S-1/A: McGraw Hill Launches Initial Public Offering Amidst Digital Transformation and AI Integration

McGraw Hill, a leading global education solutions provider, is pursuing an Initial Public Offering of 24.39 million shares at an estimated price range of $19.00 to $22.00 per share, aiming to reduce its substantial debt while continuing its digital and AI-driven growth strategy.

Summary

• McGraw Hill, Inc. is offering 24,390,000 shares of its Common Stock in an Initial Public Offering (IPO), with an expected price range of $19.00 to $22.00 per share, and plans to list on the NYSE under the symbol MH.
• The company anticipates net proceeds of approximately $466.6 million from the offering, which will be used to repay a portion of its outstanding borrowings under the A&E Term Loan Facility, reducing the outstanding balance to approximately $642.9 million (face value $693.8 million).
• For the fiscal year ended March 31, 2025, McGraw Hill generated revenue of $2,101.3 million, an increase from $1,960.5 million in fiscal year 2024, and reported a net loss of $85.8 million, an improvement from a $193.0 million net loss in fiscal year 2024.
• Adjusted EBITDA for fiscal year 2025 was $726.8 million, up from $656.6 million in fiscal year 2024, with an Adjusted EBITDA Margin of 34.6%.
• Preliminary unaudited estimates for the three months ended June 30, 2025, project revenue between $528.2 million and $536.2 million, and a net income (loss) between $0.477 million and $0.527 million, compared to a net loss of $9.447 million for the same period in 2024.
• Re-occurring Revenue, primarily from digital subscriptions and multi-year print products, constituted approximately 69% of total revenue for fiscal year 2025, up from 67% in fiscal year 2024.
• Platinum Equity, LLC will continue to beneficially own 86.5% of the voting power of outstanding Common Stock post-offering, making McGraw Hill a 'controlled company' under NYSE rules and exempting it from certain corporate governance requirements.
• The company has a total addressable market of approximately $30.0 billion as of academic year 2025, with significant segments in K-12 ($9.3 billion), Higher Education ($12.3 billion), Professional ($2.9 billion), and International ($5.5 billion).
• Key acquisitions include Boards & Beyond (December 2022 for $21.8 million cash) and EssayPop (March 2025 for $8.0 million), expanding its digital learning solutions.
• The company faces ongoing legal proceedings, including a class action lawsuit regarding author royalties, a Florida Attorney General investigation into alleged overcharges, and a patent infringement lawsuit related to Achieve3000.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. While the company has a history of net losses and substantial debt, the filing highlights strong revenue and Adjusted EBITDA growth, a successful digital transformation with increasing recurring revenue, and strategic investments in AI and new products. The IPO itself is a positive step for capital structure improvement. However, significant risks remain, including intense competition, potential disruption from generative AI, and ongoing legal challenges, which temper the overall positive outlook.

