2025 has been a strong year for IPOs in the United States. Amid the Federal Reserve's easing stance, many companies across various industries made their public debuts. Notable ones among them were AI infrastructure player Coreweave (CRWV), design major Figma (FIG), and stablecoin issuer Circle (CRCL). Investors were rewarded as well, with a model portfolio of all H1 2025 US IPOs returning 75.9% through June, far outpacing the S&P 500's ($SPX) 4.9% equivalent, fueled by large deals in AI and fintech.
And it seems one of the biggest was saved for the last.
About Medline
Founded in 1966, Medline (MDLN) is a major healthcare and medical-surgical products manufacturer and distributor. Medline operates in the healthcare supply chain with two major business segments, namely, the Medline brand (involved in manufacturing proprietary medical products) and supply chain solutions, which provides distribution and logistics services to hospitals, surgery centers, physician offices, nursing homes, and other care facilities.
Notably, Medline upsized its IPO. While its initial plan was to offer 179 million shares at a price range of $26 to $30 per share, encompassing a purported deal size of $5.37 billion, the company actually sold 216 million shares at $29 each, raising $6.26 billion instead. The shares made a thunderous debut on the exchanges with a rally of 41% from their issue price. Overall, the proceeds from the offering are to be used to reduce debt and for general corporate purposes.
However, now that the euphoria around its IPO has subsided, is the MDLN stock a sound investment contender for investors? Let's find out.
Growth & Stability: Hallmarks of the Financials
With a catalog of over 335,000 products and 69 global distribution centers, Medline is the largest provider of medical-surgical and supply chain solutions in the world. The one in second is about 35%-60% smaller than Medline in these metrics. And this dominance is reflected in its financials.
Since its inception in 1966, Medline's revenues have grown at a CAGR of 18%. Further, Medline has grown its operations profitably. The picture in recent years has been no different. While 2022 saw the company reporting sales of $21.45 billion, it grew to $23.23 billion in 2023 and $25.51 billion in 2024. And for the first six months of 2025, Medline has already reported net sales of $13.53 billion.
Encouragingly, in the same period, Medline has entered into the black, as net losses of $25 million in 2022 turned into profits of $1.2 billion at the end of 2024. For H1 2025, Medline's net income was $655 million, up 11.6% from the previous year.
Cash flow from operations has also followed a similar trajectory, although there has been an annual dip for the first six months of 2025; it is not alarming, considering the significant jump the metric has seen over the past three years. While 2022's net cash from operating activities was at a mere $187 million, it grew almost tenfold to $1.77 billion by the end of 2024. H1 2025's net cash from operating activities stood at $879 million, down from the previous year's $1.1 billion. Overall, the company closed the June 2025 quarter with a cash balance of $580 million, much higher than its short-term debt levels of $78 million.
Operating From a Position of Strength
Medline offers a unique proposition for investors. It is one of those rare companies across industries that controls both the manufacturing and distribution, thanks to its large global presence and vast array of products. While the proprietary products under the Medline brand, such as surgical kits, gloves, gowns, and drapes, among others, give Medline a strategic advantage in the form of higher gross margins and better price control. Its supply chain solutions business makes switching economically inhibiting for customers along with large volumes for Medline.
Notably, the company also operates about 26 production facilities in North America and employs about 43,000 people worldwide. Further, the customer base is spread out across roughly 100 countries. Moreover, Medline owns 33 manufacturing facilities in total, spanning an area of about 28 million square feet. This lets Medline control specs, rework, and scale product introductions quickly (e.g., private-label gloves, gowns, and procedure kits). That reduces dependency on OEM lead times and drives cost advantages that can be passed to customers or retained as margin, a competitive advantage versus pure distributors.
Additionally, its almost flawless track record of next-day delivery to roughly 95% of U.S. customers improves fill rates and reduces emergency orders. Consequently, hospitals reward suppliers who minimize clinical interruptions. This has led to extremely high prime-vendor retention (>98%). That retention converts to predictable recurring revenue.
However, even though the company's short-term debt levels may be, well, short, its long-term debt burden can emerge to be a concern if not managed properly. While at the end of June 2025, the company's long-term debt stood at $16.5 billion, the IPO was successful in paring it somewhat to about $13 billion. Although this was a reduction, the interest payments on such a huge debt pile put pressure on profitability.
Final Take on MDLN Stock
So, to return to the question made at the start of this analysis: Is the MDLN stock a sound investment contender? I reckon it is.
The company has managed to grow its operations profitably over the years, with an annual revenue run rate of more than $20 billion. Moreover, its average quarterly operating income of more than $600 million comfortably covers its interest expenses, which hover around just above $200 million on average each quarter. Further, the company's sheer scale, competitive strength, and large network of distributors almost ensure that it will remain the leading player in its space.
On the date of publication, Pathikrit Bose did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
More news from Barchart
- Nike, Tilray, and Palantir: Their Unusually Active Put Options Will Boost Your Wallet After Christmas
- Micron Says ‘We Are More Than Sold Out.’ Should You Buy MU Stock After Earnings?
- IonQ Is Down More Than 30% Since September. What Happened to the Quantum Computing Leader?
- This Investor Is Betting $1 Billion on a Lululemon Stock Turnaround. Should You Buy the Dip Here in Hopes of Gains to Come?
