, net, (ii) provision for income taxes, (iii) depreciation and amortization, (iv) inventory-related adjustments, (v) stock-based compensation, (vi) litigation (gains) charges, net, (vii) transaction-related costs, and (viii) other non-core (gains) charges. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by net sales. Adjusted Net Income is defined as net income (loss) adjusted for (i) intangible asset amortization, (ii) inventory-related adjustments, (iii) stock-based compensation, (iv) litigation (gains) charges, net, (v) transaction-related costs, (vi) other non-core (gains) charges, and (vii) tax impacts related to non-GAAP adjustments, noncontrolling interests conversion, and retained tax receivable agreement (“TRA”) benefits. Adjusted Diluted EPS is defined as Adjusted Net Income divided by adjusted weighted-average number of common stock, diluted. The adjusted weighted shares calculation assumes the impact of certain antidilutive securities that were excluded from the U.S. GAAP diluted earnings per share. Free Cash Flow is defined as net cash provided by/(used for) operating activities less net capital expenditures. The use of this non-GAAP measure does not imply or represent the residual cash flow for discretionary expenditures since the Company has certain non-discretionary obligations such as debt service that are not deducted from the measure. Net Leverage is defined as net debt (total debt less cash, cash equivalents and short-term investments) divided by Adjusted EBITDA. Medline Medline is the largest provider of medical-surgical products and supply chain solutions serving all points of care. Through its unique offering of world-class products, supply chain resilience and clinical practice expertise, Medline delivers improved clinical, financial and operational outcomes. Headquartered in Northfield, Illinois, the Company employs more than 45,000 people worldwide and operates in more than 100 countries. To learn more about how Medline makes healthcare run better, visit www.medline.com. Investor Relations:Karen King Global Head of Investor Relations Patrick FlahertyDirector, Investor Relations (847) [email protected] Media Relations:Ben FoxVice President, Corporate Communications(224) [email protected] Financial Tables (1) Not Meaningful Condensed Consolidated Cash Flow Highlights(unaudited) (1) Not Meaningful Segment Net Sales and Adjusted EBITDA Margin(unaudited) (1) The organizational structure includes Corporate & Other which consists of expenses related to centralized corporate functions, such as finance, information technology, legal, human resources, and internal audit. Reconciliation of Net Sales to Organic Sales(unaudited) Reconciliation of Net Income to Adjusted EBITDA and Net Leverage (unaudited) Reconciliation of Net Income to Adjusted Net Income and Adjusted Diluted EPS (unaudited) Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow(unaudited)

Interested in Ranpak Holdings Corp? Here are five stocks we like better. Automation drove Q2 growth: Revenue rose 12.2% year over year on a constant-currency basis, while automation revenue increased 139%, supported by deployments with Walmart and Medline and new customer wins. Profitability improved despite cost pressures: Adjusted EBITDA increased to $19.1 million and gross margin expanded by 150 basis points. Ranpak expects further margin gains from pricing, surcharges and efficiency initiatives, though automation is not expected to reach adjusted EBITDA breakeven until late 2026. Outlook and balance-sheet priorities remain intact: Management reaffirmed its full-year outlook, targeting roughly $60 million in automation revenue in 2026, while pursuing leverage reduction, cold-chain expansion and a long-term goal of $800 million in revenue by 2030. Ranpak (NYSE:PACK) reported second-quarter revenue growth driven by a sharp increase in automation equipment sales, while management said it remains on track to meet its full-year outlook and generate roughly $60 million in automation revenue in 2026. Chairman and CEO Omar Asali said automation revenue rose 139% year over year on a constant-currency basis, excluding the impact of warrants. The company saw strong automation activity in both North America and Europe, including continued deployments with Walmart and Medline as well as new customer activity. