MISSION VIEJO, CA--(NewMediaWire - Jan 17, 2017)
- Auxilio, Inc. (OTCQB: AUXOD), a leading provider of complete document
workflow solutions and IT security services for the healthcare
industry, announced today that it acquired Austin, TX
based CynergisTek, an industry leader in health
information privacy, compliance and cybersecurity consulting, for
initial consideration of approximately $26.8 million in combined
cash, stock, and seller debt. Additional "earn outs" may be
paid of up to $7.5 million over the next five years based on
certain financial criteria being met. The acquisition will
enable the Company to meet growing demand from healthcare customers
for comprehensive IT security solutions that reduce risk and
deliver long-term value.
CynergisTek generated approximately $15 million in revenues and
$5.0 million of EBITDA in 2016. The transaction is expected to
be substantially accretive to 2017 EPS. CynergisTek will
continue to operate independently as a wholly-owned subsidiary of
Auxilio, offering end-to-end IT security solutions to a diverse and
growing customer base, including some of the largest and most
prestigious health systems in the country. As part of the deal,
Auxilio's Redspin division will become part of
CynergisTek, to complement existing offerings such as penetration
testing, security assessment and risk management solutions, and to
bolster technical resources and capabilities. CynergisTek has
provided services to hundreds of hospitals and healthcare
organizations since its inception in 2004 and was recently
recognized by KLAS, a provider of unbiased vendor performance data
for the healthcare IT security sector, as the highest-rated firm
that healthcare provider organizations rely on for security
consulting and services.
The initial consideration paid to CynergisTek of approximately
$26.8 million consists of $15 million in cash, approximately 1.17
million shares of Auxilio common stock and a seller's note in the
amount of $9 million. Auxilio will enter into a 5 year term
loan from Avid Bank in the amount of $14 million to fund the cash
portion.
"We have long stated our desire to expand our reach in
healthcare IT security and this acquisition puts us in an immediate
leadership position in the category. We have come to know the
founders and employees of CynergisTek quite well over the last
couple of years and from the earliest conversations it was obvious
we shared a vision of what the future of healthcare IT security and
document workflow looked like and how the two will become
increasingly intertwined," stated Joe Flynn, CEO of
Auxilio. "While CynergisTek will continue to operate
independently, there are numerous opportunities for mutually
assisted growth over the near term and we foresee the ability to
offer services under a combined umbrella over time. This is a
truly unique fit and we could not be more excited to complete this
transaction."
CynergisTek founders, Mac McMillan and Dr. Michael Mathews, will
take Board positions in the combined entity and assume a
significant ownership stake to ensure the continued leadership and
integrity of the CynergisTek brand. The companies plan to align
their service offerings to provide comprehensive information
management solutions designed to mitigate risk, optimize
productivity and drive savings for healthcare organizations.
"With assets from Auxilio, we'll have what we need to extend our
offerings and to keep pace with market demand while simultaneously
maintaining the superior level of client support we've become known
for," said Mac McMillan, CynergisTek CEO. "Our clients
recognize that document and device security are important
components of their overall security risk profile and the ability
to deliver an integrated approach to managing those aspects of
their infrastructure along with the digital pieces we've
traditionally focused on is something we are laying the foundation
for now."
For interested parties, a conference call led by Mr. Joe Flynn,
CEO of Auxilio, will be held today, Tuesday, January 17th at
2:00pm PT, 5:00pm ET, where additional details of the transaction
will be provided.
Conference Call Information
Date: Tuesday, January 17, 2017
Time: 2:00pm PT, 5:00 pm ET
US: 1-888-224-1142
International: 1-913-312-1475
Conference ID: 9373663
Webcast: http://public.viavid.com/index.php?id=122575
A replay of the call will be available from 8:00pm ET on
January 17, 2017 to 11:59 pm ET on April 17, 2017. To access the
replay, please dial 1-877-870-5176 from the U.S. and 1-858-384-5517
from outside the U.S. The PIN is 9373663.
About CynergisTek
CynergisTek (www.cynergistek.com) is a top-ranked
cybersecurity and privacy consulting firm. The company offers
solutions to help organizations measure privacy and security
programs against regulatory requirements and assists in developing
risk management best practices. Since 2004 the company has served
as a partner to hundreds in the healthcare industry. CynergisTek is
also dedicated to supporting and educating the industry by
contributing to relevant associations such as HIMSS, AHIMA, HFMA,
HCCA, AHIA, AHLA, IAPP and CHIME. The company has been named in
numerous research reports as one of the top firms that provider
organizations turn to for privacy and security, including the 2016
KLAS Security Advisory Services report, which rated CynergisTek for
having the highest overall client satisfaction, performance and
impact on security preparedness.
About Auxilio
Auxilio (www.auxilioinc.com) provides complete document
workflow solutions and IT security services to healthcare
organizations across the United States. Auxilio has helped its
clients save more than $80 million since 2004 by providing
solutions which lower costs, improve operational efficiency and
enhance security. Auxilio's iPLATFORM, an intelligent workflow
automation suite delivers a customer driven, vendor neutral
approach to secure patient health information, reduce waste and
drive additional savings opportunities. Auxilio serves a national
portfolio of nearly 220 hospital campuses and manages over 1.5
billion documents annually from over 90,000 devices supporting over
280,000 caregivers.
Forward Looking Statements
This press release contains "forward-looking statements" as that
term is defined in the Private Securities Litigation Reform Act of
1995, regarding the enhancement of shareholder value and the
Company's strategy relating to uplisting to a national exchange.
Such forward-looking statements are based on current expectations
and involve inherent risks and uncertainties, including factors
that could delay, divert or change any of them, and could cause
actual outcomes and results to differ materially from current
expectations. No forward-looking statement can be guaranteed. These
forward-looking statements are made as of the date of this press
release, and the Company assumes no obligation to update the
forward-looking statements, or to update the reasons why actual
results could differ from those projected in the forward-looking
statements. Readers are urged to read the risk factors set forth in
the Company's most recent annual report on Form 10-K, subsequent
quarterly reports filed on Form 10-Q, and other filings made with
the SEC. Copies of these reports are available from the SEC's
website at www.sec.gov or without charge from the
Company.