Ethema Health Corporation has signed a Letter of Intent to acquire substantial assets and entities operating under the Addiction Recovery Care brand in Kentucky, marking a significant expansion in the behavioral healthcare sector. The acquisition includes ARC's in-patient facilities located in Inez, Pikeville, Owensboro and Ashland, along with out-patient facilities operating in Prestonsburg, Mount Sterling, Louisa, Ashland and Lexington. The transaction also encompasses a Psychiatric Hospital, a Pharmacy, a Medical Laboratory and a Rural Health Clinic, creating a comprehensive treatment network with capacity for approximately 900 patients.
The financial structure of the acquisition involves approximately 25% cash payment, 25% vendor note and 50% equity-linked funding from the vendor. The cash portion will be raised through new equity issuance and proceeds from sale and subsequent leasing of certain ARC facilities. This financing approach mirrors the strategy Ethema successfully implemented for its Florida operations in 2023, where real estate sale and leaseback transactions provided necessary capital.
Ethema will establish a new entity called NewcoARIA to acquire the ARC assets and separate entities, which will ultimately also hold the Company's existing Florida and Kentucky treatment operations. The proposed structure is designed to simplify the substantial acquisition while avoiding complications to Ethema's existing equity and debt structure. According to company projections, total revenue from existing Florida and Kentucky entities is forecast at approximately $25 million for 2026, while revenues from the acquired ARC assets are projected to exceed $100 million during the same period.
Shawn Leon, Ethema CEO, emphasized the strategic importance of combining ARC's assets with the company's existing ARIA Kentucky operations. 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, Leon stated. He further committed to implementing Ethema's highly regarded, responsible operating philosophy and procedures to NewcoARIA, operating at the highest level of safety and compliance as our overriding guiding principle.
Tim Robinson, CEO of ARC, expressed confidence in the transition, noting that throughout our considerable discussion process we came to trust that our clients and staff would be best served by combining our assets with ARIA. Robinson emphasized ARC's continued commitment to staff, clients and the organization's mission, expressing belief that these values would persist under the ARIA umbrella. The acquisition represents a significant consolidation in Kentucky's addiction treatment landscape, potentially creating one of the state's most comprehensive behavioral healthcare networks. For additional information about Ethema Health Corporation, visit https://www.ethemahealth.com.
