Medline (MDLN) can drive new and existing customers into its supply chain solution partnership model and Medline Branded products, leveraging its vertically integrated business model and macro healthcare tailwinds to deliver outsized performance in the short-to-long term, RBC Capital Markets said.
Medline is the only vertically integrated company that develops medical-surgical products at scale, with the potential to deliver significant earnings growth in the mid-to-long term through converting clients to Medline Branded like-for-like products, the brokerage said in a Sunday note.
The firm estimates that converting Medline's current customers in the SCS business could add about $104 million to adjusted earnings before interest, taxes, depreciation and amortization in fiscal year 2026, which means the company can achieve RBC's 2026 EBITDA estimate before factoring in other growth drivers.
Medline also has a $4 billion pipeline of existing sales from third-party products convertible to like-for-like Medline Branded products, which should grow each year as new customers are added to the SCS business.
The brokerage noted that demand for Medline's like-for-like med-surg products in ambulatory settings should benefit from healthcare shifting toward non-acute care, while tariff disruptions create opportunities to convert additional customers, driving margin accretion.
IPO proceeds of roughly $1 billion could support strategic M&A or international expansion, according to the note.
RBC initiated coverage of Medline with an outperform rating and a $47 price target.
Shares of the company rose 3.4% in recent Monday trading.
Price: 41.89, Change: +1.37, Percent Change: +3.38
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