McGraw Hill Inc. (NYSE:MH) reported fourth-quarter fiscal 2026 results that surpassed Wall Street expectations, but the strong performance failed to prevent a sharp decline in its share price as investors weighed broader concerns surrounding the education company’s outlook.
The education technology and learning solutions provider saw its shares fall 12.50% in premarket trading on Thursday following the release of its latest financial results.
Quarterly Results Outperform Expectations
For the quarter ended March 31, 2026, McGraw Hill posted adjusted earnings of $0.32 per share, comfortably ahead of analyst forecasts of $0.17 per share.
Revenue totaled $463.7 million, exceeding the consensus estimate of $439.8 million. However, sales were down 2.0% compared with the same period a year earlier.
The company attributed the decline primarily to a smaller opportunity set in the K-12 education market due to procurement timing and purchasing cycles, although this was partly offset by strong performance within its Higher Education segment.
Fiscal 2027 Guidance Tops Forecasts
McGraw Hill also issued fiscal 2027 guidance that came in ahead of analyst expectations.
The company expects annual revenue to range between $2.115 billion and $2.175 billion. The midpoint of $2.145 billion is above the consensus forecast of $2.08 billion.
Management also projected adjusted EBITDA of between $750 million and $790 million for fiscal 2027, reflecting confidence in continued operational performance.
“McGraw Hill’s growth in fiscal year 2026 underscores the strength of our strategy, the speed of our innovation and the depth of trust that we have from the education community,” said Philip Moyer, President and Chief Executive Officer.
Recurring and Digital Revenue Continue to Expand
For the full fiscal year 2026, McGraw Hill generated total revenue of $2.10 billion, representing a modest year-on-year increase of 0.1%.
The growth was largely supported by strong execution in the Higher Education business.
Recurring revenue rose 5.8% to $1.54 billion and accounted for more than 73% of total revenue during the year, highlighting the increasing importance of subscription-based and recurring business models.
Digital revenue also continued to grow, increasing 5.5% year-on-year to $1.43 billion.
Profitability and Balance Sheet Strengthen
Adjusted EBITDA for fiscal 2026 reached $744.3 million, resulting in a margin of 35.4%.
The margin improved by nearly 80 basis points compared with the previous fiscal year, reflecting ongoing operational efficiencies and a growing contribution from higher-margin digital products.
McGraw Hill also strengthened its balance sheet during the year, reducing gross debt by $645.6 million.
Board Approves Share Repurchase Programme
In addition to debt reduction, the company announced a new capital return initiative.
McGraw Hill’s Board of Directors approved a $50 million share repurchase programme on June 2, 2026, providing the company with additional flexibility to return capital to shareholders.
Despite delivering stronger-than-expected earnings, revenue and forward guidance, investors appeared cautious following the results, sending shares lower in premarket trading as the market assessed growth prospects across the education sector.