Executive Summary / Key Takeaways

• Diversified Resilience: Graham Holdings Company ($GHC) leverages a broad portfolio spanning education, television broadcasting, manufacturing, healthcare, and automotive, providing a robust foundation for stability and growth, particularly as its education and healthcare segments demonstrate strong performance.
• Strategic Portfolio Optimization: The company actively refines its business mix through targeted acquisitions in high-growth areas like healthcare and automotive, alongside divestitures of underperforming assets, enhancing overall profitability and strategic focus.
• Robust Financial Performance: GHC reported significant net income and operating income growth in the first nine months of 2025, driven by strong segment performance and effective cost management, supported by a healthy liquidity position and manageable debt.
• Technological Integration as a Differentiator: GHC's strategic use of technology, particularly in its education and healthcare SaaS offerings, enhances operational efficiency, customer engagement, and competitive positioning, contributing to sustained growth and market relevance.
• Navigating Headwinds with Strategic Adaptability: While facing challenges such as declining political advertising revenue in broadcasting and international visa policy shifts in education, GHC's diversified model and proactive management of these risks position it for continued long-term value creation.

A Conglomerate's Evolution: Diversification as a Core Strength

Graham Holdings Company, with roots tracing back to its founding in 1877 as The Washington Post Company, has transformed into a diversified holding company with a strategic emphasis on resilience through a broad portfolio. This evolution, marked by its name change in 2013, underscores a deliberate strategy to operate across educational services, television broadcasting, manufacturing, healthcare, automotive dealerships, and other ventures. This diversification is not merely a collection of businesses but a strategic framework designed to mitigate risks and capture growth opportunities across various economic cycles and industry trends.

The company's overarching strategy involves a dynamic mix of organic growth, targeted acquisitions to expand existing segments, and the disciplined divestiture or closure of underperforming assets. This approach is evident in its history, from the divestiture of Kaplan University in 2018 to recent acquisitions in healthcare and automotive, and the streamlining of its "Other Businesses" segment. This continuous portfolio optimization is central to GHC's ability to adapt to market shifts and maintain a competitive edge.

In the broader industry landscape, GHC operates in sectors undergoing significant transformation. The education sector is increasingly digital-first, demanding flexible and accessible learning solutions. Media faces challenges from cord-cutting and evolving advertising models, while healthcare is driven by technological advancements and an aging population. Manufacturing and automotive, though more traditional, are also seeing shifts towards efficiency and customer-centric services. GHC's diversified structure allows it to participate in these varied trends, balancing exposure and leveraging synergies where possible.

Technological Edge: Fueling Growth and Efficiency

GHC's strategic advantage is significantly bolstered by its technological differentiators, particularly within its education and healthcare segments. Kaplan, the education arm, leverages advanced online learning platforms and digital tools for test preparation, professional training, and academic programs. These technologies enable scalable content delivery, personalized learning experiences, and efficient student management. For instance, Kaplan's operations support services for online courses and programs demonstrate a commitment to digital infrastructure that enhances accessibility and learning outcomes for students globally.

In healthcare, GHC's subsidiaries like Clarus utilize a Software-as-a-Service (SaaS) based solution for call management, serving physician groups and hospitals. This technology streamlines patient interactions, improves operational efficiency for healthcare providers, and offers a competitive advantage by enhancing service delivery. CSI Pharmacy, another healthcare asset, is expanding its in-home infusion treatment offerings, supported by technology that facilitates specialized pharmacy services and patient care coordination. The recent acquisition of Pine Drug Holdings, LLC, and the California pharmacy license, with dispensing operations expected to commence in the fourth quarter of 2025, further highlight the company's investment in technology-enabled healthcare delivery.

These technological investments provide tangible benefits. In education, digital platforms allow for broader reach and lower per-student delivery costs compared to traditional brick-and-mortar models, potentially leading to higher operating margins. In healthcare, SaaS solutions can improve patient outcomes and reduce administrative overhead for clients, translating into stronger client retention and revenue growth for GHC. While specific quantifiable metrics for these technological advantages are not always publicly detailed, the strategic intent is clear: to enhance operational efficiency, improve customer experience, and create a competitive moat through innovation. This technological roadmap is crucial for GHC's long-term growth strategy, enabling it to adapt to evolving market demands and maintain relevance in dynamic industries.

Segment Performance: A Detailed Look at Growth and Challenges

GHC's financial performance in the first nine months of 2025 reflects the strengths and challenges across its diverse segments, with overall revenue increasing by 3% to $3.66 billion from $3.55 billion in the prior year, and operating income rising significantly to $187.4 million from $143 million.

Education Division: Digital Transformation and Global Reach

The Education division, primarily through Kaplan, remains a cornerstone of GHC's operations. For the first nine months of 2025, education division revenue totaled $1.33 billion, an increase of 4% from $1.28 billion in the same period of 2024. Operating income for Kaplan also saw a substantial increase, reaching $135.3 million, up 34% from $100.8 million.

