Good morning. My name is Michelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Great Elm Capital Group, Inc. Second Quarter 2019 Financial Results. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session [Operator Instructions] I would now like to turn your call over to Adam Yates. Please go ahead.

Thank you, Michelle and good morning everyone. Thank you for joining us for Great Elm Capital Group, Inc.'s second quarter 2019 earnings conference call. As a reminder, this webcast is being recorded on Monday, February 11, 2019. If you'd like to be added to our distribution list, you can either email investorrelations@greatelmcap.com or sign up for alerts directly on our website. This slide presentation accompanying this morning's conference call and webcast can be found on Great Elm Capital Group, Inc.’s website, www.greatelmcap.com under Events & Presentations. A link to the webcast is also available on this section of our website, as well as in the press release that was disseminated to announce the quarterly results. I'd like to call your attention to the customary Safe Harbor Statement regarding forward-looking information. Also, please note that nothing in today's call constitutes an offer to sell or a solicitation of offers to purchase our securities. Today's conference call includes forward-looking statements and projections, and we ask that you refer to Great Elm Capital Group, Inc.’s filings with the SEC for important factors that could cause actual results to differ materially from these projections. Great Elm Capital Group, Inc. does not undertake to update its forward-looking statements unless required by law. To obtain copies of the SEC filings, please visit Great Elm Capital Group, Inc.’s website under Financial Info and select SEC Filings. Hosting our call this morning is Peter Reed, Great Elm Capital Group, Inc.’s Chief Executive Officer. I will now turn the call over to Peter.

Thank you, Adam, and good morning, everyone. Thank you for joining us today. I'm joined this morning by our President and COO, Adam Kleinman; our CFO, John Woods and two senior members of our investment team, Adam Yates, and John Ehlinger. We’ll walk through an update on our recent acquisition of Valley Healthcare and Northwest Medical, as well as a brief update on the Investment Management and Real Estate verticals and their associated segment financials. We're relevant in our prepared remarks. We'll point you to the corresponding slide in the presentation that Adam referenced. Please turn to Slide 5. We have been working to grow Great Elm Capital Group into a diversified publicly-traded holding company across three business verticals: Investment Management, Real Estate, and Operating Companies. As discussed on our acquisition call in September 2018, we are pleased to say that we have now successfully completed a significant transaction in each of these three business verticals. Please turn to Slide 6, to discuss drivers of shareholder value. We have clear objectives in each vertical. In Investment Management, we seek to increase assets under management, both in GECC and in our co-investment vehicles. In Real Estate, we're interested in partnering with owners and lessees to utilize our substantial tax assets. In Operating Companies, we're focused on acquiring profitable companies with significant growth potential, both organic and through M&A. Please turn to Slide 7. It is difficult to overstate how important it is to us to maintain long-term alignment with you, our shareholders. Our team collectively owns over 1.8 million shares or 7% of the company, including our Board of Directors and their funds under management, insiders collectively own approximately 18% of the shares outstanding. We believe this fosters a significant and long-term alignment of interest amongst employees, directors, and shareholders. Let's…

Thanks, Peter. I would like to thank Peter and Adam for giving me the opportunity to join the Great Elm team, approximately two years ago. I'm proud of the work we have done over the last two years, but the avoidance of doubt, my departure from Great Elm is strictly for personal reasons. I wish Peter and the rest of the team the best of luck going forward.

Thank you, John. Let's open up the call for Q&A.

[Operator Instructions] I do have a question from Kyle Mowery, GrizzlyRock. Your line is open.

Good morning, Peter and team. Two questions from me; number one, on the DME business. I know you went through the numbers relatively quickly. Where are we on a run rate number of EBITDA? I know that there were some deferred EBITDA and also you mentioned 25% growth. So I would guess we're above the $12 million EBITDA that we kind of closed on in September. Am I accurate? And if so, do you have a run rate number that you can discuss?

Sure. Thanks you, Kyle, and good question. So yes, the business is running ahead of our internal expectations and there is some mild seasonality in the business as well as in the four months that we've had it. There have been some timing of expenses that have fallen in particular quarter. So I think the right way to think about it is to look at the year-to-date adjusted EBITDA of just over $4.9 million and to think about analyzing that which is meaningfully ahead of the number that we announced when we announced the transaction in September of last year.

Okay. That makes sense. So there's some bump in Q4 as customers maybe come up against their insurance year-end. Is that why the seasonality exists?

Yes. That is exactly right.

Okay, got it. And then on the co-investment opportunity and investment management, is that for single tranches of distressed debt or is that more of a vehicle to kind of to a number of tranches in one “fund”?

It could be either of those. We've got the flexibility to do both. The intention is to take high quality ideas and to use those and hope – and the money that we will hopefully make for a significant investors to build a more expansive in longer term relationship and ultimately leverage that into a fund or portfolio via separately managed account.

Got it. So that's sort of a fledgling where the industry is going sort of a setup just to kind of prime the pump when you guys find something interesting to do. Is that reasonable?

Very well said.

And then, is that a more of a traditional hedge fund economics with respect to performance allocation product or is that more of a fee on the product?

I think we'd expect the bulk of any fees that we generate from a co-investment product to come from performance-based incentive fees.

Got it. Thanks.

I imagine that each opportunity will have a somewhat different structure, but the bulk of that across the vehicle should come from incentive fees.

Great. Well, it's definitely on trend that’s why we see the industry doing, so keep up the good work.

Thanks, Kyle. I appreciate it.

[Operator Instructions] I have no further questions at this time. I turn the call back over to the presenters for closing remarks.

Thank you, again for joining us this morning to discuss Great Elm Capital Group's second quarter 2019 financial results. We appreciate your support and we look forward to creating long-term shareholder value together. Please do not hesitate to reach out to us if we can be helpful with anything in follow-up and have a great day.

Thank you everyone. This will conclude today's conference call. You may now disconnect.