Welcome to Medline's first-quarter 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 statement and risk factors contained in our earnings release, which accompanies 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 comparable GAAP measures in the earnings release and our disclosures and non-GAAP reconciliations that accompany these remarks, which are available on our website at ir.medline.com under Quarterly Results.

I want to remind you that we close and report on a 4-4-5-week calendar, which can create differences in days per quarter. What this means is that certain quarters could have slightly more or less days than the same quarter in the previous year.

For the first quarter of 2026, we had one less day versus the first quarter of 2025, which is a headwind. We have included a calendar of days in the supplemental disclosures available on the Medline Investor Relations website.

With that, I will now turn the call over to our CEO, Jim Boyle.

Thank you, Karen. Welcome to Medline's first-quarter 2026 earnings call.

We appreciate you joining us. I'll begin with a brief performance update for the quarter.

Mike will then review our financial results, and I'll close before we open the lines for Q&A. Turning to our performance, we started the year with 11% top-line growth in the first quarter, powered by one of our strongest quarters ever in Supply Chain Solutions.

That momentum is being fueled by implementation of the $2.4 billion in new customer signings we delivered in 2025 and existing customer growth. We also delivered another strong quarter of new customer signings.

Several of our larger wins displaced long-tenured incumbents that have held those accounts for more than a decade, and most of the deals spanned multiple channels, highlighting Medline's differentiated model and unique ability to serve customers across the entire continuum of care. Adjusted EBITDA was $776 million, an 11% decline versus prior year, reflecting robust sales that were more than offset by anticipated higher cost of goods sold, including incremental tariffs and continued operational investments to support our customers and long-term growth.

I also want to highlight the progress we've made across several key initiatives during the quarter. First, we've been diligently working on signing our first prime vendor customer in Canada, and I'm excited to announce that we have partnered with MMC, or Mohawk Medbuy Corporation.

Mohawk Medbuy is a dominant player in Ontario, serving over 300 total healthcare organizations, and we have been selected to serve as their prime vendor for nine acute member hospitals in southwestern Ontario. We are looking forward to starting implementation in the second half of 2026.

We are encouraged by the opportunity this represents and believe this partnership can help demonstrate the strength of our prime vendor model and support future PV opportunities across Canada. Second, aligned with our investment thesis in next-generation supply chain technology, we announced our partnership with Symbotic.

The Symbotic system is an AI-powered robotics platform that automates picking, storage, and retrieval of bulk items for distribution. Medline is the first healthcare company to deploy Symbotic, and we expect to begin piloting this technology next year at our Ohio distribution center with the goal of increasing throughput and the scalability to provide even more efficiency for our customers.

We also introduced PickPack Pro, a new automation fulfillment system in our Montgomery, New York distribution center. PickPack Pro is an innovative combination of four separate advanced technologies that address the unique needs of our health plan customers by improving speed, accuracy, and reliability for a more efficient fulfillment solution.

Finally, we continue to make strong progress rolling out EMPOWER, our AI-enabled digital supply chain control tower designed in partnership with Microsoft. In Q1, we added several customers to the pilot, reaching 10 in total, and we are receiving early feedback that customers are already realizing efficiency gains, improved inventory flow visibility, stronger supply and demand planning, and predictive insights to help stay ahead of disruptions.

We aim to expand the rollout in Q2 and offer EMPOWER to most acute care customers by year-end. Our goal has always been to operate the most broad and robust supply chain in the industry as a vertically integrated manufacturer and distributor.

To do so, we believe we must continue to evolve and invest accordingly. As the global operating environment becomes more complex amidst tariffs, geopolitical uncertainty, and supply chain disruptions, we have further strengthened our manufacturing and distribution footprint and maintained robust inventory levels to support our customers.

Our Medline brand includes approximately 190,000 products supported by an increasingly diversified global supplier network. Today, nearly 90% of our Medline brand products are multisourced, up 10 percentage points from five years ago.

This scale and complexity require constant and rigorous supply chain, quality, and regulatory discipline. For us, patient safety and product quality come first.

Our customer complaint rate is less than one complaint per million units sold, well below six sigma benchmarks. Any Medline recall is an action we believe is in the best interest of patients and our customers, made in close coordination with regulators, and designed to minimize risk and disruption.

Our recalls today are immaterial to our financials. We remain committed to building the most broad and robust supply chain in the industry to enhance resiliency and regulatory compliance across our network and to better position Medline to navigate global complexities.

With that, I'll turn the call over to Mike to do a deeper dive into the financials and update on our 2026 outlook.

Thank you, Jim, and good morning, everyone. We had a strong start to the year with the first quarter net sales of $7.4 billion, up 11% versus prior year.

The majority of our growth was organic with minimal contribution from foreign currency changes. The one less business day in the quarter provided a headwind of approximately 2 percentage points.

The Medline brand segment delivered $3.5 billion of net sales in the first quarter, up 6% versus prior year, or 8% adjusted for days. Looking at Medline brand sales by product category, starting with Surgical Solutions, net sales were $1.6 billion, up 7%, led by continued strong growth in surgical kitting, as we discussed last quarter.

