Medline, Inc. MDLN LCM inventory valuation adjustment

Inventories are stated at the lower of cost or net realizable value. Cost is determined primarily by the last-in, first-out (“LIFO”) method. The LIFO method presumes that the most recent inventory purchases are the first items sold and the inventory cost under LIFO approximates market. A LIFO charge is recognized when the net effect of price increases on products held in inventory exceeds the impact of price declines, including the effect of products that have lost market exclusivity. A LIFO credit is recognized when the net effect of price declines exceeds the impact of price increases on products held in inventory. The Company recognized increases in the LIFO reserve of $83 million, $53 million, and $61 million in the years ended December 31, 2025, 2024 and 2023, respectively, all within Cost of goods sold in the Consolidated Statements of Comprehensive Income. For certain foreign subsidiaries, cost is determined using the first-in, first-out (“FIFO”) method. The LIFO method was used to value approximately 89% of the Company’s inventories for both December 31, 2025 and 2024. Estimated provisions are established for slow-moving and obsolete inventory based on historical and forecasted sales trends. Rebates received from vendors relating to the purchase or distribution of inventory are considered product discounts and are accounted for as a reduction in the cost of inventory and are recognized when the inventory is sold.