Graham Holdings Company reported a sharp increase in second-quarter 2026 earnings, primarily driven by a $137 million noncash pension settlement gain and $101.9 million in gains on marketable equity securities.
Net income attributable to common shareholders increased to $281.1 million, or $64.86 per diluted share, compared with $36.7 million, or $8.35 per diluted share, in the same period last year.
The pension gain followed Graham Holdings’ purchase of an irrevocable group annuity contract for $113.9 million. The transaction settled $124.3 million of outstanding defined benefit pension obligations covering approximately 1,080 retirees and beneficiaries.
The annuity purchase was funded using assets from Graham Holdings’ pension plan. The insurance company assumed responsibility for administering and paying the covered retirement benefits, with no changes to the amount, timing, or form of the beneficiaries’ monthly payments.
As a result of the transaction, Graham Holdings was relieved of responsibility for the covered pension obligations and recorded a $137 million pre-tax noncash settlement gain during the quarter.
The company also recorded $101.9 million in net gains on marketable equity securities, compared with $11.5 million in net losses during the second quarter of 2025. However, investment gains for the first six months were $33 million, reflecting marketable equity securities losses recorded earlier in the year.
Excluding the pension gain, investment gains, and other items, adjusted net income increased 33% to $84.2 million from $63.1 million. Adjusted diluted earnings per share increased approximately 36% to $19.46 from $14.33.
The underlying businesses also delivered improved results. Second-quarter revenue increased 7% to $1.3 billion from $1.22 billion, with growth across television broadcasting, healthcare, manufacturing, automotive, and other businesses. The increase was partially offset by lower education revenue.
Operating income increased 15% to $83.6 million from $72.8 million. Adjusted operating cash flow increased 8% to $119.8 million, supported by improved performance in education, television broadcasting, manufacturing, and other businesses.
Education revenue declined 4% to $417.8 million, but operating income increased 9% to $50.3 million. Kaplan International revenue decreased 7%, while its operating income increased 10% as expenses declined faster than revenue. Supplemental education operating income increased 15%.
Television broadcasting revenue increased 3% to $109.6 million, while operating income rose 9% to $30.5 million. For the first six months of the year, television broadcasting operating income increased 23%.
Healthcare revenue increased 22% to $247.7 million, but operating income declined 2% to $24.6 million as expenses increased faster than revenue. Manufacturing revenue jumped 39% to $133.3 million, while reported operating income declined 6% due partly to higher intangible asset amortization.
Manufacturing operating income before intangible asset amortization increased 8% to $10.8 million. Adjusted operating cash flow for the segment increased 14% to $15.1 million.
Automotive revenue increased 6% to $301.4 million, while operating income declined 13% to $8.1 million. Losses from the company’s other businesses narrowed to $17.2 million from $27.3 million.
Graham Holdings also recorded a $69.6 million U.S. income tax benefit during the first half related to the restructuring and sale of Kaplan Languages Group. This benefit resulted in a $19.2 million accrual for non-U.S. global minimum corporate taxes that could be reversed if the United Kingdom and other jurisdictions enact related legislation.
The company had $900.4 million in outstanding borrowings as of June 30, 2026, at an average interest rate of 5.7%. Cash, marketable equity securities, and other investments totaled approximately $1.3 billion.
Graham Holdings repurchased 110,471 Class B shares for $122 million during the first half of 2026. The company had approximately 4.25 million shares outstanding at the end of the quarter.
