10-K: Graham Holdings Reports Mixed 2025 Results Amid Sector Shifts

Graham Holdings Company reports a 3% revenue increase to $4.91 billion in 2025, but net income and diluted EPS significantly declined, driven by varied segment performance and non-operating factors.

Summary

• Consolidated revenue for 2025 increased by 3% to $4.91 billion, up from $4.79 billion in 2024.
• Net income attributable to common shares decreased significantly to $292.3 million ($66.47 per diluted share) in 2025, compared to $724.6 million ($163.40 per diluted share) in 2024.
• Operating income rose to $234.9 million in 2025 from $215.5 million in 2024, but excluding goodwill and other long-lived asset impairment charges, operating results were down.
• Education division revenue grew 3% to $1.74 billion, with operating income increasing by 59% to $159.9 million, driven by growth in UK Professional, Singapore, and increased fees from Purdue Global.
• Television Broadcasting revenue declined by 21% to $425.1 million, and operating income fell by 44% to $112.3 million, primarily due to an $87.9 million decrease in political advertising revenue and lower retransmission and local/digital advertising.
• Healthcare division revenue surged by 33% to $815.0 million, with operating income up 89% to $96.0 million, largely due to CSI's 55% revenue growth and expansion of infusion treatment offerings.
• Manufacturing revenue increased by 10% to $436.3 million, with operating income slightly up by 1% to $18.6 million, benefiting from the acquisition of Arconic Architectural Products by Hoover.
• Automotive revenue decreased by 6% to $1.13 billion, and operating income dropped by 54% to $17.4 million, impacted by dealership closure, lower vehicle sales, and finance/insurance product declines.
• Other Businesses saw a slight revenue increase, and operating losses were modestly lower when excluding significant impairment charges from the prior year.
• The company recorded $12.3 million in intangible and other long-lived asset impairment charges in 2025, including $10.1 million for an automotive dealership franchise right.
• Net gains on marketable equity securities were $200.2 million in 2025, up from $181.3 million in 2024.
• A significant portion of mandatorily redeemable noncontrolling interest was settled for $205 million in February 2025, consisting of $186.25 million in cash and $18.75 million in Class B common stock.
• The effective tax rate for 2025 was 32.6%, unfavorably impacted by permanent differences related to mandatorily redeemable noncontrolling interest and goodwill/intangible asset impairment charges, as well as a $9.9 million deferred tax adjustment.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a cautious report. While some segments like Healthcare and Education show growth, significant declines in net income and EPS, coupled with substantial drops in Television Broadcasting and Automotive performance, indicate underlying challenges. The ongoing regulatory and legal risks, particularly in Education, add to the uncertainty.

Positives

• Consolidated revenue increased by 3% to $4.91 billion in 2025.
• Operating income increased to $234.9 million in 2025 from $215.5 million in 2024.
• Education division revenue grew by 3% and operating income increased by 59%, driven by strong performance in UK Professional and Singapore, and higher fees from Purdue Global.
• Kaplan Higher Education (KHE) revenue increased 8% due to higher fees from Purdue Global, with average enrollments at Purdue Global up 4%.
• Supplemental Education revenue increased 9% with improved operating results across most program offerings.
• Healthcare division revenue surged by 33% and operating income increased by 89%, with CSI's revenue up 55% due to expansion of infusion treatment offerings and patient service areas.
• Manufacturing revenue increased by 10%, with Dekko experiencing improved revenues and operating results from commercial office power and data products, and medical equipment assembly products.
• Net gains on marketable equity securities increased to $200.2 million in 2025 from $181.3 million in 2024.
• Working capital improved to $1,042.5 million in 2025 from $898.8 million in 2024.
• The company successfully issued $500 million of 5.625% unsecured fixed-rate notes due December 1, 2033, and refinanced existing debt, extending maturity of its revolving credit facility to November 24, 2030.
• The company settled a significant portion of its mandatorily redeemable noncontrolling interest for $205 million, reducing future obligations.