Frontline Care net sales reached $1.6 billion, up 6%, driven by robust demand across multiple product divisions, including exam gloves and personal care. Lab and Diagnostics generated net sales of $293 million, up 1%.

Double-digit core lab growth was offset by seasonality related to softer respiratory virus testing. We remain confident in our growth expectations for the remainder of the year due in part to the large number of lab signings in '25 and expected new customer signings in '26.

Transitioning to Supply Chain Solutions, the segment delivered $3.9 billion in net sales in the first quarter, up 15%, or 17% adjusted for days. This was a great quarter for the segment, which benefited from new customer implementations and existing customer growth, further increasing our pipeline for future Medline brand conversion opportunities.

Moving to sales by channel, US acute care grew 12% to $5.1 billion, driven by growth with new prime vendor customers and solid same-store sales growth. US non-acute grew 7% to $1.7 billion, supported by strong existing customer growth and new customer signings in post-acute, surgery centers, and physician offices, the latter of which was impacted by the softer respiratory season, as I mentioned earlier.

International grew 10% to $495 million due to foreign currency and volume growth in Canada and Europe. Turning to adjusted EBITDA, the first quarter came in at $776 million, down 11% versus prior year.

Adjusted EBITDA margin declined 250 basis points to 11% due to higher costs, including an incremental $85 million related to tariffs, or a $120 million net impact, and continued investment to support net sales growth, partially offset by higher net sales volume. Medline brand adjusted EBITDA decreased $65 million to $765 million.

Adjusted EBITDA margin declined 330 basis points to 22.1%, primarily as a result of higher import costs due to tariffs. Supply Chain Solutions adjusted EBITDA increased $5 million to $187 million.

Adjusted EBITDA margin declined 60 basis points to 4.8%, primarily as a result of customer mix and operational costs to support customer demand. Moving to free cash flow and the balance sheet, we generated free cash flow of $316 million in the first quarter, driven by net income, excluding non-cash items, partially offset by increased trade accounts receivable related to sales growth, increased inventory, and investment in CapEx.

CapEx for the first quarter was $96 million, which included investments in enhancements and automation in our distribution centers and capacity expansion of our Mexico kitting manufacturing. Cash and cash equivalents were $2.2 billion, and net leverage remained at 3.1 times.

Aligned with our disciplined capital allocation policy, we will continue to invest in the business and seek opportunities that are aligned with our strategic direction, optimize our balance sheet, and bring value to our customers. Let me now transition to 2026 annual guidance.

Based on our strong sales performance in Q1, we are now raising our full-year 2026 organic sales growth guidance to a range of 8.5% to 9.5% from our previous range of 8% to 9%. This is reflective of the solid same-store sales growth in the quarter due to steady healthcare utilization and procedural volumes.

Our full-year organic sales guidance still assumes some moderation of same-store sales growth on a sequential basis in the second half of the year, as previously communicated. We are maintaining our full-year adjusted EBITDA guidance of $3.5 to $3.6 billion.

We expect to generate some favorability from the lower tariff rate, offset by continued investments in operations, sales, and IT to support customer demand, and headwinds from rising oil prices due to the Middle East conflict. We have assumed that the current 10% tariff rate will expire mid-year and then return to the higher rates we experienced prior to the Supreme Court IEEPA decision.

Let me provide a brief overview of the situation in the Middle East. From a top-line perspective, our exposure remains limited as we generate de minimis sales in the region.

From an input cost perspective, we spend approximately 50 basis points of our total cost of goods on fuel for domestic freight and fuel surcharges for inbound freight. We experienced minimal impact to the P&L in the first quarter, and we expect to see a bigger impact, albeit overall immaterial, in Q2 with diesel above $5 a gallon.

We have begun to see cost increases from our suppliers tied to raw material spend for petroleum-based products, including nitrile exam gloves, resins, and plastics, and are working to mitigate these costs where possible. Given we carry a significant amount of inventory, we don't expect to see these inflationary costs hit our P&L until late Q2 or early Q3.

Consistent with how we have historically managed inflationary matters, we do not intend to react immediately, but take a measured approach as we assess the situation. Should the conflict evolve, we will plan to execute our playbook and share updates on the impact to our business.

As you consider the quarterly cadence of our results, we expect to see continued operational investments to support customer demand in Q2, as well as headwinds from the Middle East conflict, as I just indicated. As sales grow and the benefits from mitigation actions and tariffs transpire the second half of the year, we expect sequential adjusted EBITDA growth.

In summary, we began 2026 with strong momentum, delivering double-digit sales growth and raising our full-year organic sales guidance. While operating in a dynamic environment, we remain focused on delivering value for our customers.

Through continued investment in our operations and an agile approach, we believe we are positioned to navigate near-term challenges and capitalize on opportunities ahead. I'll now turn the call back over to Jim for closing remarks.

