Auxilio, a provider of document workflow solutions and IT security services for the healthcare industry, has acquired CynergisTek, a health information privacy, compliance and cybersecurity consulting company.
The deal is worth an 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.
Auxilio said 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 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.
“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.”
Title: Auxilio acquires health information privacy company for almost $27m
Source: news from Healthcare Privacy
Author: KI Design Editor