Ethema to Focus on Acquisitions for Growth Strategy

Ethema signs a non-binding letter of intent to acquire a majority interest in an addiction treatment company with $3.6 million of EBITDA

West Palm Beach, FL, Dec. 24, 2019 (GLOBE NEWSWIRE) -- via NEWMEDIAWIRE -- Ethema Health Corporation GRST ("Ethema" "GRST" or the "Company"), a provider of healthcare services, has announced that it has signed a non-binding Letter of Intent to acquire a majority interest in an addiction treatment company.  The acquisition target will have approximately $20 million in revenue for 2019 and an EBITDA of $3.6 Million.  Under the terms of the LOI the Company would be required to enter into a binding agreement by February 29, 2020 and be closed by April 30, 2020.  The purchase price will be determined during the due diligence process and is subject to agreement by both parties.  

"This is a company and owner that we are familiar with and first attempted to acquire in 2014.  They are well run and have the infrastructure in place that can support growth.  We are very excited that we now have an opportunity to jump start our growth with this platform," said Shawn Leon, CEO of the Company.

Market conditions in Florida have made it very difficult to operate profitably due to very costly marketing to attract clients and very aggressive behavior from insurance companies towards Florida based providers.   The Company has not generated the client levels necessary to fill the current location and must make changes to reduce its operating costs.  With the acquisition, the Company will have an opportunity to produce tremendous cost savings.  The acquisition target operates facilities in Washington State and Arizona and has a head office located in Florida near the Company's operations in West Palm Beach.  The Company expects to relocate its principle office into the same space as the acquisition target head office and will likely relocate its operation in West Palm Beach into a smaller facility nearby.  The Company is negotiating with another provider to lease a smaller site in West Palm Beach.  

Ethema will continue to raise additional capital as it seeks to acquire other already established providers using a set of criteria that is relevant for today's market conditions.   The Company also intends to seek partnerships with providers that can safely use legal alternative substances in the treatment process as substitutes for the widely accepted drugs that are currently being used.  In addition to this strategy for in-patient services, it will focus on bringing the virtual out-patient services it has developed to clients across the country in partnership with providers and insurance companies.

The Company has experienced sustained losses during the development of its business in Florida and is securing new financing that will allow it to stabilize earnings by buying a profitable business with positive cash flow.  The Company will raise new capital to make the acquisition and to pay down some current debt.  The Company has sold two of its properties in Delray Beach, Florida in 2019, reducing debt significantly and may pursue a sale of its Canadian property to eliminate any remaining debt.  The Company expects some of the new capital to be debt secured by the cash flow of the acquisition and some of the additional new equity to be raised directly as equity in the acquisition.  Both of these financing methods will be less dilutive on existing shareholders.  

"I am very pleased that we have a clear direction forward and a plan to stabilize the earnings, restructure the balance sheet and provide significant growth opportunity for the Company.  We have worked hard and invested a lot into the development of the business in Florida but it is now time to make these changes.  It is what is best for the Company and what will allow us to continue doing good work in the future," said Shawn Leon, CEO of the Company.  

About Ethema Health Corporation

Ethema Health Corporation GRST operates in the behavioral healthcare space specifically in the treatment of substance use disorders. Ethema developed a unique style of treatment over the last eight years and has had much success with in-patient treatment for adults. Ethema will continue to develop world-class programs and techniques for North America.  For more information you can visit our website at www.ethemahealth.com.

Notice Regarding Forward-Looking Statements

The information contained herein includes forward-looking statements.  These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.  You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements.  Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity.  We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

For information please contact:

Ethema Health Corporation

416-500-0020

shawn@ethemahealth.com