Good morning. Thank you for standing by. Welcome to Medline's second quarter 2026 results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star one one on your telephone. You'll hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would like to now hand the conference over to your first speaker today, Karen King. Welcome to Medline's second quarter and half year 2026 earnings conference call. This morning, we issued our earnings release and shared supplemental materials. Joining me on today's call are Jim Boyle, our Chief Executive Officer, and Mike Drazin, our Chief Financial Officer. During today's call, we may make forward-looking statements regarding our expectations for the future, including our business plans, strategy and investments, and expected timing and impacts. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please see the cautionary statements and risk factors contained in our earnings release, which accompany these remarks, as well as our most recent 10K and other SEC filings for more information regarding these risks and uncertainties. We may also reference non-GAAP financial measures, which excludes certain items from our financial results calculated in accordance with GAAP. You can find a discussion of our non-GAAP financial measures and reconciliations to the comparable GAAP measures in the earnings release and the disclosures and non-GAAP reconciliations that accompany these remarks, which are available on our website at ir.medline.com under Quarterly Results. With that, I will now turn the call over to our CEO, Jim Boyle. Thank you, Karen. Thank you all for joining Medline's second quarter earnings call. I'll begin with a brief performance update. Mike will review our financial results and outlook. I'll return with closing remarks before opening up the call for questions. Medline delivered strong top line growth of 12% in the second quarter, reflecting positive momentum across our business. Medline Brand grew 7% for the quarter, including the impact of an IEEPA tariff price refund to customers. Supply Chain Solutions exceeded our expectations, growing 16%, driven by new customer signings and growth within existing customers. This segment remains central to our long term strategy because it strengthens customer relationships and creates opportunities to deliver savings and value over time through conversion to higher margin Medline Brand products. We are pleased with the continued momentum across the business and are raising our fiscal year organic sales outlook to reflect stronger demand and solid execution by our team. Adjusted EBITDA increased 13% year-over-year to $1.1 billion as strong sales growth was partially offset by higher cost of goods sold, increased operational expenses and net tariff related impacts. This includes a net benefit of $243 million from IEEPA tariff refunds. As we look to the second half of the year, several external and internal factors have led us to moderate our adjusted EBITDA outlook. Our outlook reflects several headwinds, including the Middle East conflict, the Tracy warehouse fire, growth related operational investments, quality remediation efforts, and softness in our retail business. Mike will walk through the details, but we believe these investments will strengthen the business and position Medline to capture the significant growth opportunities we see ahead. I will turn now to several key developments during the quarter. First, we secured multiple new prime vendor and customer partnerships across several channels, including acute care, physician office, lab, skilled nursing, senior living, home health and hospice. Through the first half of the year, we achieved more than $650 million in total new customer signings, representing over 65% of our annual goal of $1 billion. Among those wins, we announced our expanded presence in the upper Midwest, including a new prime vendor agreement with Allina Health. This agreement expands our existing relationship across their acute care and physician office settings. While new signings vary quarter-to-quarter, these wins underscore the opportunity we have to gain share across the continuum of care. Second, I'm incredibly proud of our employees who demonstrated agility, grit, and determination in responding to the mid-June fire at our Tracy, California distribution center. Their resilience is core to who we are and guides the commitments we make every day to our customers and to one another to make healthcare run better. Our team responded quickly to the fire by leveraging our outsized inventory position, broad distribution network, and MedTrans transportation fleet to continue delivering products and minimize customer disruption. Employees at our Tracy DC went above and beyond to support the effort and quickly transitioned to nearby Medline sites over the first few weeks. Within a month, we secured 1.6 million sq ft across two distribution centers, expanding our customer facing Northern California footprint by 45%. We have already taken occupancy of the new Tracy distribution center, which we expect to begin serving customers out of in the fourth quarter and plan to occupy our new Stockton facility in January 2027. Together, these facilities will restore capacity and support customers across Northern California. What our teams have accomplished in such a short period of time is truly remarkable, Medline is stronger because of their efforts. I also want to thank our customers for their continued trust and our suppliers for helping us maintain continuity as we build an even stronger network going forward. Next, in addition to our Northern California expansion, we announced plans to open a new 1 million sq ft distribution center in Southern California to enhance the flexibility and resiliency of our supply chain and reinforce our commitment to healthcare providers across the state. With this announcement and our Northern California expansion, our California footprint is expected to reach nearly 5 million sq ft by mid-2027 and to have many of the same automation technologies already in use at other Medline facilities. This is about more than scale. It reinforces resiliency and redundancy across our network and reflects our dedication to anticipating customer needs, supporting future growth, and investing ahead of demand. As I mentioned last quarter, our goal as a vertically integrated manufacturer and distributor of medical surgical products is to operate the broadest and most robust supply chain in the industry. Achieving that requires continued investment along with rigorous supply chain, quality, and regulatory discipline. Patient safety and product quality remain our highest priority. We continue to undertake remediation activities, strengthen our quality organization, enhance our manufacturing processes, and work to reintroduce recalled products to market. For the past couple of months, we have proactively engaged with the FDA to discuss and launch our global quality action plan. To further strengthen our quality organization, we are investing in people, processes, and technology, accelerating these initiatives to support growth and better position Medline for future demand. As part of this work, we have