Free cash flow is highly sensitive to academic cycles, evidenced by a massive $244.7 million working capital outflow in 2026Q4 that highlights the company's reliance on seasonal liquidity.
| Cash from Operations | 331.17M | 646.28M | 236.16M | 256.62M | 205.69M | 395.38M | 263.6M | 156.35M | 263.89M | 197.96M | 308.42M |
| Operating CF Margin % | 15.75% | 30.76% | 12.05% | 13.18% | 11.49% | 25.6% | 16.63% | 9.79% | 15.35% | 11.38% | 16.87% |
| Operating CF Growth % | -48.76% | 173.67% | -7.97% | 24.76% | -47.98% | 49.99% | 68.59% | -40.75% | 33.3% | -35.81% | - |
| Net Income | 35.32M | -85.84M | -193.02M | -404.1M | -619.38M | 44.75M | -135.31M | -160.42M | -65.93M | -137.01M | -179.13M |
| Depreciation & Amortization | 305.61M | 362.36M | 366.38M | 371.88M | 343.19M | 120.03M | 261.54M | 244.7M | 254.99M | 240.29M | 234.94M |
| Stock-Based Compensation | 33.72M | 0 | 0 | 0 | 85M | 7.26M | 13.05M | 20.19M | 14.29M | 11.18M | 13.64M |
| Deferred Taxes | -1.05M | -1.47M | -30.44M | -59.49M | 0 | 3.87M | 0 | 0 | 0 | 0 | 0 |
| Other Non-Cash Items | -42.43M | 144.96M | 203.5M | 470.58M | 607.02M | 193.43M | 162.34M | 122.97M | 149M | 183.66M | 308.59M |
| Working Capital Changes | -291.57M | 226.27M | -110.26M | -122.26M | -210.14M | 26.03M | -38.02M | -71.09M | -88.45M | -100.16M | -69.61M |
| Change in Receivables | -22.9M | -12.49M | -42.76M | -52.33M | -9.98M | 16.25M | -3.51M | -80.84M | -3.13M | -3.78M | 11.88M |
| Change in Inventory | 9.19M | 26.3M | -784K | -85.62M | -27.32M | -4.17M | -5.63M | -45.34M | -13.73M | -26.82M | -14.18M |
| Change in Payables | -21.27M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Cash from Investing | -203.86M | -167.06M | -136.11M | -162.32M | -5.32B | -113.19M | -145.45M | -160.69M | -135.71M | -139.42M | -151.76M |
| Capital Expenditures | -84.86M | -161.06M | -156.61M | -140.56M | -30.66M | -107.98M | -73.85M | -63.24M | -45.13M | -38.22M | -41.18M |
| CapEx % of Revenue | 4.04% | 7.66% | 7.99% | 7.22% | 1.71% | 6.99% | 4.66% | 3.96% | 2.63% | 2.2% | 2.25% |
| Acquisitions | 0 | -6M | 0 | -21.76M | -5.27B | -5.2M | 0 | 0 | 0 | -11.5M | -6.83M |
| Investments | - | - | - | - | - | - | - | - | - | - | - |
| Other Investing | -119M | -90M | 20.5M | -70.52M | -24.71M | -76.06M | -71.6M | -97.45M | -90.58M | -89.69M | -103.75M |
| Cash from Financing | -264.87M | -294.68M | -77.24M | -204.57M | 5.06B | -111.64M | -113.88M | -52.43M | -142.31M | -190.91M | -12.85M |
| Debt Issued (Net) | -652.19M | -270.65M | -77.24M | -124.52M | 3.57B | -91.81M | -110.61M | -45.72M | -130.32M | 176.51M | 90.34M |
| Equity Issued (Net) | 0 | 0 | 0 | 13.26M | 0 | 108K | -2.33M | -9.76M | -2.92M | -4.56M | -1.65M |
| Dividends Paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -300.63M | -101.27M |
| Share Repurchases | 0 | 0 | 0 | 0 | 0 | 0 | -2.33M | -9.76M | -2.92M | -4.56M | -1.65M |
| Other Financing | -264.87M | -24.03M | 0 | -93.31M | 1.49B | -19.94M | -940K | 3.05M | -9.06M | -62.23M | -272K |
| Net Change in Cash | -136.31M | 186.21M | 22.14M | -114.9M | 185.32M | 167.39M | -214.92M | -61.71M | -11.12M | -134.44M | 553.19M |
| Free Cash Flow | 246.31M | 485.22M | 79.55M | 116.06M | 175.04M | 287.39M | 189.75M | 93.11M | 218.76M | 159.74M | 267.24M |
| FCF Margin % | 11.71% | 23.09% | 4.06% | 5.96% | 9.78% | 18.61% | 11.97% | 5.83% | 12.73% | 9.18% | 14.61% |
| FCF Growth % | -49.24% | 509.98% | -31.46% | -33.69% | -39.09% | 51.46% | 103.78% | -57.44% | 36.95% | -40.23% | - |
| FCF per Share | 1.34 | 2.54 | 0.42 | 0.61 | 0.92 | 24.74 | 16.50 | 8.18 | 19.42 | 14.22 | 23.96 |