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now “Automation delivered another quarter of strong growth,” Asali said, adding that the business is expected to be a long-term growth driver. He said Ranpak has also formed partnerships with warehouse integrators, including an integrator focused on automated storage and retrieval systems, to offer end-of-line packaging solutions to additional accounts. Consolidated net revenue increased 12.2% year over year on a constant-currency basis during the second quarter. Excluding the impact of warrants, constant-currency revenue growth was 12.6%. Foreign exchange added 1.8 percentage points to reported top-line growth, resulting in reported revenue growth of 14% for the quarter, according to management. → Microsoft Just Flipped the AI Spending Narrative Overnight North American revenue increased 8.5%, or 9.4% excluding warrants. The region’s automation revenue grew more than 250% excluding warrants, while the company’s protective packaging systems, or PPS, business was a slight detractor as its distribution channel faced difficult comparisons against prior-year growth. In Europe and Asia-Pacific, net revenue increased 15.4% on a constant-currency basis. Automation revenue rose 103.7%, while PPS volume grew 4.2%, led largely by strength in Europe, management said. → Carrier Earnings Could Send the Stock to a New All-Time High Overall PPS volumes increased 2.4% year over year, marking volume growth in 11 of the past 12 quarters. Asali said Europe again outperformed, while North America continued to see stronger results from large enterprise customers than from the distribution channel. He said distribution-channel conditions improved somewhat late in the quarter and should improve further in the second half as comparisons normalize and new products gain traction. Ranpak cited positive customer reception for Guardian 24, a compact packaging unit that the company said can offer cost savings compared with foam. The company is also pursuing growth in cushioning, void fill, wrapping and cold-chain packaging. Adjusted EBITDA increased by $2.6 million to $19.1 million on a reported basis. On a constant-currency basis, adjusted EBITDA increased 13.9%, or 15.8% excluding the effect of warrants. Gross profit increased 17.6% on a constant-currency basis, or 18.6% excluding a $1.7 million non-cash provision associated with warrants. Gross margin improved 150 basis points from the prior-year quarter. Chief Financial Officer Bill Drew said North American PPS margins improved by more than 250 basis points excluding depreciation, supported by efficiency gains. During the question-and-answer session, he said North American PPS margins improved by more than 300 basis points, describing continued progress from cost reductions and operating efficiencies. In Europe, margins were pressured by the timing of higher input costs relative to the implementation of a customer surcharge. Management said European paper producers began passing along price increases early in the second quarter, and Ranpak introduced a temporary surcharge to protect its margins. Asali said the company intends to remove the surcharge when market conditions normalize. Management also cited a shift by some European customers toward lower-priced, lower-margin void-fill products as a source of product-mix pressure. Still, Drew said the company expects continued gross-margin improvement in the second half through efficiency efforts, pricing actions and surcharge management. Automation carries a lower current margin profile than Ranpak’s other businesses, but Drew said the company expects margins to improve as automation scales. Management said the existing automation footprint can support more than $100 million in revenue without substantial additional capital expenditures. Ranpak expects its automation segment to reach adjusted EBITDA breakeven late in 2026 and become an EBITDA-positive contributor in 2027. Asali said much of the revenue required to support the company’s approximately $60 million automation target this year is already contracted. Asali characterized the macroeconomic backdrop as volatile, citing movements in oil and natural-gas prices, consumer confidence and geopolitical tensions. He said customers remain focused on cost reduction amid concerns about elevated energy costs, inflation and consumer demand. In North America, Ranpak said paper markets have tightened as producers seek price increases. The company also sees an opportunity to accelerate the transition from plastic packaging to paper-based alternatives as resin-based products experienced meaningful price increases in the second quarter. Management said it expects to take pricing actions in North America during the second half, which Asali said should support margins. The company also plans to continue Lean, Six Sigma, quality and productivity initiatives. Ranpak is pruning portions of its North American PPS portfolio to improve profitability. Asali said the company may reduce some lower-margin business, including areas involving warrants, while continuing to pursue higher-value accounts and opportunities. He said the moves are not expected to be materially noticeable in reported revenue. Ranpak ended the second quarter with $43.2 million of cash and no borrowings under its revolving credit facility. Reported net leverage was 4.5 times on a last-12-month basis, down 0.2 turns from the first quarter. The company said it expects cash to improve meaningfully in the second half