HMH Earnings Call

November 5, 2015

Third Quarter 2015

FORWARD LOOKING STATEMENTS AND NON-GAAP MEASURES

This presentation and oral statements made in connection with this presentation contain certain statements that are not historical

facts, including information regarding our intentions, beliefs or current expectations concerning, among other things, our results of

operations, including billings, net sales, deferred revenue and recognition thereof; financial condition; pre-publication or content

development costs; liquidity; financing activities and use of proceeds; products, including product mix and format; prospects; growth;

adjacent markets; strategies, including with respect to capital allocation; the market, including market size and share, and industry in

which we operate and potential business decisions. Those statements constitute “forward-looking statements” within the meaning of

the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties

and other factors that could cause our actual results to differ materially from the results express in or implied by our forward-looking

statements, including, but not limited to, those identified under the caption “Forward-Looking Statements” in our news release issued

on November 5, 2015 and in the “Special Note Regarding Forward-Looking Statements” and “Risk Factors” in our most recent

Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q. We undertake no obligation, and do not expect, to publicly

update or publicly revise any forward-looking statement, whether as a result of new information, future events or otherwise.

In addition, this presentation and oral statements made in connection with this presentation reference non-GAAP financial measures,

such as adjusted EBITDA, adjusted cash EBITDA , billings and free cash flow. The use of these non-GAAP measures are limited as

they include and/ or do not include certain items not included and/or included in the most directly comparable GAAP measure. A

reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is provided in the appendix

to this presentation and in our news release issued on November 5, 2015, which are posted on hmhco.com under the Investor

Relations section.

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Agenda

Welcome/Introductions

Business Update

Financial Overview

Questions and Answers

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Business Update

Third Quarter 2015 Highlights1

• HMH captured ~40% market share for the first nine months of the year in its addressable domestic education market2, including 45% of the new adoption market

• Billings declined approximately 1% primarily due to the contraction in HMH’s addressable domestic education market

• Net sales increased 4% to $576 million

• Adjusted EBITDA declined 4% to $192 million

• Digital represented approximately 33% of total billings, 44% of billings within major basal education programs

hmhco.com / 51 Three months ended September 30, 20152 HMH’s domestic education addressable market, the market where it primarily sells its instructional resources for grades K-12.3 Please see appendix for a reconciliation of non-GAAP measures.

$200 $192

2014 2015

$692$682

2014 2015

2014 2015

Adjusted EBITDA3

Billings3

Net Sales

$576$551

45% market share in New Adoption Market

Solid Performance in Education

Proven and Trusted Core Programs Act as a Foundation for

Growth Across Education Portfolio

Growing market share with EdTechIntervention Solutions

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Wins in Open Territories

Curious World: “The Netflix for Learning”

• Recent launch moves offering from a simple app to a robust content service

• Subscription-based interactive service for $9.99/month or $79.99/year

• All content mapped to 8 key learning areas as defined by HMH’s Early Learning experts

• Full dashboard and complementary website for parents

• Offers children ages three to seven an ever-expanding collection of games, videos, and eBooks mapped to key learning areas

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Extending HMH’s Digital Leadership

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Acquired select eBook and technology assets of MeeGenius in July

eBook subscription service for children up to eight years old that further strengthens our offerings beyond the classroom

Provides digital content for parents and young learners

Opportunities to leverage assets within Curious World

Extended partnership further enhances international footprint

Addition of more digital curricula to Trunity’s e-learning platform enables on and offline access to HMH programs for K-12 educators and students

Launched several science programs in international markets

Embarked on new partnership with Osmo, the creators of a platform that is revolutionizing the way children learn on the iPad

Brings HMH’s market-leading math programs and learning content to the new Osmo Numbers game

Reinforces the connection between home and school learning and underscores HMH’s digital leadership

Highlights in Trade Publishing

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Supported in the cloud, responsive design

Designed to interact with core HMH Services

• Enhances value to customers with new solutions

• Gathers data for core product and platform improvements

• Increases long-term growth and “stickiness”

• Offers attractive revenue share model with future opportunities to sell-in additional tools and services

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61%

10%

4%

7%

9%

6%

2%

Maintaining Confidence in Long-Term Goals1

• Strategic focus areas will bring greater balance to HMH’s portfolio and help drive revenue growth in the coming years

