Houghton Mifflin Harcourt Expands Into Assessment and Testing Business

Houghton Mifflin Harcourt (HMH) is a global education leader that provides comprehensive learning solutions to help students thrive in classrooms. Their Core curriculum products reach over 90% of K-12 schools, while their Extensions business focuses on supplemental materials, professional development and intervention programs.

While revenue for educational publishers has been negatively impacted by the ongoing pandemic, HMHC’s digital offerings have been in strong demand and continue to grow at a rapid pace. This has been driven by a combination of their scale, relationships and industry leading technology platforms.

Education

Houghton Mifflin Harcourt offers an array of education products, including books, educational technology and services for pre-K-12 students. The company's learning products are designed to help teachers, administrators, and students meet the challenges of today's complex learning environment. It is a global leader in pre-K-12 education.

The company's award-winning children's books, novels, nonfiction, and reference titles are enjoyed by students around the world. The company also offers interactive, results-driven learning solutions and services that advance teacher effectiveness.

Its digital content and apps offer a new way to learn, whether it's on the go or offline. The company's HMH Go app, for example, provides students with intuitive, connected learning, no matter how they choose to interact with it.

In addition to its publishing and media offerings, the company is a leader in technology innovation. Its HMH Classroom, a cloud-based learning platform, has more than 300,000 users in the US and is expected to be one of the fastest growing platforms in the industry.

To improve its education offerings, the company has launched several initiatives in recent years. These include HMH Into Learning, a series of fully integrated core curriculum solutions that combine teacher support, data-driven instructional practices and focused content architecture to accelerate growth for all learners.

According to the press release, Into Learning is a "target set of tools that K-12 districts, administrators and educators can use to transform their classrooms." In addition, it includes a "Digital Learning Essentials" series, which offers best practice training for technology-enhanced instruction.

The company also launched the HMH GO mobile app, which is a "comprehensive companion app to all of HMH's core curricula on Ed: Your Friend in Learning(r)." In addition to the HMH Go application, the company has a number of other free, downloadable educational resources available for teachers and students, including an extensive collection of digital books and multimedia content.

Books & Media

Houghton Mifflin Harcourt is known for its children's and young adult books, and also for cookbooks. It also specializes in producing entertainment, including television and movies. Its production business is in the midst of producing an animated series called Carmen Sandiego for Netflix, and the company has a flourishing audiobook division.

The company is owned by Rupert Murdoch's News Corp, and has a strong history of profitability. Its backlist is rich in classics, like J.R.R. Tolkien's "The Lord of the Rings" trilogy and George Orwell's "Nineteen Eighty-Four'' and "Animal Farm."

Its books are sold through bookstores, online retailers, and library distributors. Its digital sales and annual recurring revenue increased 19% in the first quarter of 2021, and its segment EBITDA rose 45%.

But the publishing industry is dominated by big players like Penguin Random House and Hachette Book Group, which control most of the industry's biggest titles. Its reliance on paper sales is declining as people become more digitally savvy.

So it's no surprise that Houghton Mifflin Harcourt has been trying to shift its focus toward a digital-first strategy for the books it produces, especially K-12 educational texts. A move to virtual schooling during the COVID-19 pandemic has helped drive demand for electronic materials, and Chief Executive Jack Lynch is pushing to break out software subscription renewal rates for investors.

On Monday, News Corp announced it will acquire Houghton Mifflin Harcourt's trade books and media division for $349 million in cash, and merge it with HarperCollins Publishers, a unit of News Corp. The deal is aimed at accelerating growth in digital sales, annual recurring revenue and free cash flow while paying down a significant amount of debt.

The Books & Media division, which had net sales of $191.7 million and Adjusted EBITDA of $26.6 million in 2020, has a large catalog of classic titles that will be an attractive acquisition for News Corp's HarperCollins. Its books include works by authors such as Virginia Woolf and George Orwell, along with popular children's and young adult titles.

