McGraw Hill is a newly listed education platform whose mix has already moved toward digital subscriptions while the equity still prices as if the old print-and-adoption publisher were intact. The July listing put only a minority slice of the company on the New York Stock Exchange. Platinum Equity still holds more than four fifths of the shares, which leaves public holders with a thin float and a controlled-company board. Recurring revenue now accounts for 77% of the top line, and that mix change is the operating story the market has not yet paid for.
The tension is that headline growth still looks like a mature publisher. Fiscal year revenue was essentially unchanged near $2.1 billion. K-12 adoption markets contracted and offset a double-digit Higher Education gain. Underneath that flat print, recurring revenue grew and adjusted earnings before interest, taxes, depreciation, and amortization expanded. Net leverage still sits just above three times after a large post-listing debt paydown. Management is aiming at a lower band once more cash is applied to the notes. The public float is only about 25 million shares against a much larger share count.
The June quarter beat internal expectations on sales and mix. Revenue rose to $550 million. Recurring revenue grew nearly 10%. Management left full-year guidance unchanged ahead of the back-to-school season. Higher Education again took share. Early K-12 English language arts capture rates ran above the company's own target band. The question the next two quarters resolve is whether a larger adoption cycle and Inclusive Access penetration can turn a flat publisher into a mid-single-digit compounder before Platinum starts selling into the thin public float.