Thanks, Mike. To wrap up, we are pleased with the strong start to the year, driven by the implementation ramp of our $2.4 billion in 2025 total new customer signings and solid same-store sales growth.

We also posted another strong quarter of new signings, most of which are multi-channel, reinforcing our differentiated ability to serve customers across the full continuum of care. We're investing to scale this growth while maintaining the high service levels our customers expect.

We are energized by the opportunities ahead, including our first prime vendor deal in Canada, the expansion of EMPOWER, and continued automation across our distribution network, positioning Medline to create value for our customers, drive durable long-term growth, and enhance shareholder value. Thank you for joining us.

We will now turn the call over for questions.

Good morning and thanks for taking the question. Maybe if I can dive into the macrodynamics, Mike, I heard you talk about the moving pieces and how you tend to address it historically, but as you're seeing the price increases, how much lead time are you planning to give both to your clients and your manufacturer partners on changes that you want to make, and how should we think through, maybe using tariffs as an example, the push and pull in terms of what you're assuming that's embedded within your reiterated EBITDA guidance?

Thank you.

Hey Michael, thanks for the question. We have not made a determination yet that we're going to raise prices as it relates to the Middle East conflict.

We still continue to evaluate the impact to our business, how long this may last, what costs are being impacted, and at what rates. We'll evaluate and run our playbook as we have run in the past.

If you think about price increases in the past as related to tariffs, we simply have notified our customers about 45 to 60 days in advance of those price increases. If you recall back to the tariff impact we had earlier last year, we took the time to absorb those cost increases, to evaluate the situation, ultimately we then raised prices around August of last year, and we really did that on purpose in order to maintain our understanding of the situation.

That led to sort of share gains for us, as you see from the $2.4 billion of signings that we had last year.

Thanks for taking the question. If we're walking through sort of the guidance here, obviously you're raising organic revenue, you're maintaining adjusted EBITDA guide.

It appears that maybe we saw faster-than-expected client implementations, which benefits revenue, but maybe drove higher OpEx. Is that the right way to think about it, and then maybe to follow up on Michael's question, your thoughts on the input costs related to the conflict?

On guidance, you got it right, Charles. We essentially believe that, given our strong performance in the first quarter as relates to sales growth of almost 11% growth top line, 13% adjusted for days, we have raised our organic guide to 8.5% to 9.5% for the year.

We feel very good about being able to achieve that goal. On the EBITDA side, we have held EBITDA at $3.5 to $3.6 billion in the face of both the Middle East conflict, additional investment in our business, offset by some favorability from tariffs.

We feel good about it and we expect to be able to deliver on our EBITDA guidance based upon all of those factors. As it relates to conservatism and our Middle East guidance, what I would say to you is this: The situation is obviously very very dynamic and uncertain.

As we understand the situation, as the situation evolves, as oil prices continue to moderate from day to day, we aren't going to take a reaction too quickly. As we have a better understanding of where we're going to settle as it relates to things like nitrile exam gloves, resins, and plastics, we'll then take action accordingly to run our playbook and then take the mitigation actions we need, which could include price increases, but we have not made that decision to do so today.

Got it. Appreciate it.

Thanks for the comments.

Hey guys, thank you for taking the questions. I was wondering just for a little more detail on the prime vendor signings in the quarter, obviously coming off a really strong '25 on that front.

If you could just give a little more detail on what you saw in the quarter, and the right way to think about expectations as we work our way forward on that front would be helpful.

Morning, Patrick. We did see a strong start to the year in new prime vendor signings.

We aren't giving quarterly kind of actual numbers on that because, as they can be lumpy, and you can't extrapolate if we did $500 million this quarter, it doesn't mean we're going to do $500 million every quarter. That's a made-up number, I'm not giving what the actual number is.

We are in line with our expectations and expect to achieve our goal of the billion dollars in new prime vendor signings. We're headed in the right direction, and we feel very good about what we closed year to

date. That's helpful.

Thank you.

Hi guys. Thank you so much for the question.

Maybe one, could you help us understand the puts and takes in the supply chain business maybe a little bit more, particularly on the profitability in the quarter? Then two, could you just comment on whether you think last year's PV ramps are sort of on, ahead, etc.

of schedule sort of on those ramps coming up. Thank you.

Thanks, Elizabeth. I'll take the first question and then Jim will take the second question.

On the Supply Chain Solutions business, this quarter, we saw really strong top-line growth of over 15% growth, 17% if you adjusted for days. Really, really pleased with our results there, a little bit better than our expectations, as we called out.

Really that was driven by both same-store sales growth, strong growth on the demand side from our existing customers, as well as we saw these new implementations that we talked about previously, the $2.4 billion of new implementations that occurred that we signed last year, as we recognize them in the current quarter. From an EBITDA perspective, EBITDA came in a little bit behind our expectations, but really driven by the fact that we had both some mix as it relates to new customer signings and the margin on those new customer signings as given the sizable implementations, but also given the investments in our business.

Let me just talk about the investments in our business for a second. We've always talked about the fact that we invest for the long term, we invest to sustain our growth, we made an effort to do that again in the first quarter.

