McGraw Hill's IPO: Betting on EdTech's Digital Turnaround

McGraw Hill, one of the oldest education publishers, is making a comeback. The company, which Platinum Equity acquired in a $4.5 billion deal in 2021, has filed for an IPO, aiming to capitalize on a recovering public market and its own digital transformation. The move comes at a critical juncture for EdTech: post-pandemic volatility has given way to cautious optimism, with investors increasingly favoring companies that blend profitability with innovation. Let's dissect whether McGraw Hill's IPO is a strategic bet worth taking.

The Financial Foundation: Growth Amid Losses

McGraw Hill's S-1 filing reveals a company navigating a familiar EdTech paradox: rising revenue paired with narrowing losses. Revenue hit $2.1 billion in FY2025, up from $1.96 billion in 2024. Net losses, while still present at $85.8 million in 2025, have shrunk dramatically from a $404 million loss in 2023. The key driver? A 29% year-over-year jump in adjusted EBITDA to $859 million, fueled by operational efficiency and a strategic pivot to digital solutions.

The company's K-12 segment is its crown jewel. Year-to-date K-12 billings surged 24% to $1 billion, with digital sales jumping 26% to $486 million. This growth is not just about volume—it's about market share. McGraw Hill has cornered science adoption markets in Texas and Florida, two of the largest U.S. school districts. Meanwhile, its AI-powered tools, like the AI Reader and Writing Assistant, are being rolled out during the critical "back-to-school" period, positioning it to capture the GenAI wave sweeping education.

The Higher Education Play: Inclusive Access and Digital Dominance

In higher education, McGraw Hill's strategy is equally compelling. Digital billings now account for 92% of the segment's revenue, and its Inclusive Access model—a subscription-based system that reduces textbook costs—now makes up 46% of higher ed billings. This aligns with a secular shift toward affordability and accessibility in postsecondary education, where students are increasingly cost-conscious. The segment's 16% rise in total billings to $1.6 billion suggests McGraw Hill is capitalizing on this trend.

Global Ambitions and AI Integration

The company isn't just focused on U.S. markets. Its International segment grew 6% in billings, driven by expansion in the Middle East and Latin America. Combined with its Global Professional division, which serves corporate training, McGraw Hill is building a multi-front growth engine. Its investment in AI isn't just about flashy tools—it's about personalization. The firm now serves 60 million learners annually, leveraging data-driven platforms to tailor content, a critical edge in an era where "one-size-fits-all" education is obsolete.

Valuation: A Bargain or a Stretch?

The question is: How will investors value this? Let's compare to sector multiples. EdTech's median revenue multiple is around 1.6x, but companies with strong EBITDA growth (like McGraw Hill's 29% jump) can command higher premiums. At an $859 million EBITDA run rate, a 13-15x multiple would value the company between $11.2 billion and $12.9 billion—a range that could attract investors. However, McGraw Hill's $4.5 billion acquisition price by Platinum Equity sets a floor, and the firm's narrowed losses suggest profitability is within reach.

Risks and Roadblocks

The path isn't without hurdles. First, the IPO's timing hinges on SEC approval and market conditions. A delayed or undersized offering could disappoint. Second, while K-12 and higher ed are growing, competition is fierce. Rivals like Pearson and Chegg are also digitizing rapidly, and open-source platforms threaten traditional publishers. Third, GenAI's integration is still unproven at scale—any misstep in content accuracy or user adoption could derail momentum.

Investment Takeaway

McGraw Hill's IPO is a bet on two things: the resilience of traditional educational infrastructure in a digital world and the ability to monetize AI-driven personalization. For investors, the appeal lies in its scale, diversified revenue streams, and Platinum Equity's track record of turnaround expertise. The valuation appears reasonable if the company can sustain EBITDA growth and achieve profitability.

However, this is not a "no-brainer" play. The IPO's success will depend on execution—speed to market with GenAI tools, cost management in legacy publishing, and navigating regulatory scrutiny (particularly around data privacy in education tech). For a risk-tolerant portfolio, McGraw Hill's IPO offers exposure to a sector in recovery. For others, wait for post-listing stability before diving in.

In the end, McGraw Hill's IPO isn't just about selling books—it's about redefining how education is delivered in the AI age. That's a bet worth watching.