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About Ethema Health Corporation (GRST)
Ethema Health Corporation (OTCPINK: GRST) is a specialized provider in the behavioral healthcare industry, focusing on the treatment of substance use disorders (SUDs). With a proven track record spanning over a decade, Ethema has developed a distinctive approach to in-patient care, emphasizing innovative treatment techniques and client safety. The company operates in North America, serving a diverse client base, including Medicaid-insured individuals, through state-licensed facilities.
Core Business Model and Operations
Ethema's primary revenue stream comes from offering licensed in-patient and outpatient treatment programs tailored for individuals suffering from substance use disorders. The company operates under its wholly-owned subsidiary, ARIA, which manages its facilities and treatment centers. Ethema's services include detoxification, residential care, and partial hospitalization programs (PHP) and intensive outpatient programs (IOP). These services are designed to address the complex needs of clients, ensuring comprehensive care and improved outcomes.
In addition to its healthcare services, Ethema employs a strategic financial model that integrates real estate management. The company leverages sale-leaseback transactions for its properties, providing liquidity while maintaining operational control. This approach enables Ethema to fund expansions and enhance working capital without diluting equity.
Market Presence and Expansion
Ethema has a growing presence in the behavioral healthcare sector, with operations in Florida and Kentucky. Recent acquisitions, such as the management and pending purchase of Edgewater Recovery Center (ERC) in Kentucky, have significantly expanded its operational footprint. These facilities collectively provide hundreds of licensed beds, catering to a wide range of clients. The company’s focus on Medicaid-insured clients positions it as a key player in addressing substance use disorders within underserved communities.
In Florida, Ethema operates the ARIA Boca facility, a state-of-the-art treatment center offering detoxification and residential care. The company continues to expand its services and bed capacity, aligning with its mission to provide accessible and effective treatment solutions.
Competitive Landscape and Differentiation
Operating in a competitive market, Ethema distinguishes itself through its commitment to quality care, operational efficiency, and innovative treatment methodologies. The company’s focus on Medicaid clients sets it apart, as it addresses a critical need in the healthcare system. Additionally, Ethema’s dual strategy of organic growth and acquisitions allows it to scale operations effectively while maintaining high standards of care.
Regulatory and Industry Considerations
As a provider of behavioral healthcare services, Ethema operates in a highly regulated environment. The company adheres to stringent licensing and accreditation requirements, ensuring compliance with state and federal guidelines. This regulatory framework not only safeguards client welfare but also enhances Ethema's credibility and trustworthiness in the market.
Strategic Vision
Ethema Health Corporation is committed to expanding its impact in the behavioral healthcare sector. By focusing on operational excellence, innovative treatment programs, and strategic financial management, the company aims to address the growing demand for substance use disorder treatments. Through its expanding network of facilities and client-centered approach, Ethema continues to solidify its position as a trusted provider in the industry.
Ethema Health Corporation (OTCPINK: GRST) has signed a contract to purchase its currently leased property at 950 Evernia Street, West Palm Beach, for $5,500,000. A $50,000 down payment was made, with the purchase to be finalized by February 2023. The landlord will offer $4,000,000 in financing, requiring a cash balance payment by September 30, 2022. Ethema plans to structure the purchase through a Limited Partnership, investing $100,000 and controlling the property with a 50% income interest. This acquisition aims to enhance their long-term presence in the addiction treatment sector.
Ethema Health Corporation (OTCPINK: GRST) announced a new note to replace expiring notes from Labrys Fund, extending maturity by 9 months and offering a chance to avoid extra costs if paid by October 3, 2022. The Company also reported fully extinguishing a note due to Geneva Roth Remark Holdings Inc. Ethema relocated its registered head office to its ARIA subsidiary's location. CEO Shawn Leon highlighted this collaborative effort with investors as a strategic move to enhance cash flow for debt repayment, underscoring the growing financial stability of the ARIA subsidiary.
Ethema Health Corporation (OTCPINK: GRST) anticipates a 13% revenue increase for Q2 2022 compared to Q1, attributed to new claims and historical collection trends. The company has expanded capacity with 10 new beds and expects 62 beds available in Q3 following renovations. Ethema is formalizing debt extensions and expects to start repayments from cash flow in Q3. CEO Shawn Leon expressed optimism for growth and has integrated a new billing subsidiary, contributing additional profits.
Ethema Health Corporation (OTCPINK: GRST) reported a 23.4% increase in total billed claims for Q1 2022, resulting in positive EBITDA of $186,640 for its ARIA subsidiary. Despite this growth, the overall company experienced a loss attributed to debt-related expenses. CEO Shawn Leon mentioned that revenue rises were tempered by weaker collection rates due to insurance policy resets. Looking ahead, the company projects further growth with new billing rates and additional capacity from 14 new beds. A new subsidiary, PB Billing LLC, was launched to enhance billing operations.
Ethema Health Corporation (OTC Pink: GRST) released its year-end 2021 10K report, showcasing a 20.0% increase in total billed claims for the fourth quarter compared to the third quarter of 2021. This growth led to positive earnings, offsetting earlier losses and resulting in a small net gain for the year. In Q1 2022, billed claims grew 23.4% over Q4 2021, indicating continued revenue growth. CEO Shawn Leon highlighted the significance of revenue improvements and reduced marketing spend, anticipating further growth due to planned increases in available beds.
Ethema Health Corporation (OTCPINK: GRST) is expanding its treatment facilities with plans to increase its bed count from 42 to 68. The addition involves 10 more beds on the second and third floors and a potential lease of adjacent apartments for additional beds. The ongoing construction is nearing completion, with a certificate of occupancy expected in March. CEO Shawn Leon emphasized the importance of this expansion for improving service quality and ultimately saving more lives.
Ethema Health Corporation (OTCPINK: GRST) announced a contract amendment with New Directions Behavioral Health, effective April 10, 2022, increasing rates by 6% to 17% due to rising healthcare costs. This is significant as approximately 97% of Ethema's revenue is billed to New Directions, which manages behavioral health benefits for major insurers such as Blue Cross. CEO Shawn Leon expressed satisfaction with the contract's adjustments, highlighting the importance of maintaining quality service amidst increasing operational costs.
Ethema Health Corporation (OTCPINK: GRST) has announced a strategic approach to debt management, successfully negotiating with its principal creditors to reduce debt levels without resorting to dilutive conversions. The company has made significant payments towards its outstanding notes, including a $550,000 note with Labrys Fund LP, reducing the balance to $386,000. Ethema aims to eliminate over $600,000 in variable rate conversion debt within the first half of 2022, focusing on maintaining strong lender relationships and supporting operational cash flow.
Ethema Health Corporation (OTCPINK: GRST) submitted its 2021 year-end financial statements for early review. The ARIA treatment center reported an EBITDA of approximately $163,000 for Q4, a 370% increase from Q3. Despite the traditional slow-down in December, the center achieved break-even results and maintained 100% occupancy in February. CEO Shawn Leon expressed optimism for a strong first quarter in 2022, driven by ongoing demand for their services. The company aims to build upon its existing platform in West Palm Beach throughout the year.
Ethema Health Corporation (OTCPINK: GRST) announced its third-quarter financial results, highlighting profitability from the ARIA treatment facility since its seventh month of operation. The facility generated an EBITDA of $47,359 and saw a 13% net collection rate, primarily from Blue Cross billing. Increased revenue and occupancy were noted for the fourth quarter, and the company plans to add 10 more beds by December. Ethema is also eliminating debt through equity conversion and is advancing a property purchase using a limited partnership structure to strengthen its balance sheet.
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