Enters Peak Selling Season With Momentum Amid Growing Revenue, Re-Occurring Revenue and Digital Revenue While Expanding Margins and Net Income
COLUMBUS, Ohio--(BUSINESS WIRE)--August 13, 2026--
McGraw Hill, Inc. (NYSE: MH) ("McGraw Hill" or the "Company"), a leading global provider of education solutions for preK-12, higher education and professional learning, today announced financial results for the fiscal first quarter 2027 ended June 30, 2026.
Key Fiscal First Quarter 2027 Financial Highlights
-- Total revenue of $549.9 million, an increase of 2.6% year-over-year,
driven by strong execution in Higher Education and K-12 segments.
-- Re-occurring revenue of $425.6 million, an increase of 9.8%
year-over-year, representing 77% of total revenue.
-- Digital revenue of $353.5 million, an increase of 8.8% year-over-year,
underscoring the strength of the Company's technology-based solutions,
which are deeply embedded in the learning experience.
-- Remaining performance obligation (RPO) of $1,522.2 million as of June
30, 2026, demonstrating predictability and visibility into future revenue
growth.
-- GAAP gross profit of $439.2 million, representing a GAAP gross profit
margin of 79.9%, an increase of 290 basis points versus prior year.
-- GAAP net income of $57.9 million, compared to $0.5 million in the
prior-year period.
-- Adjusted EBITDA(1) of $207.0 million, representing an Adjusted EBITDA
margin(1) of 37.7%, an increase of 192 basis points versus prior year.
-- Continued commitment to gross debt reduction, progressing toward the
Company's 2.0-2.5x net leverage target. In July 2026, Moody's Ratings
upgraded the Company's credit ratings.
"McGraw Hill's strong start to fiscal year 2027 reflects the strength of our strategy and the trust that millions of educators and institutions place in us to deliver successful learning outcomes," said Philip Moyer, President, Chief Executive Officer of the Company and a member of the Company's Board of Directors. "This quarter, we exceeded our expectations while building positive momentum as we prepare for the most important quarter of our fiscal year."
Mr. Moyer added, "AI was a contributor to the momentum we're seeing across revenue growth, margin expansion, price realization, and market share gains. AI represents a genuine tailwind for our business, and our agentic strategy continues to progress, representing an opportunity for meaningful TAM expansion ahead. By harnessing this technology, it will augment our current solutions and reinforce our ability to deliver precision education, the right content at the right moment, to our more than 100 million active curriculum licenses."
"Fiscal first quarter 2027 represents a solid start to our fiscal year, with revenue, re-occurring revenue, and Adjusted EBITDA all coming in above our expectations," said Bob Sallmann, McGraw Hill's Executive Vice President, Chief Financial Officer. "Re-occurring revenue and Adjusted EBITDA margins continue to grow, reflecting the durability of our model and cost discipline. Our margins are best-in-class among education peers, underscoring the strength and differentiation of our business. As we enter our peak selling season, our leading indicators, including our new K-12 ELA program delivering win rates above target, early stages of a multi-year K-12 curriculum adoption cycle, and continued Higher Education market share gains, are strengthening considerably. We believe that we are well positioned to deliver accelerating revenue growth and continued margin expansion in fiscal year 2027 and beyond."
Fiscal First Quarter 2027 Strategic Highlights
-- Served more than 7.5 million active users across eight live AI learning
tools, with three additional launches planned for this fiscal year.
-- Generated 63 million AI Reader learning interactions across
approximately 2.6 million students since inception through July 2026,
accelerating from approximately 47 million interactions and approximately
2.2 million students in fiscal year 2026.
-- Expanded the Company's Evergreen delivery model in Higher Education,
driving share gains and improving the customer experience and retention.
-- Advanced the Company's agentic AI strategy at scale, with pilot
opportunities progressing, including industries outside of education.
-- Broadened the Company's literacy portfolio with ROAR$(R)$, the Rapid
Online Assessment of Reading, the only research-backed dyslexia screener
for K-12, subsequent to the fiscal first quarter. Exclusive integration
will bring assessment developed at the Stanford Graduate School of
Education, Reading and Dyslexia Research Program to more K-12
classrooms.
