Firm Achieved 32% Year Over Year Revenue
Growth and Expanded Managed Security Service Offerings
CynergisTek, Inc. (NYSE AMERICAN: CTEK), a leader in
healthcare cybersecurity, privacy, and compliance, today announced
financial results for the first quarter ended March 31, 2019.
Financial Highlights for the First Quarter 2019
Include:
Financials represent business from continuing operations.
Discontinued operations have been isolated.
- Revenues from continuing operations for
the first quarter were $5.8 million an increase of 32%, compared to
$4.4 million for the same period of 2018.
- Non-GAAP adjusted EBITDA loss from
continuing operations, after adding back stock-based compensation,
was $(0.6) million in the first quarter of 2019, compared to $(0.7)
million after adding back stock based compensation and
non-recurring charges related to our debt refinancing and the
departure of a senior executive for the same period in 2018.
- Non-GAAP adjusted loss from continuing
operations per share for the first quarter 2019 was ($0.09) per
basic and diluted share, compared to ($0.11) per basic and ($0.10)
diluted share for the same period of 2018.
Recent Operational Highlights Include:
- Expanded managed service offering to
include Managed Security Services to have the full breadth of
offerings for the healthcare market.
- Drove 45% plus year over year growth in
professional and consulting services revenue.
“The first quarter of 2019 was very successful in terms of our
strategy for the future,” said Mac McMillan, President and CEO of
CynergisTek. “We reduced debt by selling the Managed Print Services
business, allowing us to increase focus on our core cybersecurity,
privacy, and compliance services. We expanded our service offerings
by launching Managed Security Services to provide proactive and
comprehensive security monitoring of network devices, endpoints,
and cloud- and SaaS- based environments. Many of our customers have
expressed interest in wanting more focused monitoring to keep up
with the increased threat landscape healthcare is
experiencing.”
For the Three Months Ended March 31, 2019 Compared to the
Three Months Ended March 31, 2018
Financial results are from our continuing operations related to
our Security services unless specifically noted that it includes
our discontinued operations related to the sale of our managed
print services (MPS) business. Revenue increased by approximately
$1.4 million to $5.8 million for the three months ended March 31,
2019, as compared to the same period in 2018, as we have
intensified our sales efforts, expanded our service offerings and
benefitted from our customers’ need for additional professional
services.
Cost of revenue was $3.5 million for the three months ended
March 31, 2019, as compared to $2.4 million for the same period in
2018. This increase was due to increased headcount in order to
provide services to a larger customer base, support new services,
and our efforts to augment the employee salary and benefit
offerings to attract and retain talent.
Gross margin was 40% of revenue for the three months ended March
31, 2019 and 45% for the same period in 2018. The reduction in
gross margin is reflective of our investment in attracting and
retaining talented cyber security employees and costs associated
with ramping up new services. We expect gross margins to improve in
the second half of the year as we grow our cybersecurity consulting
services and our new services start to gain traction in the
marketplace.
Sales and marketing expenses were $1.5 million for the three
months ended March 31, 2019, as compared to $1.4 million for the
same period in 2018. General and administrative expenses decreased
to $1.7 million for the three months ended March 31, 2019, as
compared to $2.2 million for the same period in 2018. This
reduction was due to the non-recurring charges related to our debt
refinancing and the departure of a senior executive back in the
first quarter of 2018.
On March 20, 2019, we sold the Managed Print Services (MPS)
business. The gain on the sale of this business, together with the
earnings from these discontinued operations, net of taxes totaled
$19.0 million for the three months ended March 31, 2019 compared to
income from discontinued operations, net of tax, of $1.1 million in
the 2018 period.
GAAP net loss from continuing operations for the first quarter
was $(1.5) million, or $(0.15) per basic and diluted share compared
to a net loss of $(1.9) million, or $(0.19) per basic and diluted
share for the same period of 2018. GAAP net income for the first
quarter, after adjustment from income from discontinued operations,
including gain on sale, net of tax, was $17.5 million, or $1.81 per
basic and $1.77 per diluted share compared to a net loss after
adjustment from income from discontinued operations, net of tax of
$(0.7) million, or $(0.19) per basic and diluted share for the same
period of 2018.
