Revenue growth has stabilized at 2.6% year-over-year, but the conversion of a 79.9% gross margin into a net margin of just 10.5% indicates that substantial non-operating costs, likely interest, are eroding profitability.
McGraw Hill, Inc. (MH) annual income statement — 11-year revenue, gross profit & net income history
| Metric | TTM | Mar'26 | Mar'25 | Mar'24 | Mar'23 | Mar'22 | Mar'21 | Mar'20 | Dec'18 | Dec'17 | Dec'16 | Dec'15 |
|---|
| Sales/Revenue | 2.12B | 2.1B | 2.1B | 1.96B | 1.95B | 1.79B | 1.54B | 1.58B | 1.6B | 1.72B | 1.74B | 1.83B |
| Revenue Growth % | 8.65% | 0.07% | 7.18% | 0.65% | 8.8% | 15.89% | -2.53% | -0.76% | -7.1% | -1.2% | -4.84% | - |
| Cost of Goods Sold | 388.46M | 401.14M | 422.29M | 420.33M | 464.56M | 418.52M | 336.54M | 358.28M | 394.53M | 426.64M | 427.41M | 479.47M |
| COGS % of Revenue | - | 19.08% | 20.1% | 21.44% | 23.85% | 23.38% | 21.79% | 22.61% | 24.71% | 24.82% | 24.56% | 26.22% |
| Gross Profit | 1.73B | 1.7B | 1.68B | 1.54B | 1.48B | 1.37B | 1.21B | 1.23B | 1.2B | 1.29B | 1.31B | 1.35B |
| Gross Margin % | 81.65% | 80.92% | 79.9% | 78.56% | 76.15% | 76.62% | 78.21% | 77.39% | 75.29% | 75.18% | 75.44% | 73.78% |
| Gross Profit Growth % | - | 1.35% | 9.02% | 3.84% | 8.13% | 13.54% | -1.49% | 2% | -6.97% | -1.54% | -2.71% | - |
| Operating Expenses | 1.39B | 1.39B | 1.37B | 1.38B | 1.67B | 1.81B | 958.66M | 1.17B | 1.17B | 1.2B | 1.21B | 1.25B |
| OpEx % of Revenue | - | 65.91% | 65.3% | 70.64% | 85.81% | 100.97% | 62.06% | 73.91% | 73.37% | 69.75% | 69.34% | 68.48% |
| Selling, General & Admin | 766.5M | 747.69M | 725.41M | 705.55M | 709.41M | 1.04B | 809.08M | 987.98M | 1.03B | 1.05B | 1.06B | 1.1B |
| SG&A % of Revenue | - | 35.56% | 34.52% | 35.99% | 36.42% | 57.87% | 52.38% | 62.34% | 64.39% | 61.17% | 61.01% | 60.3% |
| Research & Development | 270.64M | 276.25M | 284.43M | 263.42M | 278.1M | 0 | 35.35M | 37.81M | 5.5M | 0 | 0 | 0 |
| R&D % of Revenue | - | 13.14% | 13.54% | 13.44% | 14.28% | - | 2.29% | 2.39% | 0.34% | - | - | - |
| Other Operating Expenses | 4M | 361.92M | 362.36M | 415.88M | 683.88M | 771.58M | 114.23M | 145.49M | 137.92M | 147.57M | 145.01M | 149.56M |
| Operating Income | 333.84M | 315.78M | 306.81M | 155.3M | -188.17M | -435.89M | 249.51M | 55.2M | 30.69M | 93.37M | 106.08M | 96.88M |
| Operating Margin % | 15.77% | 15.02% | 14.6% | 7.92% | -9.66% | -24.35% | 16.15% | 3.48% | 1.92% | 5.43% | 6.1% | 5.3% |
| Operating Income Growth % | - | 2.92% | 97.56% | 182.53% | 56.83% | -274.7% | 351.98% | 79.87% | -67.13% | -11.98% | 9.5% | - |
| EBITDA | 585.28M | 677.7M | 669.16M | 521.68M | 183.71M | -155.98M | 334.19M | 151.01M | 135.77M | 202.88M | 218.91M | 221.67M |
| EBITDA Margin % | 27.65% | 32.23% | 31.85% | 26.61% | 9.43% | -8.71% | 21.63% | 9.53% | 8.5% | 11.8% | 12.58% | 12.12% |
