Medline focuses on mitigation as oil prices, tariffs shift

NORTHFIELD, Ill. – Medline is taking a “measured approach” to shifting oil prices and tariff rates, company officials say, as it prepares for potential impacts later this year.

The company saw minimal impact to its profit and loss from the conflict in the Strait of Hormuz in the first quarter but expects a larger – though still immaterial – effect in the second quarter, when diesel prices climbed above $5 per gallon.

“Consistent with how we have historically managed inflationary matters, we do not intend to react immediately,” said CFO Mike Drazin during a recent conference call to discuss the company’s first quarter 2026 financial results. “We'll 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.”

From an input cost perspective, Medline spends about 50 basis points of its total cost of goods on fuel for domestic freight and fuel surcharges for inbound freight, Drazin said.

Oil price volatility is also beginning to flow through the company’s supply chain, with suppliers passing along higher costs tied to petroleum-based raw materials such as resins and plastics, he said.

“We are working to mitigate those costs where possible,” he said. “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 Q3.”

At this point, Medline has not raised prices in response 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,” Drazin said.  “We'll evaluate and run our playbook as we have run in the past.”

Tariff outlook tied to summer reset

Medline also expects the current tariff environment to shift later this summer, when temporary measures expire and new policies are put in place. The company anticipates those tariffs will be replaced with actions under more traditional authorities, such as Sections 232 or 301, effectively restoring tariff levels closer to those in place before the Supreme Court’s ruling.

As with fuel-related costs, officials say the company will rely on its existing playbook to mitigate increases before making pricing decisions.

“If you remember, tariffs last year went from 30% to 145% then went back down to 30% in a very short timeframe,” said CEO Jim Boyle. “Had we reacted in that time, we would've looked silly. That's the way we view this situation.”

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