Fiscal First Quarter 2027 Financial Highlights
Three Months Ended June 30,
--------------------------------------------------
($ in thousands) 2026 2025
------------------------ ------------------- -------------------
Revenue $ 549,903 $ 535,710
Cost of sales (excluding
depreciation and
amortization) $ 110,704 $ 123,384
Operating and
administrative expenses $ 255,069 $ 241,549
Net income (loss) $ 57,860 $ 502
Adjusted EBITDA (1) $ 207,046 $ 191,416
Net income (loss) margin 10.5% 0.1%
Adjusted EBITDA Margin
(1) 37.7% 35.7%
Adjusted net income
(loss) (1) $ 112,753 $ 292
Fiscal First Quarter 2027 Segment Highlights
Higher Education
-- Revenue totaled $199.8 million, an increase of 9.6% year-over-year,
supported by market share gains, price realization and increases in
enrollment.
-- Re-occurring revenue totaled $182.1 million, an increase of 14.1%
year-over-year.
-- Continued Higher Education market share gains, including 5 points of
market share gained over the past four fiscal years from traditional
competitors, according to MPI.
-- Growth driven by continued Inclusive Access momentum and deeper campus
penetration; Evergreen delivery model anchors renewal base and frees
sales capacity to focus primarily on taking market share.
K-12
-- Revenue totaled $274.4 million, up 1.3% year-over-year driven by the
durability of multi-year contracts and capture rates in ELA and Science.
-- Re-occurring revenue totaled $196.6 million, an increase of 7.1%
year-over-year.
-- Robust early capture rates for Emerge, Summit and Soar; 44 states now
have a Science of Reading policy or regulation in place, covering 86% of
U.S. K-5 public school enrollment.
-- In July, the Company's California ELA programs were recommended for
approval by state reviewers, ahead of the state's approved vendor list to
be released later in calendar year 2026.
-- In August, Florida approved the Company's Math program ahead of the
state's upcoming adoption beginning in fiscal year 2028.
Global Professional and International
-- Global Professional delivered 6.3% re-occurring revenue growth
year-over-year, fueled by wins for the medical solutions portfolio,
including AI-driven Clinical Reasoning, across Osteopathic Medicine,
Physician Assistant, and Nurse Practitioner programs worldwide.
-- International revenue was $45.2 million, with delayed Middle East K-12
shipments being fulfilled, and strong momentum in Latin America,
offsetting Canadian enrollment headwinds, positioning the segment for
growth in fiscal year 2027.
Fiscal Year 2027 Guidance
We are re-affirming our fiscal year 2027 guidance, which is included below. This fiscal year 2027 guidance is forward-looking and is based on the Company's current expectations. Actual results may differ materially from what is indicated below.
Fiscal Year 2027 Guidance
---------------------------------
($ in millions) Low High
--------------------- --------------- ----------------
Revenue $ 2,115 $ 2,175
Re-occurring Revenue 1,587 1,627
Adjusted EBITDA (1) 750 790
Earnings Conference Call and Webcast
Today, August 13, 2026, at 8:30 a.m. ET, McGraw Hill will host a conference call via webcast to review fiscal first quarter 2027 results and provide a business update. The webcast will be hosted by Philip Moyer, President and Chief Executive Officer, and Bob Sallmann, Executive Vice President and Chief Financial Officer, and will conclude with a question-and-answer session.
To access the live webcast or to view a replay, visit the Company's investor relations website at https://investors.mheducation.com/
The live question and answer portion of the call can be accessed by registering online at the Event Registration Page at which time registrants will receive dial-in information as well as a conference ID. Registration can be completed in advance of the conference call.
About McGraw Hill
McGraw Hill (NYSE: MH) is a leading global provider of education solutions for preK-12, higher education and professional learning, supporting the evolving needs of millions of educators and students around the world. We provide trusted, high-quality content and personalized learning experiences that use data, technology and learning science to help students progress towards their goals. Through our commitment to fostering a culture of innovation and belonging, we are dedicated to improving outcomes and access to education for all. We have over 30 offices across North America, Asia, Australia, Europe, the Middle East and South America, and make our learning solutions available in more than 80 languages. The Company's fiscal year is the 52-week period ended March 31. Visit us at mheducation.com or find us on Facebook, Instagram, LinkedIn or X.