also modified our complaint review process, which we expect will increase medical device reporting or MDR submissions in the second half of the year. Our updated guidance reflects our current expectations of these investments and remediation efforts. Overall, I am pleased with our commercial execution this quarter. Our top-line momentum strengthens our confidence in the opportunities ahead. Prime vendor signings are tracking ahead of the pace needed to reach our billion-dollar annual signings goal, and the team showed tremendous resolve in continuing to serve customers despite the Tracy fire. While we are encouraged by our commercial momentum, we are not satisfied with the margin challenges we are currently facing, we are focused on addressing them. We believe continued execution of our growth strategy, along with disciplined cost-savings initiatives to address incremental cost pressures, will position us to return to our long-term objective of growing earnings at or above the rate of sales growth. With that, I will turn the call over to Mike for a deeper look at the financials and an update on our 2026 outlook. Thank you, Jim, and good morning, everyone. Before walking through the results, I want to thank our employees, particularly the Tracy teams, distribution team members across the network, and everyone who supported our California customers for their extraordinary effort and commitment this quarter. As I discuss our performance, I'd highlight that our results include several notable items this quarter, including IEEPA tariff refunds and impacts related to the Tracy fire. Looking through these items, underlying performance was strong. Second quarter net sales increased 12% year-over-year to $7.7 billion, driven primarily by organic growth, minimal foreign currency impact. The customer repayments tied to IEEPA tariff refunds reduced growth by approximately one percentage point. For the first half, net sales were $15 billion, up 11% year-over-year. The Medline Brand segment delivered second quarter net sales of $3.5 billion, up 7%. The customer repayments tied to IEEPA tariff refunds reduced growth by approximately three percentage points. For the first half, net sales were $7 billion, up 6% year-over-year. Turning to Medline Brand sales by product category, Surgical Solutions generated second quarter net sales of $1.6 billion, up 9%. The customer repayments tied to IEEPA tariff refunds reduced growth by approximately three percentage points. The strong growth was due to continued strength in surgical kitting, one of our largest product divisions, and the operating room. We continue to gain share by delivering differentiated solutions, onboarding new kitting programs, and helping customers improve efficiency in existing programs. These kits provide deeper insights into facility needs in the operating room and create a forum to discuss product conversions, providing opportunities to drive additional Medline Brand growth. First half net sales were $3.2 billion, up 8%. Frontline Care net sales were $1.7 billion in the second quarter, up 4%. The customer repayments associated with IEEPA tariff refunds reduced growth by approximately three percentage points. Strong demand across multiple product divisions, especially in exam gloves and personal care, was partially offset by unplanned retail channel softness. Unlike our prime vendor business, which is based on long-term contracts, retail is a shorter demand cycle business that sells products directly to consumers through major retailers. While retail represents less than 2% of our overall sales, it is almost entirely Medline Brand, creating a disproportionate headwind to growth and profitability. To better support this channel and improve competitiveness, we've realigned our sales organization around retail customers and their specific needs. For the first half of 2026, Frontline Care net sales were $3.3 billion, up 5%. Lab and Diagnostics generated second quarter net sales of $248 million, up 12%, driven by new customer implementations and existing customer demand. Many of our new prime vendor agreements are multi-channel, including lab, driving strong core acute care lab growth. First half net sales were $541 million, up 6%. The Supply Chain Solutions segment delivered second quarter net sales of $4.1 billion, up 16%, supported by new customer implementations and growth with existing customers. First half net sales were $8 billion, up 16%, expanding the opportunity for Medline Brand conversion. Moving to sales by channel, U.S. acute care net sales grew 15% year-over-year to $5.4 billion, driven by new prime vendor customers and existing customer growth. The customer repayments tied to IEEPA tariff refunds reduced growth by approximately one percentage point. For the first half, acute care net sales were $10.5 billion, up 13% year-over-year. U.S. non-acute care net sales grew 4% year-over-year to $1.7 billion. The customer repayments tied to IEEPA tariff refunds reduced growth by approximately two percentage points. Growth was primarily driven by existing customers and new customer signings in physician office and post-acute channels, including skilled nursing, long-term care, and home health, partially offset by retail softness. For the first half, non-acute net sales were $3.5 billion, up 5% year-over-year. International net sales grew 9% to $533 million in the second quarter, and 10% to $1 billion for the first half, driven by volume growth in Canada and Europe. Turning to adjusted EBITDA, second quarter results were $1.1 billion, up 13% year-over-year. This includes $243 million of net IEEPA tariff refund benefits. Without giving effect to these benefits, higher net sales volumes were partially offset by increased operating costs, including headcount to support sales growth and higher cost of goods sold, including the impact of tariff costs. Adjusted EBITDA margin increased 20 basis points to 13.8%. Expenses from the Tracy distribution center fire are excluded from adjusted EBITDA, but reduced net income by $336 million, primarily reflecting inventory and fixed asset losses and other related costs. We believe we have sufficient insurance coverage and expect future recoveries related to property, inventory, and general liability. Moving to free cash flow and the balance sheet, we generated strong free cash flow of $920 million in the first six months of the year. As in the past, working capital with the usage. This reflected the IEEPA tariff refund receivable and higher trade accounts receivable from sales growth. CapEx for the first six months was $207 million, reflecting investments in distribution center enhancements and automation, as well as capacity expansion of our Mexico kitting facility. Cash and cash equivalents were $2.3 billion, and short-term investments were $350 million, reducing net leverage to 2.9x. We are pleased to have reached our long-term leverage goal of less than three times, providing flexibility as we continue investing in growth. Let me now transition to our updated 2026 guidance. Given strong demand, continued commercial execution, and broad-based momentum, we are raising our full-year organic sales guidance for the second time