Ethema Health Corporation (OTC: GRST) announced on October 23, 2025, that it has entered into a Letter of Intent (LOI) to acquire certain assets and separate entities operating under the Addiction Recovery Care (ARC) brand in Kentucky. The acquisition includes inpatient facilities in Inez, Pikeville, Owensboro, and Ashland, as well as outpatient facilities in Prestonsburg, Mount Sterling, Louisa, Ashland, and Lexington. Additionally, the deal encompasses a psychiatric hospital, a pharmacy, a medical laboratory, and a rural health clinic. The combined addiction treatment and psychiatric facilities have a capacity of approximately 900 patients.
The purchase price will be funded with approximately 25% cash, 25% via a vendor note, and 50% through equity-linked funding from the vendor. The cash portion will be raised through new equity issuance and proceeds from the sale and leaseback of certain ARC facilities, a strategy the company previously used to finance its Florida operations in 2023. Related real estate transactions are expected to remain outside the company but could generate substantial new equity.
To facilitate the acquisition, Ethema will create a new entity, NewcoARIA, which will initially be owned by Ethema, new investors, and the vendor. NewcoARIA will ultimately hold Ethema's existing Florida and Kentucky treatment entities as well. The company is likely to pursue an Initial Public Offering of NewcoARIA on a senior U.S. exchange. This structure is designed to simplify the substantial acquisition without complicating Ethema's existing equity and debt structure. Total revenue from existing Florida and Kentucky entities is forecast at approximately $25 million for 2026, while revenues from the acquired ARC assets are expected to exceed $100 million in the same year.
Shawn Leon, CEO of Ethema, stated, “The discussions that led to the signing of the LOI started in January 2025 and we are pleased to have finally reached an LOI agreement with ARC. The principle philosophy behind the proposal was that the combination of ARC’s assets with our ARIA Kentucky assets all operating under the ARIA brand, would create a statewide network of treatment facilities to not only service the entire state but to help steer the future of treatment in the state of Kentucky.” He added that the company would implement its responsible operating philosophy and procedures to NewcoARIA, operating at the highest level of safety and compliance.
Tim Robinson, CEO of ARC, commented, “Throughout our considerable discussion process we came to trust that our clients and staff would be best served by combining our assets with ARIA. We remain committed to our staff, our clients and the ARC mission and believe that this will continue under the ARIA umbrella. We look forward to getting through a challenging year and we believe that the proposed transaction will help put this behind us.”
This acquisition marks a significant expansion for Ethema Health, which operates in the behavioral healthcare space, specifically in the treatment of substance use disorders. The company has developed a unique style of treatment over the past decade and has had much success with inpatient treatment for adults. For more information, visit www.ethemahealth.com.
