FAQ: Ethema's Acquisition of Addiction Recovery Care (ARC) Assets in Kentucky
Summary
Ethema Health Corporation has signed a Letter of Intent to acquire Addiction Recovery Care's assets and separate entities in Kentucky, creating a statewide treatment network with projected combined revenues exceeding $125 million in 2026.
What is Ethema acquiring from Addiction Recovery Care?
Ethema is acquiring ARC’s in-patient facilities in Inez, Pikeville, Owensboro and Ashland, out-patient facilities in Prestonsburg, Mount Sterling, Louisa, Ashland and Lexington, plus a Psychiatric Hospital, Pharmacy, Medical Laboratory and Rural Health Clinic.
How will Ethema finance this acquisition?
The purchase will be funded with approximately 25% cash, 25% vendor note, and 50% equity linked funding from the vendor, with the cash portion raised through new equity issuance and sale-leaseback transactions of ARC facilities.
What is NewcoARIA and why is it being created?
NewcoARIA is a new entity that will acquire the ARC assets and also hold Ethema’s existing Florida and Kentucky treatment entities, simplifying the acquisition structure and potentially pursuing an IPO on a senior U.S. exchange.
What is the expected revenue impact of this acquisition?
Total revenue from existing Florida and Kentucky entities is forecast at approximately $25 million for 2026, while revenues from the acquired ARC assets are forecast to exceed $100 million in 2026.
What treatment capacity does this acquisition add?
The acquired addiction treatment and psychiatric facilities have a capacity of approximately 900 patients.
Why did Ethema pursue this acquisition according to CEO Shawn Leon?
The combination of ARC’s assets with Ethema’s ARIA Kentucky assets will create a statewide network of treatment facilities to service all of Kentucky and help steer the future of treatment in the state.
When did discussions for this acquisition begin?
Discussions that led to the LOI signing started in January 2025.
What operating philosophy will Ethema implement in the acquired facilities?
Ethema will implement its highly regarded, responsible operating philosophy and procedures with the highest level of safety and compliance as the overriding guiding principle.
How does ARC’s CEO view this transaction?
ARC CEO Tim Robinson believes combining assets with ARIA will best serve their clients and staff, continuing the ARC mission under the ARIA umbrella while helping move past a challenging year.
What real estate transactions are involved in this acquisition?
Related real estate transactions will remain outside the Company but could be utilized to generate substantial new equity, similar to how Ethema financed its Florida operations through sale-leaseback transactions in 2023.
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