Ethema Health Corporation (OTCQB: GRST), a provider of behavioral health and substance use disorder (SUD) services, plans to acquire Addiction Recovery Care LLC, a company that has been under FBI scrutiny for health care fraud in recent years.

Combined revenue from the acquired assets could reportedly exceed $100 million in 2026 alone.

Ethema plans to fund the acquisition with 25% cash, 25% in a vendor note and 50% in equity-linked funding. Additional terms of the deal were not disclosed.

While Louisa, Kentucky-based Addiction Recovery Care has not been charged criminally, the FBI’s form seeking information in the case remains open. Shawn Leon, CEO of Ethema, told Behavioral Health Business that since it is acquiring all assets, “previous operations do not affect” the company.

Now, it will move under Florida-based Ethema Health’s umbrella of behavioral health and SUD services. The letter of intent states that, post-acquisition, Addiction Recovery Care will be absorbed into a subsidiary it holds a minority stake in, called “NewcoARIA” or “ARIA,” shortened.  

“We came to trust that our clients and staff would be best served by combining our assets with ARIA,” Tim Robinson, CEO of Addiction Recovery Care, said in a statement. “We look forward to getting through a challenging year, and we believe that the proposed transaction will help put this behind us.”

After the new entity, ARIA, is formed, Ethema will likely pursue an initial public offering of the newly formed entity to “simplify this substantial acquisition and not complicate the equity and debt structure in Ethema,” according to the release.

As part of the acquisition, Ethema will purchase all assets from Addiction Recovery Care, including its inpatient and outpatient facilities and separate entities ranging from a psychiatric hospital, pharmacy, lab to a rural health clinic. Combined, these facilities have a capacity of nearly 900 patients.

Any parts of Addiction Recovery Care’s clinical model, partnerships or staffing that do not fit within Ethema’s model will go, Leon told BHB, though he did not specify what those parts may be.

Future real estate transactions could be on the table and later utilized to generate new equity for Ethema, according to the release.

“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 in the release.

Ethema and Addiction Recovery Care have been in talks about this transaction since January 2025.

Earlier this year, Ethema completed its acquisition of Kentucky-based SUD provider, Edgewater Recovery Center, boosting its bed capacity to 600 and expanding its regional footprint. With this acquisition – and possibly some additional ones on the horizon – Enthea plans to continue expanding in this vein.

“We have a near-term goal of growing to approximately 3,000 beds,” Leon told BHB. “With ARC we will reach around 1,500 to 2,000 beds, so we will be looking for more acquisitions. We have a list of other providers that we know that can easily get us to our goal. We will have to see if the conditions are right before adding additional beds.”