# Medline (MDLN)

Sector: Medical supplies distribution

| Field | Value |
|---|---|
| Price | $35.96 |
| Fair value (Analysts) | $43.00 |
| Discount to fair value | 16.4% |
| Fair value uncertainty (Analysts) | Medium |
| Economic moat (Analysts) | Narrow |
| LSEG analyst rating (1 strong buy to 5 strong sell) | 1.86 |
| Data as of | 2026-10-16 |
| Next earnings | 2026-11-05 (estimate) |

## In short

The market prices Medline for a cut to its profit guidance, the Tracy fire and sales by its private equity owners, and results on the new guidance with good insurance recoveries can close the gap.

## Themes and gap

- Themes: Tariffs and trade (trade-tariffs), Regulation and courts (regulation-legal), High debt (leverage)
- Gap type: Can close (closable)
- Why: The Q3 2026 report, the insurance recoveries for the Tracy fire and the 2027 guidance in early 2027 show whether profit growth returns.

## About

Medline is the largest provider of medical-surgical products and supply chain solutions, and it serves all points of care: hospitals, surgery centers, physician offices, nursing homes and home care. It makes and sources many products under its own Medline brand, such as gloves, gowns, surgical kits and wound care products, and it also distributes products of other makers. It owns a large network of distribution centers. Medline is based in Northfield, Illinois. It sold shares to the public on December 18, 2025, at $29 per share, and Blackstone, Carlyle, Hellman & Friedman and the Mills family still own large stakes.

## Thesis

The market prices Medline for lower profit growth and for the shares that its owners still have to sell. In August 2026, Medline lowered its 2026 Adjusted EBITDA guidance to $3.3 billion to $3.4 billion from $3.5 billion to $3.6 billion, because of inflation from the Middle East conflict, more spending on operations, quality remediation and weak retail sales. A fire destroyed its Tracy, California distribution center on June 11, 2026, with losses of $336 million before insurance. Medline also has three unresolved FDA warning letters, and its private equity owners sold 72.6 million shares in May 2026, so more sales are possible. For the gap to close, three things must be true. Medline must reach its new 2026 guidance while organic sales grow 9.0% to 10.0%. Insurers must pay a large part of the fire losses. The company must resolve the FDA warning letters without large recalls. The Q3 2026 report, expected in early November 2026, and the 2027 guidance in early 2027 give the next evidence. If these checks pass, the gap can close over the next three to five quarters. The main reason it may not close is that cost inflation and remediation costs continue, so that profit grows much more slowly than sales.

## Checkpoints

- Nov 5, 2026 (estimate): Q3 2026 earnings: new guidance. Status: Pending. Watch: Organic sales growth near 9% to 10% and Adjusted EBITDA on track for $3.3 billion to $3.4 billion pass; another cut to the guidance fails.
- Q1 2027 (estimate): Tracy fire insurance and 2027 guidance. Status: Pending. Watch: Insurance recoveries for most of the $336 million of losses and guidance for higher Adjusted EBITDA in 2027 pass; small recoveries or flat profit guidance fail.

## Balance sheet

- Cash: $2.3B
- Debt: $12.6B
- Net debt: $10.3B
- Net debt / EBITDA: 2.9× (medium)
- Interest cover: 3.2×
- Debt due within 12 months: $29M

At June 27, 2026, borrowings were $12.58 billion: long-term borrowings of $12.55 billion and current and short-term borrowings of $29 million. Cash was $2.33 billion, and time deposits were $350 million. Net debt, as Medline defines it, was $10.07 billion, or 2.9 times Adjusted EBITDA. Interest cover is operating income divided by net interest expense for the first half of 2026. In May 2026, Medline refinanced its term loan due 2030 with a new term loan due 2033. Free cash flow was $920 million in the first half of 2026.

As of 2026-06-27.

Sources:

- https://www.sec.gov/Archives/edgar/data/2046386/000204638626000049/ex9912q26pressrelease.htm
- https://www.sec.gov/Archives/edgar/data/2046386/000204638626000051/mdln-20260627.htm
- https://www.sec.gov/Archives/edgar/data/2046386/000119312526252557/d50280d8k.htm

## Recent events

- 2026-10-13: Joseph Baratta told Medline that he will leave its board on December 31, 2026, at the same time as his departure from Blackstone. Medline said that his decision is not the result of a disagreement with the company.
- 2026-08-05: Medline reported Q2 2026 results. Net sales were $7.7 billion, up 11.6%, and Adjusted EBITDA was $1,060 million, up 13.4%. Net income fell 58.3% to $139 million because of losses from the Tracy fire. Results included $243 million of net IEEPA tariff refund benefits. Medline raised its 2026 organic sales guidance to 9.0% to 10.0% and lowered its Adjusted EBITDA guidance to $3.3 billion to $3.4 billion.
- 2026-07-07: Stephen Miller, the Chief Operating Officer, told Medline that he will retire on August 30, 2026, for health reasons. Medline started a search for a successor.
- 2026-06-11: A fire destroyed Medline's distribution center in Tracy, California. All employees left the building safely. Medline estimated losses of $336 million for inventory, fixed assets and other costs, before insurance recoveries, and it leased two other distribution centers in Northern California.
- 2026-05-28: Funds of Blackstone, Hellman & Friedman and the Abu Dhabi Investment Authority sold 72,554,594 Medline shares at $37.00 per share. Medline received no money from this sale. On the same day, Medline refinanced its term loan due 2030 with a new term loan due May 28, 2033.

## Risks

- Medium: Costs rise faster than prices. Inflation from the Middle East conflict, tariffs and spending on operations made Medline lower its 2026 Adjusted EBITDA guidance in August 2026.
- Medium: Medline has three unresolved FDA warning letters about its quality systems and manufacturing practices. Quality problems can lead to recalls, product holds or more remediation costs.
- Medium: The private equity owners still own large stakes. More sales of shares, such as the sale of 72.6 million shares in May 2026, can put pressure on the share price.
- Low: Medline has a tax receivable agreement with its pre-IPO owners. The liability was $4.39 billion at June 27, 2026, and payments under it will use cash for many years.

## Links

- Page: https://picks.kamadorueda.com/company/MDLN/
- History of changes: https://picks.kamadorueda.com/company/MDLN/history/
- JSON with full history: https://picks.kamadorueda.com/data/company/MDLN.json

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