due to seasonality and working-capital improvements. Its long-term goal is to reduce leverage to between 2.5 and 3 times over the next 24 months. Second-quarter capital expenditures totaled $6.6 million, down $3.2 million from the prior-year period. The company said it remains disciplined on spending while investing in production capacity for growth areas such as cold chain and enterprise-customer initiatives. Asali said Ranpak is expanding cold-chain capacity in the second half and believes its Climaliner Plus offering, positioned as an alternative to EPS foam, has reached an inflection point. He also reiterated the company’s longer-term target of $800 million in revenue by 2030, supported by automation, cold chain and other value-added warehouse solutions. Ranpak Holdings Corp. (NYSE: PACK) is a leading provider of sustainable, paper-based packaging solutions designed to protect products during transit. The company's core business centers on the design, manufacture and distribution of automated systems and consumable paper packaging materials that offer an eco-friendly alternative to plastic-based void-fill and protective packaging. Ranpak's solutions include crumpled paper fillers, paper wrap systems and tailored automation equipment that serve diverse end markets such as e-commerce, industrial parts, electronics and retail. Founded in 1972 and headquartered in Concord Township, Ohio, Ranpak has built a global presence by combining innovation in paper converting technology with a commitment to sustainability. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Ranpak Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

Find your next quality investment with Simply Wall St's easy and powerful screener, trusted by over 7 million individual investors worldwide. Medline (NasdaqGS:MDLN) has received a warning letter from the U.S. FDA citing significant repeated violations of current Good Manufacturing Practice regulations. The letter focuses on recurring contamination with B. cereus at Medline drug manufacturing facilities. The FDA action raises concerns about product safety, manufacturing controls, and regulatory compliance at the company. Medline operates in the healthcare products and drug manufacturing space, where quality control and regulatory compliance sit at the core of the business model. For investors in NasdaqGS:MDLN, FDA warning letters matter because they can affect manufacturing timelines, product availability, and relationships with customers that rely on consistent, compliant supply. The key issue now is how effectively and how quickly Medline can address the FDA findings and sustain those fixes over time. Investors will likely focus on the scope of any remediation plan, potential production adjustments, and the degree of future regulatory oversight that may follow from this warning letter. Wall Street's queuing for one rocket. While SpaceX counts down to its IPO, other companies tied to the new space race are already in orbit. → 20 Compelling Space Companies watchlist · Global Space Race Investing Ideas screener · Scan the sector by valuation on Rocket Lab's valuation page. Is Medline's balance sheet strong enough for future acquisitions? Dive into our detailed financial health analysis. This FDA warning letter puts Medline’s quality systems under a harsh spotlight. Repeated B. cereus findings over more than two years, coupled with what regulators describe as inadequate investigations and corrective actions, point to deeper process and governance gaps rather than a one off incident. For a company supplying drugs used in sensitive clinical settings, that raises clear patient safety and reputational questions. Operationally, the suspension of the affected product line in October 2025 and the extensive remediation the FDA is requesting could influence plant utilization, cost structure, and the timing of any restart. The requirement for independent risk assessments, facility redesign, and potentially new sterilization approaches suggests meaningful capital and operating spend, with management attention pulled toward compliance. Investors also need to consider potential follow up actions if remediation falls short, such as tighter oversight or restrictions. At the same time, the FDA has acknowledged Medline’s engagement and has left the door open to resume production once effective fixes are verified, so the outcome will depend heavily on how thorough and timely the company’s response is. This enforcement action directly tests the narrative that Medline’s broad manufacturing and distribution footprint is an asset because strong quality systems are essential if the company wants to keep leveraging its vertically integrated network. The warning letter challenges the idea that automation and process upgrades alone will support better earnings quality, since regulators highlighted weaknesses in investigations, cleanroom controls, and adherence