Document management company Auxilio has acquired health IT security technology vendor CynergisTek in a deal that could be worth as much as $34.3 million.
It’s actually more of an acquisition-merger, according to CynergisTek Chairman, CEO and Cofounder Mac McMillan, as two previously acquired Auxilio subsidiaries, Redspin and Delphiis, will move under the CynergisTek umbrella. Redspin offers medical device testing services, while Delphiis is a remotely hosted health IT risk management tool.
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“Both of those are going to be integrated into CynergisTek rapidly,” McMillan said. His Austin, Texas-based company will be operated as an Auxilio subsidiary and keep its current name.
Auxilio, of Mission Viejo, California, is paying $26.8 million in cash, stock and debt assumption up front for CynergisTek. The sellers could bring in as much as $7.5 million more over the next five years should Auxilio hit certain, unspecified financial targets, the companies said.
McMillan and his other cofounder, Michael Matthews, are taking ownership positions in Auxilio. Both have been given board seats and McMillan will be the No. 2 executive at Auxilio, under CEO Joe Flynn.
“We were not looking just to sell,” McMillan said. “[This deal] enabled us to enhance what we were doing and continue to grow,” he added.
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For example, Auxilio has a security staffing operation for healthcare organizations, something that CynergisTek did not previously offer. The buyer also is publicly traded as an over-the-counter stock, which gives 13-year-old CynergisTek access to capital it might not otherwise had.
McMillan said he looked at raising additional venture capital for his firm. “We never really were comfortable with a lot of the models that were presented to us,” he said.
Photo: CynergisTek
