Ethema Health, a US-based company operating in the behavioural healthcare space, has announced its intention to acquire all assets of Edgewater Recovery Center (ERC) in Morehead, Kentucky.
A letter of intent (LOI) has been signed between Ethema and ERC, encompassing the purchase of the operating company, or its assets and three real estate holding companies.
These real estate companies, according to Ethema, own some of the properties operated by ERC as its treatment facilities.
In conjunction with the LOI, Ethema has signed an agreement to assume management of ERC from 15 July 2024.
This arrangement will remain effective until the completion of the purchase, scheduled for 31 January 2025, or whichever occurs first.
Post-acquisition, the business will operate under the name ARIA-Edgewater until it is rebranded to ARIA.
The included real estate assets will enable Ethema to consider a sale-leaseback transaction, similar to the one executed in August 2024 for its West Palm Beach property.
This approach could provide significant working capital without the need to raise new equity, although it will not be immediately necessary due to available financing.
ERC's operations are primarily located in the urban areas of Morehead and Paducah in Kentucky.
The company currently has 440 licensed beds across its facilities, with an additional 66 beds expected to become available in Paducah this year.
The client census is projected to remain around 170 when Ethema takes over management.
This strategic acquisition is poised to assist Ethema in achieving its goal of expanding to 500 beds by the end of next year.
Ethema Health CEO Shawn Leon said: “To say that this opportunity is massive is an understatement. This will propel us to the 500-bed target much sooner than we anticipated. We know this is big growth, but we will be sure to stick to our principles in developing this opportunity. We will focus on client safety and care first.
“Then we will focus on the best programming possible for the clients to ensure the best outcomes. Third, we will bring our well-honed operational skills and efficiencies to bear on the whole organisation to ensure profitability and further growth.”