Positives

• Revenue increased by 7.2% to $2,101.3 million in fiscal year 2025 from $1,960.5 million in fiscal year 2024, driven by growth in K-12 and Higher Education segments.
• Adjusted EBITDA grew by 10.7% to $726.8 million in fiscal year 2025 from $656.6 million in fiscal year 2024, indicating improved operational performance.
• Adjusted EBITDA Margin improved to 34.6% in fiscal year 2025 from 33.5% in fiscal year 2024, reflecting operating leverage from its digital-first business model.
• Preliminary Q1 2025 estimates show a positive net income of $0.477 million to $0.527 million, a significant improvement compared to a net loss of $9.447 million in Q1 2024.
• Re-occurring Revenue increased to approximately 69% of total revenue in fiscal year 2025, enhancing revenue predictability and stability.
• Annual Net Dollar Retention (NDR) for Higher Education remained strong at 110% in fiscal years 2025 and 2024, and Global Professional NDR increased to 105% in fiscal year 2025, demonstrating strong customer retention and expansion.
• Remaining Performance Obligations (RPO) increased to $1,676.2 million as of March 31, 2025, from $1,511.1 million as of March 31, 2024, providing visibility into future revenue.
• The company has invested over $2.0 billion in digital learning solutions over the last decade, leading to a significant increase in Paid Digital Users (26 million in FY25) and learning interactions (19 billion in FY25).
• Strategic acquisitions like Boards & Beyond and EssayPop have expanded capabilities and offerings in medical education and writing solutions.
• The company leverages AI and data analytics to drive personalized learning experiences, optimize content generation, and improve customer service, with products like ALEKS and the new AI Reader.
• McGraw Hill maintains a large global sales force of approximately 1,500 professionals, providing extensive market reach and competitive advantage.
• The brand is highly recognized and trusted, with 89% of K-12, higher education, and medical school students, faculty, and administrators in the U.S. considering McGraw Hill for their classes.
• Inclusive Access programs have saved students over $1.5 billion since fiscal year 2018 and expanded to nearly 1,900 campuses, driving digital product adoption.
• The company has a strong mission-driven culture, with many employees being former educators, and a senior leadership team with over 100 years of combined education industry experience.
• Recognized as a 'Best Mid-sized Employer' by Forbes five times and 'America's Greatest Workplaces for Women' by Newsweek in 2024, indicating strong employee satisfaction and culture.
• Maintains a high cybersecurity score in the education industry and is SOC 2 compliant for customer data management.

Negatives

• The company reported net losses of $85.8 million in fiscal year 2025, $193.0 million in fiscal year 2024, and $404.1 million in fiscal year 2023.
• Substantial indebtedness of $3,277.9 million face value as of March 31, 2025, poses a significant financial risk and could restrict future capital raising or strategic initiatives.
• Platinum Equity, LLC will retain 86.5% of the voting power post-IPO, making McGraw Hill a 'controlled company' and potentially leading to conflicts of interest with other stockholders.
• New investors in the IPO will experience immediate and substantial dilution of $37.59 per share.
• The business is highly seasonal, with sales concentrated in the first and second fiscal quarters, which can lead to quarterly cash flow challenges.
• The proliferation of generative AI systems could facilitate the creation of competitive instructional materials, potentially reducing demand or negatively impacting pricing for McGraw Hill's products.
• Increased customer expectations for lower prices or free/discounted bundled products could reduce sales revenue.
• The company faces risks from changes in state academic standards and the timing/scope of federal, state, and local education funding, including the expiration of COVID-19 related ESSER funds in 2025.
• Declining enrollment at colleges and universities could adversely affect demand for Higher Education products.
• Reliance on a small number of resellers, with one experiencing financial difficulties, poses a risk to accounts receivable and financial results.
• Ongoing legal proceedings, including a class action lawsuit and government investigations, could result in significant costs, reputational damage, or adverse judgments.
• The company does not anticipate paying dividends or repurchasing shares in the foreseeable future, limiting direct returns for stockholders.
• Becoming a publicly traded company will incur significantly increased costs and require substantial management time for compliance, potentially lowering profits.

