Auxilio, a document workflow and IT security services provider, has acquired Austin-based CynergisTek, a health IT security, privacy and compliance consultancy firm for about $26.8 million in cash, stock and seller debt, Auxilio announced Tuesday.
Over the next five years, CynergisTek may receive an additional $7.5 million in earn outs, based on whether the company meets certain financial criteria, officials said in a statement.
Founded in 2004, CynergisTek was recently recognized by KLAS as the highest-rated firm for healthcare security and consulting services.
The deal will expand CynergisTek’s capabilities by utilizing Auxilio’s Redspin services, tools and personnel. Officials said CynergisTek will continue to operate independently as a wholly-owned subsidiary of Auxilio, which will include end-to-end IT security tools.
The Redspin division will join CynergisTek to complement the company’s existing services, like penetration testing, security assessment and risk management and will improve technical resources and capabilities, according to officials.
“It’s 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,” Auxilio CEO Joe Flynn said in a statement. “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.”
CynergisTek was paid an initial consideration of about $28.6 million, which includes $15 million in cash, 1.17 million shares of Auxilio common stock and a seller’s note of $9 million, officials said. Auxilio entered into a 5-year term loan from Avid bank for $14 million to fund the cash payment.
CynergisTek founders Mac McMillan and Michael Matthews will join Auxilio’s board of directors and take an ownership stake in the company. The companies will align service offerings to provide information management solutions for risk mitigation and improved productivity and savings in the healthcare industry.
“With assets from Auxilio, we’ll have what we need to extend our offerings and to keep pace with market demand,” Mac McMillan said in a statement.
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Email the writer: jessica.davis@himssmedia.com
