MH 10-K & 10-Q changes, risk factors and insider trading

McGraw Hill is a leading global provider of information solutions for education across K-12 to higher education, and through professional learning. We harness the power of content, data-driven insights, and learning science to deliver personalized learning experiences and drive positive outcomes throughout the entire learning lifecycle. We believe that we have positively impacted hundreds of millions of learners and educators with our personalized learning solutions to support learning at scale worldwide. On an annual basis, we serve approximately 60 million learners and educators. We believe that education positively impacts lives and, for more than 135 years, we have continuously innovated to help educators and institutions unlock the potential of each learner.

We believe that education is foundational to global stability and economic prosperity. Recent investments in technology infrastructure and the rapid proliferation of mobile devices have accelerated the adoption of digital learning solutions and fostered a culture of data-driven instruction across the education landscape. Demand for personalized content, delivered via intuitive digital solutions, is reshaping the industry as educators continue to leverage technology, including generative AI, to meet students where they are in their learning journey.

Understanding how learning happens is critical to building effective learning solutions, like ALEKS, which has leveraged data science and machine learning to enhance learning outcomes for over 25 years. Over the last decade, we have invested more than $2.0 billion in developing a suite of market leading digital learning solutions. Our scalable digital solutions rely on shared technology infrastructure, years of collaborative partnerships with leading institutions, expertise in learning science and a focus on high-value iterative product design and development activities led by a team of approximately 300 software engineers. We utilize our data analytics capabilities to generate continuous feedback loops that drive product and go-to-market innovation, which allows us to simplify workflows while creating meaningful learning experiences that are tailored to the needs of each learner.

For the nine months ended December 31, 2025 and 2024, we generated revenue of $1,639.1 million and $1,628.0 million, respectively, and a net income (loss) of $85.6 million and $71.0 million, respectively. For the nine months ended December 31, 2025 and 2024, we generated Adjusted EBITDA of $613.7 million and $595.1 million, respectively. See “—Key Operating Metrics” and “—Non-GAAP Financial Measures.”

Recent Developments

On December 30, 2025, Simon Allen notified the Board of Directors (the "Board") of his intention to retire from his position as the Company's President and Chief Executive Officer ("CEO"), effective on February 9, 2026 (the "Transition Date"). As a result, on January 2, 2026, the Board appointed Philip Moyer to succeed Mr. Allen as the Company's President and CEO and also appointed Mr. Moyer to the Board, effective as of the Transition Date. Mr. Allen will cease serving as President and CEO on the Transition Date and will continue to serve as Chair of the Board.

In connection with his appointment, Mr. Moyer is entitled to receive restricted stock unit (“RSUs”) awards with an aggregate grant date fair value of $8.0 million under the Company's 2025 Stock Incentive Plan. In addition, Mr. Moyer will be eligible to purchase shares of the Company's Common Stock with a fair market value of up to $1.5 million under the 2025 Stock Incentive Plan, with a corresponding equal number of RSUs granted to him.

The Education End-Markets We Serve

We serve the needs of three primary customer end markets in education – K-12, higher education and professional which predominately serves the medical and engineering markets. While the United States is our largest market, we serve customers in international markets through an expansive global distribution network. Our operating segments are as follows:

Our K-12 segment represented 46% and 51% of total revenue for the nine months ended December 31, 2025 and 2024, respectively. Our Higher Education segment represented 38% and 32% of total revenue for the nine months ended December 31, 2025 and 2024, respectively. Our Global Professional segment represented 7% of total revenue for each of the nine months ended December 31, 2025 and 2024, respectively. Our International segment represented 9% and 10% of total revenue for the nine months ended December 31, 2025 and 2024, respectively. The remaining total revenue relates to adjustments made for in-transit product sales, which are included in the segment “Other.”

Our revenue models across each of our businesses are transforming along with our customers’ increasing adoption of digital learning solutions. In general, our digital solutions are sold on a subscription basis with high renewal rates, which provides a more predictable and stable long-term revenue model.