• Including adjacent markets, HMH’s total addressable market in 2019 projects to grow to over $5B ($18B including consumer)

• Shift to digital creates meaningful opportunities to introduce and promote subscription-based models that will drive recurring revenue across the portfolio

2014

24% of portfolio

• Basal business was the majority of the portfolio

$1.6B

40%

10%5% 8%

18%

12%

8%

2019P

46% of portfolio

• Growth through product diversification driving greater balance

$2.0B

� Basal

� Assessment

� Consumer

� Trade

� Intervention/

Supp

� International

� PD & Services

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1 You are cautioned not to place undue reliance on our long-term financial goals as they not be representative of our future financial condition and results of our operations.

Billings

Value Creation Through Prudent Capital Allocation

• Year to date through September, approximately $240 million of shares have been repurchased on the open market and through privately negotiated transactions.

• On November 3, HMH Board of Directors authorized an increase in the size of its existing share repurchase program by an additional $500 million for an aggregate total of $1 billion.

• On a pro forma basis, as of the third quarter of 2015, approximately $760 million would have been available under the aggregate share repurchase program which may be executed through the end of 2018.

• HMH plans to increase its debt by an additional $250 million, subject to market and other conditions.

Share Repurchase Program Total Authorization

Previous Current Aggregate

Up to $500 million Up to $1 billion

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Financial Overview

Third Quarter & YTD 2015 Financial Performance

Adjusted EBITDA1

Net Sales

1 Please see appendix for a reconciliation of non-GAAP measures.

($ in Millions)

($ in Millions)

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Adjusted Cash EBITDA1

($ in Millions)

Billings1

($ in Millions)

Q3 2015 Net Sales

Education Segment Drivers

($ in Millions)

Drivers• Increase largely driven by an $82 million

contribution from the EdTech business, which was acquired in Q2 2015.

• Strong performance in the West Virginia and Tennessee adoption markets.

• Offset by smaller domestic education market in 2015 versus 2014.

Year to Date Net Sales

Drivers• Increase was driven by impact of EdTech

acquisition and strong performance in the California math and West Virginia adoptions.

• Offset by smaller domestic education market in 2015 vs. 2014 due to the absence of large adoptions, including Texas Math and Science adoptions as well as Florida Reading.hmhco.com / 15

Q3 2015 Net Sales

Trade Publishing Segment Drivers

($ in Millions)

Drivers• Strong net sales of frontlist culinary titles

such as The Whole 30, The Real Paleo Diet Cookbook and Cake My Day

• Offset by the absence of prior year strong sales of titles such as The Giver and the bestselling What If? in 2014

Year to Date Net Sales

Drivers• Net sales for Trade Publishing in the first

three quarters of the year largely impacted by the same drivers outlined above for the third quarter.

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Financial Highlights

1 As of December 31, 2014 , cash and short term investments includes cash and cash equivalents of $456.6M and short-term investments of $286.8M. As of September 30, 2015, cash and short term investments includes cash and cash equivalents of $377.0M and short-term investments of $146.5M.

2 Liquidity includes cash and cash equivalents, short-term investments and borrowing availability under our revolving credit facility of $220.0M and $203.0M as of December 31, 2014 and September 30, 2015, respectively.

3 Please see the appendix for a reconciliation of non-GAAP measures.4 Capital Expenditures include pre-publication costs and property, plant and equipment expenditures.

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2015 Outlook1

BILLINGS

NET SALES

CONTENT DEVELOPMENT SPEND

Decrease 1% to 4% from 2014

Increase 3% to 6% from 2014

$110 million - $120 million

ADDRESSABLE DOMESTIC EDUCATION MARKET SIZE2

Approximately $2.7 billion

1 HMH’s expectations as of November 5, 2015.2 HMH’s domestic education addressable market, the market where it primarily sells its instructional resources for grades K-12. HMH also sells its products in other markets such as trade, international, direct to consumer and early childhood along with adult education, which are not included in this market size

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Questions and Answers

Appendix

Segment Information1

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1 Details may not sum to totals due to rounding.2 Corporate and Other represents certain general overhead costs not fully allocated to the business units such as Legal, Accounting, Treasury, Human Resources, Technology and executive functions.