Also, if you think about those investments, those investments happened back in the second quarter, third quarter, and fourth quarter of last year as well, that carried into the first quarter of this year. We're investing in our sales, to continue to drive the growth in the top line.

We're investing in operations to make sure we have the best service levels in the industry. We're investing in IT to make sure we have the best cyber, the best AI capabilities, and to invest in things like warehouse management and other capabilities as well.

We continue to invest in the business for the long term. Those two things, both the mix and the investments, impacted our margin in Supply Chain Solutions for the quarter.

Morning, Elizabeth. As to that, we are on par with the ramp-up we talked about of the $2.4 billion in total new customer signings for 2025.

As you remember, historically, it's normally been 10% in the first year, 70% in the second year, and then the rest in the third year. We had some large signings in 2025, and went in earlier in the year, that yielded 25% revenue realization in 2025.

We'll get 65% in 2026, and the rest will be in 2027. It's in line with what we shared in the past.

Great. Thanks, guys.

Thanks. Good morning.

Maybe just going back to the tariffs, you all talked about before the various tools you have to mitigate some of the burden from those. Some of them can have a pretty immediate impact, like Mike, you talked about the price increases, others like changing countries where you manufacture, who you partner with can take longer.

Maybe can you just frame for us how much work is happening behind the scenes on some of these longer-term mitigation efforts, like changing countries, changing partners? Then, just anything on timelines when benefits from those should start to flow through.

I guess, are there likely mitigation benefits that continue to come through over the rest of this year and then maybe lag into next too?

Hey Sean, good morning. Listen, what you're describing is in our DNA every day regardless of what's happening, and it's something we focus on with very, very intentional focus.

That's part of having over 90% of our products from Medline brand have multiple sourcing options, and that's up 10%, as we talked about, from five years ago. Our teams are always navigating kind of what's the best geography and location and sourcing platform to get the best outcome.

They're doing it both during and in advance of the challenges so we can actually move quickly with our decisions based on what's happening. As part of the challenge right now with the Strait of Hormuz is access to oil, which actually is one of the number one things for NBR and the ability to actually take exam gloves, for example, that'll have a burden.

We own our fleet of trucks, you'll have some challenges with fuel. We're doing everything we can to navigate that, making sure we're sourcing from the right location.

We're buying in advance of the challenges to make sure that we get enough inventory on hand to kind of solve some of the things that are going on. We will continue, as Mike mentioned, we're going to leverage our playbook and understand what's happening today, not react in terms of actually pushing price increases through until we fully understand the problem.

As Mike mentioned, the current situation is very, very dynamic and it's changing every day, and who knows, it can change tomorrow. If you remember, tariffs last year went from 30% to 145% and then went back down to 30% in a very short timeframe.

Had we reacted in that time, we would have looked silly, and that's the way we view this situation. We're going to continue to leverage our playbook to do as much as possible internally to mitigate any challenges before we pass anything on to our customers.

You'll feel that throughout the entire year, because we're going to get some now, some later, and some long term.

Great. Thank you.

great. Thanks very much and good morning.

Jim, I wonder if you can maybe just talk about new product launches and your expectation of what you saw in the quarter and kind of what your expectations are going forward, and where your new customers are most focused.

From product launches, there were very few new products launched in the first quarter. We did launch the forced-air warming we've talked about in the past in a more robust fashion in the first quarter.

Our teams are focused on making sure we continue to add additional categories to our lines each and every year, and we have more that will come throughout the rest of the year. Honestly, what we've been focused mainly on is making sure that we create stability around the current challenges and really laser-focused on mitigating any challenges for our customers on a go-forward basis.

From a new customer perspective, we continue to sign new customers. We continue to advance the brand throughout the conversion profile with our existing customers, both with those new customer signings.

As the first year we normally double the Medline brand penetration going from 10% to 20%, and then with our existing customers, continuing that pipeline of 3% to 4% increase, consistently driving value for our customers. It's been one of first and foremost focusing on the current situation to make sure we mitigate and really create differentiation and really scalability and optionality around the current challenge state, and then focusing on making sure we continue to drive value for our customers through our existing categories, and then finally expanding the brand through new categories from a product launch perspective.

Thank you.

Hi, good morning. Thanks for taking the question.

I guess you made a couple comments in the prepared remarks about a stable operating environment and utilization, and I guess I was hoping just with your broad lens, you could comment more on that, because there's been debate or concern about utilization softening with things like ACA expiries or just macro uncertainty that we're seeing globally. I'd love any more color you can provide on the trends you're seeing with utilization and spending.

We can tell you in the first quarter, we didn't see much change in utilization. The acceleration in growth for us is share gains, but the actual utilization seemed pretty consistent or on par with what we expected.

That being said, we do anticipate some softening in the back half of the year, just specifically due to cuts in reimbursement, the lack of access to insurance, the OBBA. There is some conservatism and some concern around that in the marketplace, which may lead to some softening of really consumers' or patients' willingness to go get access to care.

