When it comes to penny stock investing, being in the right sector at the right time is where the big money is made. We here at Insider Financial have seen it all – bear and bull run alike. From cannabis to Bitcoin to COVID-19 and lately EV plays, we have covered them all and gotten our subscribers in and out at the right times.
One sector that hasn’t gotten a lot of coverage is addiction treatment. Most of us know someone that has dealt with addiction issues. If not, we at least have heard the stories, especially about how expensive treatment can be.
The reason addiction treatment has been overlooked in penny land is because of the lack of pure-play opportunities for investors, until now. Ethema Health (GRST) is the first pure-play opportunity that we have come across and represents a ground floor opportunity in a multi-billion-dollar industry. In this article, we take a look at Ethema Health (GRST) and how this company aims to become a market leader when it comes to treating addiction and substance abuse issues.
Ethema Health (GRST)
Ethema Health (GRST) is a Colorado Corporation incorporated under Colorado Law on April 1, 1993. Ethema Health Corporation developed and operated a first class residential addiction treatment center in Canada under the Greenestone brand. The Company sold this operation in February 2017 but retained the real estate in which the treatment center operated and it is leased to the new owners of the treatment business. The Company subsequently purchased the assets of a treatment center business in Delray Beach Florida in February 2017 and is now in the process of growing the Florida business.
Florida Treatment Center
Anyone that knows Florida knows that it is ground zero when it comes to addiction treatment. People come from all over the country to be treated for addiction.
Ethema Health (GRST) has been issued a license from Florida’s Department of Children and Family Services to operate addiction treatment services at its location at 950 Evernia Street, West Palm Beach. The license includes detox, residential, partial hospitalization, intensive out-patient, and out-patient services which allows Evernia to offer a full continuum of care at its location.
Evernia will be doing business as Addiction Recovery Institute of America (ARIA) and has licensed this name from another Ethema subsidiary, Addiction Recovery Institute of America LLC.
The Company’s key personnel are in place and expect to start operating in the next two to three weeks once all support staff and frontline workers have been brought on board. As previously announced the Company has been posting more frequent updates on Twitter @healthethema.
No Reverse Split
One of the biggest worries in penny land is the dreaded reverse split. Once a stock does a reverse split, the evil shorts pile on at the higher price. The good news is that investors don’t have to worry about this occurring with Ethema Health (GRST).
The management and the board do not have plans to do a reverse split. We will consider a small r/s after we up list to a higher exchange. We are excited for all that is about to be unveiled. $GRST
— Ethema Health (@HealthEthema) October 6, 2020
Debt Restructuring Complete
In August, Ethema Health (GRST) completed its debt restructuring with Leonite Capital LLC (“Leonite”), including the completion of the additional new financing that was a condition of the restructuring. The Company has amended the terms of its debt with Leonite to convert over $1.4 million of defaulted debt into CDN$960,000 (approximately US$700,000) of 10% convertible preferred shares in its wholly-owned subsidiary Cranberry Cove Holdings Ltd., and $400,000 in 6% convertible preferred shares in the Company.
The Company has filed an article of amendment to create a new class of preferred shares for this amendment and a new class of preferred shares for its subsidiary Cranberry Cove Holdings Ltd. The remaining balance of the Leonite debt was reduced to $150,000, which had its terms reset to its original terms prior to its default on the note. As part of the restructuring, Leonite exchanged all of its previous warrants for one new warrant.
New financing of $300,000 was required as part of the restructuring including the previously announced completion of $220,000 in financing from Leonite Capital and the closing on August 14, 2020, of $100,000 in new financing from Auctus Fund LLC. With this new financing, the acquisition of 51% of American Treatment Holdings Ltd. is in escrow pending approval of a change of ownership application with DCF.
With the restructuring complete and the impending opening of the new treatment center location, Ethema Health (GRST) expects to work further on the previously announced acquisition opportunities. The Company is still working on the financing to purchase 25% of Biohazard Health Services Ltd. (“Covid Clear”) for $250,000.00 as per the original LOI which has been extended.
Covid Clear has doubled its revenue every month in the last 4 months including revenue expected to exceed $100,000 for the month of August. It has been awarded a large contract for the treatment of public spaces for the Florida locations of a national company.
Covid Clear expects that this contract will generate over one million dollars in revenue in 2020. Ethema Health (GRST) will be a customer of Covid Clear to ensure that the new facility will have additional levels of safety required to protect its clients and staff from Covid-19.
No More Dilution
Besides a reverse split, the other nemesis for penny investors is dilution. The latest news from Ethema Health (GRST) shows that the share printing press has been turned off.
The last newly issued common shares were issued June 11, 2020. No new issues since then. Compliant with all amending agreements with variable rate lenders. Ready to open new facility expect to take first clients as of Monday October 26. $GRST
— Ethema Health (@HealthEthema) October 21, 2020
Currently trading with a market cap of $12 million, Ethema Health (GRST) is a ground floor opportunity when it comes to addiction treatment. With Florida being ground zero in terms of treatment facilities, we see the opportunity for CEO Shawn Leon to embark on an M&A spree to roll-up the fragmented addiction treatment industry. With the sector having unlimited potential, Ethema Health (GRST) is a steal at current levels. We don’t believe Ethema Health (GRST) will remain this cheap for much longer.
As always, good luck to all (except the shorts)!
WHEN INSIDER FINANCIAL HAS A STOCK TIP, IT CAN PAY TO LISTEN. AFTER ALL, OUR FREE NEWSLETTER HAS FOUND MANY TRIPLE-DIGIT WINNERS FOR OUR SUBSCRIBERS. WE SPECIALIZE IN FINDING MOMENTUM BEFORE IT HAPPENS!
Disclosure: We have no position in OTCMKTS:GRST or any of the securities mentioned. We wrote this article ourselves and it expresses our own opinions. We are not receiving compensation for it. We have no business relationship with any company whose stock is mentioned in this article. Insider Financial is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This article is not a solicitation or recommendation to buy, sell, or hold securities. This article is meant for informational and educational purposes only and does not provide investment advice.