to existing corrective actions. The extensive remediation work the FDA is requesting, including independent assessments and potential changes to sterilization methods, may not be fully captured in prior expectations that focus on Prime Vendor wins and efficiency gains. Knowing what a company is worth starts with understanding its story. Check out one of the top narratives in the Simply Wall St Community for Medline to help decide what it's worth to you. ⚠️ Repeated contamination findings and what regulators describe as inadequate root cause analysis increase the risk of higher compliance costs, potential product disruptions, and tighter oversight if remediation is not effective. ⚠️ Analysts have flagged that interest payments are not well covered by earnings, so any additional remediation spending or prolonged production changes could put extra pressure on financial flexibility. 🎁 Medline operates in a healthcare-supply and drug-manufacturing sector where consistent demand for essential products can support long term contract relationships if quality and reliability are restored. 🎁 Analysts currently see multiple rewards for shareholders, including expectations of earnings growth and a view that the stock trades below some estimates of fair value, which could appeal to investors who believe the company can fix its quality systems. Investors should watch how quickly Medline completes the independent risk assessments, facility and process upgrades, and sterilization reviews requested by the FDA, and whether regulators signal satisfaction with those steps. Any updates on the status of the suspended product line, timelines for a potential restart, or broader manufacturing changes will matter for capacity and cost visibility. Commentary from management at events, including investor conferences, can also help clarify how remediation is prioritized against growth projects in areas like automation and Prime Vendor contracts. Finally, changes in analyst commentary, risk flags, or rating revisions will give an external read on whether the market views the FDA concerns as contained or still evolving. To ensure you're always in the loop on how the latest news impacts the investment narrative for Medline, head to the community page for Medline to never miss an update on the top community narratives. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include MDLN. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

This article first appeared on GuruFocus. Carlyle Group (NASDAQ:CG) reported a weaker first quarter as the firm's strong pace of asset sales has not yet flowed through into carried interest for shareholders. Distributable earnings dropped 28% from a year earlier to $327 million, or 89 cents a share on an after-tax basis, below the 93-cent average estimate from analysts surveyed by Bloomberg. The Washington-based investment firm generated $7 billion of proceeds across its US buyouts business, mainly from Carlyle Partners VII and Carlyle Partners VIII, with asset sales including secondary share offerings for health-care company Medline Inc. and airline-repair business StandardAero Inc. CEO Harvey Schwartz said Carlyle remains disciplined and focused, while noting that the quarter marked a record period for US buyout exits. Warning! GuruFocus has detected 6 Warning Signs with CG. Is CG fairly valued? Test your thesis with our free DCF calculator. The pressure point for investors is that exits are moving faster than realized shareholder carry. Realized net performance revenue, the portion of carried interest flowing to shareholders, fell 84% from a year earlier to $20.5 million. That decline reflects the way Carlyle's funds are structured, since they need to distribute a certain amount to fund investors before the firm can begin passing those gains on to shareholders. Fee-related earnings also slipped 3.4% to $300 million, adding another layer of softness to the quarter even as asset sales remained robust. This could make Carlyle's first-quarter report less about exit activity itself and more about the timing of when those exits possibly translate into earnings power. Still, the broader platform continued to expand. Assets under management rose 4.9% to $475 billion, supported by $13 billion of inflows, driven by a record quarter for Carlyle's AlpInvest secondaries business. The firm also reported $96 billion of dry powder, up 13% from a year earlier, giving it more capital available for future deployment. Since taking the helm three years ago, Schwartz has focused on growing Carlyle's credit, wealth and AlpInvest units, a strategy that could remain central to the firm's long-term earnings path. Even so, Carlyle shares had fallen 14% this year through Wednesday, moving lower alongside peers as investors remain cautious about the potential threat of artificial intelligence to private equity portfolio companies and the industry's exposure to private credit.

