Houghton Mifflin Harcourt (HMH) is a global educational publishing and technology company that reaches more than 50 million students in the U.S. and 150 other countries.
Eighty-eight percent of its revenue comes from education, with the remaining 12% from trade and reference. HMH is primarily focused on the Pre-K-12 market, but also covers general interest, children’s and reference works. The company leads K-12 market with a market share of 40%.
Houghton Mifflin Harcourt’s history as an educational publisher dates back to 1832. Houghton Mifflin was acquired by Riverdeep in 2006 and acquired Harcourt from Reed Elsevier in 2007. In April 2015, HMH signed an agreement to acquire the Educational Technology and Services business of Scholastic Corporation. The company has been listed on NASDAQ since November 2013, a “transformational year” for HMH according to CEO Linda Zecher.
Analysis & Key Developments
HMH’s net sales for fiscal 2015 increased by 44 million USD, or 3.2%, from 1.37 billion USD for the same period in 2014, to 1.42 billion USD. The net sales increase was driven by a contribution of 148 million USD from the acquisition of EdTech. Revenues at the larger educational division consequently grew by 42 million USD, or 3.5%, to 1.25 billion USD. The trade publishing business had another solid year, with revenues increasing slightly from 163 million USD in 2014 to 165 million USD during 2015.
In March 2015, Houghton Mifflin Harcourt announced that Joseph P. Abbott, Jr. would succeed Eric Shuman, who retired from his role as the company’s Chief Financial Officer (CFO). Abbott joined HMH from Morgan Stanley’s Global Media and Communications Group, where he led the firm’s advisory of clients in the education content and information services sectors as an investment banker.
In December 2015, Houghton Mifflin Harcourt Trade president Gary Gentel announced that he would retire in 2016, and will be succeeded by Ellen Archer. Archer was most recently president and publisher of Walt Disney Co.’s Hyperion Books.
In May, 2015, Houghton completed the acquisition of Scholastic’s Educational Technology and Services (EdTech) business and paid an aggregate purchase price of 575 million USD in cash.
In July, Houghton acquired select e-book and technology assets of MeeGenius, an e-book subscription service for children up to eight years of age. This reflects Houghton’s strategic focus on the direct to consumer market.
Large English-language schools in high growth territories accounted for most of HMH’s international sales, primarily in Asia, the Pacific, the Middle East, Latin America, the Caribbean and Africa.
Digital products with net sales from e-books reached 21 million USD in 2015, representing approximately 12.7% of the trade publishing division.
In October 2015, HMH announced the launch of Curious World, a children’s subscription platform that offers “all types of media under one roof—e-books, games and video,” according to Caroline Fraser, senior v-p of development and acquisition for HMH’s Consumer Group.
Houghton’s bestselling titles included The Whole 30 by Melissa Hartwig, Jacques Pépin’s Jacques Pépin Heart & Soul in the Kitchen and general interest titles such as by Thing Explainer. Backlist titles What If by Randall Munroe and The Giver by Lois Lowry were also strong.