this year to 9%-10% from our previous range of 8.5%-9.5%. This guidance includes the $89 million of IEEPA tariff refunds we plan to provide to our customers. The higher outlook reinforces our confidence in our business model, resilient healthcare demand, and our ability to continue gaining share. The same time, we are lowering our full-year adjusted EBITDA outlook to $3.3 billion-$3.4 billion from $3.5 billion-$3.6 billion. The revised outlook does not reflect the IEEPA tariff refunds received or expected, but includes several other internal and external factors. Externally, we are seeing slightly higher than expected inflationary pressure related to the Middle East conflict, as discussed on our Q1 earnings call, as well as costs related to the Tracy fire. Internally, the outlook reflects increased operational investments to support customer demand, the quality investments Jim discussed earlier, and softness in our retail channel. In total, we estimate that roughly half of the incremental earnings impact from these factors is transitory and roughly half is more permanent and will become part of our future cost base. I'll walk through these components shortly, but first, let me update you on our tariff cost assumptions. Discussed on our last earnings call, the lower tariff rate from Section 122 tariffs in February through July of this year created favorability versus our prior guidance. Section 122 tariffs have now been replaced by Section 301 forced labor tariffs. Based on this, we now estimate full-year 2026 net tariff impacts of approximately $350 million, down $140 million from the $490 million we provided during our fourth quarter earnings call last February. Given our significant inventory on hand, any tariff rate changes from this point forward are expected to have an immaterial impact on our financial results in 2026 and to primarily affect 2027. Moving to the drivers of the adjusted EBITDA guidance change. Starting with the Middle East conflict, consistent with our discussion during our Q1 earnings call, most of the inflationary pressures, including fuel and product costs, are offset by the tariff benefit I just mentioned. Consistent with our long-standing practice of supporting long-term customer relationships, we have chosen to absorb these costs at this time rather than broadly pass them on to our customers, an approach that has served both Medline and our customers well over time. As I mentioned earlier, our first half results include $336 million of costs related to the Tracy fire. These costs are excluded from our adjusted EBITDA and therefore not included in our guidance. In the second half of 2026, we currently expect to incur an additional $50-$100 million of Tracy-related costs. A portion of these costs, such as cleanup costs, product rerouting, and air freight, will be excluded from adjusted EBITDA. Other costs, including lease expenses and labor inefficiencies as we operate without automation, will remain in our base. Consistent with our Q1 earnings call, some operational costs are expected to be offset by tariff benefits. Since last quarter, these costs have increased as we invest in staffing, technology, and scaling efforts to meet faster than anticipated demand growth. While these investments are creating near-term inefficiencies, they position Medline to become more efficient over time as our team ramps and new technology is optimized. As Jim mentioned in his opening remarks, we discussed our global quality action plan with the FDA. We have identified and quantified expected remediation costs, which include enhancements in our quality organization and investments in our manufacturing network. In addition, a portion of the impact relates to products that were taken off the market due to recalls and/or FDA inspection findings. Based on our latest assessment, some of those products, including our CHG wipes manufactured at our Waukegan facility, are taking slightly longer than originally expected to complete the necessary work to bring back online, which results in earnings loss. The final component is related to the unplanned retail channel softness we discussed earlier. This is impacting frontline care and U.S. non-acute sales and margins. While we are taking steps to improve retail, we expect it to remain a headwind through the balance of the year. To help frame the impact of this overall reduction in adjusted EBITDA guidance, the external factors, including the Middle East and the Tracy Fire, account for approximately 25%, with the internal factors, including operational investment, quality remediation efforts, and softness in retail, remaining 75%. We will provide our 2027 outlook during our Q4 and full year 2026 call in the first quarter of 2027. The fundamental drivers of earnings growth remain the same and include sales volume growth, Medline Brand conversion, approximately $5 billion of conversion opportunity, leveraging our scale to drive savings in sourcing, manufacturing, and distribution, and operational efficiency initiatives. We continue to monitor the impact of our business from both the Middle East conflict and tariff rates and will execute on the playbook we have discussed previously to mitigate the impact to our customers and to Medline. We remain focused on disciplined execution of enterprise-wide productivity and cost savings initiatives designed to offset incremental cost pressures that will enable us to mitigate the additional costs we are incurring to achieve our long-term objective of delivering sustainable and strong earnings growth at or greater than sales growth over time. If you look at quarterly cadence for the remainder of the year, the third quarter of 2026 has 63 days, one fewer than Q2. While the fourth quarter 2026 has 66 days, one more than Q4 2025. As a result, we expect sequential sales to be relatively flat in Q3 before increasing in Q4 due to the seasonality and days. Adjusted EBITDA is expected to increase sequentially each quarter with the strongest contribution in Q4. With respect to the $200 million of incremental cost, we expect approximately one-third to be incurred in Q3 and the remaining two-thirds in Q4. Turning to the rest of our outlook assumptions, all the ranges remain consistent with our prior outlook, with the exception of tax distributions, which we have narrowed to $250 million-$300 million, the bottom end of the guidance range, reflecting sponsor sale activities in the first half of the year. CapEx, which we updated to a range of $500 million-$600 million to account for the Tracy fire. While we anticipate receiving insurance coverage for the incremental $100 million in capital, the timing of recovery is uncertain. In summary, we delivered strong top-line performance with double-digit sales growth in both the second quarter and first half, demonstrating broad-based momentum across the business and continued commercial execution. Our organic growth-driven strategy continues to deliver results and create significant opportunity ahead. This performance supports our decision to raise full-year organic sales guidance for the second time this year. In spite of the near-term pressures we are managing, we remain confident in the underlying