Medline Inc.MDLN

Medline Inc. Leases Disclosure

10-KFiled Feb 25, 20262 min read
LEASES
Lessee Activities

The following table summarizes the components of lease cost:

Year ended
(in millions)
December 31, 2025December 31, 2024December 31, 2023
Operating lease cost$106 $90 $67 
Variable lease cost31 25 19 
Short-term lease cost4 3 2 
Total lease cost$141 $118 $88 
Sublease income(12)(10)(7)
Total lease cost, net$129 $108 $81 

Variable lease cost primarily includes payments for operating expenses, maintenance, electricity and property taxes.

The following table presents the lease-related assets and liabilities recorded on the Consolidated Balance Sheets:
(in millions)
Consolidated Balance Sheets captions:
December 31, 2025December 31, 2024
Operating leases:
Operating lease right-of-use assetsOther long-term assets$432 $384 
Current portion of operating lease liabilitiesAccrued expenses and other current liabilities66 76 
Long-term operating lease liabilitiesOther long-term liabilities386 329 
Total operating lease liabilities$452 $405 

The Company’s operating leases have a weighted-average remaining lease term of 7 years for both December 31, 2025 and 2024. The weighted-average discount rate of the Company’s operating leases is 7% and 8% for December 31, 2025 and 2024, respectively.

Future lease annual operating lease payments under non-cancelable leases over the next five years and thereafter is as follows:
(in millions)
Total
2026$92 
202785 
202877 
202966 
203056 
Thereafter215 
Total future lease payments$591 
Less: Imputed interest(139)
Present value of future lease payments$452 

As of December 31, 2025, the Company has executed operating lease agreements for warehouse distribution facilities that have not yet commenced. As such the total expected future lease payments of $312 million for these agreements are not reflected in the table above. These operating leases will commence after December 31, 2025 with lease terms of 12 years.

Lessor Activities

The following table summarizes the components of lease income recorded in Cost of goods sold and Selling, general and administrative expenses:

Year ended
(in millions)
December 31, 2025December 31, 2024December 31, 2023
Operating lease income$15 $13 $15 
Variable lease income2 2 2 
Total lease income$17 $15 $17 

The variable lease income includes reimbursements for tenant improvements, property tax, services, utilities, and maintenance.
Estimated maturities of operating lease receivables over the next five years and thereafter is as follows:

(in millions)
Total
2026$13 
202710 
20288 
20297 
20307 
Thereafter9 
Total future lease receivables$54 
Assets under operating leases are included in Property, plant, and equipment, net of the Company’s Consolidated Balance Sheets and consist of the following as of:
(in millions)
December 31, 2025December 31, 2024
Buildings and improvements$92 $110 
Land and improvements35 41 
Less: Accumulated depreciation(22)(23)
Assets under operating leases, net$105 $128 

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

Other Available Disclosures

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