Negatives

• Net income attributable to common shares decreased significantly to $292.3 million in 2025 from $724.6 million in 2024.
• Diluted earnings per share decreased to $66.47 in 2025 from $163.40 in 2024.
• Excluding goodwill and other long-lived asset impairment charges, overall operating results were down in 2025.
• Television Broadcasting revenue declined by 21% and operating income fell by 44%, primarily due to an $87.9 million decrease in political advertising revenue and declines in retransmission and local/digital advertising.
• Retransmission revenue, net of network fees, declined in 2025 and is expected to continue declining in the future due to cord-cutting trends.
• Automotive revenue decreased by 6% and operating income dropped by 54%, impacted by the closure of the Ourisman Jeep of Bethesda dealership, lower new and used vehicle sales, and a decline in finance and insurance product offerings.
• US Pathways revenues and operating results were down significantly in 2025 due to changes in U.S. visa policies and practices for international students.
• Hoover's core fire-retardant wood product business experienced a substantial decline due to the sluggish multi-family housing market, and incurred significant transaction, transition, and intangible asset amortization costs related to the Arconic acquisition.
• Framebridge, an investment stage business, reported significant operating losses in 2025, which were higher than in 2024, due to ongoing expansion investments.
• The company recorded a $10.1 million intangible asset impairment charge related to the CDJR automotive dealership franchise right due to underperformance and continued decline in revenues.
• A net foreign currency loss of $10.1 million was reported in 2025, compared to a gain of $5.4 million in 2024.
• The effective tax rate was unfavorably impacted by a $9.9 million deferred tax adjustment related to state income tax rate changes for pension plans.