• Kaplan International: Revenue increased by 2% (4% on a constant currency basis) for the first nine months of 2025, driven by strong performance in UK Pathways, UK Professional, and Singapore. However, US Pathways, Languages, and Australia experienced lower student enrollments, partly due to changes in US visa policies and practices for international students. Operating income for Kaplan International grew by 8% to $88.9 million. The UK government's announced reduction in funding for Level 7 apprenticeships effective 2026 presents a future challenge for Kaplan Financial, necessitating a shift towards self-funded commercial transactions.
• Kaplan Higher Education: This segment saw an 8% revenue increase for the first nine months of 2025, primarily due to an increased fee recorded from Purdue Global, its largest institutional client, where enrollments grew by 3%. Operating results improved by 45% to $45.5 million, also benefiting from reduced higher education development costs.
• Kaplan Supplemental Education: This segment reported a 9% revenue increase and a 32% rise in operating results for the first nine months of 2025, driven by growth across most program offerings.

Television Broadcasting: Navigating a Shifting Landscape

The Television Broadcasting segment, Graham Media Group (GMG), faced headwinds. Revenue for the first nine months of 2025 decreased by 16% to $314.6 million, down from $374 million in the prior year. This decline was primarily attributed to a $39.5 million decrease in political advertising revenue and a $6.4 million decrease in retransmission revenue, coupled with declines in local and digital advertising. Operating income for the segment fell by 36% to $79.1 million. The company anticipates a continued decline in retransmission revenue in 2025 due to "cord cutting," a trend expected to persist.

Manufacturing: Acquisition-Driven Growth

Manufacturing revenues increased by 6% to $318.5 million for the first nine months of 2025. This growth was largely driven by Hoover, following its acquisition of Arconic Architectural Products, LLC in July 2025, which expanded its aluminum cladding product offerings. Dekko and Joyce also contributed to revenue increases, partially offset by lower demand at Forney and for multi-family housing products at Hoover. Operating income for the segment surged by 67% to $19.7 million, primarily due to strong performances at Dekko and Joyce.

Healthcare: Significant Expansion and Profitability

The Healthcare segment demonstrated substantial growth, with revenues increasing by 36% to $584.4 million and operating results nearly doubling, up 95% to $64.4 million, for the first nine months of 2025. This impressive performance was largely fueled by significant growth at CSI Pharmacy, driven by an expansion of infusion treatment offerings and patient service areas, as well as growth in home health and hospice services. The segment also benefited from a reduction in pension expense.

Automotive: Sales Headwinds and Strategic Acquisitions

Automotive revenues for the first nine months of 2025 decreased by 6% to $851.8 million, primarily due to declines in new and used vehicle sales. Operating income also declined by 24% to $22.1 million. The company ceased operations of the Ourisman Jeep of Bethesda dealership in early September 2025, incurring a $0.6 million impairment charge. However, GHC expanded its automotive presence with the acquisition of a Honda (HMC) automotive dealership in October 2025.

Other Businesses: Portfolio Rationalization and Emerging Growth

The "Other Businesses" segment, encompassing specialty, retail, and media ventures, saw a 1% revenue increase for the first nine months of 2025 to $257.1 million. Operating losses were slightly down, excluding prior-year impairment charges, driven by improved results at several businesses, including World of Good Brands (WGB), which was substantially shut down by the end of Q3 2025 after selling various websites. Clydes Restaurant Group (CRG) saw revenue growth from new openings and price increases, while Framebridge, a custom framing service, continued its expansion with new retail stores and a manufacturing facility, though it remains an investment-stage business with significant operating losses.

Financial Health and Capital Allocation

Graham Holdings Company maintains a solid financial position, underpinned by healthy cash flow generation and a diversified asset base. For the first nine months of 2025, net cash provided by operating activities increased to $318.9 million from $290.7 million in the prior year, primarily driven by higher net income. The company's liquidity is robust, with $1.24 billion in cash, marketable equity securities, and other investments as of September 30, 2025. An additional $232.8 million was available from its $300 million revolving credit facility.

Total borrowings outstanding stood at $731.9 million as of September 30, 2025, at an average interest rate of 5.9%. This includes $400 million of 5.75% unsecured notes due June 1, 2026, which the company intends to refinance. The company's debt-to-equity ratio (TTM) is 0.26, indicating a conservative capital structure. Profitability metrics are strong, with a TTM gross profit margin of 30.95%, an operating profit margin of 7.16%, and a net profit margin of 20.19%. The EBITDA margin (TTM) stands at 30.83%.

Capital allocation priorities include strategic investments and shareholder returns. The company expects to pay a dividend of $7.20 per share in 2025. Capital expenditures are estimated to be in the range of $80 million to $90 million in 2025, reflecting ongoing investments in its diverse operations. A significant event in Q1 2025 was the settlement of a substantial portion of the mandatorily redeemable noncontrolling interest related to GHC One for $205 million, which included $186.25 million in cash. Management believes it has sufficient financial resources to meet its business requirements for the next 12 months, including working capital, capital expenditures, interest payments, potential acquisitions, and dividends.

