Graham Holdings Company (GHC) Q3 2026 earnings review
Graham Holdings operating profit jumps 27%, but education sales shrink
Graham Holdings, the owner of Kaplan schools, local TV stations, healthcare providers and car dealerships, grew its non-education businesses fast enough to outweigh a smaller school division. Total revenue rose 4% from a year ago, while sales outside education climbed 14% by our math on election advertising and specialty pharmacy growth. Profit per share excluding one-offs rose 33% to $18.77 as television profit nearly doubled and share buybacks reduced the share count.
| Revenue outside Education | +14% from a year ago (by our math) |
|---|---|
| Total revenue | $1,326M +3.7% from a year ago |
| Profit per share, excluding one-offs | $18.77 +33% from a year ago |
| Operating cash flow, excluding one-offs | $121.8M +11% from a year ago |
⚖️ Verdict: 🟢 Bullish
The story got better because broadcast television, manufacturing and car dealerships widened their operating margins while management retired 3% of the company's shares over the past year. One caution: the education division is shrinking from both asset sales and a 36% profit drop in test preparation, while higher capital spending reduced free cash flow by 9% by our math.
The question now is how much earnings power remains at Kaplan after selling both its languages unit in May and Dublin Business School in October, and whether healthcare margins can stop narrowing. Fourth-quarter division results will show the size of the remaining international school business.
🐂 Bull Case
Television Broadcasting Profit Almost Doubled
Graham Holdings runs seven local television stations, and election-year advertising in the third quarter lifted the division's results. Revenue at the broadcasting unit rose 19.2% from a year ago to $125.3 million, while operating costs at the stations fell 1.9% to $76.8 million.
Because station costs are mostly fixed, nearly all of the extra ad revenue turned into profit. Division operating income jumped 81.0% to $48.5 million, lifting the unit's operating margin by 13.2 percentage points to 38.7% by our math. That single division generated more than all of the company's total $18.4 million operating profit increase.
What to watch: fourth-quarter television revenue and operating profit. The weeks before the November US midterm elections bring the heaviest political ad spending, which will show how much cash the stations can generate before the off-election drop next year.
Buybacks Accelerated as Share Count Shrank
Graham Holdings bought back 176,529 of its Class B shares during the first nine months of 2026 for $198.6 million, the company said. By our math, subtracting first-half purchases leaves 66,058 shares bought in the third quarter for $76.6 million, up from 32,190 shares in the first quarter.
Those purchases shrank the diluted share count by 3.1% from a year ago to 4.24 million shares. Consequently, while net income excluding one-offs grew 29.3% to $80.2 million, profit per share excluding one-offs rose faster at 33.3% to $18.77. The board still has 285,953 shares left on its September 2024 repurchase authorization.
What to watch: fourth-quarter share repurchases after the October sale of Dublin Business School. The $127.5 million cash inflow gives management extra cash to retire more shares.
Manufacturing and Auto Lift Operating Profit
Graham Holdings owns industrial businesses and car dealerships that expanded during the quarter, helping to offset the drop in education. The company said "Revenues, operating results and adjusted operating cash flow increased at television broadcasting, healthcare, manufacturing, automotive and other businesses, partially offset by a decline at education".
- Manufacturing revenue: $147.6 million, up 18.8% from a year ago
- Manufacturing operating income: $9.0 million, up 34.4% from a year ago
- Automotive revenue: $299.1 million, up 4.8% from a year ago
- Automotive operating income: $9.3 million, up 48.0% from a year ago
Both divisions kept cost growth below sales growth, so their margins widened. Automotive operating expenses rose 3.9% against 4.8% revenue growth, while manufacturing operating expenses rose 17.9% against 18.8% revenue growth.
What to watch: fourth-quarter manufacturing revenue and margin after passing the one-year mark of the July 2025 Arconic acquisition. Slower growth would show how much of the recent rise came from buying businesses rather than underlying demand.
🐻 Bear Case
Education Revenue and Profit Shrank
Kaplan, the company's largest division by revenue, provides international schooling, university services and professional exam preparation. Division revenue fell 14.5% from a year ago to $404.3 million, and operating income dropped 19.9% to $39.3 million.