Safe Harbor Statement
This press release includes statements that are, or may be deemed to be, "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by the use of forward-looking terminology, including terms such as "believes," "estimates," "anticipates," "expects," "projects," "intends," "plans," "may," "will," "should" or "seeks," or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts and include, but are not limited to, statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which it operates. By their nature, forward-looking statements involve risks and uncertainties, as they relate to events and depend on circumstances that may or may not occur in the future. The Company's expectations, beliefs and projections are expressed in good faith, and the Company believes there is a reasonable basis for them; however, the Company cautions readers that forward-looking statements are not guarantees of future performance and that the Company's actual results of operations, financial condition and liquidity, and the developments in the industry in which the Company operates, may differ materially from those made in or suggested by the forward-looking statements contained in this press release. There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from the forward-looking statements contained in this press release, including those described under the headings "Risk Factors", "Management's Discussion and Analysis of Financial Condition and Results of Operations", "Business" and "Cautionary Note Regarding Forward-Looking Statements" in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, and in other filings made with the U.S. Securities and Exchange Commission. In addition, even if our results of operations, financial condition and liquidity, and the developments in the industry in which we operate are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of results or developments in subsequent periods. Any forward-looking statements the Company makes in this press release speak only as of the date of such statement. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities law. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.
(1) Non-GAAP Financial Measures
In addition to presenting financial results that have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), we have included in this release the following non-GAAP financial measures--EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted net income (loss), Adjusted basic and diluted earnings (loss) per share, Adjusted operating and administrative expenses, Adjusted selling and marketing expenses, Adjusted general and administrative expenses, Adjusted research and development expenses and Net Leverage Ratio. All such financial measures are not required by or presented in accordance with GAAP. We believe that these non-GAAP financial measures are useful in evaluating our business and the underlying trends that affect our performance. The Company has included non-GAAP financial measures within the meaning of Regulation G and Item 10(e) of Regulation S-K. We include these non-GAAP financial measures in this release because management uses them to assess our performance. We believe that they reflect the underlying trends and indicators of our business and allow management to focus on the most meaningful indicators of our continuous operational performance. Although we believe these measures are useful for investors for the same reasons, readers of the financial statements herein should note that these measures are not a substitute for GAAP financial measures or disclosures. Each of these measures is not a recognized term under GAAP and does not purport to be an alternative to net income (loss), or any other measure derived in accordance with GAAP as a measure of operating performance, or to cash flows from operations as a measure of liquidity. Such measures are presented for supplemental information purposes only, have limitations as analytical tools and should not be considered in isolation or as substitute measures for our results as reported under GAAP. Management uses non-GAAP financial measures to supplement GAAP results to provide a more complete understanding of the factors and trends affecting our business, rather than evaluating GAAP results alone. Because not all companies use identical calculations, our measures may not be comparable to other similarly titled measures of other companies, and our use of these measures varies from others in our industry. Such measures are not intended to be a measure of cash available for management's discretionary use, as they may not capture actual cash obligations associated with interest payments, other debt service requirements and taxes.
Because of these limitations, we rely primarily on our GAAP results and use these non-GAAP measures only supplementally. See "Reconciliations of Non-GAAP Financial Measures" in the "Supplemental Information" section below and "Management's Discussion and Analysis of Financial Condition and Results of Operations--Non-GAAP Financial Measures" in our Quarterly Report on Form 10-Q filed on August 13, 2026, for reconciliations of non-GAAP financial measures to the most directly comparable financial measure stated in accordance with GAAP.
(2) Learning interactions measures the volume of user-driven educational activities across McGraw Hill platforms, including answering questions, completing assignments, and engaging with learning content. This data captures activity across K-12 platforms (Open Learning, ConnectED, ALEKS), Higher Education (Smartbook, Connect), and Enterprise IDM. For the fiscal year ended March 31, 2026, coverage expanded to include A3K Literacy, Actively Learn, and additional Connect data.
Forward-Looking Non-GAAP Financial Measures
This press release contains forward-looking estimates of Adjusted EBITDA for fiscal year 2027. We provide this non-GAAP measure to investors on a prospective basis for the same reasons (as set forth above) that we provide it to investors on a historical basis. We are unable to provide a reconciliation of our forward-looking estimate of fiscal year 2027 net income (loss) to a forward-looking estimate of fiscal year 2027 Adjusted EBITDA because certain information needed to make a reasonable forward-looking estimate of net income (loss) for fiscal year 2027 is unreasonably difficult to predict and estimate and is often dependent on future events that may be uncertain or outside of our control. In addition, we believe such reconciliations would imply a degree of precision that would be confusing or misleading to investors. The unavailable information could have a significant impact on our future financial results. Our forward-looking estimates of both GAAP and non-GAAP measures of our financial performance may differ materially from our actual results and should not be relied upon as statements of fact.
