Ethema Health Revenue Soars 202% Amidst Widening Losses

TL;DR

**GRST is burning cash on acquisitions, revenue is up but so are losses – a risky bet on future growth.**

AI Summary

ETHEMA HEALTH Corp (GRST) reported a significant increase in revenue for the six months ended June 30, 2025, reaching $8,423,195, up from $2,790,200 in the same period of 2024, representing a 201.9% increase. Despite this revenue growth, the company's net loss widened to $1,180,626 for the six months ended June 30, 2025, compared to a net loss of $839,478 in the prior year, a 40.6% increase. Key business changes include the acquisition of Edgewater Recovery Centers, LLC (ERC) on January 9, 2025, through its subsidiary ARIA Kentucky LLC, expanding its addiction treatment operations into Morehead and Paducah, Kentucky. This acquisition involved a $250,000 payment to the seller and the assumption of significant liabilities, including a settlement agreement with the United States government. The company also acquired the remaining 25% of ATHI on May 15, 2024, for $1,100,000, consolidating its ownership of Evernia. Risks include a substantial accumulated deficit of $45,600,098 as of June 30, 2025, and a total stockholders' deficit of $8,639,193, indicating ongoing financial challenges. The strategic outlook appears focused on expanding treatment center operations through acquisitions, as evidenced by the ERC and ATHI transactions, aiming for increased market presence despite current losses.

Why It Matters

Ethema Health's aggressive expansion through acquisitions, like Edgewater Recovery Centers, signals a push for market share in the addiction treatment sector, which could be a long-term play for investors if integration is successful. However, the widening net loss and substantial accumulated deficit raise concerns about profitability and financial stability, potentially impacting employee job security and the company's ability to sustain quality services for customers. In a competitive healthcare landscape, Ethema's ability to convert increased revenue into net income will be critical for its viability and to attract further investment, especially given the related-party transactions with CEO Shawn Leon's BH Properties Fund LLC.

Risk Assessment

Risk Level: high — The company reported a net loss of $1,180,626 for the six months ended June 30, 2025, and an accumulated deficit of $45,600,098, indicating persistent unprofitability. Total liabilities significantly exceed total assets, with $37,536,555 in liabilities against $28,897,362 in assets as of June 30, 2025, highlighting a precarious financial position and reliance on debt.

Analyst Insight

Investors should exercise extreme caution and thoroughly scrutinize Ethema Health's ability to achieve profitability from its recent acquisitions. Monitor future filings for signs of improved net income and positive cash flow from operations, as the current financial trajectory suggests high risk.

Financial Highlights

debt To Equity

N/A

revenue

$8.42M

operating Margin

N/A

total Assets

$28.90M

total Debt

$37.54M

net Income

-$1.18M

eps

N/A

gross Margin

N/A

cash Position

N/A

revenue Growth

+201.9%

Revenue Breakdown

Key Numbers

• $8.42M — Revenues for six months ended June 30, 2025 (Increased 201.9% from $2.79M in 2024)
• $1.18M — Net loss for six months ended June 30, 2025 (Widened from $839,478 in 2024)
• $45.60M — Accumulated deficit as of June 30, 2025 (Increased from $44.42M as of December 31, 2024)
• $8.64M — Total stockholders' deficit as of June 30, 2025 (Increased from $7.46M as of December 31, 2024)
• $28.90M — Total assets as of June 30, 2025 (Increased from $12.16M as of December 31, 2024, largely due to acquisitions)
• $37.54M — Total liabilities as of June 30, 2025 (Increased from $19.62M as of December 31, 2024, primarily due to assumed liabilities and bank loans)
• $250,000 — Payment for Edgewater Recovery Centers, LLC acquisition (Paid by ARIA Kentucky LLC on January 9, 2025)
• $1.10M — Acquisition cost for remaining 25% of ATHI (Paid on May 15, 2024)
• 7,726,283,805 — Common shares outstanding as of October 31, 2025 (Reflects a high share count, potentially indicating dilution)
• $462,759 — Net cash used in operating activities for six months ended June 30, 2025 (Increased from $269,920 in 2024, indicating higher cash burn from operations)

Key Players & Entities

• ETHEMA HEALTH Corp (company) — Registrant
• ARIA Kentucky LLC (company) — Wholly owned subsidiary of Ethema Health Corp
• Edgewater Recovery Centers, LLC (company) — Acquired by ARIA Kentucky LLC
• John Elam (person) — Seller in the Edgewater Recovery Centers, LLC acquisition
• ATHI (company) — Company in which Ethema Health Corp acquired remaining 25% minority interest
• Evernia Health Center LLC (company) — Subsidiary of Ethema Health Corp, involved in Boca Cove Detox acquisition
• Boca Cove Detox, LLC (company) — Company whose assets were acquired by Ethema Health Corp
• Shawn Leon (person) — CEO of Ethema Health Corp and controller of BH Properties Fund LLC
• BH Properties Fund LLC (company) — Related party controlled by CEO Shawn Leon, involved in real property leases for ARIA Kentucky
• United States government (regulator) — Party in a settlement agreement assumed by ARIA Kentucky LLC