Competitive Positioning and Strategic Responses

Graham Holdings Company occupies a unique position as a diversified conglomerate, which inherently shapes its competitive dynamics. Unlike more focused competitors such as Pearson PLC (PSO), The New York Times Company (NYT), or Gannett Co., Inc. (GCI), GHC's strength lies in its ability to leverage diversification for stability and cross-segment synergies.

In the education sector, GHC's Kaplan competes with global giants like Pearson. While Pearson boasts a larger scale and deeper global penetration in standardized educational products, Kaplan differentiates itself through a diversified offering that integrates media and digital tools, potentially offering greater flexibility in content delivery. GHC's established brand in media-adjacent education provides a unique value proposition, allowing for bundled services that enrich learning experiences. However, GHC may lag in pure educational scale, where Pearson has a reputation for deeper global penetration. Financially, GHC's revenue growth in education appears stable, with strong operating income growth, suggesting effective management in a competitive market.

Within media, GHC's television broadcasting and digital publications like Slate and Foreign Policy compete with entities such as The New York Times and Gannett. The New York Times excels in premium content and subscriber loyalty, while Gannett focuses on widespread distribution. GHC's media assets, part of a larger conglomerate, offer versatility and the potential for faster innovation in cross-platform content, such as combining news with educational tools. This integrated approach can provide a qualitative edge in user engagement. However, GHC's media segments are susceptible to advertising market fluctuations and the ongoing trend of "cord-cutting," which has impacted its retransmission revenue. GHC's diversification provides a buffer against these market shifts, offering greater resilience compared to more media-centric competitors.

In manufacturing and healthcare, GHC competes with a fragmented landscape of specialized players. Its strategic acquisitions, like Hoover Architectural Solutions and CSI Pharmacy's expansion, demonstrate a proactive approach to gaining market share and enhancing product offerings. The company's healthcare SaaS solutions provide a technological differentiator, streamlining operations for clients and improving service delivery.

Overall, GHC's competitive advantages stem from its diversified portfolio, strong brand recognition in key segments, and strategic use of technology to enhance operational efficiency and customer engagement. While it may not dominate any single market in terms of sheer scale, its integrated approach and adaptability allow it to compete effectively. Vulnerabilities include potential over-reliance on traditional media revenue streams and the smaller scale of some segments compared to highly focused rivals. However, the high barriers to entry in regulated sectors like education and capital-intensive media help GHC defend its market position.

Outlook and Forward-Looking Initiatives

Graham Holdings Company's outlook for the remainder of 2025 and beyond is shaped by its ongoing strategic initiatives and anticipated market dynamics. The company projects capital expenditures for 2025 to be in the range of $80 million to $90 million, indicating continued investment across its businesses.

In education, while UK Pathways benefited from favorable timing in Q3 2025, revenues and operating results are expected to be down in Q4 2025 compared to the prior year. The company will continue to assess the fee recorded from Purdue Global quarterly. The planned reduction in UK government funding for Level 7 apprenticeships in 2026 will necessitate a shift towards self-funded commercial transactions for Kaplan Financial, highlighting the need for strategic adaptation.

The Television Broadcasting segment anticipates a continued decline in retransmission revenue in 2025 due to cord-cutting trends. This necessitates a focus on other revenue streams and cost management.

In healthcare, CSI Pharmacy's dispensing operations are expected to commence later in the fourth quarter of 2025, which should contribute to future growth. The planned opening of a new Clydes Restaurant Group establishment in Reston, VA, in Q2 2026, and Framebridge's continued retail store expansion in Q4 2025, signal growth initiatives in the "Other Businesses" segment. The expected dissolution of GHC One by March 31, 2026, will also impact the mandatorily redeemable noncontrolling interest.

The company acknowledges macroeconomic risks related to tariff policies and a potential economic slowdown as the most meaningful risks to its financial results. Changes in international laws and regulations, particularly US visa policies, also pose a risk to Kaplan International's student enrollments. However, GHC's diversified structure is intended to limit its overall risk exposure.

Conclusion

Graham Holdings Company stands as a testament to the power of strategic diversification in a dynamic global economy. Its transformation from a media powerhouse to a multi-industry conglomerate has created a resilient enterprise capable of generating substantial cash flows and adapting to evolving market conditions. The strong performance in its education and healthcare segments, driven by strategic acquisitions and technological integration, underscores the effectiveness of its portfolio approach. While facing challenges in traditional media and regulatory shifts in international education, GHC's proactive management, robust liquidity, and commitment to targeted investments position it for sustained long-term value creation. For discerning investors, GHC offers a compelling narrative of stability, strategic agility, and a diversified growth engine, making it a noteworthy consideration in a complex investment landscape.