MCGRAW HILL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except for share and per share data)
Three Months Ended June 30,
--------------------------------------------
2026 2025
------------------- -------------------
Revenue $ 549,903 $ 535,710
Cost of sales (excluding
depreciation and
amortization) 110,704 123,384
------------------- -------------------
Gross profit 439,199 412,326
Operating expenses
Operating and
administrative
expenses(1) 255,069 241,549
Depreciation 16,348 17,187
Amortization of
intangibles 53,500 57,365
------------------- -------------------
Total operating
expenses 324,917 316,101
------------------- -------------------
Operating income (loss) 114,282 96,225
Interest expense
(income), net 45,770 58,774
------------------- -------------------
Income (loss) from
operations before
taxes 68,512 37,451
Income tax provision
(benefit) 10,652 36,949
------------------- -------------------
Net income (loss) $ 57,860 $ 502
=================== ===================
Basic earnings (loss)
per share $ 0.30 $ 0.00
Diluted earnings (loss)
per share $ 0.30 $ 0.00
(1) See "Supplemental Information--Reconciliations of Non-GAAP Financial
Measures; Non-GAAP operating and administrative expenses" for a breakdown of
our GAAP operating and administrative expenses and a reconciliation to the
corresponding Non-GAAP financial measure.
MCGRAW HILL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except for share data)
June 30, 2026 March 31, 2026
------------------------ --------------------------
(Unaudited)
Assets
Current assets
Cash and cash
equivalents $ 193,637 $ 253,519
Accounts receivable,
net of allowance
for credit losses
of $12,638 and
$14,517 as of June
30, 2026 and March
31, 2026,
respectively 377,884 362,483
Inventories, net 183,213 195,022
Prepaid and other
current assets 133,328 162,625
---------------------- ----------------------
Total current
assets 888,062 973,649
Product development
costs, net 306,676 285,970
Property, plant and
equipment, net 92,505 90,421
Goodwill 2,522,595 2,522,595
Other intangible
assets, net 1,173,912 1,227,253
Deferred income
taxes 8,546 8,572
Operating lease
right-of-use
assets 43,225 44,836
Other non-current
assets 343,131 332,225
---------------------- ----------------------
Total assets $ 5,378,652 $ 5,485,521
====================== ======================
Liabilities and
stockholders' equity
(deficit)
Current liabilities
Accounts payable $ 118,740 $ 126,701
Accrued royalties 100,656 81,436
Accrued compensation 33,569 108,434
Deferred revenue 732,926 835,357
Current portion of
long-term debt 13,170 13,170
Operating lease
liabilities 7,592 8,365
Other current
liabilities 138,553 93,086
---------------------- ----------------------
Total current
liabilities 1,145,206 1,266,549
Long-term debt 2,561,270 2,560,698
Deferred income
taxes 15,443 15,214
Long-term deferred
revenue 789,230 836,001
Operating lease
liabilities 55,898 57,301
Other non-current
liabilities 23,215 23,540
---------------------- ----------------------
Total
liabilities 4,590,262 4,759,303
Commitments and
contingencies
Stockholders' equity
(deficit)
Common Stock, par
value $0.01 per
share;
2,000,000,000
shares authorized,
191,276,168 and
191,146,027 shares
issued and
outstanding as of
June 30, 2026 and
March 31, 2026,
respectively 1,911 1,911
Additional paid-in
capital 1,978,413 1,972,702
Accumulated deficit (1,188,020) (1,245,880)
Accumulated other
comprehensive
income (loss) (3,914) (2,515)
---------------------- ----------------------
Total
stockholders'
equity
(deficit) 788,390 726,218
---------------------- ----------------------
Total liabilities and
stockholders' equity
(deficit) $ 5,378,652 $ 5,485,521
====================== ======================
MCGRAW HILL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three Months Ended June 30,
------------------------------------------------
2026 2025
-------------------- --------------------
Operating activities
Net income (loss) $ 57,860 $ 502
Adjustments to reconcile
net income (loss) to net
cash provided by operating
activities
Depreciation (including
amortization of
technology costs) 16,348 17,187
Amortization of
intangibles 53,500 57,365
Amortization of product
development costs 13,628 13,302
Amortization of deferred
royalties 38,039 34,669
Amortization of deferred
commission costs 7,655 7,435
Stock-based compensation 3,884 --
Credit losses on
accounts receivable (1,251) (2,286)
Inventory obsolescence 3,958 3,486
Deferred income taxes 255 864
Amortization of debt
discount 3,166 3,352
Amortization of deferred
financing costs 1,222 1,253
Changes in operating assets
and liabilities:
Accounts receivable (18,041) (105,289)