I will tell you the inverse of that is that consumer or that patient who is not going to get care for the flu, in many cases actually ends up in the hospital or in the emergency room with actually a more complex procedure, which ends up increasing the cost of care. The net effect might actually end up being something very consistent from an overall total revenue or total impact perspective to the marketplace.

It just might look different as opposed to patient volumes. It might be a higher acuity case that's coming into healthcare.

Right now, the way we look at it is the first quarter we didn't see much impact from a reduction in patient volumes. However, I think the entire industry is indicating that there might be some softness coming in the back half of the year.

Great. Thank you very much.

Thank you. Good morning, everybody.

I wanted to see if you could go into a little bit more detail on some of the underlying drivers here on the Medline brand side of the business, both in Q1 and how you're thinking about the balance of the year, understanding that there was an impact here on Lab and Diagnostics consistent with what everyone has talked about on flu and related sales in that category, but maybe help us think about some of the key drivers in that franchise as you go through the balance of the year, and then how that factors into just the overall mix of performance Medline brand versus supply chain solutions in the updated outlook.

Hey David, thanks for the question. Medline brand growth of about 6%, reported growth of 6% or 8% adjusted for days was very much in line with our expectations.

Frontline Care grew at about 6%, really sort of in line with expectations as well. Solid growth there given the market dynamics.

Surgical Solutions continues to be a strong category for us, up almost 8% and almost 10% adjusted for days. Then, as you called out, Lab and Diagnostics, really growing only 1%, but if you really look at the two components, there's a core business there that actually grew high double digits, high teens, and then there's a seasonal business, respiratory virus testing business, that basically was down year over year as you may recall given the fact that the severity of the flu season was weaker this year relative to last year.

We still expect the Lab and Diagnostics business to be very strong this year, given sort of the continued core base business growth, and that flu respiratory virus season really happened primarily in the first quarter. Really expecting continued strong growth getting out of the first quarter here for that Lab and Diagnostics business overall.

Medline brand continues to be a strong growth driver for us, as given both the same-store sales growth, as well as our continued focus on conversions with our existing customer base. From a Supply Chain Solutions perspective, we already talked about this, but Supply Chain Solutions grew at a very healthy rate in the top line given both same-store sales and the new customer signings.

We expect that to continue throughout the year given that $2.4 billion of signings we had. Now, as we recalled out previously, and Jim just mentioned this, we do expect some moderation in our same-store sales growth on a sequential basis in the back half of the year given the challenges we may face given the uncertainty around ACA, OBBA, those types of things.

Overall though, still expecting strong growth out of the supply chain business.

Hey, good morning, guys, and thanks for taking my questions. I guess, how many days inventory do you typically run between your Medline brand versus your Supply Chain Solutions?

You talked about the inflationary pressures sort of 2Q and 3Q. Can you sort of break that out of how we should think about the inflationary pressures in both segments, or if it's just in Medline brand?

Any way you can help quantify for us if these current plastic, resin, fuel costs remain stable at these levels for the rest of the year? Thank you.

On an inventory basis, we carry about 80 days of inventory on hand overall. We carry more in the Medline brand side, less obviously in the Supply Chain Solutions side.

To the point about inflationary pressures, let's just talk about those for a second. If you think about the tariffs, let's start with the tariffs first in the quarterly cadence.

As we called out last year, we were expecting about $200 million of incremental tariff headwinds, year on year, $490 million overall. We expected the majority of that to happen in the first half of this year and it's playing out just as we thought.

We saw about $120 million of tariff impact in the first quarter, $85 million incrementally. Essentially the remainder of that inventory that's at a higher tariff cost will be sold here in the second quarter.

Then if you think about the fact that the tariffs are now at a 10% rate as of essentially late February, early March, we expect the favorability from that 10% rate to hit us in the back half of 2026. You'll see some favorability on the Medline brand margin side given that tariff favorability.

The flip side of that is we expect to see the Middle East impact not really hitting us materially until the back half of the year, although we're starting to see some fuel cost impact. Diesel costs as it relates to our trucks and our trailers to move our products around domestically, we have started to see some impact from that as diesel fuel is above $5 a gallon at the moment, and so we'll see some impact from that.

The biggest impact on the inventory side from both nitrile exam gloves, resins, and plastics will really happen and starting to happen now as far as the cost increases, but those won't land in the US until sort of the second half of the year and show up on our P&L at that point in time. The last component of our quarterly cadence would be the operating investments in our business.

Obviously, we made those investments last year, some are continuing into this year, and so those are going to show up throughout the next couple quarters as well.

Great. Thanks so much.

Thanks. Good morning.

My question was maybe somewhat similar to that last one, but I guess I was just trying to figure out across all the manufacturing inputs for exam gloves, and resins, plastics, etc., what percent of your overall Medline brand product portfolio maybe impacted by the rising commodity inputs? Are we talking about 10% to 20% of the total MB book of business, or maybe something greater?