Risks

• Changes in international laws and regulations, policy announcements, travel restrictions, and sanctions could materially adversely affect international student enrollments and Kaplan's business.
• Difficulties and expenses in managing properties in England and Scotland, including potential repair costs not covered by contractors, could materially impact Kaplan's expenses.
• Difficulties in managing foreign operations and failure to comply with foreign regulatory requirements, such as data protection laws, could negatively affect Kaplan's business.
• Changes in U.K. and international tax laws, including the end of VAT exemption for private schools (effective January 1, 2025) and reduced Level 7 apprenticeship funding (effective January 1, 2026), could materially adversely affect Kaplan International.
• Possible changes to the U.S. Department of Education, including an executive order to dismantle it, could negatively impact the company's operations and partner institutions' ability to comply with obligations.
• Failure to comply with statutory and regulatory requirements as a Third Party Servicer to Title IV participating institutions could result in monetary liabilities or other material adverse consequences, including joint and several liability with Purdue Global.
• Failure to comply with the ED's Title IV Incentive Compensation Rule, especially if revenue sharing guidance changes, could subject Kaplan to liabilities, sanctions, and fines.
• Failure to comply with the ED's Title IV Misrepresentation Regulations could result in liabilities, sanctions, and fines for Kaplan or its client institutions.
• Compliance reviews, program reviews, audits, and investigations, including in connection with Borrower Defense to Repayment (BDTR) claims (e.g., $35 million in loans from previously owned Kaplan schools and additional claims from Sweet v. Cardona settlement), could result in significant liabilities, sanctions, and fines.
• Noncompliance with regulations by KNA's client institutions, such as Purdue Global's Title IV eligibility, accreditation, or state licensure, may adversely impact Kaplan's results of operations.
• Failure to realize the anticipated benefits of the Purdue Global transaction due to Purdue Global's control over university policies or cost increases could impact Kaplan's ability to achieve expected benefits.
• Regulatory changes and developments, such as new Title IV regulations (July 2023) or increased scrutiny of postsecondary education and service providers, could negatively impact Kaplan's results of operations.
• Reductions in the use of standardized tests in college or graduate school admissions and increased competition from lower-cost or free test prep products could reduce demand for KNA's Supplemental Education offerings.
• Changes in the extent to which licensing and proficiency examinations are used to qualify individuals for certain careers could reduce demand for Kaplan's offerings.
• Changing perceptions about the effectiveness of television broadcasting in delivering advertising and increased competition from digital platforms could adversely affect the profitability of television broadcasting.
• Increased competition resulting from technological innovations in video programming distribution systems and changing consumer behavior (e.g., cord-cutting, vMVPDs, network direct-to-consumer platforms) could adversely affect the company's operating results.
• Changes in the nature and extent of government regulations, including FCC rules on media ownership and retransmission consent, could adversely affect the company's television broadcasting business.
• The transition to new technical standards for broadcast television stations (ATSC 3.0) may alter the competitive environment or cause the company to incur increased costs.
• Changes in MVPD subscriber numbers, retransmission consent fees, reverse retransmission consent payments to networks, and broadcast exclusivity could adversely affect the company's revenues.
• Extensive regulation of the healthcare industry, with frequent changes and evolving interpretations, could adversely affect the company's healthcare businesses and results of operations.
• Ongoing market consolidation among managed-care organizations, hospitals, and payors could result in reduced access to patients for the healthcare group.
• Reviews and audits by government agencies and private payors, including CMS, could negatively impact the company's healthcare businesses.
• Federal and state changes to reimbursement and other aspects of Medicare and Medicaid, such as value-based purchasing and decreased payments, could have a material adverse effect on the healthcare business.
• Continued nursing staffing shortages could adversely affect the growth of the company's healthcare businesses and increase labor costs.
• Limited ability to control rates received for healthcare services, particularly from Medicare and non-Medicare payors, could materially adversely affect the business if costs cannot be reduced.
• Reliance on plasma supply and third-party manufacturing could limit CSI's ability to meet demand and increase costs.
• Failure to recruit and retain production staff needed to meet customer demand could have a material adverse effect on the company's manufacturing businesses.
• The company may be subject to liability claims related to manufacturing operations or product design, which could harm its reputation and financial results.
• Termination or non-renewal of dealership agreements by automobile manufacturers and limitations on the company's ability to acquire additional dealerships could adversely affect the automotive business.
• Changes affecting automobile manufacturers, such as financial condition, negative publicity, shifts in consumer demand (e.g., for electric vehicles), or production disruptions, could adversely affect the automotive business.
• Changes to state dealer franchise laws to permit manufacturers to enter the retail market directly could adversely impact the company's traditional dealership model.
• Changes in economic conditions and vehicle inventories are difficult to predict and may adversely impact the results of operations of the company's dealerships.
• If Saatchi Art is unable to attract and retain artists and customers, convert visitors, and drive traffic to its marketplaces and events, its business and results of operations would be adversely affected.
• Claims related to authenticity, ownership, or intellectual property rights of artwork sold by Saatchi Art could adversely impact its business.
• If Society6 is unable to attract and retain customers and successfully drive traffic to its marketplace, its business and results of operations would be adversely affected.
• Failure to recruit and retain employees in the company's restaurants could adversely impact the restaurant business, exacerbated by tipped wage legislation.
• Food-borne illness concerns and damage to the company's reputation could harm the restaurant business.
• Concentration of the company's restaurants in the Washington, D.C. region subjects the business to regional economic conditions.
• As a controlled company, the rights of Class B Common Stockholders are limited due to the Graham family's control.
• Failure to comply with environmental and health and safety laws could negatively impact the company's businesses.
• Failure to successfully integrate acquired businesses could negatively affect the company's operating results.
• Changes in business conditions have caused and may in the future cause goodwill and other intangible assets to become impaired, as evidenced by the Framebridge reporting unit's fair value exceeding its carrying value by less than 20%.
• Current tariffs and the introduction of additional tariffs could increase material costs and reduce demand for the company's businesses.
• System disruptions and security threats to the company's information technology infrastructure or those of third parties, including a data security incident at Kaplan in Q4 2025 and the use of generative AI by cyber criminals, could have a material adverse effect.
• Failure to comply with privacy laws or regulations (e.g., GDPR, CCPA, CPRA, new state laws, AI regulations) could have a material adverse effect on the company's businesses.
• Uncertainty in the development, deployment, and use of AI in the company's products and services, as well as its businesses more broadly, could adversely affect the company's business and reputation.
• Potential liability for intellectual property infringement claims could adversely affect the company's businesses.

