Did you know that the largest initial public offering in 2025 was a boring medical supply company based in Chicago? But, boring can be beautiful, and Medline (MDLN) looks primed and ready to continue delivering on its history of rapid, profitable sales growth.
Medline bills itself as “the largest provider of medical-surgical products and supply chain solutions serving all points of care.” It boasts 335,00 products and 33 manufacturing facilities in more than 100 countries. 95% of customers here in the United States can receive next-day delivery. It therefore isn’t much of an exaggeration to consider Medline the Amazon (AMZN) of medical and surgical (“medsurg”) products.
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Hospitals, surgery center, and physicians are among the main users of Medline’s medical kits, surgical gloves, wound care, and lab supplies. A key competitive advantage is its namesake Medline Brand products, which count as private label and help boost margins. By serving as both the manufacturer and distributor, it gets to keep the margin another reseller might demand to get its products to market.
Medline just went public, but was already publicly traded prior to a private buyout back in 2021. The buyout at the time was for $34 billion. The current initial public offering (IPO) was priced at $29 per share and raised $6.3 billion, which will be used to pay down debt. Medline’s current valuation is $35.5 billion, or only slightly ahead of the valuation at which it was taken private. Based on the valuation multiple of EV/EBITDA, both the buyout and IPO are in the mid-teens.
So, what the heck did the private equity buyers, which included Blackstone, Carlyle, and Hellman & Friedman, do while Medline was privately owned? They grew sales substantially. At the time of the buyout , Medline reported 20 manufacturing sites, which has increased by over 50% to 33. And sales were $17.5 billion in 2020. Current analyst projections call for around $30 billion in sales this year (full year 2026).
Debt during the buyout in 2021 was $17 billion, or half of the $34 billion. This heavy debt load was cited as motivation to raise capital during the IPO. Debt stood at $16.5 billion prior to the IPO. We’ll see during the next earnings release the extent to which debt has been paid down. Analysts are already pretty optimistic that this is taking place.
Medline has posted very impressive sales growth throughout its history. It boasts 18% average annual sales growth since its founding in 1966, and 50 straight years of net sales growth. Sales growth has slowed to 14% annually over the past decade, which is to be expected as the law of large numbers kicks in. But over 90% of the growth has been organic, which is seen as superior to acquiring rivals to grow. Acquisitive growth could have led to even more debt and required additional effort to integrate other companies.
Source: Company IPO prospectus
Growth expectations are also strong. Management sees a total addressable market (“TAM”) of $375 billion, or more than ten times current levels. Healthcare is also seen as recession-proof, or at least recession-resistant. People and patients need medical care regardless of the economic climate.
For full year 2025, analysts project earnings of $1.17 per share, and a nearly 20% jump to $1.52 per share in 2026. Sales expectations call for 8% annual growth over the coming three years.
Free cash flow projections are also pretty robust. Analysts see free cash flow of $1.5 billion for all of 2025 and at least $2.1 billion for 2026. The key boost is to come from debt paydown from the IPO proceeds. This works out to free cash flow of at least $1.80 per share, or ahead of earnings expectations.
Medline is also much more profitable than key rivals. And growing faster. Below is a brief overview compared to the other large drug and supply distributors.
Gross Margin
~27.4%
~4.1%
~3.6%
~20.5%
Operating Margin
~8.5%
~1.3%
~1.4%
~2.1%
Net Margin
~4.8%
~1%
~0.8%
~(-0.5%)*
The only negatives I can find for this strong investment candidate is the lofty P/E multiple of 28. Approximately 70% of sales also stem from hospitals , which is arguably a concentration, but it’s hard to see that being volatile in any way.
Also, the private equity owners appear to be keeping 60% of the voting control. This could be a negative should fundamentals deteriorate, but for now, it’s hard to argue with Medline’s growth track record, which continued apace while it was in private hands.
Finally, there is a risk that the private equity owners could sell their shares. They have a lock-up period of 180 days and hold almost 50% of the outstanding shares. But again, this shouldn’t be a major concern. The owners have proven to be good stewards of Medline when they held it privately.
I really like Medline as an investment candidate – it has solid growth, operates in a steady industry, and has a storied history. I was pleasantly surprised while researching its business outlook and that investors can once again participate because of its IPO late last year.
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