| EBITDA Growth % | 15.13% | 1.28% | 28.27% | 183.96% | 217.78% | -146.67% | 121.31% | 11.22% | -33.08% | -7.32% | -1.24% | - |
| D&A (Non-Cash Add-back) | 251.44M | 361.92M | 362.36M | 366.38M | 371.88M | 279.92M | 84.68M | 95.8M | 105.08M | 109.51M | 112.83M | 124.79M |
| EBIT | 321.92M | 315.78M | 306.81M | 204.8M | 123.83M | 55.77M | 279.06M | 104.88M | 45.96M | 107.63M | 123.16M | 121.64M |
| Net Interest Income | -149.07M | 0 | -293.45M | -326.44M | -278.22M | -214.62M | -193.32M | -188.1M | -180.58M | -179.38M | -199.51M | -192.92M |
| Interest Income | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Interest Expense | 149.07M | 0 | 293.45M | 326.44M | 278.22M | 214.62M | 0 | 0 | 0 | 0 | 0 | 0 |
| Other Income/Expense | -258.99M | -271.99M | -296.17M | -323.02M | -265.67M | -286.92M | -190.55M | -178.98M | -180.58M | -166.65M | -226.07M | -188.14M |
| Pretax Income | 74.85M | 43.79M | 10.64M | -167.72M | -453.84M | -722.82M | 58.96M | -123.78M | -149.89M | -73.28M | -119.98M | -91.26M |
| Pretax Margin % | 3.54% | 2.08% | 0.51% | -8.56% | -23.3% | -40.38% | 3.82% | -7.81% | -9.39% | -4.26% | -6.9% | -4.99% |
| Income Tax | -17.83M | 8.47M | 96.48M | 25.29M | -49.73M | -48.56M | 14.21M | 11.53M | 10.54M | 7.35M | 15.12M | 11.53M |
| Effective Tax Rate % | -23.82% | 19.34% | 906.61% | -15.08% | 10.96% | 6.72% | 24.1% | -9.31% | -7.03% | -10.03% | -12.6% | -12.63% |
| Net Income | 92.68M | 35.32M | -85.84M | -193.02M | -404.1M | -674.25M | 44.75M | -135.31M | -160.42M | -65.93M | -137.01M | -179.13M |
| Net Margin % | 4.38% | 1.68% | -4.08% | -9.85% | -20.75% | -37.66% | 2.9% | -8.54% | -10.05% | -3.84% | -7.87% | -9.8% |
| Net Income Growth % | 142.37% | 141.15% | 55.53% | 52.24% | 40.07% | -1606.71% | 133.07% | 15.66% | -143.32% | 51.88% | 23.52% | - |
| Net Income (Continuing) | 92.68M | 35.32M | -85.84M | -193.02M | -404.1M | -674.25M | 44.75M | -135.31M | -160.42M | -65.93M | -135.1M | -102.79M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -1.91M | -76.34M |
| Minority Interest | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EPS (Diluted) | 0.48 | 0.19 | -0.45 | -1.01 | -2.12 | -3.53 | 3.86 | -11.77 | -14.09 | -5.85 | -12.03 | -9.22 |
| EPS Growth % | 140.89% | 142.22% | 55.45% | 52.36% | 39.94% | -191.45% | 132.8% | 16.47% | -140.85% | 51.37% | -30.48% | - |
| EPS (Basic) | - | 0.19 | -0.45 | -1.01 | -2.12 | -3.53 | 3.86 | -11.77 | -14.09 | -5.85 | -12.03 | -9.22 |
| Diluted Shares Outstanding | 191.31M | 183.67M | 191M | 191M | 191M | 191M | 11.62M | 11.5M | 11.38M | 11.27M | 11.23M | 11.15M |
| Basic Shares Outstanding | 191.25M | 183.47M | 191M | 191M | 191M | 191M | 11.6M | 11.5M | 11.38M | 11.27M | 11.39M | 19.44M |
| Dividend Payout Ratio | - | - | - | - | - | - | - | - | - | - | - | - |
Quick answers to the most common questions about buying MH stock.