long-term earnings power of the business. While we are absorbing higher costs in certain areas that create near-term margin pressure, they support the priorities that matter most to our customers: reliability, quality, service, and scale. We believe these investments strengthen Medline's competitive position and support long-term value creation. I'll now turn it back to Jim for closing remarks. Thanks, Mike. In closing, we are encouraged with the top-line momentum we continue to see across the business. We are executing with discipline and investing decisively to support our growing customer base. Medline is well positioned for durable long-term growth, supported by a deep commitment to our customers, industry-leading scale, a resilient, profitable business model, a healthy balance sheet, and a compelling long-term opportunity. We remain highly confident in our market position and ability to create sustainable shareholder value by delivering the service, value, reliability, and quality our customers expect that continues to differentiate Medline in the marketplace. Thank you for joining us. We will now open the call up for questions. Thank you. At this time, we'll conduct the question and answer session. As a reminder, to ask a question, you'll need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Michael Cherny from Leerink Partners. Your line is now open. Good morning. Thanks for taking the question. Mike, I want to dive a little bit into some of these expenses and whatnot that you discussed relative to the future baseline thought process. A lot of it clearly, as we can hear, is tied towards outperforming on new business. As you think philosophically about your pathway forward for share gains over time, is the general philosophy that the idea of overspending, if you want to use it that, relative to your baseline is part of the pathway forward for how you plan to drive new business? I guess along those lines, what are the market conditions that you need to see? I'm not trying to get to 2027 guidance, but the changes that you need to see to get back towards that EBITDA leverage above revenue growth. Thank you. Thanks, Michael. The answer is actually yes. If you think about our business, we've been intentional for many, many years of investing in our business for growth ahead of the growth. If you go back in the history of the performance of the business, we would invest in things like new distribution centers, new manufacturing sites. We'd add additional sales team members to support the growth of the future. That's no different than what we're doing here today in areas like operations and quality, as we called out. I think overall for our business, we're very happy with our underlying performance of the business. Delivering top line sales growth in the second quarter of 11.6% on a reported basis, but really 13% if you exclude the tariff, IEEPA refund, customer repayment is really, really solid performance. The overall, the underlying performance of the business is strong and remains strong, and we expect to see that continue as we head out into the rest of the year, given our overall raising our sales guidance. From the standpoint of the future of the business, I think we need to see continued execution of our overall performance relative to things like operational investments and our quality remediation efforts. We need to continue to see continued signings, new signings, and we're proud about the signs we've had so far this year of over $659 million to date. Those are the types of things that we need to continue to see, but we are seeing in our business that suggests that our overall performance will be strong going into the future period of time. I want to take a minute before we go to the next question, though, just to clarify one thing that I think is causing a little bit of confusion for people, and that's, if you think about how we've approached this, we took a conservative approach to how we handle the tariff refunds and our guidance. Most importantly, we wanted to maintain transparency in our results. If you think about what we've done, we've excluded from our adjusted EBITDA guidance the net tariff refunds of $243 million to show you the true underlying performance of the business. As we took down our EBITDA guidance from $3.3-$3.4, our original guidance did not include this $243 million of tariff refunds. In addition, on the revenue side, we kept the $89 million of customer repayments in our sales guidance just to maintain simplicity in how we show the numbers. Even with that $89 million in our sales guidance, we were still able to raise our overall sales growth to 9%-10% for the year. Thank you. Thank you. Our next question comes from Elizabeth Anderson from Evercore ISI. Your line is now open. Hi, guys. Thanks so much for the question. I appreciate the clarification that you just gave, Mike. I realize a lot of these factors are not necessarily entirely in your control, but as we kind of think about this new guidance and being kind of like the new baseline, can you help people understand the level of conservatism that you've baked in about some of these longer term macro factors like oil and shipping and those kind of items? Thank you. Yeah. The external factors that we think about are the Middle East and the Tracy fire. On the Middle East side, just to give you a number, we have a $70 million of estimator expected impact for 2026 in our overall guide. That is inclusive of what they've talked about before, both the diesel fuel cost to fuel our transportation from MedTrans fleet and third party trailers. In addition, it also includes a lot of the product and raw material costs that we're purchasing. Overall, we've assumed roughly diesel prices around $5 in that guide. We've essentially used our costs of our raw materials and finished goods as of roughly two weeks ago. That's the $70 million in the Middle East. As it relates to the tariffs, as we talked about, we have assumed that tariff rates do not change essentially for the rest of the year. If tariff rates were to change at this point in time, it'd be a very immaterial impact to our overall results. It would impact 2027. Got it. Thank you. Thank you. Our next question comes from Sean Dodge from BMO Capital Markets. Your line is now open. Yeah, thanks. Good morning. Maybe just kind of staying on the guidance and just to clarify, last quarter you had talked about increasing the operational investments to support customer demand. It sounds like you're stepping those up even more now. Is that right? How much is the step-up related to those? Just any examples of what these new investments are? If I'm hearing right, it sounds like we should be thinking about these being kind of more of the inclusive of the run or additive to the run rate. Thanks. Yeah. The operations investments that we're making are not new. We talked about them last quarter. As we talk about bringing this $2.4 billion of new business online, we've had to invest in additional people to support that. If you think about the investments we've made, we invested in people to support the new customer signings plus existing customer growth as well. The example we gave last quarter was