FAQ

Risk Factors

• Substantial Accumulated Deficit [high — financial]: As of June 30, 2025, the company has an accumulated deficit of $45,600,098. This indicates that the company has incurred more expenses than revenues since its inception, raising concerns about long-term financial viability.
• Stockholders' Deficit [high — financial]: The total stockholders' deficit was $8,639,193 as of June 30, 2025. This negative equity position suggests that the company's liabilities exceed its assets, a critical indicator of financial distress.
• Integration of Acquisitions [medium — operational]: The company has recently completed significant acquisitions, including Edgewater Recovery Centers, LLC and the remaining stake in ATHI. Successfully integrating these operations, managing assumed liabilities, and realizing projected synergies are crucial for future performance.
• Increased Cash Burn from Operations [medium — financial]: Net cash used in operating activities increased by 186.2% to $462,759 for the six months ended June 30, 2025, from $269,920 in the prior year. This escalating cash burn rate requires careful management and potentially additional funding.
• Assumed Liabilities from Acquisitions [medium — legal]: The acquisition of Edgewater Recovery Centers, LLC involved assuming significant liabilities, including a settlement agreement with the United States government. The financial impact and resolution of these assumed obligations pose a risk.
• High Share Count and Potential Dilution [medium — financial]: With 7,726,283,805 common shares outstanding as of October 31, 2025, the company has a very large number of shares. This could lead to significant dilution for existing shareholders if further equity is issued.

Industry Context

The addiction treatment sector is experiencing growth driven by increasing awareness and demand for services. ETHEMA HEALTH Corp is actively pursuing a strategy of consolidation and expansion through acquisitions to capture market share. However, the industry is competitive and subject to regulatory oversight and reimbursement complexities from various payors.

Regulatory Implications

The company's operations, particularly its acquisition of Edgewater Recovery Centers, LLC, involve a settlement agreement with the United States government. This highlights potential regulatory scrutiny and the importance of compliance with healthcare regulations and billing practices.

What Investors Should Do

1. Monitor acquisition integration and synergy realization.
2. Analyze cash flow trends and funding needs.
3. Evaluate the impact of assumed liabilities.
4. Assess the long-term viability given the financial deficits.

Key Dates

• 2025-01-09: Acquisition of Edgewater Recovery Centers, LLC (ERC) — Expanded addiction treatment operations into Kentucky, adding new facilities and patient capacity.
• 2024-05-15: Acquisition of remaining 25% of ATHI — Consolidated ownership of Evernia, strengthening control over a key subsidiary.
• 2025-06-30: End of Six-Month Reporting Period — Period during which revenue grew significantly but net loss widened, reflecting acquisition costs and operational expansion.

Glossary

Accumulated Deficit

The total cumulative net losses of a company since its inception that have not been offset by net income. (Indicates the company's historical unprofitability, with a significant deficit of $45,600,098 as of June 30, 2025.)

Stockholders' Deficit

The negative value of a company's equity when its liabilities exceed its assets. (Shows a negative equity of $8,639,193 as of June 30, 2025, highlighting financial strain.)

Goodwill

An intangible asset that arises when one company acquires another for a price greater than the fair market value of its identifiable net assets. (Management must make significant estimates for valuations, and the excess purchase price over fair value is recorded as goodwill, which is subject to impairment testing.)

Accounts Receivable

Money owed to a company by its customers for goods or services delivered. (The company's ability to collect receivables is critical, with risks including claim denials and patient non-payment.)

Year-Over-Year Comparison

ETHEMA HEALTH Corp has demonstrated impressive revenue growth, increasing by 201.9% to $8.42M for the six months ended June 30, 2025, compared to $2.79M in the prior year, largely due to strategic acquisitions. However, this growth has come at the cost of a widening net loss, which increased by 40.6% to $1.18M. Total assets and liabilities have also significantly increased, reflecting the impact of acquisitions and assumed debt. New risks related to the integration of acquired businesses and the financial implications of assumed liabilities have emerged.

