Ethema Health (ticker: GRST) is exceptionally undervalued. It’s because Ethema’s shares have traded at prices below a penny per share since 2019. Companies with sub-penny share prices become invisible to investors. The blindness caused by difficult to calculate share prices results in distortions which create opportunities for analysts and savvy investors.
Ethema is my first ever sub penny stock recommendation throughout my 47 years career. Due to the substantial discount Ethema’s share price has potential to multiply by several hundred times within seven to 10 years.
Ethema’s visibility with investors recently improved significantly. The company became listed on SaveChangeWorld.com (SCW) on June 6th. SCW is a website that exclusively features small private and public companies which have technology, products and services that can save or change the world. SCW’s mission statement is to reduce the risk for all who invest in or assist to help micro-cap and low share price public and private small companies to become successful.
My buy price limit for Ethema shares is $0.0012. At June 7, 2024, the company’s share price closed at $0.0005, which was 41.6% below my buy limit price. The shares climbing from $0.0005 to my price limit of $0.0012 would represent an increase of 140%.
Assuming shares are purchased for $0.0012, the gain could potentially be 816% within 3 to 5 years. From the lower $0.0005 the gain could be 2100%. The potential gains assume that Ethema is successful to:
- Deploy a $25 million perpetual financing strategy at prices ranging from $0.0012 to $0.0027
- Utilize the cash raised from the strategy to acquire facilities which, in aggregate, can generate annual revenue of $86 million and pretax income of $25 million.
Ethema opened its existing West Palm Beach substance abuse treatment facility in 2020. Annual revenue has increased for three consecutive years. The company’s plan is to acquire existing facilities with the capital that it raises instead of developing additional facilities.
For 2022, the substance abuse recovery industry produced $138.4 billion of revenue. Grandview Research has projected the industry to grow by a compounded 6.3% to $225.2 billion by 2030. The chart below depicts that the industry had 17,353 facilities in 2022. The average revenue per facility per annum is $7.97 million.
The industry is ideal for utilizing a growth by acquisition strategy. 98% of the substance abuse facilities are owned by small operators. The largest company in the industry is Acadia Healthcare (ACHC). For 2022, Acadia’s 250 facilities generated $2.61 billion of revenue, equivalent to 2% of the industry’s total volume. Based on Acadia’s market cap at June 7, 2024, its shares traded at a multiple of 2.2 times revenue.
The much-fragmented industry is ripe for consolidation. The small independent operators have a history of sexually abusing their participants. The excerpt from below articulates the problem:
“Why Is Rehab Sexual Assault So Common?
Rehab sexual assault is a growing problem in California for several reasons:
- State of vulnerability: Rehabilitation participants may be in a difficult state and dealing with addiction, withdrawal, and other challenges. This is perhaps one of the most difficult periods of their lives, and counselors and other staff may seek to take advantage of participants.
- Lax hiring rules: Reports show that in the state of California, lax background check rules make it possible for registered sex offenders and other serious felons to serve as rehabilitation counselors. Individuals fired for misconduct may simply transfer to another private rehab facility, where they may be hired despite their background.
- Fear of reporting: Many sexual assault victims are hesitant to file a report about what happened to them. This can stem from feelings of fear, embarrassment, and confusion. As a result, the cycle of abuse may be allowed to continue in the rehab facility.”
See also the following articles:
“He built New Hampshire’s largest addiction treatment center. Now, he’s accused of sexual misconduct”, March 27, 2022
“How sex abuse lawsuit against former Liverpool rehab director revealed more allegations of abuse”, May 21, 2024
Ethema clearly meets all of SaveChangeWorld.com’s requirements. Ethema is very much needed to become highly successful as a save the world company.
Ethema’s plan is to utilize a perpetual financing strategy to raise an aggregate of $25 million. The strategy is being utilized by other companies that are listed on SCW including EmotionTrac, GotChosen and Capital Engine.
Under a perpetual financing strategy an issuer or a company remains in a constant capital raising mode. The moment that a financing round is completed another round is launched at a higher valuation.
To learn more about the perpetual financing strategy go to https://savechangeworld.com/perpetual-financing-strategy/. The video below about the strategy is also highly recommended:
AirBnb’s Perpetual Financing Strategy Forever Changed the World – Mar 30 2024
The table below depicts EmotionTrac’s success at utilizing a perpetual financing strategy to raise $7 million at share prices ranging from $0.50 to $2.50.
The table below depicts Ethema’s perpetual financing strategy to be utilized to raise $25 million at share prices ranging from $0.0012 to $0.0027.
The $25 million is to be utilized to acquire existing facilities which, in aggregate, can produce $86 million of revenue and $25 million of pre-tax income. Based on the 2.2 times revenue multiple for Acadia, Ethema has the potential to be valued for $189.2 million. Assuming 17.1 billion shares outstanding, the share price would be $0.011, a 2100% gain from $0.0005. The gain assuming shares purchased at my $0.0012 limit would be 816%.
The plan is for Ethema’s shares to offered under Regulation A+ on Capital Engine’s funding platform. Capital Engine has 8,000 accredited investors. $800 million has been raised from investors by the Capital Engine platform for issuers since inception.
Ethema’s CEO Shawn Leon will be a guest interviewee for the Saturday June 15, 2024 Markowski on the Market (MOTM) 11:30AM weekly ZOOM session. To register to attend FREE MOTM weekly sessions, receive session agenda alerts and to have access to archives click below to register:
SaveChangeWorld.com (SCW) is owned and operated by Dyansty Wealth (DW). DW has a track record for assisting startup and early stage companies to deploy a perpetual financing strategy. DW assisted privately held EmotionTrac to raise approximately $7 million from 2017 to 2023 via its perpetual financings strategy at share prices ranging from $0.50 to $2.50.