Inventories 7,864 10,544
Prepaid and other
current assets (16,360) (28,185)
Accounts payable and
accrued expenses (63,566) (91,569)
Deferred revenue (149,389) (27,553)
Other current
liabilities 42,342 12,233
Other changes in
operating assets and
liabilities, net (513) (3,962)
-------------------- --------------------
Cash provided by
(used for)
operating
activities 601 (96,652)
-------------------- --------------------
Investing activities
Product development
expenditures (34,360) (22,788)
Capital expenditures (23,929) (16,283)
-------------------- --------------------
Cash provided by
(used for) investing
activities (58,289) (39,071)
-------------------- --------------------
Financing activities
Payment of A&E Term Loan
Facility (3,293) (3,292)
Payment of finance lease
obligations (1,684) (1,718)
Deferred Initial Public
Offering costs -- (2,374)
Exercise of stock options 1,827 --
-------------------- --------------------
Cash provided by
(used for) financing
activities (3,150) (7,384)
-------------------- --------------------
Effect of exchange rate
changes on cash 956 608
-------------------- --------------------
Net change in cash and cash
equivalents (59,882) (142,499)
Cash and cash equivalents,
at the beginning of the
period 253,519 389,830
-------------------- --------------------
Cash and cash equivalents,
at the end of the period $ 193,637 $ 247,331
==================== ====================
Supplemental disclosures
Cash paid for
interest expense $ 9,464 $ 22,408
Cash paid/(refunded)
for income taxes,
net (3,511) 56,813
Supplemental Information
Reconciliations of Non-GAAP Financial Measures
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin
"EBITDA" is defined as net income (loss) from continuing operations plus interest expense (income), net, income tax provision (benefit), depreciation and amortization.
"Adjusted EBITDA" is defined as net income (loss) from continuing operations plus interest expense (income), net, income tax provision (benefit), depreciation and amortization, restructuring and cost savings implementation charges, the effects of the application of purchase accounting, advisory fees paid to Platinum Advisors pursuant to the Advisory Agreement (which was terminated on July 25, 2025 in connection with the consummation of our initial public offering), impairment charges, transaction and integration costs, stock-based compensation, (gain) loss on extinguishment of debt and the impact of earnings or charges resulting from matters that we do not consider indicative of our ongoing operations.
Further, although not included in the calculation of Adjusted EBITDA below, we may at times add estimated cost savings and operating synergies related to operational changes ranging from acquisitions or dispositions to restructurings, and exclude one-time transition expenditures.
"Adjusted EBITDA Margin" is calculated by dividing Adjusted EBITDA by total revenue.
The following table presents a reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin to the most directly comparable GAAP financial measure for the periods presented.
Three Months Ended June 30,
--------------------------------------------------
($ in thousands) 2026 2025
----------------- ------------------- -------------------
Net income (loss) $ 57,860 $ 502
Interest expense
(income), net 45,770 58,774
Income tax
provision
(benefit) 10,652 36,949
Depreciation,
amortization and
product
development
amortization 83,476 87,854
------------------- -------------------
EBITDA $ 197,758 $ 184,079
Restructuring and
cost savings
implementation
charges (a) 3,746 3,106
Advisory fees (b) -- 2,500
Transaction and
integration costs
(c) -- 100
Stock-based
compensation (d) 3,884 --
Other (e) 1,658 1,631
------------------- -------------------
Adjusted EBITDA
(f) $ 207,046 $ 191,416
=================== ===================
Total Revenue $ 549,903 $ 535,710
Net income (loss)
margin 10.5% 0.1%
Adjusted EBITDA
Margin 37.7% 35.7%
(a) Represents severance and other expenses associated with headcount
reductions and other cost savings initiated as part of our formal
restructuring initiatives.
(b) For the three months ended June 30, 2025, represents the pro rata portion
of the annual $10.0 million of advisory fees paid to Platinum Advisors
pursuant to the Advisory Agreement (which was terminated on July 25, 2025 in
connection with the consummation of our initial public offering).
(c) This primarily represents transaction and integration costs associated
with acquisitions.
(d) Represents stock-based compensation expense related to awards granted to
our employees, directors and consultants under the Company's long-term
incentive plans.
(e) For the three months ended June 30, 2026 and 2025, this amount represents
(i) foreign currency exchange transaction impact of $(0.7) million and $(1.9)
million, respectively, (ii) non-recurring expenses related to strategic
initiatives, including marketing, consulting, and non-operational costs
associated with the market introduction of a new product launch of $2.6
million and $0.8 million, respectively, (iii) reimbursements of expenses paid
to Platinum Advisors incurred in connection with its services under the
Advisory Agreement (which was terminated on July 25, 2025 in connection with
the consummation of our initial public offering) of nil and $0.1 million,
respectively, (iv) non-recurring transaction-related costs associated with our
initial public offering that were expensed as incurred of nil and $1.9
million, respectively, and (v) the impact of additional insignificant earnings
or charges resulting from matters that we do not consider indicative of our
ongoing operations of $(0.3) million and $0.7 million, respectively, that are
primarily related to individually insignificant miscellaneous items, including
asset dispositions, third-party consulting and advisory fees associated with
system and process rationalization initiatives, as well as certain additional
payments related to incremental insurance premiums and policies as a result of
the Platinum acquisition that did not renew after the consummation of our
initial public offering.
(f) The purchase accounting, impairment charges and (gain) loss on
extinguishment of debt adjustments included in the definition of Adjusted
EBITDA are not presented in the table above, as there were no such charges
recognized during the three months ended June 30, 2026 and 2025.
Adjusted net income (loss) and Adjusted basic and diluted earnings (loss) per share
"Adjusted net income (loss)" is defined as net income (loss) from continuing operations adjusted to exclude amortization of intangible assets, restructuring and cost savings implementation charges, the effects of the application of purchase accounting, advisory fees paid to Platinum Advisors pursuant to the Advisory Agreement (which was terminated on July 25, 2025 in connection with the consummation of our initial public offering), impairment charges, transaction and integration costs, stock-based compensation, (gain) loss on extinguishment of debt and the impact of earnings or charges resulting from matters that we do not consider indicative of our ongoing operations and the related tax impact of those adjustments.
"Adjusted basic and diluted earnings (loss) per share" is calculated by dividing Adjusted net income (loss) by the basic and diluted weighted average shares outstanding.
The following table presents a reconciliation of Adjusted net income (loss) and Adjusted basic and diluted earnings (loss) per share to the most directly comparable GAAP financial measure for the periods presented.
Three Months Ended June 30,
---------------------------------------------
($ in thousands) 2026 2025
-------------------- ------------------ -------------------
Net income (loss) $ 57,860 $ 502
Amortization of
intangible assets
(1) 53,341 57,168
Restructuring and
cost savings
implementation
charges (2) 3,746 3,106
Advisory fees (2) -- 2,500
Transaction and
integration costs
(2) -- 100
Stock-based
compensation (2) 3,884 --
Other (2) 1,658 1,631
Tax impact of
adjustments(3) (7,736) (64,715)
------------------ -------------------
Adjusted net income
(loss) $ 112,753 $ 292
================== ===================
Basic earnings (loss)
per share $ 0.30 $ 0.00
Diluted earnings
(loss) per share $ 0.30 $ 0.00
Adjusted basic
earnings (loss) per
share $ 0.59 $ 0.00
Adjusted diluted
earnings (loss) per
share $ 0.59 $ 0.00
Basic
weighted-average
shares outstanding 191,247,605 166,611,519
Diluted
weighted-average
shares outstanding 191,308,015 166,611,519
(1) Represents amortization of definite-lived acquired intangible assets.
(2) Represents the same adjustments used in calculating EBITDA and Adjusted
EBITDA.
(3) Represents the tax impact of the adjustments, which are pre-tax, based
upon the estimated annual effective income tax rate.
Non-GAAP operating and administrative expenses
"Adjusted operating and administrative expenses" is defined as GAAP operating and administrative expenses adjusted to exclude restructuring and cost savings implementation charges, advisory fees paid to Platinum Advisors pursuant to the Advisory Agreement (which was terminated on July 25, 2025 in connection with the consummation of our initial public offering), transaction and integration costs, stock-based compensation, amortization of product development costs and the impact of earnings or charges resulting from matters that we do not consider indicative of our ongoing operations.
"Adjusted selling and marketing expenses" is defined as GAAP selling and marketing expenses adjusted to exclude stock-based compensation and the impact of earnings or charges resulting from matters that we do not consider indicative of our ongoing operations.
