Ethema signs binding asset purchase agreement for all of the business assets of Edgewater Recovery Center LLC
Rhea-AI Summary
Ethema Health (OTCPINK: GRST) has signed a binding Asset Purchase Agreement to acquire the business operations and operational assets of Edgewater Recovery Center, (ERC) in Kentucky. The transaction excludes real property and requires various consents. ERC has been managed by Ethema since July 15, 2024, and will continue operations until ARIA Kentucky, a new subsidiary, is fully licensed and accredited.
The current ERC patient census is approximately 195 patients, with expectations of significant growth. Ethema plans to add 16 beds in October at the Paducah location. ARIA Kentucky will primarily serve Medicaid-insured clients, with potential for expansion due to ongoing investigations into other Medicaid providers in the state.
The real property associated with ERC operations will be acquired separately by a fund controlled by Ethema's CEO, Shawn Leon, and leased to ARIA Kentucky at market rates.
Positive
- Binding Asset Purchase Agreement signed to acquire Edgewater Recovery Center's business operations
- Current patient census of approximately 195, with expectations of significant growth
- Plans to add 16 beds in October at the Paducah location
- Potential for expansion due to ongoing investigations into other Medicaid providers in Kentucky
- ERC operations stabilized and cash flow positive over the last three months
Negative
- Transaction requires multiple consents from government agencies, managed care organizations, lenders, and creditors
- Real property acquisition involves a related party transaction with the CEO's fund
News Market Reaction – GRST
On the day this news was published, GRST declined NaN%, reflecting a moderate negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
ERC has been managed by the Company since July 15, 2024 and will continue to be managed until such time as the newly created, wholly owned subsidiary of the Company, ARIA Kentucky, LLC ("ARIA Kentucky") is fully licensed, accredited and contracted with the managed care organizations, whereupon the operations of ERC will cease. ERC will continue to generate revenues from servicing clients during the transition period. The existing interim management of ERC will be continued by ARIA Kentucky and all operations will be conducted under the Addiction Recovery Institute of America ("ARIA") Brand.
The current ERC patient census in
ERC and after the closing of the transaction, ARIA Kentucky, primarily provides care to Medicaid insured clients. There is currently on-going investigations into other Medicaid providers in
Certain of the Real Property associated with the operations of ERC are fully levered and requires credit and personal guarantees which the Company is unable to provide. This Real Property is to be acquired in a separate transaction by a fund controlled by the CEO of the Company, Shawn Leon, a related party, and will be leased to ARIA Kentucky on an arms-length basis, at market related rates.
Mr. Leon, Company CEO reported, "It has been an honor to work with a dedicated team of professionals these last three months, and I can confidently say that this team operates at the highest level of integrity and provides a very effective program that continues to serve the needs of Kentuckians ravaged by the opioid epidemic. We aim to continue providing highly effective services at the highest integrity level and look forward to becoming the provider of choice in the
About Ethema Health Corporation
Ethema Health Corporation (OTCPINK: GRST) operates in the behavioral healthcare space specifically the treatment of substance use disorders. Ethema developed a unique style of treatment over the last decade and has had much success with in-patient treatment for adults. Ethema will continue to develop world class programs and techniques for
Notice Regarding Forward-Looking Statements
The information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
For information please contact:
Ethema Health Corporation
shawn@ethemahealth.com
Text to 416-500-0020
Twitter @healthethema
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SOURCE Ethema Health Corporation
FAQ
What is the significance of Ethema Health (GRST) signing the Asset Purchase Agreement with Edgewater Recovery Center?
How many patients does Edgewater Recovery Center currently serve in Kentucky?
What are Ethema's (GRST) expansion plans for the Paducah location?
How will the real property associated with ERC operations be handled in the Ethema (GRST) transaction?
What type of insurance does ARIA Kentucky primarily serve?