- Kaplan International revenue: $230.1 million, down 21.8% after the May sale of Kaplan Languages Group
- Kaplan International operating income: $17.3 million, down 40.2% from a year ago
- Supplemental education revenue: $80.8 million, down 6.8% from a year ago
- Supplemental education operating income: $9.7 million, down 35.5% from a year ago
- Higher education operating income: $17.9 million, up 21.9% on 1.8% revenue growth
The international drop reflects the May 2026 sale of the languages unit, but supplemental education—which sells test preparation—shrank on its own. Supplemental expenses fell only 0.8% while sales fell 6.8%, cutting its profit by more than a third.
What to watch: fourth-quarter Education revenue and operating income after the October sale of Dublin Business School. Removing another profitable international unit will reduce the division's earnings base further.
Healthcare Margin Narrowed Despite Fast Pharmacy Growth
Graham Holdings highlighted healthcare as a growth driver, and division revenue jumped 24.9% from a year ago to $260.3 million. Most of that growth came from CSI Pharmacy Holding Company (CSI), its specialty infusion pharmacy business, where sales rose 34.8% to $162.3 million.
However, healthcare operating expenses grew 26.5% to $237.0 million, outpacing revenue. At CSI, expenses rose 37.9%, which squeezed CSI's operating margin down by 2.1 percentage points to 9.1% by our math. Meanwhile, operating cash flow excluding one-offs at the rest of the healthcare unit fell 6.4% to $12.0 million, holding total healthcare cash flow growth to 4.6%.
What to watch: CSI operating margin in the fourth quarter. Continued cost growth above 35% would mean rapid patient additions are bringing lower-margin revenue.
Higher Capital Spending Cut Free Cash Flow
Graham Holdings tracks adjusted operating cash flow, which is operating profit before intangible write-offs plus depreciation and pension expense. That measure rose 10.6% from a year ago to $121.8 million in the third quarter.
Capital expenditures, however, almost doubled from $20.2 million a year ago to $39.6 million, or 3.0% of revenue by our math. For the first nine months, capital spending rose 48.2% to $80.2 million. Subtracting capital expenditures from the company's operating cash flow measure leaves $82.2 million in third-quarter free cash flow by our math, down 8.6% from $89.9 million a year ago.
What to watch: fourth-quarter capital expenditures and full-year cash flow in the annual report. The release does not state which division required the extra $19.4 million in third-quarter property and equipment spending.
👓 Other Themes
Kaplan Sold Dublin Business School
Kaplan continued shrinking its international footprint after selling its languages business in May. In the third quarter, Kaplan "entered into an agreement to sell Dublin Business School (DBS) to China Chunlai Education Group Co., Ltd., a provider of private higher education in China", the company said. The deal closed on October 27, 2026, bringing in $127.5 million for the Irish college's shares and intellectual property.
💲 Other KPIs
Cash, stock holdings and other investments stood at $1,246.2 million against $853.4 million of debt at quarter end, leaving $392.8 million in net cash by our math. Total debt fell from $900.4 million in the second quarter as the company paid down $45.0 million on its revolving credit line, which carries a 5.8% average interest rate.
Unallocated corporate expenses and smaller ventures—such as Slate, Framebridge and Clyde's restaurants—lost a combined $43.8 million in the quarter by our math, compared with $42.7 million a year ago. Losses at the smaller ventures narrowed by 12.5% to $21.9 million, while corporate office expenses rose 24.0% to $21.9 million.
❓ Key Questions
How much profit did Dublin Business School contribute?
Kaplan closed the $127.5 million sale of Dublin Business School on October 27, 2026, but the release does not state the college's annual revenue or operating income. Investors need those figures to calculate how much Kaplan International will shrink in the fourth quarter.
Which division caused capital spending to double?
Third-quarter capital expenditures rose 96% from a year ago to $39.6 million, cutting free cash flow by 8.6% by our math. The earnings release gives only the company-wide total without breaking down whether the money went to dealerships, manufacturing plants, or education.
Why did supplemental education profit drop 36%?
Revenue at Kaplan's supplemental education unit fell 6.8% to $80.8 million, while operating profit dropped 35.5% to $9.7 million. The release does not explain whether weaker demand for professional licensing exams or pricing pressure caused the drop.