McGraw Hill (MH) risk factors, FY2026 10-K

Risks Related to Our Customer Markets

1. 01We face competition from both large, established industry participants and new market entrants, the risks of which are enhanced due to rapid changes in our industry and market
2. 02Increased availability of and support for free or relatively inexpensive products may reduce demand for or negatively impact the pricing of our products
3. 03Generative AI systems may make it easier for competitive instructional materials to be created which could negatively affect demand for or the pricing of our products
4. 04If we fail to adapt and respond effectively to changing technology, evolving industry standards and changing customers’ needs or requirements, our platforms may become less competitive
5. 05Increased customer expectations for lower prices or free/discounted bundled products could reduce sales revenue
6. 06Our failure to win new adoptions in certain U.S. states could adversely affect our revenue and operating results
7. 07Changes in state academic standards could affect our market and require investment in new or different products
8. 08Changes in the timing and scope of anticipated levels of federal, state and local education funding available for the purchase of instructional materials could adversely affect purchases for our K-12 products
9. 09Factors that reduce enrollment at colleges and universities could adversely affect demand for our Higher Education products
10. 10Evolving policy changes (including by the current U.S. administration), increasing political pressures, community activism, cultural sensitivities, and funding shifts may impact the adoption and purchase of our titles in the K-12 market and affect the timing and cost of development and implementation
11. 11The high degree of seasonality of our sales typically results in ebbs and flows in our revenues, which impacts our quarterly operating results and cash flows
12. 12A change from up-front payment by school districts for multi-year licenses could adversely affect our cash flow

Operational, Legal and Compliance Risks

1. 13Operational disruptions, malfunctions or intentional hacking of our technological systems such as our hosting systems and delivery platforms, or the technological systems of the third parties on which we rely, could adversely affect our operations or business and cause financial loss and reputational damage
2. 14Failure to comply with privacy, accessibility and other laws could have a material adverse impact on our reputation and financial performance
3. 15Defects in our digital products could cause financial loss and reputational damage
4. 16Our business is dependent upon our brand recognition and reputation, and if we fail to maintain or support our brand recognition or reputation, our business could be harmed
5. 17consumer awareness of our brand cost-effectively, our business, results of operations and financial condition could be materially adversely affected
6. 18Legal actions against us, including putative class action lawsuits, could be costly to defend and could result in significant damages
7. 19Failure to act in accordance with generally accepted ethical business standards or comply with applicable statutes regarding bribery, corruption, fraud, sanctions and competition could result in substantial financial cost and adversely impact our reputation
8. 20Rapidly changing expectations and standards on environmental, social and governance (“ESG”) matters may impact our business, subject us to unforeseen liability or cause harm to our reputation
9. 21Changes in accounting rules could adversely affect our future operating results

Risks Related to Distribution, Sourcing and Talent

1. 22We utilize the services of third-party suppliers, distributors, representatives and retailers for a substantial portion of our sales
2. 23An insufficient supply of, or increases in the costs of, paper could adversely affect our financial results
3. 24Consolidation and concentration in our distribution and retail channels for our Higher Education products could adversely affect our profitability and financial results
4. 25An adverse change in orders or payments by a material reseller could adversely affect our financial results
5. 26Unexpectedly large returns could adversely affect our financial results
6. 27We outsource the performance of many critical operational functions to third parties
7. 28We may not be able to retain or attract the key authors and talented personnel that we need to remain competitive and grow
8. 29A significant increase in operating costs and expenses due to inflation or other causes could have a material adverse effect on our profitability and cash flow

Risks Related to Strategic Initiatives and Financings

1. 30Our investments in new products and distribution channels and entry into new markets may not be profitable
2. 31Future acquisitions could disrupt our business and may divert management’s attention and, if unsuccessful, harm our business
3. 32We have recorded, and may in the future record, goodwill or indefinite-lived intangibles impairment charges related to our reporting units, which could materially adversely impact our results of operations
4. 33Our substantial indebtedness may restrict our ability to react to changes in the economy or our industry and exposes us to interest rate risk and risk of default and prevent us from fulfilling our obligations under the Credit Agreements, the Notes and other indebtedness
5. 34We may not be able to generate sufficient cash flows from operations to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful
6. 35Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly
7. 36Despite our substantial indebtedness, we may still be able to incur significantly more debt, which could intensify the risks described above
8. 37As of March 31, 2026, we had a state net operating loss (“NOL”) carryforward of $56.4 million, of which $45.9 million will be subject to expiration between 2027 and 2044. Our foreign NOL carryforwards as of March 31, 2026 are $68.7 million, mainly in the United Kingdom which are not subject to expiration

Risks Related to Non-U.S. Operations and Sales

1. 38We face risks of doing business abroad
2. 39Fluctuations between foreign currencies and the U.S. dollar could adversely affect our financial results
3. 40Sales to clients outside the United States or with international operations expose us to risks inherent to international businesses, which may include adverse impacts arising out of international regulatory changes
4. 41U.S. tariff policy could increase our costs and affect our financial results
5. 42Changes in macroeconomic and geopolitical conditions have affected, and could continue to affect our growth, business and results of operations
6. 43Our business is subject to the risks of fire, floods and other natural catastrophic events, and to interruption by man-made problems such as computer viruses, data security breaches or terrorism

Risks Related to Our Relationship with Platinum and Being a “Controlled Company”

1. 44Platinum controls us, and its interests may conflict with ours or other stockholders’ in the future
2. 45might affect the market price of our Common Stock. This concentration of ownership may also adversely affect our share price
3. 46Anti-takeover provisions in our organizational documents could delay or prevent a change of control

Risks Related to Our Organizational Structure

1. 47Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results of operations and financial condition

Risks Related to Ownership of Our Common Stock

1. 48Future offerings of debt or equity securities by us may have a material adverse effect on the market price of our Common Stock
2. 49material weakness, our financial statements could be inaccurate and we could face restricted access to the capital markets
3. 50Our stock price may change significantly, and stockholders may not be able to resell shares of our Common Stock at or above the price paid or at all and could lose all or part of their investment as a result
4. 51Because we have no current plans to pay cash dividends on our Common Stock, stockholders may not receive any return on investment unless they sell their Common Stock for a price greater than that which they paid for it
5. 52If securities or industry analysts do not publish research or reports about our business or if they downgrade our stock or our sector, our stock price and trading volume could decline
6. 53Changes in tax laws may impact the tax treatment of income or gains on our Common Stock
7. 54If we or Platinum sell additional shares of our Common Stock or are perceived by the public markets as intending to sell them, the market price of our Common Stock could decline
8. 55Our board of directors is authorized to issue and designate shares of our preferred stock in additional series without stockholder approval
9. 56Our amended and restated bylaws provide that we will indemnify our directors and officers, in each case to the fullest extent permitted by the Delaware General Corporation Law (the “DGCL”)
10. 57Our second amended and restated certificate of incorporation contains exclusive forum provisions for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders