Investor Presentation November 2017 NYSE AMERICAN: CTEK Safe - - PowerPoint PPT Presentation

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Investor Presentation November 2017 NYSE AMERICAN: CTEK Safe - - PowerPoint PPT Presentation

Investor Presentation November 2017 NYSE AMERICAN: CTEK Safe Harbor Statements This presentation contains, and our officers and representatives may from time to time make, forward-looking statements within the meaning of the safe harbor


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Investor Presentation

November 2017 NYSE AMERICAN: CTEK

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Safe Harbor Statements

This presentation contains, and our officers and representatives may from time to time make, “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of

  • 1995. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,”

“believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Examples of forward-looking statements include, among others, statements we make (herein or

  • therwise) regarding the size of the potential market for our services; the number of potential customers/clients for
  • ur services; plans and strategies of CynergisTek and its subsidiaries for future growth and performance; market

acceptance of our business model; our ability to integrate acquisitions and merged companies; and timelines relating to growth, milestones, and strategic focus. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on management’s current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among

  • thers, the risk factors discussed throughout Part II, Item 7. Management’s Discussion and Analysis of Financial

Condition and Results of Operations, and in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2016; and throughout Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Quarterly Reports on Form 10-Q for the quarters ending March 31, June 30 and September 30, 2017, Any forward-looking statement made by us in this presentation is based only on information currently available to us and speaks only as of the date on which it is made. We expressly disclaim any

  • bligation to publicly update any forward-looking statement, whether written or oral, that may be made from time

to time, whether as a result of new information, future developments, or otherwise.

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Introduction

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CynergisTek

Cybersecurity & Information Management for Healthcare

Nationwide Presence Consultants average 15 years of experience in their domain expertise Revenue $60M in 2016 Covered Entities 1,000 healthcare provider locations and business associates Contracts 3-5 year service contracts Auxilio acquires CynergisTek in 2017

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Market Opportunity

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Print Has Increased 11%

Significant risk to PHI and cost savings opportunity for hospital.

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Cost of a Breach

Breaches cost the healthcare industry $6.2B/yr1, 90% of all hospitals had a breach in the past two years.2

Healthcare IT Dynamics

3.5 Million Covered Entities and 35 Million Business Associates

IT Spend on Security3

Healthcare 4-6% Financial 10-12% Government 7-9%

Internet of Things (IoT)

Estimated 30 billion devices by 2020. Biomedical device risk.

Increased Regulation

OCR enforcement of HIPAA among Covered Entities and Business Associates.

Lack of Resources

Shortage of estimated 1.5M cybersecurity resources. Leading to managed services and program delivery.

References on slide 25

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$12B+ Domestic Market Opportunity

EHR produces 60%

  • f print volume1
  • Paper represents

30% of all breaches

Healthcare $12B Market

Market Cap combined Healthcare Cybersecurity and MDS business

40% of 2016 breaches were unauthorized disclosure2 64% increase in breaches related to hacking in 2016 vs. 20153 41% of data breaches in 2017 were tied to insider error or wrongdoing, which compromised nearly 1.2 million patient records.

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In the News

Enterprise Attacks are Growing and Impacting Consumers

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Ransomware 64% of victims in the U.S. pay ransom Threats 1 in 131 emails are malicious Weaponized IoT devices Take down critical cloud services

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Disruptive Attacks Shutting down hospitals Identity Theft Every two seconds someone is a victim of identity theft

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Global 689 million people globally were victims of cybercrime in 2016

Cybersecurity labor crunch to hit 3.5 million unfilled jobs by 2021

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Solutions

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The Services We Provide

Consulting Services

  • Risk Assessment
  • Technical Security

Assessment

  • Print Security Assessment
  • Architecture Assessment
  • Social Engineering and

Phishing

  • Privacy Program

Assessment

  • Policy and Procedure

Development

  • Compliance Program

Effectiveness Assessment

  • HIPAA Research Program

Assessment

  • Meaningful Use Audits

Managed Services

  • Compliance Assist Partner

Program

  • Vendor Security

Management

  • Privacy Monitoring
  • Vulnerability

Management

  • Managed Print Service
  • Incident Response

Management Professional Services

  • Remediation
  • Program Development
  • Strategic Staffing
  • Virtual CISO

Security/Privacy/Compliance/Cost

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Thought Leader Unique lead generation efforts of educational events and PR to gain share of voice in the market.