3 Please see appendix for a reconciliation of non-GAAP measures.

Non-GAAP Reconciliation – Adjusted EBITDA, Adjusted Cash EBITDA1

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1 Details may not sum to total due to rounding.2 Represents certain non-cash accounting adjustments, relating to deferred revenue.

($ in millions)

2014 2015 2014 2015

Net Income (Loss) 107 131 (28) (37)

Interest Expense 5 10 13 22

Provision (Benefit) for Income Taxes 3 (40) 7 (30)

Depreciation Expense 18 17 53 53

Amortization Expense 62 59 184 163

Non-Cash Charges- Stock-Based Compensation Expense 3 3 9 10

Non-Cash Charges- (Gain) Loss on Derivative Instruments 1 0 2 2

Non-Cash Charges- Asset Impairment Charges - - 1 -

Purchase Accounting Adjustments2 1 4 3 5

Fees Expenses or Charges for Equity Offerings, Debt or

Acquisitions 0 - 4 19

Restructuring 0 4 3 5

Severance, Separation Costs and Facility Closures 0 2 5 4

Loss on Extinguishment of Debt - 1 - 3

Adjusted EBITDA 200 192 256 219

Change in Deferred Revenue 141 106 245 148

Adjusted Cash EBITDA 341 298 501 367

Q3 YTD

Non-GAAP Reconciliation – Segment Adjusted EBITDA1

1 Details may not sum to total due to rounding.2 Represents certain non-cash accounting adjustments. Most significantly relating to deferred revenue.

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Trade Adjusted EBITDA

($ in millions) 2014 2015 2014 2015

Net Income (Loss) $3 $0 ($3) ($8)

Depreciation Expense 0 0 0 1

Amortization Expense 4 3 11 10

Non-Cash Charges- Asset Impairment

Charges0 0 0 0

Purchase Accounting Adjustments2 0 0 0 0

Adjusted EBITDA 7 4 8 3

Year to DateQ3

Non-GAAP Reconciliation – Adjusted EBITDA Corporate/Other1

1 Details may not sum to total due to rounding.

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Corporate/Other Adjusted EBITDA

($ in millions) 2014 2015 2014 2015

Net Income (Loss) ($28) $6 ($85) ($75)

Interest Expense 5 10 13 22

Provision (Benefit) for Income Taxes 3 (40) 7 (30)

Depreciation Expense 2 3 5 9

Non-Cash Charges- (Gain) Loss on

Derivatives Instruments1 0 2 2

Non-Cash Charges- Stock-based

Compensation Expense3 3 9 10

Fees Expenses or Charges for Equity

Offerings, Debt or Acquisitions0 0 4 19

Restructuring 0 4 3 5

Severance, Separation Costs and

Facility Closures0 2 5 4

Loss on Extinguishment of Debt 0 1 0 3

Adjusted EBITDA (13) (11) (37) (31)

Q3 Year to Date

Non-GAAP Reconciliation – Liquidity1

1 Details may not sum to total due to rounding.2 Borrowing Base is net of letters of credit issued under the facility. HMH issued $20.2 million of Letters of Credit as of December 31, 2014 and $29.5 million as of September 30, 2015.

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Liquidity

$ in Millions December 31, 2014 September 30, 2015

Cash and Cash Equivalents 457 377

Short Term Investments 287 146

Total Available Cash 743 524

Revolving Credit Facility

Borrowing Base2220 203

Outstanding Borrowings 0 0

Available under Revolving

Credit Facility220 203

Total Liquidity 963 727

Non-GAAP Reconciliation – Free Cash Flow1

1 Details may not sum to total due to rounding.

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$ in Millions

September 30, 2014 September 30, 2015

Net cash used in operating

activities301 163

Additions to pre-publication

costs(90) (79)

Additions to property, plant, and

equipment(50) (50)

Free Cash Flow 161 35

Nine Months Ended

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Non-GAAP Reconciliation – Billings

$ in millions 2014 2015 2014 2015

Net Sales 551 576 Net Sales 1,107 1,118

Change in Deferred Revenue 141 106 Change in Deferred Revenue 245 148

Billings 692 682 Billings 1,352 1,266

Q3 YTD

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Balance Sheet($ in Millions)

