Medline Inc. is expanding its use of artificial intelligence (AI), digital supply chain software and robotics as it supports higher demand from new customer wins.
In its first quarter of 2026, the medical supply company reported double‑digit sales growth, driven by new customer implementations and continued strength in its Supply Chain Solutions segment, executives said. Medline also raised its full‑year sales growth outlook, citing steady health care utilization and procedural volumes.
At the same time, costs remain a pressure point. Mike Drazin, chief financial officer at Medline, told investors that the company saw a $120 million net tariff impact in the quarter. That included an incremental $85 million tied to tariff changes. He said during Medline’s earnings call that the company is also monitoring higher fuel and raw‑material costs linked to conflict in the Middle East.
As Medline scales its distribution network, the company is investing in next‑generation automation across its facilities. That includes a planned 2027 pilot with Symbotic, whose AI‑powered system automates pallet breakdown, storage, retrieval and outbound pallet building.
In parallel, Medline is expanding Mpower, its AI‑enabled supply chain platform developed with Microsoft.
Medline customer feedback points to efficiency gains in Q1
Built on Microsoft Azure, Medline’s Mpower is designed to give health systems a real-time view of supply risks and product availability. The tool helps hospital customers track inventory, forecast demand and respond to supply disruptions.
As of early May, the platform is live and rolling out to customers in phases throughout 2026, Medline said.
Described as a “digital control tower,” Mpower brings together customer supply and demand data, workflow automation and predictive analytics into one dashboard. It also includes an AI chat agent that lets users ask questions, explore product alternatives and move clinical approvals through the system, the company said.
During Q1, Medline added several customers to the pilot, bringing the total to 10, CEO Jim Boyle said on the company’s earnings call.
He said early feedback has shown “efficiency gains, improved inventory flow visibility, stronger supply and demand planning, and predictive insights to help stay ahead of disruptions.”
Specifically, early data showed Mpower cut time and effort in order-substitution workflows by more than 50%. This is compared with a five- to seven-day baseline without the platform, Medline said. Health systems using Mpower with Medline’s pre-approved AutoSub program also saw a 1% to 2% increase in unadjusted fill rates.
Looking ahead, Boyle said Medline could add cameras inside supply rooms to track inventory in real time, generate replenishment signals and give customers more current data on what they have on hand.
Medline adds warehouse automation
In April, Medline announced a partnership with Symbotic. According to Medline, the platform uses autonomous robots to break down inbound pallets, store and retrieve items, and build outbound pallets based on downstream needs.
In 2027, Medline plans to pilot the technology at one of its 45 U.S. distribution centers.
“Medline is the first health care company to deploy Symbotic,” Boyle said. “We expect to begin piloting this technology next year at our Ohio distribution center, with the goal of increasing throughput and scalability to provide even more efficiency for our customers.”
Medline is also expanding other automation tools, including automated packaging, Pick Pack Pro and AutoStore.
Pick Pack Pro speeds fulfillment of health plan orders for over-the-counter products, especially during quarterly demand spikes, the company said.
AutoStore is a goods-to-person robotic picking system for individual-item orders. Boyle said Medline now has 2,100 AutoStore robots across its network and is adding two more installations.
Medline sales rise on new customer growth in Q1
During Q1, Medline also announced its first prime-vendor deal in Canada. The company will serve as a main supplier for nine acute member hospitals in Southwestern Ontario through Mohawk Medbuy Corp. The rollout is expected to begin in Q2 2026, Boyle said.
For the first quarter ended March 28, Medline reported net sales of $7.4 billion, up 10.7% from $6.6 billion a year earlier. Organic sales increased 10.1%.
Boyle said Medline is now implementing $2.4 billion in new customer signings from 2025.
He said the company also had another strong quarter of new signings, “most of them multi-channel.”
By channel, U.S. Acute Care sales rose 12% to $5.1 billion. U.S. Non-Acute sales increased 7% to $1.7 billion, and international sales grew 10% to $495 million.
By category, Supply Chain Solutions delivered $3.9 billion in net sales, up 15%. The Medline Brand segment saw $3.5 billion in Q1 net sales, up 6%.
Overall net income fell 25.8% to $239 million, compared with $322 million a year earlier. This was driven by the impact of tariffs, higher operating expenses tied to new customer growth and an employee bonus related to the company’s December initial public offering.
Medline still raised its full-year 2026 organic sales growth outlook to 8.5% to 9.5%, up from its previous forecast of 8% to 9%.
Medline weighs tariffs and Middle East cost pressures
Drazin said the company saw about $120 million of tariff impact in the first quarter, including $85 million of incremental year-over-year impact.
In the back half of 2026, Medline expects some benefit from the current 10% tariff rate. But Drazin said that could be offset by continued investments in operations, sales and IT, along with higher costs tied to the Middle East conflict.
Boyle said uncertainty around the Strait of Hormuz is adding pressure to oil-related costs, including fuel and petroleum-based products such as exam gloves.
Executives said Medline does not plan to push through price increases until it has a clearer view of the cost impact.
“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,” Boyle said.
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