The sale, expected to close in the fourth quarter of 2021, is expected to deliver $20 million in cost savings over two years. The acquisition will also provide HarperCollins with a robust backlist, which will include titles such as "The Lord of the Rings," "Nineteen Eighty-Four" and "Animal Farm." It will also take over HMH's warehouse facility in Indiana.

Assessment & Testing

Houghton Mifflin Harcourt, a Boston-based learning technology company, is expanding into the assessment and testing business through a deal to acquire Oregon-based nonprofit NWEA. The acquisition enables the company to expand its assessment and learning resources into one comprehensive package, the two organizations said in an announcement Tuesday.

Educators are increasingly looking to the connection between curriculum and assessment as an effective way to support student learning, said Scott Cizek, president and CEO of Harcourt Education. In particular, he pointed to the recent merger of AdvancED and measurement company Measured Progress, which combined their curriculum resources and assessment capabilities under a new name: Cognia.

A key piece of this strategy is the Iowa Assessments and Cognitive Abilities Test, a suite of tests designed to monitor growth across a broad spectrum of academic areas. A series of updates to the tests has increased rigor and psychometric quality, including an updated Form E that allows teachers to evaluate students' performance against the Common Core State Standards and track College and Career Readiness.

In addition, the company purchased software-maker Edusoft in December 2003, which specializes in online and computer-based tests and databases to store results. The company claims to serve more than 300 school districts, and its Web-based tools and data warehouses can help classroom teachers create mini tests that can gauge their students' progress in preparing for state exams.

The testing industry is undergoing a shakeup due to the federal No Child Left Behind Act. Newcomers such as Measured Progress, Data Recognition, and Educational Testing Service are seeking to secure state contracts.

While some educators may like the idea of a consolidated approach to assessment and curriculum, others worry about the impact it could have on the test-making landscape. Greg Bagby, coordinator of instructional technology in Hamilton County Schools in Tennessee, told Education Week that he doesn't see the benefits of merging assessment and curriculum companies without first ensuring that all the programs are tied to state learning requirements.

Other issues include whether or not assessment companies will be able to make money from the combined product offerings. "We have a very competitive landscape right now," Marion said, noting that companies such as Pearson Educational Measurement and CTB McGraw-Hill already have substantial testing contracts in the U.S. and could eat into NWEA's market share.

Professional Development

Houghton Mifflin Harcourt’s professional development services help teachers strengthen their teaching practices by providing a variety of high-impact courses, trainings and coaching sessions. These courses are designed to increase teachers’ knowledge of content, pedagogy and instructional strategies, as well as their ability to implement those strategies in their classrooms.

The company’s Education Services division delivers personalized, technology-based professional development to teachers and school districts worldwide. The service helps teachers build skills, learn best practice and engage with colleagues, all while ensuring that they meet district goals.

Online courses are aligned to research and provide teachers with a range of high-impact strategies that are easy to implement in their classrooms. Courses are available as a series of 60-minute modules or can be built into custom learning plans.

Instructional coaches partner with teachers to co-construct a personalized learning plan that meets their specific needs. By assessing and addressing each teacher’s TPACK, coaches are able to ensure that they are receiving the most value from their professional development sessions.

By combining coaching with live webinars and interactive sessions, teachers are able to build their capacity and receive feedback from their coach throughout the professional development process. They are also able to set their own learning goals and track their progress, which can be extremely beneficial to them in terms of their overall learning.

In addition to these onsite and online professional development services, Houghton Mifflin Harcourt also offers a variety of online learning opportunities that provide teachers with a wide range of educational topics, including math, science, social studies, reading and writing. These online courses offer teachers a choice of time and place to learn, and are accessible anywhere there is internet access.

With the goal of bringing a more modern and engaging experience to their users, Houghton Mifflin is moving away from the traditional book publisher to a modern learning company that can better serve educators, students and administrators. The company recently launched a new digital experience that provides education professionals with tools and resources to make teaching easier, more efficient and more effective for their students.