"Adjusted general and administrative expenses" is defined as GAAP general and administrative expenses adjusted to exclude restructuring and cost savings implementation charges, advisory fees paid to Platinum Advisors pursuant to the Advisory Agreement (which was terminated on July 25, 2025 in connection with the consummation of our initial public offering), transaction and integration costs, stock-based compensation and the impact of earnings or charges resulting from matters that we do not consider indicative of our ongoing operations.
"Adjusted research and development expenses" is defined as GAAP research and development expenses adjusted to exclude stock-based compensation and the impact of earnings or charges resulting from matters that we do not consider indicative of our ongoing operations.
The following table presents a reconciliation of these non-GAAP operating and administrative expenses to the most directly comparable GAAP financial measure for the periods presented.
Three Months Ended June 30,
--------------------------------------------------
($ in thousands) 2026 2025
------------------ --------------------- ---------------------
Operating and
administrative
expenses $ 255,069 $ 241,549
Restructuring and
cost savings
implementation
charges (3,746) (3,106)
Advisory fees -- (2,500)
Transaction and
integration costs -- (100)
Amortization of
product
development costs (13,628) (13,302)
Stock-based
compensation (3,884) --
Other (1,658) (1,631)
--------------------- ---------------------
Adjusted operating
and administrative
expenses (1) $ 232,153 $ 220,910
===================== =====================
Selling and
marketing $ 94,784 $ 87,397
Stock-based
compensation (225) --
Other (1,886) (417)
--------------------- ---------------------
Adjusted selling
and marketing
expenses (1) $ 92,673 $ 86,980
===================== =====================
General and
administrative $ 86,812 $ 75,392
Restructuring
and cost
savings
implementation
charges (3,746) (3,106)
Advisory fees -- (2,500)
Transaction and
integration
costs -- (100)
Stock-based
compensation (3,069) --
Other 786 (906)
--------------------- ---------------------
Adjusted general
and administrative
expenses (1) $ 80,783 $ 68,780
===================== =====================
Research and
development $ 59,845 $ 65,458
Stock-based
compensation (590) --
Other (558) (308)
--------------------- ---------------------
Adjusted research
and development
expenses (1) $ 58,697 $ 65,150
===================== =====================
(1) We calculate each of these measures by using the same adjustments used in
calculating EBITDA and Adjusted EBITDA to the extent such items are included
in the corresponding GAAP operating and administrative expense category.
Net Leverage Ratio
"Net Leverage Ratio" is calculated by dividing net debt as of the most recent balance sheet date by the Last Twelve Months ("LTM") Adjusted EBITDA. Net debt is defined as Gross Debt, net of cash and cash equivalents. Gross Debt is defined as the total amount of principal borrowings outstanding.
LTM is defined as the twelve-month period ended on the last day of the most recently completed fiscal quarter and is calculated by adding the results for the three months ended June 30, 2026, to the results of the fiscal year ended March 31, 2026, and subtracting the three months ended June 30, 2025.
As of June 30,
-------------------------
($ in thousands) 2026
-------------------------------- ---------------------
A&E Term Loan Facility due 2031 $ 551,547
2022 Secured Notes due 2028 828,466
2024 Secured Notes due 2031 650,000
---------------------
First Lien Indebtedness $ 2,030,013
2022 Unsecured Notes due 2029 599,034
---------------------
Gross Debt $ 2,629,047
Cash and cash equivalents (193,637)
---------------------
Net Debt $ 2,435,410
LTM Adjusted EBITDA (1) $ 759,894
Net Leverage Ratio (2) 3.2 x
(1) LTM Adjusted EBITDA is calculated by adding Adjusted EBITDA for the three
months ended June 30, 2026 of $207,046, to Adjusted EBITDA for the fiscal year
ended March 31, 2026 of $744,264, and subtracting Adjusted EBITDA for the
three months ended June 30, 2025 of $191,416.