Future Outlook

Management expects the decline in retransmission revenue, net of network fees, to continue in the future due to cord-cutting trends. The company estimates capital expenditures for 2026 to be in the range of $90 million to $100 million and anticipates recording a net pension credit of approximately $97.1 million in 2026. A dividend of $7.52 per share is expected to be paid in 2026. The company plans to open a new Clydes Restaurant Group location in Reston, VA, in Q2 2026 and another at Dulles International Airport later in 2026. Framebridge continues to actively explore opportunities for further store expansion. The company believes it has sufficient financial resources to meet its business requirements for the next 12 months, including working capital, capital expenditures, interest payments, potential acquisitions, strategic investments, dividends, and stock repurchases. However, limits on international student recruitment introduced in Australia are expected to impact Kaplan Business School in 2026. The U.K. government's reduction of the Level 7 apprenticeship levy starting January 1, 2026, is not expected to materially impact Kaplan Professional Education's revenues for 2026, but strategies are being considered to mitigate potential future impacts.

Management Comments

• The company will continue to assess the fee it records from Purdue Global on a quarterly basis to make a determination as to whether to record all or part of the fee in the future and whether to make adjustments to fee amounts recognized in earlier periods.
• While per subscriber rates from cable, satellite and OTT providers have grown, overall cable and satellite subscribers are down due to cord cutting, resulting in retransmission revenue net of network fees in 2025 to decline compared with 2024, and this trend is expected to continue in the future.
• In management's opinion, the company will have sufficient financial resources to meet its business requirements in the next 12 months, including working capital requirements, capital expenditures, interest payments, potential acquisitions and strategic investments, dividends and stock repurchases.
• Overall, the company estimates that it will record a net pension credit of approximately $97.1 million in 2026.
• The company expects to pay a dividend of $7.52 per share in 2026.

Industry Context

StockSavvy.ai notes that Graham Holdings Company's diversified portfolio provides a buffer against sector-specific headwinds, but several segments face significant industry shifts. The education sector, particularly international student recruitment, is grappling with tightening visa regulations in key markets like Australia and the U.S., impacting Kaplan's Pathways business. The U.K.'s removal of VAT exemptions for private schools and changes to apprenticeship funding also present challenges for Kaplan Professional Education. In television broadcasting, the industry continues to contend with declining traditional cable/satellite subscribers due to cord-cutting and increased competition from digital platforms (vMVPDs, direct-to-consumer streaming), leading to reduced retransmission revenues. The automotive retail sector is navigating cyclical sales, supply chain disruptions, and evolving consumer preferences, including the transition to electric vehicles, alongside potential changes to state dealer franchise laws that could allow direct sales by manufacturers. The healthcare sector, particularly home health and hospice, is subject to extensive and evolving federal and state regulations, including value-based purchasing and changes to Medicare/Medicaid reimbursement, which intensify financial and operational pressures. The manufacturing sector faces competitive markets and volatility in input costs. Across all digital businesses, the increasing sophistication and volume of cybersecurity threats, including those enhanced by generative AI, and the rapidly evolving global data privacy regulatory landscape (GDPR, CCPA, CPRA, state AI laws) pose significant compliance and operational risks.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Legal Proceedings

• The company and its subsidiaries are subject to various civil lawsuits and administrative proceedings arising in the ordinary course of business, including contract disputes, negligence, libel, intellectual property infringement, employment law violations, and claims from current and former students and employees.
• Management believes it is reasonably possible that future losses from existing and threatened legal, regulatory, and other proceedings in excess of recorded amounts could reach approximately $10 million.
• Kaplan received Borrower Defense to Repayment (BDTR) applications from the Department of Education (ED) in 2021 seeking discharge of approximately $35 million in loans from students at previously owned Kaplan schools, including Kaplan University. Kaplan believes it has substantive and procedural defenses and expects to vigorously defend against any liability.
• In January 2024, Kaplan was informed of additional BDTR applications regarding former Kaplan University and Purdue Global students, submitted during the expedited review period of the Sweet v. Cardona settlement (June 23, 2022, to November 15, 2022). Kaplan believes these applications lack merit and are outside the statute of limitations.
• If BDTR claims are successful, the ED may seek reimbursement from Kaplan, which could result in significant liability.

