Strength in Higher Ed and Open Territories Offset Choppier CA & TX Outlook; Lowering PT to $19 from $22, Maintain BUY

Research evidence excerpt

Strength in Higher Ed and Open Territories Offset Choppier CA & TX Outlook; Lowering PT to $19 from $22, Maintain BUY

ile Global S&P 500 (rebased)

Source: FactSetEQUITY Professional experiences some headwinds due to ongoing wind-down of non-core

print titles.

■ Adjusted EBITDA margins remain in the mid-30s range. Company Description

McGraw Hill, Inc. is a top two provider

Upside Scenario: $23/sh of instructional material to the U.S.

■ Capture rates in the upcoming K-12 procurement cycle exceed 35%. K-12 and Higher Education markets, asRESEARCH

■ Enrollment growth in Higher Education for the 2025-2026 school year exceeds the well as a leading provider of learning

~2.5% embedded in our expectations. material in the Global Professional

■ Revenue/retention benefits from the Sharpen learning app, McGraw-Hill+ and market. The company's courseware is

Evergreen drive revenue growth above our mid-single-digit baseline. delivered on top of its ConnectED K-12

■ Scribe and other AI-tools yield better cost efficiencies and time-to-market benefits platform, its Connect Higher Education

than we currently model, enabling Adjusted EBITDA margins to rise to the platform, and its Access platform for

upper-30s or better. Global Professional. In addition to its

core, supplemental and intervention

titles, key offerings in K-12 include Downside Scenario: $8/sh MH+ and ALEKS. In Higher Education,

■ Capture rates in the upcoming K-12 procurement cycle are 20% or less. key innovations include Sharpen, AI

■ Enrollment trends are worse than anticipated, with Higher Education most Reader and Evergreen. In total, McGraw-

vulnerable given its more discretionary nature compared to elementary & Hill has over 270,000 active titles and

secondary school enrollment. serves 26MM+ paid digital users. In