Risks

• Operating in a highly competitive market against large, established industry participants and new market entrants, including those offering no-cost competitive products.
• Ability to win new markets, adapt to changing state academic standards, and anticipate and meet changes in timing and scope of federal, state, and local education funding and enrollment.
• Effect of various political and economic issues and ability to comply with laws and regulations, both in the United States and internationally.
• Ability to adjust to developments in the economic or regulatory environment.
• General economic conditions, including inflationary pressures, interest rate fluctuations, and volatility.
• Order patterns and payment schedules of customers and high degree of seasonality related to the business.
• Factors that reduce enrollment at colleges and universities.
• Compliance with privacy, accessibility, and other laws and adequate protection of personal data.
• Ability to adjust to rapidly changing expectations and standards on various environmental, social, and governance matters and initiatives.
• Reliance on third parties to help complete business functions including distribution, critical operational functions, and supply of products.
• Ability to retain and recruit qualified authors, employees, and key personnel.
• Ability to defend challenges to intellectual property rights in products.
• Defects in and an increase in unauthorized copying and distribution of products.
• Changes in policy and funding shifts, including the potential reorganization or dismantlement of the U.S. Department of Education and the impact on cost of development and implementation strategies.
• Ability to make accurate assumptions or estimations in preparing financial statements and ability to correctly implement any required changes based on such assumptions or estimations.
• Financial leverage, which could adversely affect ability to raise additional capital to fund operations, and other risks related to indebtedness, including $3.278 billion face value of outstanding debt as of March 31, 2025.
• Platinum's significant influence over the company and its status as a controlled company under NYSE rules.
• Stock price may be volatile and stockholders may not be able to sell shares at or above the purchase price.
• No anticipation of paying dividends or repurchasing shares in the foreseeable future.
• Generative artificial intelligence (AI) systems may make it easier for competitive instructional materials to be created, negatively affecting demand or pricing.
• Increased customer expectations for lower prices or free/discounted bundled products could reduce sales revenue.
• Failure to adapt and respond effectively to changing technology, evolving industry standards, and changing customer needs or requirements.
• Operational disruptions, malfunctions, or intentional hacking of technological systems.
• Failure to adequately protect personal data in possession or control could cause financial loss, regulatory enforcement action, civil or criminal liability, and reputational damage.
• Evolving policy changes, increasing political pressures, community activism, cultural sensitivities, and funding shifts may impact adoption and purchase of K-12 titles.
• A change from up-front payment by school districts for multi-year licenses could adversely affect cash flow.
• Legal actions, including putative class action lawsuits, could be costly to defend and result in significant damages.
• Failure to act in accordance with generally accepted ethical business standards or comply with applicable statutes regarding bribery, corruption, fraud, sanctions, and competition.
• An insufficient supply of, or increases in the costs of, paper could adversely affect financial results.
• Consolidation and concentration in distribution and retail channels for Higher Education products could adversely affect profitability.
• An adverse change in orders or payments by a material reseller could adversely affect financial results.
• Unexpectedly large returns could adversely affect financial results.
• Significant risks involved in utilizing AI, machine learning, data analytics, and similar tools, including errors, bias, and regulatory evolution.
• Investments in new products and distribution channels and entry into new markets may not be profitable.
• Future acquisitions could disrupt business and divert management's attention.
• Future goodwill or indefinite-lived intangibles impairment charges related to reporting units.
• Inability to generate sufficient cash flows from operations to service all indebtedness.
• Ability to incur significantly more debt despite substantial existing indebtedness.
• Limitations on the ability to use net operating losses and other tax attributes to offset future taxable income.
• Risks of doing business abroad, including lack of local knowledge, longer payment cycles, difficulties in protecting intellectual property, and political instability.
• Fluctuations between foreign currencies and the U.S. dollar could adversely affect financial results.
• U.S. tariff policy could increase costs and affect financial results.
• Changes in macroeconomic and geopolitical conditions can affect growth, business, and results of operations.
• Risks of fire, floods, other natural catastrophic events, and man-made problems such as computer viruses, data security breaches, or terrorism.
• Anti-takeover provisions in organizational documents could delay or prevent a change of control.
• McGraw Hill, Inc. is a holding company and depends on its subsidiaries for cash to fund expenses.
• Unanticipated changes in effective tax rates or adverse outcomes from examination of tax returns.
• Stockholders will incur immediate and substantial dilution.
• Failure to comply with requirements to design, implement, and maintain effective internal controls could have a material adverse effect.
• Sales of additional shares of Common Stock after this offering or the perception of such sales could cause the market price to decline.
• If securities or industry analysts do not publish research or reports, or if they downgrade the stock, stock price and trading volume could decline.
• Changes in tax laws may impact the tax treatment of income or gains on Common Stock.
• Significantly increased costs and additional regulations as a publicly traded company.

