Healthcare Document Solutions Provider Auxilio Acquires CynergisTek for Up to $34.3 Million
Auxilio, Inc., a provider of complete document workflow solutions and IT security services for the healthcare industry, acquired Austin, TX-based CynergisTek, health information privacy, compliance and cybersecurity consulting vendor.
Auxilio will pay as much as $34.3 million for CynergisTek if certain financial criteria are met.
Auxilio says that the deal calls for an initial consideration of approximately $26.8 million in combined cash, stock, and seller debt, and additional "earn outs" may be paid of up to $7.5 million over the next 5 years based on certain financial criteria being met.
According to Auxilio, the acquisition will enable it to meet growing demand from healthcare customers for comprehensive IT security solutions that reduce risk and deliver long-term value.
CynergisTek will continue to operate 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.
While CynergisTek will continue to operate independently, there are numerous opportunities for mutually assisted growth over the near term and Auxilio foresees the ability to offer services under a combined umbrella over time, said Joe Flynn, CEO of Auxilio.
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.
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.
Auxilio says that 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.