Great Elm Group, Inc. (GEG) - 10-K Summary
Business Context and Reporting Period
Company: Great Elm Group, Inc. (GEG)
Filing Type: Form 10-K (Annual Report)
Period Ended: June 30, 2026
Business Overview: GEG is an alternative asset management company managing a diversified portfolio across credit, real estate, and specialty finance. Key subsidiaries include Great Elm Capital Management, LLC (GECM), which manages Great Elm Capital Corp. (GECC), and Monomoy CRE, LLC (MCRE), which manages Monomoy UpREIT. The company also operates a construction management business (Monomoy Construction Services, LLC) following the acquisition of Greenfield CRE assets in February 2025.
Assets Under Management (AUM): Approximately $770.6 million as of June 30, 2026.
Key Financial Metrics
| Metric (in thousands) | Year Ended June 30, 2026 | Year Ended June 30, 2025 |
|---|---|---|
| Total Revenues | $27,776 | $16,316 |
| Net (Loss) Income | $(36,908) | $15,550 |
| Net (Loss) Income Attributable to GEG Stockholders | $(35,444) | $12,891 |
| Operating Loss | $(14,010) | $(8,003) |
| Net Realized/Unrealized Loss on Investments | $(22,244) | $16,854 (Gain) |
| Cash and Cash Equivalents | $53,474 | $30,603 |
| Working Capital | $91,905 | $128,283 |
| Long-Term Debt (Face Value) | $26,945 (7.25% Notes) | $26,945 |
| Convertible Notes (Face Value) | $36,838 | $35,063 |
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased 70% to $27.8 million, driven primarily by a $15.7 million increase in Real Estate segment revenues due to property sales in September 2025 and June 2026. This was partially offset by a $4.3 million decrease in Alternative Credit revenues due to a waiver of incentive fees for GECC.
- Profitability Decline: The company reported a net loss of $36.9 million compared to net income of $15.6 million in the prior year. The primary driver was a $39.1 million swing in net realized and unrealized gains/losses, turning from a gain to a significant loss due to unrealized depreciation on three special purpose vehicles and a reduction in the stock price of another investment.
- Segment Performance:
- Alternative Credit: Reported a net loss of $0.96 million (vs. $2.35 million income in 2025) due to reduced incentive fees.
- Real Estate: Reported a net loss of $6.36 million (vs. $3.77 million loss in 2025). While revenues surged, operating costs increased significantly ($5.2 million increase in compensation) due to the Greenfield Acquisition.
- Segment Reclassification: Effective Q1 2026, the company realigned reporting into two segments: Alternative Credit and Real Estate. Prior period results were recast.
Guidance, Outlook, Risks, and Unusual Items
- Outlook: Management believes it has sufficient liquidity to meet obligations for at least the next 12 months. The company continues to explore investment management opportunities and strategic transactions.
- Unusual Items:
- Investment Losses: A $12.6 million unrealized depreciation was recognized on Level 3 equity investments in special purpose vehicles.
- Incentive Fee Waiver: GECM waived all accrued and unpaid incentive fees for GECC through June 30, 2026.
- Risks:
- Investment Concentration: Significant revenue dependence on GECC and Monomoy UpREIT; performance of these vehicles directly impacts fee revenue.
- Debt Covenants: 7.25% Notes due 2027 include covenants limiting additional indebtedness or dividends if the net consolidated debt-to-equity ratio exceeds 2:1 (Current ratio: 0.25:1).
- Dilution: Significant potential dilution exists from the conversion of $36.8 million in Convertible Notes and the exercise of warrants issued to Woodstead Value Fund LP.
- Construction Business: New construction management segment faces risks related to scaling, subcontractor performance, and competition.
Key Facts for Investor Verification
- Valuation of Level 3 Assets: Verify the assumptions and discount rates (10.0% - 11.4%) used to value the $1.8 million in Level 3 equity investments, which drove a $12.6 million unrealized loss.
- Real Estate Sales Sustainability: Assess whether the $14.7 million in real estate property sales revenue is a recurring trend or a one-time event driven by specific project completions.
- Convertible Note Conversion: Monitor the conversion status of $36.8 million in Convertible Notes held by related parties and third parties, which could significantly dilute existing shareholders.
- Stock Repurchase Program: Verify the remaining capacity of the $40 million repurchase program (approx. $24 million remaining as of August 2026) and its impact on share count.
- Related Party Transactions: Review the terms of the $17.9 million in Convertible Notes held by related parties and the voting waiver agreements in place.