McGraw Hill, Inc.

What they do

McGraw Hill provides blended digital and print learning solutions, including core curricula, adaptive digital platforms, and assessment tools. It operates four reportable segments: K-12, Higher Education, Global Professional, and International. The company leverages proprietary content, software, and data analytics, with AI-driven personalized learning features.

Revenue drivers

• Higher Education — Sells adaptive digital learning solutions and instructional materials to students, instructors, and institutions, largely through online retailers and direct-to-student e-commerce. In fiscal 2026, approximately 68% of Higher Education revenue came from the Evergreen delivery model.
• K-12 — Provides core, supplemental, and intervention curricula to U.S. school districts, with blended digital and print offerings. This segment is a focus of growth, with new ELA program win rates above target and a multi-year curriculum adoption cycle underway.
• Global Professional — Offers comprehensive medical and engineering learning solutions, including digital and print materials, to students, institutions, and professionals.
• International — Delivers digital and print solutions in over 100 countries and 80 languages, adapting U.S.-based K-12 and Higher Education solutions for global markets.

Recent performance

For the fiscal first quarter ended June 30, 2026, total revenue was $549.9 million, up 2.6% year-over-year, with GAAP net income of $57.9 million versus $0.5 million in the prior-year period. Re-occurring revenue grew 9.8% to $425.6 million, representing 77% of total revenue, and digital revenue grew 8.8% to $353.5 million. Adjusted EBITDA was $207.0 million, with a 37.7% margin, up 192 basis points year-over-year. For fiscal year 2026, annual revenue was $2.10 billion, with net income of $78.7 million and positive operating cash flow of $331.2 million.

Strategy

McGraw Hill aims to acquire new customers through its trusted brand and digital solutions, and to cross-sell and up-sell to existing customers across segments. The company is investing in data and AI-driven product differentiation, using its proprietary data and learning interactions to enhance personalized learning. It has expanded its Evergreen delivery model in Higher Education and is advancing an agentic AI strategy, including pilot opportunities outside education. The company focuses on gross debt reduction, targeting a 2.0-2.5x net leverage ratio.

Risks

• Competition from low-cost or AI-generated content — The market is highly competitive, and low-cost or no-cost alternatives, including those from large language models, could erode demand for proprietary curriculum.
• Dependence on education funding cycles — Results are sensitive to changes in federal, state, and local education funding, state standards, and enrollment trends, which can be unpredictable and seasonal.
• Seasonality and order timing — Revenue is highly seasonal, with a significant portion concentrated in the peak selling season, and customer order patterns can vary.
• Economic and geopolitical conditions — Inflation, interest rate fluctuations, foreign exchange volatility, and conflicts like the Middle East military conflict can adversely impact operations.

Outlook

Management expects accelerating revenue growth and continued margin expansion in fiscal 2027, citing strong leading indicators such as K-12 ELA win rates above target, a multi-year curriculum adoption cycle, and Higher Education market share gains. The company plans to launch three additional AI learning tools this fiscal year, building on eight live tools serving over 7.5 million active users. Progress toward reducing gross debt continues, with Moody's upgrading credit ratings in July 2026.