| FCF Conversion (FCF/Net Income) | 9.38x | -7.53x | -1.22x | -0.64x | -0.31x | 8.84x | -1.95x | -0.97x | -4.00x | -1.44x | -1.72x |
| Interest Paid | 207.93M | 274.73M | 333.37M | 257.7M | 179.71M | 146.57M | 159.49M | 164.95M | 166.03M | 169.71M | 170.25M |
| Taxes Paid | 0 | 46.92M | 43.78M | 16.01M | 0 | 10.28M | 0 | 0 | 0 | 0 | 0 |
High debt service burden
According to the provided cash flow data, McGraw Hill exhibits extreme divergence between net income and operating cash flow, with OCF/NI ratios frequently reaching extreme levels, such as the -192.53 figure in 2026Q1, which suggests that accounting accruals and non-cash charges heavily distort the company's reported profitability.
The massive swings in the OCF/NI ratio indicate that net income is a poor proxy for the company's actual cash-generating capability. Investors should monitor whether these fluctuations are driven by the timing of digital subscription recognition or if they reflect underlying structural issues in how the company manages its accrual-based accounting.
As reported in financial statements, McGraw Hill's free cash flow is highly seasonal, peaking at 308.2 million dollars in 2026Q3, yet the company frequently reports negative FCF in off-peak quarters, such as the -169.9 million dollar outflow observed in 2026Q4, highlighting a reliance on specific academic cycles.
The inability to generate consistent positive free cash flow outside of the third quarter suggests that the company's cost structure remains too rigid to support its operations year-round. This pattern warrants further investigation into whether the business can achieve self-sustaining cash flow without relying on seasonal working capital inflows.
Based on the reported figures, working capital changes are the primary driver of cash flow variance, with a massive 244.7 million dollar outflow in 2026Q4 contrasting sharply with the 216.1 million dollar inflow in 2025Q3, reflecting the company's sensitivity to the timing of educational adoption cycles.
The extreme swings in working capital suggest that McGraw Hill is highly susceptible to the timing of state-mandated adoptions and institutional billing cycles. This volatility makes it difficult to forecast cash availability, as the company appears to be financing its operations through these lumpy, seasonal cash movements.
Data from recent filings indicates that McGraw Hill maintains a consistent capital intensity, with CapEx/Revenue ratios frequently exceeding 5 percent, reaching as high as 12.2 percent in 2025Q4, which suggests that the company must continuously reinvest in its digital platforms to remain competitive against emerging educational technologies.
The persistent level of capital expenditure appears necessary to maintain the ALEKS and Connect platforms, implying that these are not just growth investments but essential maintenance costs. Investors should monitor whether these capital requirements will decrease as the digital transition matures or if they represent a permanent, high-cost burden.
Quick answers to the most common questions about buying MH stock.
McGraw Hill, Inc. (MH) generated $331.2M in net cash from operating activities in 2026. This reflects the cash generated directly from core business operations.
McGraw Hill, Inc. (MH) generated $246.3M in free cash flow in 2026. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
McGraw Hill, Inc. (MH) spent $84.9M on capital expenditures in 2026. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.