Future Outlook

McGraw Hill intends to extend its position as a leading global provider of education solutions by acquiring new customers, cross-selling and up-selling to existing customers, leveraging AI and data analytics to enhance solutions, investing in technology-enabled innovation across the learning lifecycle (e.g., AI Reader, ALEKS Adventure, McGraw Hill Plus, SIMskills Badges), increasing its international presence, and proactively pursuing strategic M&A opportunities. The company expects to expand revenue through novel solutions and continue optimizing product development expenditures by leveraging its digital ecosystem.

Management Comments

• Simon Allen, President and CEO, will serve as Chairman of the board of directors upon the completion of this offering, bringing deep experience in educational publishing and leading large teams across six continents.
• Robert Sallmann, appointed CFO in April 2024, is responsible for Accounting, Finance, Internal Audit, Investor Relations, Corporate Development, Tax, Treasury, Procurement, Real Estate, and Supply Chain teams, with over 20 years of experience in financial and operational strategy.
• David Cortese, appointed Chief Digital Information Officer in April 2024, oversees digital experience and innovation strategy, including IT, customer experience, digital product management and engineering, cybersecurity, AI, and data, analytics and insights, with over 30 years of technology leadership experience.
• Tracey Tiska, appointed Chief Human Resources Officer in June 2025, is responsible for all aspects of Human Resources globally, developing and delivering HR strategies in support of business transformation and growth goals.
• Management believes that education plays a vital role in shaping society and that there is a direct correlation between the quality of a country's education system and its economic success.
• Management believes McGraw Hill is one of the most trusted and recognized education brands in the world, with 89% of U.S. K-12, higher education, and medical school students, faculty, and administrators considering McGraw Hill for their classes.
• Management views AI as a 'tailwind' that advances the ability to personalize learning at scale by facilitating meaningful learning experiences and interactions through learning solutions.
• Management believes that high-quality technical digital learning solutions are critical tools to help address the growing demand for skilled professionals and close the widening global skills gap.

Industry Context

The education industry is undergoing significant modernization driven by technology, including data science, machine learning, and generative AI, which are reshaping learning experiences. The total addressable market is estimated at approximately $30.0 billion as of academic year 2025. There is a growing demand for personalized learning solutions, data-driven insights for educators, and equitable access to affordable course materials. The need for technical and skills-based professional learning is intensifying due to rapidly changing job requirements, particularly in healthcare and AI expertise, where significant shortages are projected. McGraw Hill positions itself as a leader in this evolving landscape by focusing on digital-first solutions, AI integration, and a broad reach across K-12, higher education, and professional learning segments.

Comparison to Industry Standards

• McGraw Hill is a top two provider in the U.S. K-12 market, serving approximately 99% of public K-12 districts, indicating a strong market penetration compared to competitors like Amplify, Curriculum Associates, Houghton Mifflin Harcourt, and Savvas.
• The company is a top two provider of digital and print learning solutions in the U.S. higher education market, serving approximately 82% of U.S. higher education institutions, competing with Pearson, Cengage, and Macmillan Learning.
• Its AccessMedicine solution is available across approximately 94% of U.S. medical schools, demonstrating a leading position in the high-stakes medical education market against competitors like AMBOSS, Elsevier, and Wolters Kluwer.
• The ALEKS math and science solution has leveraged data science and machine learning for over 25 years and supported over 64 million lifetime learners, showcasing a long-standing commitment to adaptive learning technology.
• The Evergreen content delivery model, launched in 2023, has seen 95% of Connect instructors move to the 2024 release by March 31, 2025, suggesting a faster content update cycle than traditional industry standards.
• With approximately 1,500 sales professionals worldwide, McGraw Hill claims one of the largest sales forces in the education sector, providing a significant go-to-market advantage.
• The company's proprietary data set of learning interactions expanded from approximately 5.8 billion in FY2022 to over 19 billion in FY2025, representing a 49% compound annual growth rate, indicating robust data collection for AI-driven insights.
• Inclusive Access programs have saved students over $1.5 billion since FY2018, demonstrating a significant impact on affordability compared to traditional models.
• McGraw Hill has been recognized by Forbes as one of the 'Best Mid-sized Employers' five times and by Newsweek as one of 'America's Greatest Workplaces for Women' in 2024, suggesting strong internal culture and employee satisfaction relative to industry peers.
• The company maintains the 'highest cybersecurity grade in the education industry' according to a third-party platform and is SOC 2 compliant, indicating a strong commitment to data security compared to industry benchmarks.