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Dec 31, 2014 Sep 30, 2015

Current Assets

Cash and cash equivalents $457 $377

Short-term investments 287 146

Accounts receivable less allowance

for bad debts and book returns

Inventories 184 186

Deferred income taxes 20 17

Prepaid expenses and other assets 19 29

Total current assets 1,222 1,234

Property, plant, and equipment, net 138 135

Pre-publication costs, net 237 327

Royalty advances to authors, net 47 46

Goodwill 533 784

Other intangible assets, net 802 940

Deferred income taxes 4 4

Other assets 28 37

Total assets 3,011 3,506

479 256

Dec 31, 2014 Sep 30, 2015

Current Liabilities

Current portion of long-term debt $68 $8

Accounts payable 51 80

Royalties payable 80 96

Salaries, wages, and commissions payable 60 66

Deferred revenue 157 235

Interest payable 0 0

Severance and other charges 6 5

Accrued postretirement benefits 2 2

Other liabilities 27 38

Total current liabilities 451 530

Long-term debt, net of discount 176 786

Long-term deferred revenue 370 460

Accrued pension benefits 19 16

Accrued postretirement benefits 27 25

Deferred income taxes 112 151

Other liabilities 98 22

Total liabilities 1,251 1,991

Stockholders' Equity

Preferred stock - -

Common stock 1 1

Treasury stock - (239)

Capital in excess of par value 4,785 4,823

Accumulated deficit (3,000) (3,037)

Accumulated other comprehensive loss (27) (33)

Total stockholder's equity 1,760 1,515

Total liabilities and stockholder's equity 3,011 3,506

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Income Statement($ in Millions)

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2014 2015 2014 2015

Net Sales $551 $576 $1,107 $1,118

Costs and expenses

Cost of sales, excluding pre-publication

and publishing rights amortization205 220 465 485

Publishing rights amortization 25 19 81 62

Pre-publication amortization 33 32 95 87

Cost of sales 264 272 640 634

Selling and administrative 168 192 457 506

Other intangible asset amortization 3 7 9 15

Impairment charge for investment in preferred stock - - 1 -

Severance and other charges 0 2 5 4

Operating Income (Loss) 116 103 (6) (39)

Other Income (Expense)

Interest expense (5) (10) (13) (22)

Change in fair value of derivative instruments (1) (0) (2) (2)

Loss on extinguishment of debt - (1) - (3)

Income (Loss) before taxes 110 91 (21) (67)

Income tax expense (benefit) 3 (40) 7 (30)

Net Income (Loss) 107 131 (28) (37)

Q3 Year to Date

13

Statement of Cash Flows($ in Millions)

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Sept 30, 2014 Sept 30, 2015

Cash flows from operating activities

Net loss ($28) ($37)

Depreciation and amortization expense 237 217

Amortization of debt discount and deferred financing costs 4 6

Deferred income taxes 3 42

Stock-based compensation expense 9 10

Loss on extinguishment of debt - 3

1 -

Change in fair value of derivative instruments 2 2

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable (207) (192)

Inventories (8) 12

Accounts payable and accrued expenses 47 26

Royalties, net 16 16

Deferred revenue 244 148

Interest payable (0) 0

Severance and other charges (5) (3)

Accrued pension and postretirement benefits (10) (4)

Other, net (4) (82)

301 163

Nine Months Ended

Net cash provided by operating activities

Adjustments to reconcile net loss to net cash provided by

operating activities

Impairment charge for investment in preferred stock

Sept 30, 2014 Sept 30, 2015

Cash flows from investing activities

$94 $287

Purchases of short-term investments (275) (147)

Additions to pre-publication costs (90) (79)

Additions to property, plant, and equipment (50) (50)

Acquisition of business, net of cash acquired (9) (578)

(330) (567)

Cash flows from financing activities

Proceeds from term loan - 796

Payments of long-term debt (2) (245)

Payments of deferred financing fees - (15)

Repurchases of common stock - (239)

(1) (1)

Proceeds from stock option exercises 15 28

12 324

(17) (80)

Cash and cash equivalents at beginning of period 314 457

Net decrease in cash and cash equivalents (17) (80)

297 377

Nine Months Ended

Cash and cash equivalents at end of period

Proceeds from sales and maturities of short-term investments

Net cash used in investing activities

Net cash provided by financing activities

Net decrease in cash and cash equivalents

Tax w ithholdng payments related to net share settlements of

restricted stock units