Key Financial Figures

• $299,492 — sition of Aria Kentucky, net of cash of $299,492 49,492 — Acquisition of assets —
• $1,100,000 — ority stockholder for gross proceeds of $1,100,000. The Company paid an initial deposit of
• $25,000 — The Company paid an initial deposit of $25,000 and on closing an additional $600,000.
• $600,000 — of $25,000 and on closing an additional $600,000. The Company issued a non-interest-bear
• $475,000 — ssory note for the remaining balance of $475,000, which promissory note is repayable in
• $10,000 — ry note is repayable in installments of $10,000 a month on each monthly anniversary dat
• $157,500 — n (eight installments), and payments of $157,500 on month nine and month eighteen, for a
• $240,000 — ive Agreement. The purchase price was $240,000 which was settled by a deposit of $20,0
• $20,000 — 0,000 which was settled by a deposit of $20,000 and a cash payment of $220,000 and the
• $220,000 — eposit of $20,000 and a cash payment of $220,000 and the payment to the Seller of $83,39
• $83,393 — 20,000 and the payment to the Seller of $83,393 for the assumption of the security depo
• $250,000 — t closing ARIA Kentucky paid the Seller $250,000 and assumed certain liabilities related

Filing Documents

• grst_10q.htm (10-Q) — 1244KB
• ex31_1.htm (EX-31.1) — 13KB
• ex32_1.htm (EX-32.1) — 5KB
• 0001903596-25-000512.txt ( ) — 7319KB
• grst-20250630.xsd (EX-101.SCH) — 64KB
• grst-20250630_cal.xml (EX-101.CAL) — 67KB
• grst-20250630_def.xml (EX-101.DEF) — 168KB
• grst-20250630_lab.xml (EX-101.LAB) — 427KB
• grst-20250630_pre.xml (EX-101.PRE) — 347KB
• grst_10q_htm.xml (XML) — 1446KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION Item l.

Financial Statements

Financial Statements 1 Condensed Consolidated Balance Sheets as of June 30, 2025 (Unaudited) and December 31, 2024 2 Unaudited Condensed Consolidated 3 Unaudited Condensed Consolidated 4 Unaudited Condensed Consolidated 5 Notes to the Unaudited Condensed Consolidated Financial 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 34 Item 3.

Quantitative and Qualitative Disclosures About Market

Quantitative and Qualitative Disclosures About Market Risk 39 Item 4.

Controls and Procedures

Controls and Procedures 39

- OTHER INFORMATION

PART II - OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 40 Item 1A.

Risk Factors

Risk Factors 40 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 40 Item 3. Defaults Upon Senior Securities 40 Item 4. Mine Safety Disclosures 40 Item 5. Other Information 40 Item 6. Exhibits 40

SIGNATURES

SIGNATURES 41 1 ETHEMA HEALTH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS June 30, 2025 December 31, 2024 ASSETS (unaudited) Current assets Cash $ 441,724 $ 244,771 Accounts receivable, net 1,527,808 260,841 Prepaid expenses 34,523 23,146 Other current assets 2,519 — Total current assets 2,006,574 528,758 Non-current assets Property and equipment, net 1,308,902 699,688 Intangible assets, net 3,254,844 536,971 Goodwill 3,573,396 — Right of use assets 10,817,251 9,920,592 Right of use assets – related party 7,423,571 — Deposits paid 512,824 472,393 Total non-current assets 26,890,788 11,629,644 Total assets $ 28,897,362 $ 12,158,402 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities Accounts payable and accrued liabilities $ 1,270,101 $ 764,255 Bank loans 599,671 — Assumed liability 827,641 — Convertible notes, net of discounts 3,965,006 3,973,245 Short-term notes, net 2,925,566 2,575,123 Promissory note 335,000 405,000 Funding arrangements, net 1,247,978 516,247 Related party advance, net 273,461 264,966 Government assistance loans 21,342 15,088 Operating lease liability 511,241 299,102 Operating lease liability -related party 427,962 — Finance lease liability 9,310 9,829 Related party payables 1,582,481 633,318 Stock subscription liability 198,600 198,600 Total current liabilities 14,195,360 9,654,773 Non-current liabilities Bank loans 4,038,070 — Assumed liability 683,280 — Note payable – related party 84,527 — Government assistance loans — 6,149 Operating lease liability 10,742,709 9,949,454 Operating lease liability – related party 7,036,770 — Finance lease liability 2,655 6,593 Deferred taxation 753,184 — Total non-current liabilities 23,341,195 9,962,196 Total liabilities 37,536,555 19,616,969 Stockholders' deficit Preferred stock - Series A; $ 0.01 par value, 10,000,00

Business

Business combinations The Company allocates the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed for business combinations with third parties based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired users, acquired technology, and trade names from a market participant perspective, useful lives and discount rates. Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. 7 ETHEMA HEALTH CORPORATION NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 2. Summary of significant accounting policies (continued) d) Cash and cash equivalents For purposes of the statements of cash flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents. The Company maintains cash and cash equivalents with several financial institution in the USA and Canada. There were no cash equivalents at June 30, 2025 and December 31, 2024. The Company primarily places cash balances in the United States with high-credit quality financial institutions located in the United States which are insured by the Federal Deposit Insurance Corporation up to a limit of $ 250,000 per institution. e) Accounts receivable Accounts receivable primarily consists of amounts due from third-party payors (non-governmental) and private pay patients and is recorded net of allowances for doubtful accounts and

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