(2) In addition to the Net Leverage Ratio, the Company is subject to a
Consolidated First Lien Net Leverage Ratio springing covenant, pursuant to its
credit agreement. The Consolidated First Lien Net Leverage Ratio is calculated
by dividing Consolidated First Lien Secured Debt by LTM Consolidated Adjusted
EBITDA, as such terms are defined in our credit agreements. As of June 30,
2026, the Consolidated First Lien Net Leverage Ratio was 2.9x. The
Consolidated First Lien Secured Debt was $1,852,252 as of June 30, 2026, and
is defined as First Lien Indebtedness of $2,030,013 plus capital lease
obligations of $15,876, net of cash and cash equivalents of $193,637. LTM
Consolidated Adjusted EBITDA is calculated by adding Consolidated Adjusted
EBITDA for the three months ended June 30, 2026 of $77,354, to Consolidated
Adjusted EBITDA for the fiscal year ended March 31, 2026 of $751,803, and
subtracting Consolidated Adjusted EBITDA for the three months ended June 30,
2025 of $179,622. Consolidated Adjusted EBITDA differs from Adjusted EBITDA
presented elsewhere herein and is defined in our credit agreements.
Key Operating Metrics
Re-occurring Revenue and Transactional Revenue
Three Months Ended June 30,
--------------------------------------------------------------------------------------------
2026 2025
-------------------------------------------- ----------------------------------------------
Re-occurring Transactional Re-occurring Transactional
($ in thousands) Revenue Revenue Total Revenue Revenue Total
----------------- -------------- ----------------- --------- -------------- ----------------- -----------
K-12 $ 196,595 $ 77,809 $274,404 $ 183,641 $ 87,290 $270,931
Higher
Education 182,102 17,734 199,836 159,552 22,827 182,379
Global
Professional 25,140 9,675 34,815 23,657 11,502 35,159
International 21,727 23,503 45,230 20,764 30,700 51,464
Other -- (4,382) (4,382) -- (4,223) (4,223)
--- --------- -------- ------- --- --------- -------- -------
Total Revenue $ 425,564 $ 124,339 $549,903 $ 387,614 $ 148,096 $535,710
=== ========= ======== === ======= === ========= ======== === =======
Remaining Performance Obligation (RPO)
June 30, 2026 March 31, 2026
----------------------------------- -------------------------------------
($ in thousands) Current Non-current Total Current Non-current Total
----------------- -------- ------------- ---------- -------- ------------- ------------
RPO by Segment:
K-12 $477,491 $ 733,155 $1,210,646 $477,183 $ 772,190 $1,249,373
Higher
Education 169,906 47,029 216,935 268,649 53,350 321,999
Global
Professional 62,058 6,619 68,677 58,186 7,791 65,977
International 20,465 2,427 22,892 30,394 2,670 33,064
Other 3,006 -- 3,006 945 -- 945
------- --------- --------- ------- --------- ---------
Total RPO $732,926 $ 789,230 $1,522,156 $835,357 $ 836,001 $1,671,358
======= ========= ========= ======= ========= =========
Net Dollar Retention
Net dollar retention "NDR" is calculated by dividing (a) the digital subscription amounts invoiced to existing customers during the year, inclusive of changes in enrollment, price changes and attrition by (b) the digital subscription amounts invoiced to such customers for the comparable prior year.
Digital and Print Revenue
Disaggregation of Revenue - Print and Digital
Three Months Ended June 30,
----------------------------------------------------------------
2026 2025
------------------------------ --------------------------------
($ in thousands) Digital Print (1) Total Digital Print (1) Total
----------------- -------- --------- --------- -------- --------- -----------
Revenue by
Segment:
K-12 $113,919 $160,485 $274,404 $108,597 $162,334 $270,931
Higher
Education 190,146 9,690 199,836 168,826 13,553 182,379
Global
Professional 26,713 8,102 34,815 25,272 9,887 35,159
International 22,755 22,475 45,230 22,353 29,111 51,464
Other (2) -- (4,382) (4,382) -- (4,223) (4,223)
------- ------- ------- ------- ------- -------
Total Revenue $353,533 $196,370 $549,903 $325,048 $210,662 $535,710
======= ======= ======= ======= ======= =======
(1) Print revenue contains print and multi-year print products.
(2) Includes in-transit product sales and intersegment revenue adjustments
that are not included within segment revenues reviewed by the Company's Chief
Operating Decision Maker.
View source version on businesswire.com: https://www.businesswire.com/news/home/20260812010516/en/
CONTACT: Investor Contacts:
Danielle Kloeblen
Danielle.kloeblen@mheducation.com
Zack Ajzenman
Zack.ajzenman@mheducation.com
Lizzie Kenter
Lizzie.kenter@mheducation.com
Media Contacts:
Cathy McManus
Cathy.mcmanus@mheducation.com
Tyler Reed
Tyler.reed@mheducation.com
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