For fiscal year 2026, McGraw Hill, Inc. (MH) reported total revenue of $2.10B. This represents a 15.0% increase compared to $1.83B in 2016.
McGraw Hill, Inc. (MH) is profitable, generating $35.3M in net income for the fiscal year ending 2026 with a net profit margin of 1.7%.
McGraw Hill, Inc. (MH) reported an operating income of $315.8M, resulting in an operating profit margin of 15.0%. This margin reflects the operational efficiency of the business before interest and taxes.
McGraw Hill, Inc. (MH) generated $1.70B in gross profit for the year, representing a gross profit margin of 80.9%. This demonstrates the company's core pricing power and production efficiency.
Key Metrics
Top Statement Risk
Leverage consuming operating income
Metrics are mathematically derived from official filings.
Stagnant Growth Amidst Digital Transition
Revenue growth has been essentially flat, with the most recent quarter showing only 2.6% year-over-year growth, suggesting the digital transition is stabilizing volumes but not yet driving meaningful expansion.
The company's revenue trajectory appears to have stabilized after a period of volatility, with recent quarters showing low single-digit growth or slight declines. This pattern suggests the shift from transactional print to recurring digital subscriptions is creating a more predictable, albeit slower-growing, revenue base. The lack of acceleration indicates that gains in digital activation rates and Inclusive Access enrollment may be offsetting declines in legacy print, resulting in a net-neutral growth profile for now.
Gross Margin Strength Masked by Net Compression
While gross margins have expanded significantly to nearly 80% in recent quarters, the net margin remains critically thin at 10.5% in Q1 2027, indicating substantial non-gross profit expenses are eroding profitability.
The structural improvement in gross margin from the low 60s to the high 70s/low 80s range is a clear positive, reflecting the successful scaling of low-marginal-cost digital platforms. However, the persistent and wide gap between operating margin (20.8%) and net margin (10.5%) in the latest quarter suggests a heavy burden of interest expense or significant non-cash charges below the operating line. This dynamic implies that while the core business is operationally efficient, the company's capital structure is severely constraining bottom-line profitability.
Operating Leverage Eroded by Financial Leverage
Operating income scaled impressively to $114.3M on $549.9M revenue in Q1 2027, but the conversion to net income was severely hampered, with over half of operating profit consumed by non-operating costs.
The company demonstrates strong operating leverage, with operating margin expanding from single digits to over 20% in recent quarters as fixed-cost digital platforms scale. However, this operational efficiency is not translating to the bottom line. The dramatic compression from a 20.8% operating margin to a 10.5% net margin in the same period indicates that financial leverage, likely in the form of high interest payments, is the primary impediment to shareholder returns. This suggests management's focus on EBITDA optimization may be overshadowing the need for deleveraging.
SG&A Discipline Contrasts with R&D Investment
SG&A expenses have been reduced from over $250M to the $160-$180M range, while R&D investment has been consistently maintained around $60-$70M per quarter, signaling a strategic shift toward platform development.
The cost structure shows a clear management priority: streamlining general and administrative overhead to fund the ongoing R&D required for adaptive learning platforms like ALEKS and Connect. The reduction in SG&A from its 2024 peak suggests successful cost rationalization, likely from consolidating sales forces or back-office functions. The sustained R&D spend, despite flat revenue, indicates a commitment to maintaining the technological moat, though investors should monitor whether this investment is generating sufficient returns in the form of higher digital activation rates.
Thin Net Margin Vulnerable to Rate Shocks
The company's net margin of just 1.7% on a trailing basis, combined with a Debt/Equity ratio of 3.64, presents a significant risk where even a modest increase in interest rates could push the company into a net loss position.
The most compelling bear case centers on the fragile profitability at the net income level. With operating income of $114.3M in Q1 2027 converting to net income of only $57.9M, a substantial portion of operating profit is being consumed by financing costs. Given the elevated leverage profile, any upward movement in interest rates or a refinancing at higher coupons could severely erode or eliminate net income. This financial structure leaves the company with minimal margin of safety and makes it highly sensitive to capital market conditions, a risk that may not be fully reflected in its valuation relative to less-levered peers.