as we saw these new customer signings come online, we saw it happening in a couple of DCs, but we didn't have automation. We had inefficiencies. You're seeing inefficient labor at the moment. What we're doing is we're making investments in our AutoStore and those facilities, but we're also expanding our network capacity by adding new distribution centers. Jim talked about in this previously, we were adding a DC in Texas, we're adding a DC in California. We're also talking about adding a couple more DCs in the Midwest. To help support this current growth. As we add new distribution centers, as we add automation, we expect to see those inefficiencies subside and hopefully see some savings in our business. You also have to remember that when we add, think about the $2.4 billion we're adding, we're adding the labor burden in advance of the revenue realization. In some cases, we're adding it three to six months. This year, because we had such an outsized growth last year that's being realized this year from a prime vendor perspective, we're seeing an outsized pre-add of labor in advance of this distribution. That's weighing the number down as well. Okay. That's helpful. Thank you. Thank you. Our next question comes from the line of Daniel Grosslight with Citi. Your line is now open. Hi, this is Brendan on for Daniel. Thank you so much for taking our questions. Just a quick question on the overall tariff refund. You guys accrued around $89 million this quarter. I'm curious just what's the overall customer response to that, and whether all repayments have been accounted for, and if there are potential for additional payments to be made in the future, and if they'll receive the same accounting measures. Thank you. As we've called out, the total tariff refund that's available to us is $507 million. We recorded in our financials for the first half of this year a net tariff benefit of $240 million. That is basically $330 million of phase one tariffs that we believe we are going to collect or have collected, net of the $90 million roughly of customer repayments. That $90 million of customer repayments is for the full amount of the $507 million of tariffs. We expect to receive all of that over time. We have not yet made that payment. We booked that as an accrual on our balance sheet as of today. Our expectation is to make that payment to our customers in the latter part of this year. We have communicated that we are making this payment to our customers. We've not yet quantified that for them individually, but we're going to do so in the coming months. You have to remember, we absorbed the vast majority of that $500 million. The only thing we passed through to the customers is the $89 million, and that's the full accounting of the prices. That's why it's fully accounted for. Thank you very much. Thank you. Our next call comes from Pito Chickering from Deutsche Bank. Hey, good morning, guys. Thanks for taking the question. Just wanted to dig back into that $200 million of inflationary pressure. You said a quarter of it is external, three-quarter of it is internal, and a third of the impact is in three Q and two-thirds is in the fourth quarter. Can you just help us think about the internal and external pressures as we use the fourth quarter as a launchpad for 2027? Which continue into next year and at what pace, and which ones fade away? Thank you. If you think about it, we roughly have estimated about half of the cost or the impact to margin is transitory, and about half of it is really permanent, will roll into our base overall. If you think about what the drivers of that are, obviously, we believe the Middle East is a bit transitory. The Tracy fire impact is transitory and will have some impact rolling into 2027, but over time, will subside as we stand up the new distribution center in Tracy and Stockton and add automation to those facilities. Obviously, the operational investments and some of the quality investments will be more permanent in nature and will roll into our base in 2027. Some of the product-related costs as it relates to quality will not. As we talked about before, we took our time to delay a little bit the going live with a couple of products. We'll go back live in 2027. Those are more temporary or transitory in nature. Lastly, on the retail side of the house, those are probably more permanent in the short term. As Jim mentioned, we do expect to. We have realigned our organizations to go after that business and ensure we drive growth again in that market. Great. Thanks so much. Thank you. Our next call comes from Steven from Mizuho Securities. Your line is now open. Thanks. Good morning. It's Steven Valiquette from Mizuho. Just a quick financial question here. This may be pretty obvious, but I guess just to confirm. The adjusted EBITDA in the June quarter of the $1 billion and $60 million, I'm assuming it includes the $243 million benefit from the tariff refund. When thinking about trying to model out for the full year, should we think of that as $817 million, I think, and trying to arrive at an EBITDA for the full year within the $3.3 billion-$3.4 billion? I'm just thinking ahead here, there could be some confusion within the consensus numbers for EBITDA for the back half if some people are treating it differently, et cetera. Hopefully that question makes sense. Thanks. It does. Thank you, Steven. That does make sense. Yes, the true underlying performance of the business in the second quarter for adjusted EBITDA was $817 million. That was a beat versus consensus. We're very proud of that result given the strong performance in the quarter. Yes, for purposes of that $243 million, we are isolating that and calling that out separately. We don't think you should include that in our overall guidance number. We're not including it in our overall guidance number, so you should not include it in your consensus. Okay, got it. Thank you. Yeah, we think it's responsible to be conservative in our approach and just guide based on the actual results of the business, not on a refund. Thank you. Our next call comes from Matthew Taylor with Jefferies. Your line is now open. Hi, good morning. Thanks for taking the question. I actually wanted to ask one about the customer signings. You said you're $650 million towards your $1 billion goal halfway through the year. Could you talk about the achievability of a billion or more this year? Signings that could happen in the second half, if you have any visibility there, et cetera, maybe just talk about the trends that you've seen so far this year. Yeah, Matthew, thanks for the question. First, we're pleased with the $650 million in the first quarter. We're ahead of pace to achieve the $1 billion, we're confident that we're going to hit the $1 billion plus. That is a goal that we believe we can control. It's within the framework of what we have visibility to, we do see a line of sight as it relates to what's available in the marketplace to achieve that goal. Just for context, that $650 million is made of a bunch of singles and doubles. Last year, we had several home runs. That's what actually led to the $2.4 billion. Each year, the signings makeup looks different, right? They can be