Related Party Transactions

• The company holds a 90% interest in eight automotive dealerships managed by an entity affiliated with Christopher J. Ourisman, a member of the Ourisman Automotive Group family of dealerships.
• The company invested an additional $29.3 million in its equity affiliate, Intersection Holdings, LLC, in September 2025, which used a portion to settle $19.3 million of an outstanding term loan owed to the company.
• An additional $28.7 million was invested in Intersection in November 2025, and Intersection repaid the remaining $5.0 million balance on the term loan in December 2025.
• Kaplan International Holdings Limited (KIHL) loaned its joint venture with the University of York 22 million, repayable over 25 years at 7% interest, with an outstanding balance of 18.8 million as of December 31, 2025.
• The company has several restaurant leases with an entity affiliated with some of Clydes Restaurant Group's senior managers.
• Some automotive leases are with an entity affiliated with the automotive segment's minority shareholder.
• A significant portion of the mandatorily redeemable noncontrolling interest related to GHC One, including CSI, was settled with a group of minority shareholders (current and former senior managers of the healthcare business) for $205 million in February 2025.

Stakeholder Impact

• Shareholders: Experience significantly lower net income and diluted EPS, but benefit from increased dividends and ongoing share repurchase authorization. Class B shareholders have limited voting rights due to the company's controlled status.
• Employees: Benefit from strong compensation and benefits programs, including healthcare, insurance, paid time off, and a 401(k) Plan. Some employees are covered by pension plans and have received Separation Incentive Programs (SIPs) or Voluntary Retirement Incentive Programs (VRIPs). Training and talent development initiatives are in place.
• Customers: Impacted by service quality and offerings across diverse segments (education, media, healthcare, automotive, restaurants). Changes in regulatory environments (e.g., education visa policies, healthcare reimbursement) could affect service availability or cost.
• Suppliers: The healthcare segment (CSI) relies on plasma supply and third-party manufacturing, making it vulnerable to disruptions. Manufacturing businesses depend on various material suppliers, facing risks from tariffs and cost volatility.
• Creditors: The company's credit ratings (Ba1/BB Stable) were affirmed, and it successfully refinanced debt, indicating continued access to capital markets. However, increased total debt and variable interest rates expose it to interest rate risk.

Next Steps

• CRG plans to open a new restaurant in Reston, VA, in the second quarter of 2026.
• A Clydes restaurant will open in Dulles International Airport under a licensing agreement in 2026.
• Framebridge continues to actively explore opportunities for further retail store expansion.
• Purdue Global's Program Participation Agreement with the ED will need to be renewed prior to December 31, 2028.
• The company estimates capital expenditures will be in the range of $90 million to $100 million in 2026.
• The company expects to pay a dividend of $7.52 per share in 2026.
• Arconic Architectural Products, LLC and the Hendrick Honda of Woodbridge dealership will be included in management's assessment of internal control over financial reporting in fiscal year 2026.

Key Dates

Recommendation

Graham Holdings Company presents a mixed financial picture for 2025. While revenue growth and strong performance in the Healthcare and Education segments are positive, the significant decline in net income and diluted EPS, coupled with substantial underperformance in Television Broadcasting and Automotive, warrants caution. The company faces considerable regulatory and legal risks, particularly concerning Kaplan's education business and potential liabilities from Borrower Defense to Repayment claims. The diversification of its portfolio provides some resilience, but the headwinds in key traditional segments and the ongoing investment in growth areas with current operating losses (like Framebridge) create uncertainty. Given these balanced factors of growth, decline, and significant risks, a 'hold' recommendation is appropriate for a seasoned investor, suggesting monitoring performance and risk mitigation strategies before making further investment decisions.

Keywords

Diversified Holding Company, Education Services, Kaplan, Television Broadcasting, Healthcare Services, Home Infusion, Manufacturing, Automotive Dealerships, Digital Media, Custom Framing, Restaurant Group, SEC Filing, 10-K, Financial Performance, Risk Factors, Corporate Governance, Cybersecurity, Regulatory Compliance, Goodwill Impairment, Purdue Global, International Education, Advertising Revenue, Retransmission Fees, Medicare Reimbursement, AI Technology