The reconciliation of GAAP to non-GAAP information can be found
in the tables at the end of this release and provide the details of
the Company’s non-GAAP disclosures and the reconciliation of
non-GAAP information.
CYNERGISTEK, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
March 31, 2019
(unaudited)
December 31, 2018 ASSETS Current assets: Cash
and cash equivalents $ 12,386,637 $ 6,571,381 Accounts receivable,
net 4,309,391 5,572,467 Prepaid and other current assets 3,763,872
1,425,858 Refundable income taxes - 472,059 Current assets held for
sale - 8,427,408
Total current assets
20,459,900 22,469,173
Property and
equipment, net 848,131 887,874
Deposits 79,710 87,778
Deferred income taxes 1,615,173 2,146,020
Intangible
assets, net 8,637,255 9,089,989
Goodwill 17,008,189
17,008,189
Noncurrent assets held for sale -
1,844,349
Total assets $ 48,648,358 $ 53,533,372
LIABILITIES AND STOCKHOLDERS’ EQUITY Current
liabilities: Accounts payable and accrued expenses $ 362,770 $
1,370,336 Accrued compensation and benefits 1,393,890 1,592,765
Deferred revenue 1,262,627 918,165 Income taxes payable 4,840,746 -
Note payable - 343,750 Current portion of long-term liabilities
839,590 3,271,052 Current liabilities held for sale 138,894
7,299,561
Total current liabilities
8,838,517 14,795,629
Long-term
liabilities: Term loan, less current portion - 12,851,617
Promissory notes to related parties, less current portion 1,125,000
5,015,625 Capital lease obligations, less current portion - 1,570
Operating lease liability, less current portion 355,031 436,805
Noncurrent liabilities held for sale - 58,967
Total long-term liabilities 1,480,031
18,364,584
Commitments and contingencies
Stockholders’ equity: Common stock, par value at $0.001,
33,333,333 shares authorized, 9,723,065 shares issued and
outstanding at March 31, 2019, and 9,630,050 shares issued and
outstanding at December 31, 2018 9,723 9,630 Additional paid-in
capital 32,319,958 31,910,831 Accumulated earnings (deficit)
6,000,129 (11,547,302 )
Total stockholders’ equity
38,329,810 20,373,159
Total liabilities and
stockholders’ equity $ 48,648,358 $ 53,533,372
CYNERGISTEK, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(UNAUDITED)
Three Months Ended March 31,
2019 2018 Net
revenues $ 5,773,657 $ 4,374,569
Cost of revenues
3,484,639 2,408,780 Gross profit
2,289,018 1,965,789
Operating expenses:
Sales and marketing 1,481,383 1,367,871 General and administrative
expenses 1,653,633 2,169,291 Depreciation 38,985 35,064
Amortization of acquisition-related intangibles 452,734
452,734 Total operating expenses
3,626,735 4,024,960
Loss from
operations (1,337,717 ) (2,059,171 )
Other income (expense):
Other income 8 20 Interest expense (295,905 )
(399,733 ) Total other income (expense) (295,897 )
(399,713 )
(Loss) before provision for income taxes
(1,633,613 ) (2,458,884 )
Income tax benefit 144,214
602,472
Net loss from continuing
operations (1,489,399 ) (1,856,412 )
Income
from discontinued operations, including gain on sale, net of
tax 19,036,830 1,149,069
Net
income (loss) $ 17,547,431 $ (707,343 )
Net
income (loss) per share: From continuing operations:
Basic $ (0.15 ) $ (0.19 ) Diluted $ (0.15 ) $ (0.19 )
From discontinued operations: Basic $ 1.97 $ 0.12 Diluted $
1.92 $ 0.12
Net income: Basic $ 1.81 $ (0.07 )
Diluted $ 1.77 $ (0.07 )
Number of weighted average
shares outstanding: Basic 9,673,689
9,586,608 Diluted 9,931,048 9,586,608
CYNERGISTEK, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP LOSS FROM CONTINUING OPERATIONS TO
NON-GAAP ADJUSTED EBITDA FROM CONTINUING OPERATIONS
(UNAUDITED)
Three Months Ended March 31,
2019 2018 GAAP loss
from operations $ (1,337,717 ) $ (2,059,171 )
Adjustments: Depreciation 38,985 35,064 Amortization of
acquisition-related intangibles 452,734 452,734 One-time
