Ethema Health Corp (GRST)

[Bubae]

Looks like there is a reason why Ethema Health was able to acquire the Kentucky treatment centers for essentially nothing. Aside from the fact that the previous owners of the Edgewater Recovery was hit with a $2.2 million settlement over false laboratory claims I found a couple of articles dated in the past month suggesting that the addiction recovery industry in Kentucky is under pressure by industry-wide reimbursement cuts for Medicaid. Citing the Edgewater letter of intent press release of July 12th "The Kentucky operation primarily provides care to Medicaid insured clients." Beginning to see the need for the reverse split and the regulation "A" offering that is pending?

Addiction Recovery Care closes 9 facilities since FBI probe
By JANE REID KLEYN [e-mail] Oct 30, 2024
https://www.pmg-ky2.com/springfield/news/addiction-recovery-care-closes-9-facilities-since-fbi-probe/article_acc5f69b-69d5-5625-b419-a04ca451a820.html

Kyle Collier, ARC’s spokesperson, attributed the closures to “the impending and substantial industry-wide reimbursements cuts for addiction and mental health services” which forced ARC to make difficult decisions regarding locations and staff. ARC says addiction treatment and mental health providers statewide will be affected by the impending industry-wide reimbursement cuts.

Addiction recovery company under FBI investigation reducing staff, blames reimbursement cuts
Deborah Yetter Kentucky Lantern Sentinel Echo October 27, 2024
https://insurancenewsnet.com/oarticle/addiction-recovery-company-under-fbi-investigation-reducing-staff-blames-reimbursement-cuts

Kentucky's largest provider of drug and alcohol treatment is cutting staff and restructuring some services, citing significant cuts in Medicaid reimbursement from the government health plan that covers almost all of its clients.

"These difficult decisions are a direct result of impending and significant reimbursement cuts for many addiction and mental health service providers in Kentucky," it said.

Ethema signs LOI to purchase Edgewater Recovery Center LLC
News provided by Ethema Health Corporation Jul 12, 2024, 17:19 ET
https://www.prnewswire.com/news-releases/ethema-signs-loi-to-purchase-edgewater-recovery-center-llc-302196144.html

ERC operates primarily in the urban areas of Morehead in the east end of Kentucky and Paducah in the west end of Kentucky. Altogether, ERC has about 440 licensed beds across all of its locations and has another 66 beds available to come on-line in Paducah in Calendar 2024.

The Kentucky operation primarily provides care to Medicaid insured clients. This will help the Company add this dimension to its in-network insurance strategy.

Mr. Shawn Leon, Company CEO reported, "to say that this opportunity is massive, is an understatement.

We are honored to have been chosen as the buyer to take over this much sought after opportunity and look forward to becoming the provider of choice in the state of Kentucky." Mr. Leon added,

Bubae
Re: None
Monday, November 04, 2024 12:23:45 PM
Post# 51399 of 51453
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=175330189&txt2find=elam

Reading over the last 8K has me asking what did Shawn Leon really acquire to buy on Ethema Health's behalf other than liabilities and how does he intend to fund the new operations. The purchase price in last weeks 8K was reported to be $250K and the assumption of liabilities. The July 8K reporting the letter of intent shows the $250K as payment "...to be directed towards payment of legal fees and brokerage fees" The July press release is boasting more than 400 beds. So what did Shawn Leon acquire for what looks like the assumption of liabilities? I don't see the language for the $2.6 million deal described in the July 8K anymore. Is the language for the $2.6 million special financing described in the July 8K describing Shawn Leons property purchase side deal?