CynergisTek, a well-known healthcare privacy and information security consultancy, now is part of document management/IT security firm Auxilio following an acquisition.
Auxilio will pay as much as $26.8 million in cash, stock and seller debt with additional payments of as much as $7.5 million over five years if CynergisTek meets certain financial performance metrics, for a possible total cost of $34.3 million. Auxilio already owns data security vulnerability testing and assessment services firm Redspin and risk management vendor Delphiis, which will be merged into CynergisTek.
CynergisTek leaders Mac McMillan and Michael Mathews will join the board of the combined entity and have significant ownership stakes. CynergisTek will operate independently, but opportunities exist to offer combined services over time, said Auxilio CEO Joe Flynn in a statement. “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,” Flynn added.
Auxilio competes against such heavyweight document management firms as HealthPort and MRO, but is well-capitalized with good management, says John Osberg, a merger and acquisition specialist at consultancy Informed Partners.
Auxilio buying CynergisTek to expand into the advisory services market is a smart move, Osberg believes. Auxilio has electronic technology to help hospitals protect their written documentation by controlling whom, when and where documents can be printed. In essence, it specializes in automated risk assessment processes.
Now, Auxilio will integrate its existing security holdings--RedSpin, Delphiis and CynergisTek--into a single cybersecurity company. CynergisTek will increase its capability to offer IT staffing services to hospitals.
Merging into Auxilio was an opportunity for CynergisTek to continue growth as a publicly held company, McMillan adds. “The fact of the matter is, to take it to the next level will take more than our energy.”
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While the final name of the entity is not yet clear, McMillan, who will serve as president of Auxilio and CEO of CynergisTek, hopes to keep the CynergisTek brand alive to maintain industry recognition.
CynergisTek, recognized by vendor research firm KLAS as the highest-rated healthcare firm for security consulting in 2016, also brings revenue to Auxilio; having generated $15 million in revenue during 2016 and $5 million in earnings before interest, taxes, depreciation and amortization.
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