We are a top two provider in the K-12 market in the United States, serving approximately 99% of public K-12 districts. We go to market with blended digital and print learning solutions as a holistic provider of end-to-end core, supplemental and intervention curricula to support the needs of U.S. K-12 schools. Core Solutions are digital and print solutions that serve mainstream educators with research-based, comprehensive learning solutions. Supplemental Solutions are additional learning resources that complement, enrich and extend core program solutions. Intervention Solutions are solutions that leverage our expertise in data science and learning science to help identify and support students at risk for academic faltering, to remediate learning gaps or to support special learning or behavioral needs. AP and Electives are additional learning solutions to support college readiness, career and technical education, and electives. We sell our learning solutions directly to school districts across the U.S. through multi-year contracts providing strong visibility and predictability of forward revenue. The timing of purchase and the contract length varies by state resulting in variation in the total K-12 sales opportunity in a given year with states with large K-12 populations like Florida, California and Texas having an outsized impact on the sales opportunity in the years that they procure content.

We are a top two provider of digital and print learning solutions in the U.S. higher education market based on market share, serving approximately 82% of U.S. higher education institutions. The proliferation of digital technology has reshaped Higher Education. To support the evolving needs of educators and learners, we provide comprehensive digital course experiences for nearly every subject through our flagship Connect solution, with over 34 million lifetime learners. Our Evergreen content delivery model provides continuous content updates to keep materials engaging and aligned with the latest standards, which we believe outpaces the industry standard and advances beyond the traditional approach of episodic revision cycles.

In Fall 2024, the number of students who were enrolled in post secondary institutions was 19 million. Although we cover all major academic disciplines, our content portfolio is organized into three key disciplines: (i) Business, Economics & Computing; (ii) Science, Engineering & Math; and (iii) Humanities, Social Science & Languages. Our top selling products include Economics: Principles, Problems, and Policies (McConnell/Brue/Flynn), ALEKS, Managerial Accounting (Garrison) and The Art of Public Speaking (Lucas). The primary users of our solutions are students enrolled in two- and four-year non-profit colleges and universities, and to a much lesser extent, for-profit institutions. Although we sell our solutions to the students as end users, it is the instructor who often makes the ultimate decision regarding materials for the course. A key distribution model for Higher Education is Inclusive Access, a course material affordability program, designed by institutions and guided by the U.S. Department of Education. Inclusive Access has saved students over $1.5 billion since the fiscal year ended March 31, 2018, offering them the choice to select the learning resources that are right for them.

We are a global content provider of trusted, high stakes medical and engineering learning solutions and support learners and educational institutions with technologies developed to maximize learning outcomes. Through our subscription-based learning solutions such as Access, we provide students, institutions and professionals with comprehensive medical and engineering learning solutions. Our AccessMedicine solution is available across approximately 94% of U.S. medical schools.

Other represents certain transactions or adjustments that are unusual or non-operational. In addition, adjustments made for in-transit product sales, timing-related corporate cost allocations and other costs not attributed to a single reportable segment are recorded within Other.

K-12 revenue for the three months ended December 31, 2025 and 2024 was $128.2 million and $150.2 million, respectively, representing a decrease of $22.0 million, or 14.6%. The decrease was primarily attributable to lower Transactional Revenue and Re-occurring Revenue of approximately $20.2 million and $1.8 million, respectively, driven by a smaller market opportunity in the current period.

Higher Education revenue for the three months ended December 31, 2025 and 2024 was $225.4 million and $181.8 million, respectively, representing an increase of $43.6 million, or 24.0%. The increase was primarily due to:

•higher Re-occurring Revenue of approximately $49.2 million, due to the timing of deferred revenue recognition associated with the increased adoption of digital products, including growth in Inclusive Access sales, market share gains, continued growth in U.S. enrollments and price increases; partially offset by

•lower Transactional Revenue of approximately $5.6 million, primarily driven by a change in duration mix of digital product sales, partially offset by a reduction in product returns.

•lower inventory obsolescence reserve of approximately $1.1 million, resulting from a significantly reduced inventory balance due to the shift toward digital sales and the timing of K-12 market opportunities; partially offset by

•higher selling and marketing expense of approximately $2.4 million, driven by higher sales force sales commission and increased investment in sales conferences and promotional activities in the Higher Education segment, consistent with the growth in revenue;

•higher professional fees of approximately $1.3 million, reflecting an increase in legal, accounting and compliance-related costs associated with operating as a public company; and