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Medical Devices & Supplies: Stock-based compensation (ASC 718)

Note: ASC 718-10-50 disclosures including unrecognized compensation cost and expected recognition period.
Medline Inc. (MDLN) · Form 10-K for period ended 2025-12-31 · filed 2026-02-25 · Section: NOTE 17 - STOCK-BASED COMPENSATION (Continued)

Total fair value of Incentive Units vested during the year ended December 31, 2025 was $ 2 million. As of December 31, 2025, there was $ 49 million of unrecognized compensation cost related to Incentive Units, which is expected to be recognized on a graded or straight-line basis over a weighted-average period of 1.1 years. The following table summarizes the information about Class B units in Medline Holdings that were reclassified to Incentive Units in Medline Holdings:

Incentive UnitsWtd. Avg. Grant Date Fair Value
Effect of the Reorganization and IPO as of December 17, 202517,056,4316.45
Granted——
Vested( 339,388 )5.16
Forfeited( 2,178,225 )5.80
Unvested as of December 31, 202514,538,8185.86

Exchanging Unitholders

The Holdings Incentive Units and Class A units held by participants other than Continuing Unitholders (the “Exchanging Unitholders”) were exchanged for vested Class A common stock and RSUs, in the case of Class A units and Class B CUPIs, and vested Class A common stock, RSUs, RSAs, and options, in the case of Class B units, in the Company. The RSAs, RSUs, and options will vest according to the same vesting schedule as the corresponding Class B units, in respect of which they are being granted, except that no awards will vest until the later of the date that is 180 days following the IPO and the existing vesting date of the underlying Class B units. This modification resulted in the re-measurement of the awards in accordance with ASC 718. Total compensation cost for the modified awards equaled the grant date fair value of the pre-IPO awards, plus any incremental compensation cost measured at the modification date (i.e. the IPO date). The change in fair value of these awards prior to and after the reclassification was not material. The modification impacted 68 participants.

RSAs

As of December 31, 2025, there was $ 13 million of unrecognized compensation cost related to RSAs, which is expected to be recognized on a graded or straight-line basis over a weighted-average period of 1.4 years. The following table summarizes the RSAs activity during the year ended December 31, 2025:

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