restructuring and legal fees - 735,183 Stock-based compensation
282,344 178,447
Non-GAAP adjusted
EBITDA from continuing operations $ (563,654 ) $ (657,743 )
Non-GAAP adjusted EBITDA per share Basic $ (0.06 ) $
(0.07 ) Diluted $ (0.06 ) $ (0.06 )
CYNERGISTEK, INC. AND
SUBSIDIARIES RECONCILIATION OF GAAP NET LOSS FROM CONTINUING
OPERATIONS TO NON-GAAP ADJUSTED LOSS FROM CONTINUING OPERATIONS
(UNAUDITED)
Three Months Ended March 31,
2019 2018 GAAP net
loss from continuing operations $ (1,489,399 ) $ (1,856,412 )
Adjustments: Non-Cash Income Tax Adjustment (144,214 )
(602,472 ) Other Expense - (20 ) Depreciation 38,985 35,064
Amortization of acquisition-related intangibles 452,734 452,734
One-time restructuring and legal fees - 735,183 Stock-based
compensation 282,344 178,447
Non-GAAP adjusted loss from continuing operations $ (859,550
) $ (1,057,476 )
Non-GAAP adjusted loss per share
Basic $ (0.09 ) $ (0.11 ) Diluted $ (0.09 ) $ (0.10 )
Conference Call InformationDate: Tuesday May 14,
2019Time: 12:00 PM EDTU.S.: 1-888-220-8474; International:
1-323-794-2590Conference ID:
1751236Webcast: http://public.viavid.com/index.php?id=134475
A replay of the call will be available from 3:00 pm ET on May
14, 2019 to Tuesday May 21, 2019, 11:59 pm ET. To access the
replay, please dial 1-844-512-2921 from the U.S. and 1-412-317-6671
from outside the U.S. The PIN is 1751236.
About CynergisTek, Inc.
CynergisTek is a top-ranked cybersecurity and information
management consulting firm dedicated to serving the healthcare
industry. CynergisTek offers specialized services and solutions to
help organizations achieve privacy, security, and compliance goals.
Since 2004, the company has served as a partner to hundreds of
healthcare organizations and is dedicated to supporting and
educating the industry by contributing to relevant industry
associations. The company has been named in numerous research
reports as one of the top firms that provider organizations turn to
for privacy and security, and won the 2017 Best in KLAS award for
Cyber Security Advisory Services.
Forward Looking Statements
This release contains certain forward-looking statements
relating to the business of CynergisTek that can be identified by
the use of forward-looking terminology such as “believes,”
“expects,” “anticipates,” “may” or similar expressions. Such
forward-looking statements involve known and unknown risks and
uncertainties, including uncertainties relating to product/services
development, long and uncertain sales cycles, the ability to obtain
or maintain proprietary intellectual property protection, market
acceptance, future capital requirements, competition from other
providers, the ability of our vendors to continue supplying the
company with equipment, parts, supplies and services at comparable
terms and prices and other factors that may cause actual results to
be materially different from those described herein as anticipated,
believed, estimated or expected. Certain of these risks and
uncertainties are or will be described in greater detail in our
Form 10-K and Form 10-Q filings with the Securities and Exchange
Commission, which are available at http://www.sec.gov. CynergisTek
is under no obligation (and expressly disclaims any such
obligation) to update or alter its forward-looking statements
whether as a result of new information, future events or
otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190513005807/en/
Investor Relations Contact:Bryan Flynn(512) 402-8550 ext.
8InvestorRelations@CynergisTek.com
Media Contact:Danielle JohnsSenior Account ExecutiveAria
Marketing(617) 332-9999 x241djohns@ariamarketing.com
CynergisTek (AMEX:CTEK)
Historical Stock Chart
From Apr 2024 to May 2024
CynergisTek (AMEX:CTEK)
Historical Stock Chart
From May 2023 to May 2024