lumpy for quarter-to-quarter, which is part of the reason why we didn't give a number in the first quarter. Because if I would've said we signed $50 million in primary care closings in the first quarter, everybody would've said, "Oh, no, what's going on with Medline?" If I would've said $500 million in the first quarter, you guys would've judged us on $2 billion. We think it's important to give you context mid-year. That $650 million gets us on track, actually ahead of pace to achieving it, we feel confident we're headed in the right direction from that perspective. Great. Thank you very much. Thank you. Our next call comes from David Larsen with BTIG. Your line is now open. Then just also with the IEEPA tariffs, was there a drag in 3Q 2025, 4Q 2025, and 1Q 2026 related to the IEEPA tariffs that I guess are going to remain on the books, though the reverse sort of benefit will not be recognized as we progress through the rest of the year? Thanks very much. I'll take Allina. I'll let Mike handle the IEEPA perspective. Allina is a great win in the Upper Midwest. It is expanding our relationship across multiple classes of trade, the acute care physician office and several others. We don't actually give kind of the numbers as it relates to each individual deal. It was a sizable deal. The next question would be, do we think something's going to change with the Sutter acquisition? The answer is no. We actually happen to be the primary care at Sutter Health as well. I can just tell you, it went live about three weeks ago. It went live very well. We see them as a tremendous partner and an opportunity to expand the relationship even further over time. It was a good win, and it's something we're proud of. On the tariff question, David, the IEEPA tariffs hit us in the second half of last year, and our peak quarter was really the fourth quarter as well as the first half of this year. In this year overall so far in 2026, we've seen about $230 million of total tariff headwinds in our results. To your question, as the IEEPA tariffs were ruled illegal and they put 122s in place, essentially in the back half of this year, you're going to see our P&L be unburdened by the 10% roughly rate, which is a benefit to what we called out in our guidance originally. We originally called out $490 million of impact, which was including all IEEPA tariff impact. Now we're looking at $350 million with the new 10% rate. Thank you. Thank you. Our next caller is Kevin Caliendo with UBS. Your line is now open. Guys, thanks for taking my question. I want to kind of go a little bit further on Pito question. If we take the guidance for the second half of the year, adjust for the one-timers that you called out, the expenses that some are going to be consistent, some are not. If we take that run rate, understanding there's some seasonality, adjust for those one-timers, is there any reason to not take that run rate, think about the new business wins and the sort of normalized growth and come up with sort of a number for 2027? Is there any other headwinds or tailwinds we should be thinking about there as we sort of, because I think that's where there's a lot of confusion as to what the real run rate is and how to think about what it should look like for next year. Like what's the baseline that we're operating off of? Any help there would be great. Yeah, Kevin. Let me try to clarify that for you. If you think about the overall impact of the business on an annualized basis, if you exclude the $140 million of the tariff benefit that we talked about a minute ago, you're really looking at about $340 million of overall impact, right? Change and impact to bottom line. Right. Ultimately, if you take that and apply the same metrics like 50% transitory, 50% permanent, that gives you a better perspective on how to think about the run rate going forward into 2027. That being said, we've not stopped identifying cost savings opportunities in our business. We are looking at enterprise-wide cost savings initiatives to mitigate some portion of that burden that we're facing in our overall results. While I can't quantify for you what 2027 is going to look like, we obviously are doing our best to try to mitigate what we can. The other area that I would say is just uncertainty are the external factors like the Middle East and the tariffs. Those two also have to play into the math, and we have to wait and see how those settle out. Okay. Thank you. Thank you. Our next call is from Brandon Vazquez from William Blair. Your line is now open. Hey, thanks for taking the question. I wanted to ask, there's a lot of moving pieces in the cost line here. There's Middle East inflationary pressure, there's tariffs. In the past, you guys have kind of taken a thoughtful approach to pricing and you're absorbing those prices now, but you, in the past, have eventually pushed pricing through to kind of offset some of these headwinds. Can you guys just level set us where you are today on kind of assessing what prices you can and can't push through, and then when you might think of doing another round of pricing increases to offset some of this? I guess the follow-up question to all of this that investors are asking a lot is, the Medline Brand margins are in the low 20 range now. They used to be mid to mid-plus 20% range. Is there a pathway to get back there and what's the catalyst to expect to get there? Thanks. Hey, Brandon. Thanks for the question. You're right, this is a play we've seen historically, right? This is not a new game. Right now, we don't act in times of uncertainty and chaos and crisis. Maybe just look at the cost of oil and the cost of raw material over the last six months. They've gone up and down depending on what's going on with the Strait of Hormuz. Is oil flowing through? Is it not flowing through? We think in those times when we don't have visibility to certainty, it's better to absorb and take share than it is to take price that you ultimately have to pull back and give. That's just a different philosophy than the competition in the marketplace. That said, as we've done historically, price is an option, and when we feel like we're at a place where we understand what the true cost impacts are, we understand the burden on the business, we will push price increases through, and we do have levers and contract terms in our agreements that allow us to do that. Over time, if this is the new norm, will we push price increases through? The answer is yes. We do have an avenue to get back to the margin profile you're describing. What we find in these moments is it's better to take share and have the margin lift, kind of follow. We did that during the pandemic. We've done it during multiple scenarios where we focused on feeling the pain and the burden at the same time as the customer, being in the boat with the customer, winning share in the marketplace and over time, pushing those price increases through where we could actually justify it to our customers. Thank you. Our next question comes from Erin Wright with Morgan Stanley. Your line is now open. Great. Thanks. Can you speak a little bit more higher level just on overall utilization trends right now? Remind us of how that fits