Then also, is it safe to say that exam gloves is the biggest product category that maybe impacted by this, or is that not necessarily the case? Just trying to get more [clears throat] context around all that.

Thanks.

We're not going to quantify for you that impact right now, Steven, and the reason for that is because only a percentage of our overall cost of those goods are actually impacted by the oil. If you think about that, the reality is that if you think about exam gloves, for example, a portion of the exam glove is impacted by oil prices, but exam gloves is our biggest category.

Plastics and resins, we buy some resins for purposes of manufacturing plastics, we buy plastics as well. Those are the three major categories that are impacted.

What we'd still tell you now is that the Middle East impact that we expect in the back half of this year is offset by the tariff favorability.

Got it. Thanks.

Thank you, and thanks for taking my questions. I want to ask about your first prime vendor partnership in Canada.

Congrats on that. I know it's still pretty early here, but has anything changed from your expectations or how you think about that market and opportunities there?

As it relates to your annual goal of $1 billion in new customer signings, did this already include signings from the Canadian market, or could we see some upside if you keep signing more customers there?

Good morning, Jailendra. The $100 billion a hundred the billion dollars in prime vendor signings is US only, so that new prime vendor closing in Canada is in addition to.

We're really excited about it because it's a way that's potentially changed the dynamics of the market of how products are delivered, and could lead to an acceleration of the Medline brand conversions in that space as well. It is the first prime vendor in the Canadian market.

As we talked about, it's a nine-hospital system that we're working with Mohawk Medbuy Corporation on. We're in the beginning stages of it, and this is something that we will learn.

I think it's too immature for me to give guidance or any kind of anticipation around what we expect. What I can tell you is, we will leverage the playbook we have in the US to drive significant value to the Canadian customers who are in this partnership.

I can tell you we already have customers asking, could we be next, but we want to actually build really the playbook and really the design with Mohawk Medbuy with this group of customers to make sure we deliver the right value and really the right supply chain mechanisms to create the right product, the right place, at the right time with the best value. It is in addition to, and we think it's really an opportunity to change the dynamics in really healthcare distribution in the Canadian space.

Great. Thanks a lot.

Hi, good morning. I have a big-picture, long-term question on your Lab and Diagnostics franchise.

I perceive most of those products to serve hospital labs, doctor office labs, and maybe high-volume clinical labs. My question is, what is the ambition for building that portfolio to serve research laboratories, education settings, maybe pharma or industrial manufacturing?

Where does that stack rank on your priority list of long-term business expansion? Thank you.

You hit the nail on the head. We are in physician office and acute care and some educational labs as what we're focused on right now.

Candidly, it's a $25 billion TAM that we do $1 billion in. There's so much opportunity in what we have, and perfecting how we go after that business and capitalizing on the opportunity in front of us is really first and foremost before we think about research labs and other things.

One of the things we always do is try not to really eat the pizza all at once. We're going to eat a piece at a time.

The way I look at this is this is something we're focused on and it's just a tremendous opportunity. As Mike mentioned earlier, the core lab growth, taken apart from really what happened with flu, is up double digits, right?

It's growing significantly. It's something we're pretty excited about.

Really within that framework, between Lab and Diagnostics, 30% of that is a Medline brand convertible opportunity. Right now, candidly, we're focused on the opportunity in front of us before we think about expansion.

Thanks very much and good morning. I guess I'll stick with my buddy Mike's line of questioning on market expansion since most of the main topics have been covered.

I'm curious on an update on your initiatives, progress, next steps in dental and animal health. If you could provide us some updates in those categories, would be fantastic.

Thank you very much.

Thanks, Eric. As we bought Sinclair in the Canadian market and really that's a way for us to really understand the dental space.

What our teams have been focused specifically on is creating the Medline brand convertible opportunities within that segment to make sure that we could actually build a model that mimics how we do it in the US, both in the acute and physician office and surgery center space, we could drive value for our customers from a Medline brand perspective and create a margin lift for our brand. I can tell you we're ahead of the curve and we already have 30% convertible opportunity.

Our Medline brand divisions are doing a stellar job of creating Medline brand equivalent to that market. What we're also learning is really that service model and making sure we have the service techs that can service the business, because if you don't service the business, you don't get the opportunity for the distribution.

We're building that out. I'm very optimistic in where we're headed, and I do think it's a potential for the US, but we want to get really the full playbook built in advance of doing that.

I can tell you we're ahead of the curve in terms of where we planned, and I think there's an opportunity to make it look and feel not much different than the rest of the business in the US, which would be very, very positive. Second, from an animal health perspective, that is a market today it's a $4 billion TAM.

We continue to expand that TAM as we add new Medline categories. That is a brand business.

That is not a distribution business. We're not looking to be a distributor of dog food and flea collars.

What we want to be is a manufacturer of medical supplies in that space. We're leveraging partnerships with Covetrus, Wedgewood, MWI from a distribution platform, and it's growing nicely, and we think it's a tremendous opportunity for growth on a go-forward basis.

