Florida Company Enters Letter of Intent to Buy ARC; Cutbacks Have Closed Many ARC Facilities

By Roberta Cantrell
BSN Editor

Addiction Recovery Care, or ARC, Kentucky’s largest provider of treatment and recovery services, has announced its pending sale to Ethema Health Corp., a Palm Beach, Florida-based behavioral health company.

Addiction Recovery Care ARC reported the potential sale to Ethema Health Corp., a Palm Beach, Florida-based behavioral health company in a news release Wednesday, Oct. 22, saying the two companies have “entered into a letter of intent” for Ethema to acquire the assets and operations of ARC. It did not disclose the sale price.

Once the fastest-growing provider of addiction services in Kentucky, ARC has foundered over the past 14 months amid reports of an ongoing FBI investigation into possible health care fraud and closer scrutiny by insurers who process claims for patient care and had begun slashing reimbursement.

Over the past year, ARC has closed multiple facilities and programs and laid off several hundred employees. At its peak in 2024, ARC who was once the fastest-growing provider of addiction services, had about 1,800 residential treatment beds, programs throughout Kentucky and about 1,350 employees.

However, over the past 14 months amid reports of an ongoing FBI investigation into alleged possible health care fraud and closer scrutiny by insurers who process claims for patient care and had begun slashing reimbursement causing ARC to close multiple facilities and programs and laid off several hundred employees.

Medicaid, the government health plan for low-income individuals, pays for nearly all of ARC’s services, which include residential and outpatient care. ARC in 2023, received about $130 million in payments from Kentucky’s Medicaid program, which gets about 70% of its money from the federal government.

Shawn Leon, owner of Ethema, said in the news release the purchase of ARC would advance the company’s goal of expanding addiction and recovery services in the region.

“This acquisition will significantly contribute to reaching our goal of building a network of 3,000 beds by the end of 2026 and solidifying ARIA Kentucky as a regional powerhouse in recovery services,” he said,

Ethema already operates the former Edgewater Recovery Center based in Morehead, whose previous owners came under federal scrutiny last year over alleged fraudulent billing practices. The company agreed to pay $2.2 million in a civil penalty for its role in a scheme to submit false laboratory claims to Medicaid and Medicare for drug testing, according to the U.S. Attorney’s Office for the Eastern District of Kentucky.

In a press release from Vanessa Keaton Spokesperson for Arc she writes:

Ethema Health Corporation (OTCPINK: GRST) (Ethema), a leading provider in the behavioral healthcare space and operator of the ARIA Kentucky treatment centers, today announced they have entered into a Letter of Intent (LOI) to acquire the assets and operations of Addiction Recovery Care, LLC (ARC), one of Kentucky’s most respected addiction treatment organizations. 

This strategic consolidation comes at a transformative time for behavioral healthcare in Kentucky and reflects a shared commitment to sustaining and strengthening high-quality, community-based addiction treatment while supporting professionals who make recovery possible every day. Following necessary organizational changes, ARC’s ownership has determined that partnering with Ethema Health Corporation is the most responsible and forward-looking step towards a stronger future. Ethema will operate the considerable assets under its existing Kentucky brand, ARIA Kentucky.

The core focus of this acquisition is to safeguard the well-being of clients, preserve the dedicated workforce that has long served communities across the Commonwealth, and ensure continued access to compassionate, evidence-based care.

“ARC has been deeply rooted in the communities we serve, and this decision was made with our clients, employees, and their families at the forefront,” said Tim Robinson, Owner of ARC. “As the treatment landscape evolves, we recognize that this partnership with Ethema provides the stability, innovation, and long-term investment needed to continue our mission. It ensures our exceptional team can remain focused on what matters most, providing compassionate, evidence-based care and helping Kentuckians build lives of purpose.”

For Ethema, the acquisition represents a pivotal step in its strategic growth plan, significantly expanding its licensed bed capacity, strengthening community partnerships, and extending its geographical reach.

“We’re honored to carry forward ARC’s legacy of service,” said Shawn Leon, Owner of Ethema Health Corporation. “This agreement isn’t just about growth, it’s about commitment. Together, we will build on Kentucky’s leadership in addiction recovery by investing in people, programs, and communities that change lives. Our combined teams will ensure continuity of care for every client and expand the availability of high-quality services throughout the region. This acquisition will significantly contribute to reaching our goal of building a network of 3,000 beds by the end of 2026 and solidifying ARIA Kentucky as a regional powerhouse in recovery services.”

Ethema and ARC will now move through due diligence and plan for a seamless transition that prioritizes uninterrupted client services, employee stability, and continued partnership with local communities across Kentucky.

If the sale of ARC to Ethema goes through, it will bring to an end ARC’s 17-year operation by Robinson, a lawyer and recovering alcoholic who founded ARC in 2008 as a single halfway house in Lawrence County.