Management Changes

Corporate Governance

Legal Proceedings

• Florida False Claims Act Investigation: The Attorney General for the State of Florida issued a subpoena in June 2022 regarding alleged overcharges on instructional materials for public K-12 schools. Production of documents was completed in December 2022, and a former sales representative was deposed in January 2024. No material developments or further contact from the Attorney General's office since then. The outcome and potential loss are currently unpredictable and not reasonably estimable.
• Author Royalty Class Action Lawsuit: Two purported class actions were filed in January and February 2021 in the Southern District of New York, alleging breach of author agreements and implied covenant of good faith and fair dealing regarding royalty calculation methodology. The breach of contract claim was dismissed in January 2022, but the implied covenant claim was denied dismissal. Plaintiffs voluntarily dismissed the implied covenant claim in September 2022 and appealed the contract claim dismissal. In November 2024, the Second Circuit remanded the case for further adjudication on one element of the breach of contract claim. Discovery has resumed, and depositions are anticipated in Q2/Q3 2025. The issue of class certification remains open. The outcome and potential loss are currently unpredictable and not reasonably estimable.
• Achieve3000 Patent Infringement Lawsuit: Achieve3000 filed a complaint in July 2020 against Beable Education Inc. and its founder, Saki Dodelson, alleging intellectual property/patent infringement, fraudulent inducement, unfair competition, theft of trade secret, and breach of contract. A counterclaim was filed in July 2021. The Patent Trial and Appeal Board ruled the patent invalid in January 2023, which was affirmed by the Federal Circuit in July 2024. Achieve3000 filed an application to reissue the patent in November 2023. Discovery resumed in March 2025, with depositions expected in Q2/Q3 2025. The outcome of the counter-claims and potential loss are currently unpredictable and not reasonably estimable.

Related Party Transactions

• Platinum Acquisition: On July 31, 2021, Platinum Equity acquired 100% of McGraw-Hill Education, Inc. for a purchase price of $4.713 billion.
• Advisory Agreement: McGraw Hill, Inc. and Platinum Advisors (an affiliate of Platinum Equity) entered into a Corporate Advisory Services Agreement. The company paid Platinum Advisors annual advisory fees of $10.0 million for each of the fiscal years ended March 31, 2025, 2024, and 2023, plus expense reimbursements. This agreement will be terminated upon the consummation of the IPO.
• Share Purchases by Management: Certain current and former members of the management team, including executive officers, purchased Class B non-voting common stock after the Acquisition. For example, former CHRO Ms. Tait purchased 33,334 shares.
• Investor Rights Agreement: In connection with the IPO, the company intends to enter into an Investor Rights Agreement with Platinum, granting Platinum significant rights including director nomination rights, demand and piggyback registration rights for its shares, and certain information and access rights. The company will pay all registration expenses (excluding underwriting fees/commissions) and indemnify Platinum.
• Indemnification Agreements: The company expects to enter into indemnification agreements with each of its directors prior to the IPO, requiring indemnification and expense advancement to the fullest extent permissible under Delaware law.
• Reserved Share Program: Up to 5% of the shares offered in the IPO are reserved for sale to directors, officers, employees, and certain affiliates of Platinum and/or Platinum Advisors.
• Underwriter Relationships: Certain underwriters and their affiliates have provided investment banking and other commercial dealings, including acting as lenders, issuing banks, and joint lead arrangers/bookrunners under the company's credit agreements and as initial purchasers/joint book-running managers for its notes, for which they received customary fees.

