Key financial results
- Third quarter net sales increased 10% year-over-year to $7.9 billion, driven almost entirely by organic growth with minimal foreign currency impact.
Third quarter net sales increased 10% as compared to the third quarter of 2025.
- Adjusted EBITDA rose 12% to $1 billion, and margins increased 10 basis points to 12.2%.
Adjusted EBITDA rose 12% to $1 billion.
- Free cash flow reached $1.8 billion for the first 9 months of the year, driven by net tariff benefits and favorable working capital.
We generated strong free cash flow of $1.8 billion for the first 9 months of the year.
- Cash and short-term investments totaled $3.6 billion and net leverage improved to 2.5x, down from 2.9x last quarter.
Cash and short-term investments were $3.6 billion and net leverage improved to 2.5x, down from 2.9x last quarter.
Business segment results
- Medline Brands: Medline Brands generated third quarter net sales of $3.6 billion, an increase of 7% with growth across all 3 product categories.
The Medline Brands segment generated third quarter net sales of $3.6 billion, an increase of 7%
- Surgical Solutions: Surgical Solutions generated net sales of $1.7 billion, up 8%, driven by surgical kitting and broader demand for operating room products.
Surgical Solutions generated net sales of $1.7 billion, up 8%.
- Front Line Care: Front Line Care net sales reached $1.7 billion, up 4%, driven by healthy demand in exam gloves and personal care.
Front Line Care net sales were $1.7 billion, up 4%
- Lab and diagnostics: Lab and diagnostics generated net sales of $272 million, up 14%, driven by growth with existing customers and new customer implementations.
Lab and diagnostics generated net sales of $272 million, up 14%
- Supply Chain Solutions: Supply Chain Solutions delivered net sales of $4.2 billion, up 14%, driven by new customer implementations and existing customer growth.
The Supply Chain Solutions segment delivered third quarter net sales of $4.2 billion, up 14%
- Supply Chain Solutions: Supply Chain Solutions adjusted EBITDA margin was 4.4% in the quarter, impacted by customer mix from new prime vendor relationships and higher operating expenses.
Supply Chain Solutions adjusted EBITDA margin was 4.4% in the quarter
- U.S. acute care: U.S. acute care net sales grew 12% year-over-year to $5.5 billion.
U.S. acute care net sales grew 12% year-over-year at $5.5 billion
- U.S. nonacute care: U.S. nonacute care net sales grew 6% year-over-year to $1.9 billion.
U.S. nonacute care net sales grew 6% year-over-year to $1.9 billion
- International: International net sales grew 8% to $518 million driven by volume growth in Canada and Europe.
International net sales grew 8% to $518 million
Capital allocation
- CapEx for the first 9 months was $348 million, reflecting distribution network automation, new distribution center construction, and Mexico kitting facility expansion.
CapEx for the first 9 months was $348 million
- Management prepaid $750 million on a term loan in October to demonstrate a disciplined approach to leverage.
demonstrated by the $750 million term loan prepayment we made in October
- The company established a newly authorized $1 billion share repurchase program to return capital to shareholders opportunistically.
Our newly authorized $1 billion share repurchase program gives us flexibility to do so opportunistically.
Industry trends and dynamics
- Management noted cost pressures from inflation tied to elevated oil prices, raising estimated Middle East conflict costs from $70 million to $80 million.
primarily inflation tied to elevated oil prices, which has increased our estimate of Middle East conflict costs from $70 million to $80 million
- Diesel costs for transportation remained elevated at close to $6.25 per diesel.
We're now paying close to $6.25 per diesel.
Competitive landscape
- The company secured strong total new customer signs across multiple channels, including physician offices for a major health system and hospital labs for a Midwest IDN.
We had another strong quarter of total new customer signs across multiple channels
- Management highlighted that the Canadian prime vendor partnership with Mohawk Medline is live at 5 hospitals with positive customer feedback.
our first prime vendor partnership with Mohawk Medline now live at 5 hospitals
Macroeconomic environment
- Third quarter results included an $81 million benefit from IEEPA tariff refunds and associated customer repayments.
Results included an $81 million benefit from IEEPA tariff refunds and associated customer repayments.
- Foreign currency had a minimal impact on net sales growth during the quarter.
driven almost entirely by organic growth with minimal impact from foreign currency.
Growth opportunities and strategies
- The new distribution center in Tracy, California is on track to open by year-end with the largest single auto store installation to date.
Our new distribution center in Tracy is on track to open by year-end
- The company plans to construct new facilities including a 1.2 million square foot distribution center in Dallas-Fort Worth, a 1 million square foot facility in Southern California, and an 800,000 square foot facility in Michigan.
Financial guidance and outlook
- Management raised full year 2026 organic sales guidance to 10% to 10.5% from 9% to 10%.
we are raising our full year 2026 organic sales guidance for the third consecutive quarter to 10% to 10.5% from 9% to 10%.
- The company reaffirmed full year 2026 adjusted EBITDA guidance of $3.3 billion to $3.4 billion, expecting to land near the midpoint.
We are reaffirming our adjusted EBITDA guidance of $3.3 billion to $3.4 billion and expect to land at approximately the midpoint.
- For the preliminary 2027 framework, management expects net sales growth in the high single digits and adjusted EBITDA growth in the low to mid-single digits.
- The company expects adjusted EBITDA growth to return to at or above net sales growth in 2028.
We continue to expect adjusted EBITDA growth to return to at or above net sales growth in 2028.
Quality and restructuring initiatives
- Under the Global Quality action plan, independent third parties are conducting assessments across more than 30 manufacturing sites worldwide.
engaged independent third parties to conduct assessments across our more than 30 manufacturing sites worldwide.
- The company launched a restructuring program expected to incur $20 million to $30 million in costs in the fourth quarter.
expect to incur approximately $20 million to $30 million in restructuring costs to be recorded in the fourth quarter
- The restructuring program is designed to generate approximately $80 million to $90 million in annualized savings, primarily realized in 2027.
expect these actions to generate approximately $80 million to $90 million in annualized savings, primarily realized in 2027.
Q3 FY2026 results
| Metric | Result | Change |
|---|---|---|
| Net sales | $7.9 billion | 10% |
| Medline Brands net sales | $3.6 billion | 7% |
| Supply Chain Solutions net sales | $4.2 billion | 14% |
| Adjusted EBITDA | $1 billion | 12% |
| Free cash flow | $1.8 billion | Not stated |
How management sounded
Balanced (+25 on our -100 to +100 scale). Management highlighted strong top-line momentum and raised sales guidance, while openly addressing near-term margin and inflation pressures. Management sounded more upbeat than on 6% of the 302 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Read the analyst Q&A summary and guidance and outlook for this call.
What to watch before the next call
- Execution of the Tracy distribution center opening by year-end and automation improvements in mid-2027.
- Implementation of price increases in early 2027 to offset inflationary pressures.
- Progress on the enterprise cost savings and restructuring program expected to generate $80 million to $90 million in annualized savings.
Earlier calls
- Q2 FY2026 (Aug 5, 2026), tone Balanced: Medline reported 12% top line growth to $7.7 billion in the second quarter and raised its full year organic sales guidance to 9% to 10%, while lowering its adjusted EBITDA outlook due to operational and quality investments, the Tracy fire, retail softness, and Middle East inflation.
