Ethema Health to Acquire Addiction Recovery Care Assets in Kentucky, Creating Statewide Treatment Network

Ethema Health Corporation has signed a Letter of Intent to acquire substantial assets from Addiction Recovery Care LLC operating under the ARC brand in Kentucky. The acquisition includes multiple in-patient facilities located in Inez, Pikeville, Owensboro and Ashland, along with out-patient facilities in Prestonsburg, Mount Sterling, Louisa, Ashland and Lexington. The transaction also encompasses several specialized healthcare entities including a Psychiatric Hospital, a Pharmacy, a Medical Laboratory and a Rural Health Clinic, collectively representing treatment capacity for approximately 900 patients.

The financial structure for 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-leaseback transactions involving certain ARC facilities, a financing strategy Ethema previously employed for its Florida operations in 2023. Related real estate transactions outside the company are expected to generate substantial new equity.

Ethema will establish a new entity called NewcoARIA to acquire the ARC assets and separate entities, which will ultimately also house the company's existing Florida and Kentucky treatment operations. The new entity will be initially owned by Ethema, new investors and the vendor, with plans to pursue an Initial Public Offering on a senior U.S. exchange. This structure is designed to simplify the substantial acquisition while avoiding complications to Ethema's existing equity and debt structure.

The combined revenue potential is significant, with existing Florida and Kentucky entities forecast at approximately $25 million for 2026, while the acquired ARC assets are projected to generate over $100 million in revenue during the same period. Company CEO Shawn Leon emphasized that discussions leading to the LOI began in January 2025, with the strategic goal of combining ARC's assets with Ethema's ARIA Kentucky operations to create a comprehensive statewide treatment network. Leon stated the company will implement its responsible operating philosophy and procedures to NewcoARIA, prioritizing safety and compliance as guiding principles for client care.

ARC CEO Tim Robinson expressed confidence that combining assets with ARIA would best serve clients and staff while maintaining commitment to the ARC mission under the ARIA umbrella. The proposed transaction is viewed as a strategic move to overcome challenges and position the combined entity for future growth in Kentucky's addiction treatment landscape. For more information about Ethema Health Corporation, visit https://www.ethemahealth.com.