Medline reported Q1 net sales of $7.4 billion, up 11% year‑over‑year, driven by a 15% increase in Supply Chain Solutions and ramping implementations of the $2.4 billion of new customer signings from 2025; the company raised full‑year organic sales guidance to 8.5–9.5% while maintaining adjusted EBITDA guidance at $3.5–$3.6 billion. Profitability was pressured as adjusted EBITDA fell 11% to $776 million and margins declined ~250 bps, with management citing incremental costs from tariffs (referencing roughly $85M incremental and ~$120M net impact) and continued investments, while warning of potential Middle East‑related fuel and raw‑material headwinds. Medline generated $316 million of free cash flow, ended the quarter with $2.2 billion in cash and 3.1x net leverage, and is prioritizing reinvestment and automation/AI initiatives (including a Symbotic robotics pilot and expansion of the Microsoft‑backed “Mpower” control tower) while remaining open to opportunistic M&A. Interested in Medline? Here are five stocks we like better. A Fresh IPO That Long-Term Investors Shouldn’t Ignore Medline (NASDAQ:MDLN) reported first-quarter 2026 net sales of $7.4 billion, up 11% year over year, as the company began implementing a large cohort of new customer wins signed in 2025 and saw continued growth with existing customers. Management highlighted strength in its Supply Chain Solutions business and reiterated its focus on investing in automation and AI-driven supply chain tools, while navigating tariff-related costs and emerging inflationary pressures tied to Middle East-driven energy and raw material price changes. CEO Jim Boyle said the company “started the year with 11% top-line growth in the first quarter,” calling it “one of our strongest quarters ever in Supply Chain Solutions.” He attributed the momentum to the implementation ramp of the $2.4 billion in new customer signings from 2025, as well as existing customer growth and another “strong quarter of new customer signings.” Boyle added that several wins displaced “long-tenured incumbents” and often spanned multiple channels. → 3 Emerging Markets ETFs to Maximize Exposure to High-Potential Countries CFO Mike Drazin noted that the company’s four-five week reporting calendar resulted in “one less business day” versus the prior year, creating a headwind of roughly two percentage points. He said the majority of Medline’s sales growth was organic, with minimal impact from foreign currency changes. By segment, Drazin reported that Medline Brand generated $3.5 billion in net sales, up 6% year over year (or 8% adjusted for days). Supply Chain Solutions produced $3.9 billion, up 15% (or 17% adjusted for days), which Drazin said was supported by new customer implementations and existing customer growth. → The Real SpaceX Play: 5 Chip Stocks Powering the IPO Before It Launches Within Medline Brand, Drazin outlined performance by product category: Surgical Solutions: $1.6 billion, up 7%, led by surgical kitting. Front Line Care: $1.6 billion, up 6%, driven by demand in areas including exam gloves and personal care. Laboratory and Diagnostics: $293 million, up 1%, as double-digit core lab growth was offset by seasonally softer respiratory virus testing. Drazin said management remained confident in laboratory and diagnostics growth expectations for the rest of the year, citing the volume of lab signings in 2025 and expected new signings in 2026. In response to an analyst question, he added that the core laboratory business grew in the “high teens,” while respiratory virus testing declined due to a weaker flu season versus last year. → Tyson Foods' Total Returns: Tasty Treats for Income Investors? By channel, Drazin reported: U.S. Acute Care: $5.1 billion, up 12%, driven by new prime vendor customers and same-store growth. U.S. Non-Acute: $1.7 billion, up 7%, with strength in post-acute, surgery centers, and physician offices (which was impacted by the softer respiratory season). International: $495 million, up 10%, due to foreign currency and volume growth in Canada and Europe. Asked about utilization trends, Boyle said Medline did not see “much change in utilization” in the first quarter and described Medline’s growth acceleration as “share gains.” However, he said the company anticipates “some softening in the back half of the year” tied to reimbursement cuts and reduced access to insurance, while also noting that deferred care can translate into higher-acuity hospital visits. Adjusted EBITDA was $776 million, down 11% year over year. Drazin said adjusted EBITDA margin declined 250 basis points to 11%, citing higher costs and continued investments, partially offset by higher volumes. He highlighted “an incremental $85 million related to tariffs” (and referenced a $120 million net tariff impact in the quarter), along with ongoing operational investments. Segment profitability trends diverged: Medline Brand: Adjusted EBITDA margin fell 330 basis points to 22.1%, “primarily as a result of higher import costs due to tariffs.” Supply Chain Solutions: Adjusted EBITDA increased to $187 million, but margin declined 60 basis points to 4.8% due to “customer mix and operational costs to support customer demand.” During Q&A, Drazin said Supply Chain Solutions EBITDA came in “a little bit behind our expectations,” pointing to margin mix from new implementations and ongoing investment in sales, operations, and IT. Medline generated free cash flow of $316 million in the first quarter. Drazin said the result was driven by net income excluding non-cash items and partially offset by higher receivables from sales growth, increased inventory, and capital spending. First-quarter CapEx was $96 million, including distribution center enhancements and automation and capacity expansion for Mexico kitting manufacturing. The company ended the quarter with $2.2 billion in cash and cash equivalents and net leverage of 3.1x. In response to questions about capital priorities, Boyle said Medline’s first priority is to invest in the business, while also leaning into M&A “when we see the right opportunity.” If opportunities do not materialize, he said the company would use capital to further reduce leverage over time. Based on first-quarter performance, Drazin said Medline raised full-year 2026 organic sales growth guidance to 8.5% to 9.5%, up from 8% to 9%. The company maintained its full-year adjusted EBITDA guidance of $3.5 billion to $3.6 billion. Drazin said the EBITDA outlook reflects expected benefits from a lower tariff rate offset by continued investments and potential headwinds from rising oil prices tied to conflict in the Middle East. He noted Medline’s direct sales exposure to the region is “de minimis,” but the company faces input cost exposure through fuel and petroleum-linked raw materials. Drazin estimated fuel-related spending at about 50 basis points of total cost of goods and said the company expects a larger but “overall immaterial” impact in the second quarter if diesel remains above $5 per gallon. He also said supplier increases tied to petroleum-based products, including nitrile exam gloves, resins, and plastics, could take effect in the P&L in late Q2 or early Q3 due to inventory levels. On tariffs, Drazin said Medline is assuming the current 10% tariff rate expires mid-year and returns to higher levels seen prior to the Supreme Court IEEPA decision. Later in the call, he clarified that the company expects rates to revert to pre-ruling levels around August, noting that Section 122 measures run out after 150 days in late July and that policymakers may use Section 232 or 301 authorities to recreate prior rates. When asked about pricing actions, Drazin said Medline had not yet determined whether it would raise prices related to Middle East-linked inflation. He said that during prior tariff actions, Medline typically provided customers with 45 to 60 days’ notice before price increases and had previously chosen to absorb costs for a period to evaluate conditions. Beyond near-term financial performance, Boyle highlighted several strategic initiatives, including a first prime vendor partnership in Canada with Mohawk Medbuy Corporation, a Symbotic partnership to pilot AI-powered robotics in Medline’s Ohio distribution center next year, automation enhancements such as Pick Pack Pro in Montgomery, N.Y., and continued rollout of “Mpower,” an AI-enabled supply chain control tower built with Microsoft. Boyle said Medline expanded the Mpower pilot to 10 customers in the quarter and aims to offer it to most acute care customers by year-end. Medline (NASDAQ: MDLN) is a healthcare products and services company that manufactures, sources and distributes a wide range of medical supplies and equipment for healthcare providers. Its product portfolio spans clinical consumables and personal protective equipment, surgical and procedural supplies, wound care and incontinence products, diagnostic and laboratory supplies, and select durable medical equipment. Medline supports care settings that include hospitals, health systems, long-term care facilities, ambulatory clinics and home health providers. In addition to product manufacturing and distribution, Medline provides supply‑chain and logistics services designed to help healthcare customers manage inventory, reduce costs and streamline operations. The article "Medline Q1 Earnings Call Highlights" was originally published by MarketBeat.