Stakeholder Impact

• Shareholders: New investors will experience immediate and substantial dilution. Platinum Equity's continued majority voting control will limit the influence of other shareholders and may lead to conflicts of interest. No dividends are planned in the foreseeable future. The share price may be volatile post-IPO.
• Employees: The company offers competitive compensation, comprehensive health and welfare benefits, and training/development programs. A new 2025 Stock Incentive Plan will be adopted, and stock ownership guidelines will be implemented, potentially aligning employee interests with company performance. Management changes have occurred in key executive roles.
• Customers (Learners, Educators, Institutions): The company's focus on digital transformation, AI-powered solutions (e.g., ALEKS, AI Reader, McGraw Hill Plus), and affordability programs (Inclusive Access) aims to enhance learning experiences and outcomes. However, increased customer expectations for lower prices and potential impacts from generative AI could affect product demand and pricing.
• Suppliers: The company relies on third-party suppliers for critical operational functions, including paper, printing, and distribution. Increases in raw material costs (like paper) and freight could impact profitability. Consolidation in distribution channels could lead to less favorable terms.
• Creditors: The IPO proceeds will be used to reduce a portion of the company's substantial indebtedness, which could improve its financial health and reduce interest expense. However, the company remains highly leveraged, and its ability to service debt depends on future cash flows and market conditions.

Next Steps

• Completion of the Initial Public Offering and listing of Common Stock on the New York Stock Exchange under the symbol MH.
• Repayment of approximately $466.6 million of outstanding borrowings under the A&E Term Loan Facility using IPO net proceeds.
• Adoption of the new 2025 Stock Incentive Plan and implementation of stock ownership guidelines for NEOs and non-employee directors.
• Continued investment in technology-enabled innovation, including further development of AI-powered learning tools like AI Reader and McGraw Hill Plus.
• Expansion of international presence by leveraging existing digital solutions and investing in local products.
• Assessment of opportunities for strategic mergers and acquisitions to strengthen core business, expand into attractive adjacencies, and acquire strategic capabilities.
• Ongoing monitoring and defense against legal proceedings, including the author royalty class action lawsuit and the Florida Attorney General investigation.
• Compliance with public company reporting requirements, including the first Section 404(a) assessment for the fiscal year ending March 31, 2027.

Key Dates

Recommendation

McGraw Hill's IPO presents a mixed investment profile. On one hand, the company demonstrates strong operational momentum with consistent revenue and Adjusted EBITDA growth, a successful pivot to digital solutions with increasing recurring revenue, and a clear strategy leveraging AI and data analytics. Its market leadership in key education segments and strong brand recognition are significant competitive advantages. The use of IPO proceeds to reduce substantial debt is a positive step towards improving financial flexibility. However, the company has a history of net losses, indicating profitability challenges under GAAP. The 'controlled company' status by Platinum Equity raises corporate governance concerns for minority shareholders, and the significant dilution for new investors is notable. Furthermore, the education industry faces evolving challenges from generative AI and pricing pressures, and the company is involved in several ongoing legal proceedings with uncertain outcomes. Given these factors, a 'hold' recommendation is appropriate for a seasoned investor, suggesting observation of post-IPO performance, debt reduction progress, and the effective execution of its digital and AI strategies amidst industry shifts and legal risks, before making a more definitive investment decision.

Keywords

Education Technology, EdTech, Initial Public Offering, IPO, Digital Learning, Artificial Intelligence, AI in Education, K-12 Education, Higher Education, Professional Learning, SEC Filing, Financial Results, Corporate Governance, Debt Management, Market Leadership, Content Solutions, Learning Science, Risk Factors, Platinum Equity