into the growth algo. What sort of in-market trends are you most levered to? You mentioned strength in the kitting business where you do have sizable share. I guess, how does that play into that? How do you think about just the health of your hospital customers as well, more broadly in the current backdrop? Thanks. Thanks, Erin. When you think about kind of flow, we don't measure patient volume, which I think is what you're hearing a lot from a lot of the providers in the network and concerns around the OBBA and the Affordable Care Act and the lack of patients flowing into the market. What we measure is volume or throughput of supplies. I can tell you that the first two quarters we've seen no slowness. Matter of fact, part of the reason why we're raising our guidance is because we're seeing the same store sales outperform what we anticipated. Do we have a little softness baked in the back half of the year based on what we are hearing from our customers and what they're saying to The Street? We do. However, our business model tends to benefit either way. What I mean by that is when a person doesn't have access to insurance, they tend to not go to the primary care and they delay their need for healthcare until they actually have a higher acuity of care need, and they end up in the emergency room, or they end up in the med surge floor or the ICU, which for that patient actually has a much higher utilization of supplies. Even if the overall volume is down across the different care settings, the actual volume and utilization of supplies either maintains or goes up because that patient actually ends up needing more if they went to the doctor for pneumonia or a cold or something like that. I will tell you, we have seen, as it relates to what we measure, flow of goods, a lift, not a drop. We are being conservative in how we look at the back half of the year tied out to what we're hearing from our customers. There's a modest softness, what we see in kind of the back half of the year, but we have not seen that in our business to date. Thank you. The next call comes from Michael Pollack from Wolfe Research. Your line is now open. Good morning. Question on the retail business. I heard 2% of total revenue, mostly Medline Brand, for sake of round numbers, $600 million of revenue. My question is margin profile on that revenue, is it meaningfully higher than Medline Brand segment, or should we use the segment? I'm trying to understand profit mix. Is it 4% or is it more than that? Then just why weak, why soft? What's the assessment? Is it execution or is it macro? Thank you. I'll take the first question, Mike, and Jim will take the second part of the question. Our retail business is less than 2% of our overall sales. Your number's close, maybe a little bit higher than where we're at. If you think about the business, that business is pretty much all Medline Brand, it runs at Medline Brand margin. That's why we're taking the EBITDA down by a larger percentage relative to what you'd see on the overall mix of the business, the back half of the year, just from the retail business. Yeah. Really the burden that we're feeling is a loss of a portion of a customer, candidly, just to a lack of our sales team understanding the needs of the customers and meeting them where they were. We actually lost a portion of business at a decent-sized retail customer. I can tell you what we've done is we've redesigned the sales team. We've actually engaged with the customer, and we're working to earn that business back. The retail business tends to be much more volatile. It doesn't have the same contract terms and really the stickiness that we do in our base business. Think about acute and non-acute. Which means you can lose it fast and you can win it fast. I can tell you we're adjusting How we engage, we understand the needs of the business, and we're working towards winning that back. Thank you. Our next call comes from Navann Ty at BNP Paribas. Your line is now open. Hi. Good morning. Thanks for taking my question. I have one more on the retail side. If you had seen weakness across retailers or focused on a certain type, and it sounds like the weakness was Medline specific, if you could confirm that. My second question is on the investment. If you could discuss the continuing investments across service levels and IT and AI, et cetera, and what metrics are you monitoring to slow down the investments. Sorry if I missed it. Thank you. On your first question, Navann, that is correct. It's Medline specific. It's not the overall retail market. It's retail softness relative to our business, specifically in that one customer that Jim talked about. On your second question, we are continuing to make investments in our business to drive efficiencies across the entire organization. We are always looking for ways in which to drive productivity and throughput in our operations facilities. We're always looking at ways to drive efficiency in our manufacturing sites. We are making investments in AI to drive efficiencies in how we deliver our service to our customers. That is part of what we are doing today and will always do in our business to drive productivity for ourselves and for our customers. Thank you. Our next caller is Jailendra Singh from Truist Securities. Your line is now open. Yeah, thanks. Thanks for taking my questions here. I want to go back to large customer implementations creating near-term margin pressure within Supply Chain Solutions. Is that all driven by the operational investments you're doing to bring these customers on board, or is there something unique about these customers? Just trying to better understand if there's any change in terms of your general margin expansion framework you laid out last year in terms of starting point or pace of ramp. Any color would be helpful. Jailendra, thank you very much for the question. It's not a margin change. We had an outside lift on $2.4 billion, it's a bit of big growth. Remember, 90% day one is Supply Chain Solutions. We burdened the business based on the throughput of the volume of the widget that we're selling. The first-year signings normally have a first-year rebate, and that first-year rebate impacts the margin of Supply Chain Solutions more than it does Medline Brand because 90% of it is in the Supply Chain Solutions business. When you think about the $2.4 billion with that first-year rebate, it goes away in the next year. You'll see a lift in the next year. Just to add to that, on the Supply Chain Solutions margin, we reported 4.9% adjusted EBITDA margin for the quarter, I would tell you that's probably more in line where we're going to land for the year. While we don't give guidance on our segments, I think now just given both the year one rebates plus the operational investments that we called out earlier in the business, we're looking at more like 4.9%-5% adjusted EBITDA for that business. Got it. Thanks a lot. Thank you. Our next call comes from Eric Coldwell with Baird. Your line is now open. Thanks very much. Good morning. Just a quick one. In the slides and in the commentary, I think you mentioned what you called notable wins in physician and lab market. Was hoping for some color