Hey, can you talk a little bit more about your AI efforts, EMPOWER, the digital supply chain control tower, just any color you can put around how that improves your clients' performance or perhaps improves your COGS? Then also, any more color around the robotics in the warehouse would be very helpful.

Thanks a lot.

We're really excited about EMPOWER because we think it's going to change the dynamics of how customers look at their overall supply chain and give them advanced analytics so they can be prepared in advance of any challenges. We're already seeing a 50% improvement of throughput and engagement as it relates to disruptions in the market.

One of the biggest challenges in healthcare is how do we get in front of hurricanes? How do we get in front of supply chain disruptions to give our customers supplies in advance of the need so they didn't end up with back orders?

If you remember, last year we had the challenge with IV fluids, right? If we would have been in front of that, we could have given our customers advance notice to really stockpile some inventory in advance of the challenges that were coming ahead.

I can tell you EMPOWER is helping drive that. The AI and the analytics and understanding our customers' business, giving them visibility to their entire supply chain, giving them predictive analytics, and really the ability to ask it questions.

Copilot is the brain, and it has access to their entire kind of data set, both from a fulfillment throughput and item master perspective. It's creating standardization across their platform and recognizing where there's redundancy and duplication across their supply chain.

It is creating a hub-and-spoke model to their supply room in the facility all the way to our distribution center, we have the ability to actually reduce inventory on hand, eliminate items that are candidly not being used from an obsolescence perspective and from an expiration perspective. We're really excited about it, and I can tell you early innings, it's delivering more than what we expected, and we have a pretty robust roadmap from a features perspective to where eventually you'll have a camera in the room decrementing the inventory, creating demand and replenishment signals, and giving customers real-time data on what's in their inventory.

That is headed in the right direction, and we're launching it to more customers. Internally, in the distribution centers, when you think about efficiency and throughput and leveraging our existing assets and infrastructure, the way you actually do more with what you have is you get better throughput.

When you think about AutoStore, we have 2,100 robots across our network. We're adding two more installations across our distribution centers.

That increases the throughput by 250% and reduces the labor burden by 50%. It's a very meaningful input both from a labor reduction and a quality and service perspective for our customers.

We're launching the first installation of Symbotic to navigate the bulk side of the house. The bulk side of the house is really what owns most of the real estate in the distribution center.

If we can create efficiency and throughput on that side through AI and robotics, it gives us the ability to leverage our existing asset infrastructure and minimizes the need to expand buildings, because we can pick, pack, and ship in a much more robust fashion. You think about AutoStore, AutoStore manages less than case volume, 70% of our lines are less than case, and then when you think about bulk storage, because we keep so much inventory on hand, Symbotic will help us manage that on the right-hand side of the distribution center.

We're really excited about it.

Excellent. Thank you.

Hi everyone. Thanks for taking the question.

Mike, just a question of clarification on tariffs. I think in the prepared remarks, did I hear correctly, you said that in the back half of the year, you're assuming that tariff rates go back to the pre-SCOTUS decision?

One, wanted to clarify that, and then if you could talk about why you would assume they go back up, as I think your blended rate pre-SCOTUS was higher than the 10%, and if you can give any quantification at all of what the difference between the two might be, that'd be helpful as well. Thank you.

Thanks, Brandon. Yes, that is correct.

We did say that we expect that the rates will go back to pre-SCOTUS ruling in that obviously time, sometime this summer, essentially. The reason for that is we're taking an approach to try to be realistic about what might happen.

We know that the 122s run out after 150 days in late July, and so what we are hearing is they're looking to use either 232s or 301s to recreate what they had previously. We're taking a realistic or a conservative view of what might happen in our business and how we're going to navigate and then attack that accordingly.

That being said, we did submit a robust public comment statement is just educating them on kind of what this actually could mean for the industry. If you remember back during the pandemic, in the public comment period, we did get some exceptions.

We'll see what happens.

Morning. This is David Ridley-Lane on for Andrew.

The 50 basis points higher overall revenue growth in the guidance equates to about $140 million of revenue, or maybe $40 million or so of gross profit dollars. Is it fair to say that year-over-year change in the tariff assumption, basically having the 10% rate through August, offsets all the other inflationary impact on your cost of goods in 2026?

As we called out before, we're holding our guidance to $3.5 to $3.6 billion. We expect to see favorability from the tariffs at the 10% rate through the end of July, offset by higher investments in our business, as well as the impacts from the Middle East as we know of them today.

Those three things combined are going to offset, leading to our guidance remaining at $3.5 to $3.6 billion.

Thank you very much.

Thank you.

Good morning. Thanks for taking the question.

Maybe just wanted to dig a little deeper in the strong sales performance and ask a question about your sales channels, specifically the US non-acute segment. Just curious to hear how you feel you're tracking versus expectations in that segment and if you still feel strongly about the market opportunity and the like-for-like conversion opportunity there.

We still feel very good about our US non-acute business. US non-acute business grew 7% on a reported basis, 9% adjusted for days, in the quarter, really driven by both our post-acute, which is nursing home, home health, and hospice, our surgery centers, and our physician offices.

