Auxilio Inc – Another Double for Smallcaps Investment Research
When we first featured Auxilio Inc. (AUXO – $5.26) in October 2015, its stock was trading at $0.95. Within less than two years of our recommendation, the stock hit a high this week of $5.73, and it’s even been as high as $6.72 a couple of weeks ago. Taking into account the 1-for-3 reverse split from January 2017, the stock went up 101% and 136% respectively.
Several catalysts during the past few quarters contributed to this excellent achievement. The Company signed several multimillion dollar contracts, it uplisted to the NYSE Mkt and most importantly it completed a $34.3 million acquisition that is expected to immediately boost sales and earnings.
CynergisTek Acquisition
Auxilio’s biggest achievement was its acquisition of Austin, TX based CynergisTek, an industry leader in health information privacy, compliance and cybersecurity consulting in January 2017.
CynergisTek has provided services to hundreds of hospitals and healthcare organizations since its inception in 2004 and was recently recognized by KLAS – a provider of unbiased vendor performance data for the healthcare IT security sector – as the highest-rated firm that healthcare provider organizations rely on for security consulting and services.
CynergisTek generated approximately $15 million in revenues and $5.0 million of EBITDA in 2016. The transaction is expected to be substantially accretive to 2017 EPS.
Auxilio paid 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. 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.
“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.
Substantial Contract Added
Late 2016, Auxilio signed a five-year contract with MaineHealth, a prominent 1,100 bed health system employing more than 11,000 employees. MaineHealth is the Company’s first Print as a Service (PRaaS) customer. PRaaS is Auxilio’s new offering providing hospitals a scalable and customizable service to address all or some aspects of the document continuum.
Auxilio’s PRaaS offering provides hospitals the ability to choose the level of service needed. Its flexible PRaaS plans range from toner management and break/fix to an innovative solution that analyzes document workflow and security to optimize and manage the document processes. With the recent acquisition of CynergisTek, an industry leader in health information privacy, compliance and cybersecurity consulting, Auxilio can now offer its healthcare clients integrated document and device security solutions that reduce risk and deliver long-term value.
Moreover, in March of 2017, Auxilio signed another five-year, approximately $12.5 million contract with a 1,000-bed prestigious teaching hospital located in the Central United States to deliver a Print-as-a-Service (PRaaS) program.
“Our goal is to drive out costs, saving up to 50% over five years for the university medical center. Our priority is streamlining the fragmented print environment and then introducing workflow solutions to transform document processes to digital workflows and implement a security strategy to protect PHI found on devices, the network and printed documents,” said Sean Hughes, EVP of Operations at Auxilio.
Reverse Split and Uplisting
Early 2017, the Company decided to initiate a reverse stock split of its shares at a ratio of 1-for-3.
“Our Board of Directors laid out a plan designed to enhance shareholder value last year and a listing on a major exchange was one key consideration. We continue to execute well as a business and I am pleased to take another step toward our vision of becoming a nationally listed public company,” commented Joseph Flynn.
Less than a month later that vision became a reality when Auxilio’s common stock was approved for listing on the NYSE MKT.
Joe Flynn said, “This acceptance marks a significant milestone for us in our company’s ongoing growth. Uplisting to the NYSE MKT is the most effective method for us to increase stock liquidity and exposure to attract institutional investors, and is a key piece of the equation in our plan to enhance shareholder value.”
Conclusion
It has always been the endeavor of Smallcaps Investment Research to recommend good, solid, and undervalued small cap stocks to ensure that our readers benefit from our stock picks. We highlighted Auxilio Inc. in 2015 as we felt that the Company had a solid business being a leading provider of complete document workflow solutions and IT security services for the healthcare industry. Our thorough research again proved to be correct, making Auxilio the 76st stock that at least doubles out of a total of 161 recommendations. Check out our Track Record for more details.
| Sign up for our weekly e-mail newsletter and be the first to receive our best ideas and updates. |
| For important disclosures, please read our disclaimer. |