on what's driving those wins, where it's coming from. Is it affiliated with existing customers, maybe doing expansions in existing customers? Also, if you would, an update on the lab market specifically after the Q1 seasonal and low illness season items. Just give us some better sense on how that snapped back. Thanks very much. Yeah. When you think about the wins both in the physician office and in the lab market, it was a combination of both. It was expanding relationships with existing acute prime vendors where we didn't have those secondary classes of trade, where we were able to pick up the physician office business or pick up the lab business in those existing customers. Some large independent physician office networks, specifically, and some lab wins in customers where we are not the prime vendor, which is a beautiful thing because whenever you can be a prime vendor in the lab, this gives us an opportunity to actually win the rest of the business no differently than when we're a prime vendor for the acute care business. It gives us the opportunity to win that secondary and tertiary markets that they own. Think about surgery centers, physician office labs. It is a part of our playbook both to win just literally brand new store sales and to grow same-store sales within their existing network. We saw a blend of both of those things. From a lab perspective, you think about the first quarter did have a drag because of seasonality, and we saw a very nice uplift in the second quarter, specifically on our core business grew significantly. We ended up growing nicely in acute care especially. That's where we saw a really nice lift in the lab business. We're very happy with the results this quarter. Thank you. Our next call comes from Andrew Obin from Bank of America. Your line is now open. Good morning. Morning. Morning. Just a question. You were talking about prime vendor wins and I'm a customer of NYU Langone. I think you press release a win there. You said that here today signings have been more singles than doubles, to use your analogy. Are there some potential home runs in the pipeline? Just a follow-up question, are any of your competitors also passing through IEEPA refunds? Is this a differentiator for you that allows you to win these orders? Thank you. A couple of things. There are absolutely more home runs in the marketplace and opportunities for us to win. They tend to be larger. You move them a little slower than you move some of the singles and doubles and triples, if you will. They take a little bit longer time to actually build really that cadence of understanding of the opportunity we can drive in order to win the business. It's important to understand, most of the wins we won in acute care were not through an RFP or a bid cycle. We won them because a customer chose to leave the competitor. From a prime vendor perspective, we don't have a giant win. Last year, we had CommonSpirit. That in my opinion, is a home run. It's a large customer that we won. Then second, what was the second part of the question? Do your competitors sort of passing through IEEPA pre-funds? Thank you. Sorry about that. The answer is, we don't comment on what they're doing. I think we're doing things, candidly, what we believe is we have to be transparent, fair, and do the right thing every time. I think that's a different approach than the market takes, but I can't tell you exactly what they're doing. What I can tell you is this is the right thing to do for our business. Thank you. Thank you. Our next call comes from Charles Rhyee from TD Cowen. Your line is now open. Yeah. Thanks for taking the question. Maybe just going back a little bit on sort of your estimates for the impacts from the Middle East here, understanding that a lot of it's out of your control, but just trying to understand a little bit your thought process. You sized it at sort of right now input costs at $70 million. Obviously, a lot of back and forth going on right now obviously at a macro level here. Can you give us a little bit more thoughts on your thought process on how you are trying to figure out what sort of a new norm is? Obviously when you think about the current administration and sort of the back and forth, it seems like it's changing all the time. Just curious how you are trying to put some, I can't even say guardrails, right, but some rails around sort of this sizing, this impact. Anything there additional would be helpful. Thank you. Yeah. Charles, the $70 million is primarily made up of product costs, raw materials, and finished goods that we source or that we buy in order to manufacture our own finished goods. That's the vast majority of the cost. The smaller portion are the cost of fuel, diesel and the inbound freight costs, the fuel surcharges we pay. Obviously we're doing our best to negotiate and work with our suppliers to understand the potential impacts and all these raw material costs. We're identifying ways in which to mitigate those costs through actions. We're leveraging our broad sourcing relationships across the globe to do that, ultimately moving production around where we can. We'll continue to monitor the situation. It is a fluid situation, we can't sit here and tell you where we're going to land, ultimately, we'll just keep on running the playbook we've run all along and leverage our broad scale relationships, leveraging our footprint, to drive as much cost savings as we can to mitigate the impact to our business. I think last quarter you had mentioned that you had started to see some input costs rise. Is that very broad based now, or is that still sort of selective depending on sort of your suppliers or maybe what's happening up the supply chain in terms of what your suppliers are feeling in terms of their input costs? Yeah, I think there's a ton of different input costs that we have to deal with. For example, on exam gloves, we deal with the NBR as an example, or with resins, we deal with polypropylene or polyethylene. It depends on the individual raw material that we're talking about. We're seeing sort of this, I would call it a whipsaw effect, where one week it's going up, the next week it's going down. We're trying not to react to the weekly uncertainty and sort of stay calm and balanced throughout this approach and try to work with them on a more long-term basis, which is how we've always operated. It's not about today. It's about the future. It's how we work with them to make sure we provide the right level of supply, the best quality at the best cost. The things the world's been focused on. Appreciate it. Thank you. Thanks, Charles. Thank you. This concludes. That brings our. Oh, excuse me. No, sorry. Go ahead. This concludes the question and answer session. I'd like to turn it over to CEO Jim Boyle for closing remarks. Thank you. Thank you all for joining the call. We are pleased with our second quarter results and the lift and revenue guidance for the back half of the year. We are implementing enterprise-wide cost savings initiatives to address the margin headwind, and we're committed to delivering long-term value for our shareholders. Thank you all very much for joining the call, and I hope you have a great week.