Really solid growth in all of those channels within the non-acute space. We do expect the market to grow at a faster rate in the non-acute space, but we do expect in 2026 our US acute care business will grow faster than US non-acute because of the new customer signings that we had last year, the $2.4 billion that we signed overall.

We still feel very good about the non-acute space, continue to take share in that space, and grow at a greater rate than the market.

Thank you.

Great. Thanks.

I have kind of a broader question just on the landscape for new customer wins and just the longer-term pipeline there. Are you seeing any changes in the competitive landscape on the distribution side?

For instance, just with changes from a corporate structure perspective or otherwise? Maybe how or even how others are responding from a fuel cost perspective or otherwise there?

Again, I know you say you're on track with kind of new wins, but is the pipeline building on that front? What's your line of sight into that, either by channel, as well?

Thanks.

Thanks, Erin. The pipeline is very robust.

As Modern Healthcare just reported, the top 100 health systems in America, we have over 50% of them, which means there's 50% we don't have, there's a tremendous amount of opportunity in front of us. From a competitive landscape, we have good competitors, but they're running their same playbook that they have in the past, which historically we've had really a significant differentiation, both through our brand and the ability to serve the entire continuum of care.

We just have a different value prop and a different supply chain vehicle that delivers best-in-class service. We don't see much change in the market dynamics as it relates to the opportunity set in front of us.

Healthcare continues to consolidate, and as it consolidates, we tend to do better because customers are looking for a partner that can serve all classes of trade that they own, both from the acute care to the physician office to the home health to the hospice. Medline is the only clear provider in healthcare that can do that.

Pair that with our ability to drive significant value through our brand, it just creates a different value prop as compared to the others of the marketplace. That is both true in the acute care space and in the non-acute space, both where they're affiliated with the acute care system, or an integrated delivery network, or an independent provider.

We feel optimistic about the future. The market opportunity in front of us is vast, and we have clear visibility to what's available and what we think we can actually earn.

Hi, good morning. Thanks for taking my questions.

Wanted to hear if you had any updated expectations for the Section 232 tariffs on PP&E and medical consumables and equipment. Also, a second question is on your leverage target and how high on the priority list M&A is for Medline in the current environment.

Thank you.

Thanks for the question. As we called out previously, we do anticipate that the 122s will run out in the end of July, and the administration intends to put new in place.

They may use either 232s or 301s. The 232 investigation happened many months ago.

We responded with our response and shared really good information about the market and the situation, and we'll continue to work with the administration as necessary to inform them of the market dynamics. I can't call out when that's going to occur or what's going to happen, but we'll monitor the situation to be ready to act as we have in the past.

As it relates to leverage, we ended the quarter with 3.1 times leverage. We carry about $2 billion $2.2 billion of cash on hand, and our intention is, first and foremost, to invest in the business with that excess cash that we have on hand.

We're going to lean in on M&A where we see the right opportunity to do so, and then over time, over the long term, if we don't see M&A opportunities, we will use that capital to reduce our leverage even further. Ultimately, our goal right now is to identify, grow organically first, and look for M&A opportunities that would drive strategic growth in our business for the long term.

Thank you.

Thanks so much. Good morning, Jim.

Hi, Mike. I just was reflecting on some of your comments, particularly about some of the challenges in the current environment and reflecting that obviously it's having impacts on your competitors, who I would personally imagine are less able to optimally deal with it.

My question is, maybe talk to us a little about the competitive environment, or displacements you're seeing, and just when you reflect back in years past at moments like this, are there unique opportunities for you to sort of press more aggressively on the offense as other competitors perhaps less well positioned or distracted or pressured, and just any incremental color or thoughts there as we end the call? Thank you so much.

Thanks, Rick. Listen, you hit the nail on the head.

We tend to perform better in times of crisis or challenge because our value prop is differentiated. When you think about the cuts in reimbursements, customers are looking for speed to value.

We have the best value story in the marketplace because we can drive value through our brand and we can drive value through the cost of distribution. We're in a position to take advantage of what's in front of us, and when I say take advantage, it means deliver value to our customers in a meaningful way that's differentiated as compared to the competition.

I do think we're in a position to create additional opportunity. That happened during the pandemic.

It happened last year during the tariff situation, which is why we had $2.4 billion in prime vendor closings. The market dynamics from a consolidation perspective, from a cuts in reimbursement perspective, from a really unique environment with what's happening with some of our competitors really divesting or selling off resources, it just creates an opportunity in really a segment for us to do really outsized growth as compared to what may be out there.

That doesn't mean we don't have good competitors. It just means we have a different value prop.

I do think we're in the right position. I do think we have the ability to help our customers in the time of need, and we will continue to do so in a differentiated fashion going forward.

Thanks.

Thank you for joining us on our first-quarter earnings call. We are pleased with our performance and excited that we're able to expand really our revenue projections and hold our earnings guidance.

We are optimistic about the future and looking forward to what's to come. We hope you have a great week.