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Our depth and breadth in the industry make us a trusted partner to healthcare leadership, providing the services they need. Account Managers embedded into client to upsell services across the organization. Building long-term partnerships and becoming the trusted advisor with our clients.

Go-to-Market Strategy

Market Approach

Upsell

Longevity

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Competitive Advantage

Unmatched Healthcare Cybersecurity Experts

CynergisTek won the 2017 Best in KLAS Award for Cyber Security Advisory Services

Effective Leadership Customer Driven Strong Relationships and Track Record Well Known Industry Player Actionable Insight Tailored Solutions

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Financial Performance

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Snapshot

NYSE AMERICAN 11/28/2017 Share price $4.06 Market cap $41M FD Shares Outstanding 10M Shares Owned by Mgmt. and Board 25% Income Statement 2016 YTD Q3 2017 Revenue1 $60M $53M Adjusted EBITDA1 $3.4M $5.3M Adjusted Earnings $3.3M $3.9M Cash $6.1M $2.7M2 Debt $1.3M $21.4M

1 Please see our annual and quarterly financial results for complete details. 2 Company maintains a $5M receivable based line of credit with $0 balance outstanding.

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Revenue

Financial Highlights

$44 $61 $60 $53 19% 17% 20% 29% $44 Q3 YTD 2014 2015 2016 YTD 3Q17 Revenue Gross Margin YTD $ IN MILLIONS

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Adjusted EBITDA

Financial Highlights

1 Adjusted Earnings: adjusting for estimated cash tax adjustment, interest expense, amortization of intangibles, stock based compensation and depreciation

$2.1 $1.8 $3.4 $5.3 $1.8 $1.7 $3.3 $3.9 2014 2015 2016 YTD 3Q17 Adjusted EBITDA Adjusted Earnings $ IN MILLIONS

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About Us

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Snapshot of Clients

Sample representation more than 1,000 healthcare provider locations and business associates.

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1 3 2 4

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Create $150M Recurring Revenue Healthcare IT Services Business

5 year goal with >15% adjusted EBITDA.

Employee Investment

Continue to strengthen and build on the teams depth of knowledge in cybersecurity.

Increase Shareholder Value Cybersecurity Focus

Continue growing service offerings to meet market demand. Be the #1 trusted source in the market.

Growth Initiatives

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Management Team

Mac McMillan

Chief Executive Officer

Paul Anthony

Chief Financial Officer

Mac has nearly 40 years of both government and private sector experience. He served as Director of Security for two Defense Agencies and as an Intelligence Officer in the U.S. Marines. He has worked in the healthcare industry since his retirement from the federal government and contributes regularly to industry thought leadership. Paul is a Certified Public Accountant and an expert in financial management, investor relations, tax, treasury and risk management with over 20 years of professional services experience with worldwide enterprises, publicly traded companies and start-ups. His career has included time with KPMG, Peat Marwick LLP and IBM.

Angela Rivera

EVP Operations

David Finn

EVP Strategy

Angela Rivera is a passionate executive with 24 years of years experience in the healthcare industry with significant focus serving the healthcare provider industry. Ms. Rivera served the last 17 years in various roles at Computer Task

  • Group. In her most recent role as Vice President,

Health Solutions for Computer Task Group, she held executive responsibility for solutions and growth strategy, quality service delivery, and management of the professional consulting base that delivered information technology services and solutions to CTG’s healthcare provider, payer, and life sciences clients in North America. David, comes from Symantec and has been involved in leading the planning, management, and control of enterprise-wide, mission-critical information technology and business processes for more than 30 years. His unique experience in risk management and control objectives of technology (including audit, security, and privacy) allows him a distinctive perspective in the design and implementation of business applications and the processes that the technology must support.

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Board of Directors

J.D. Abouchar

Chairman of the Board

Drex DeFord

Director Principal at Drexio Digital Health, former Healthcare CIO

Mac McMillan

Director CEO OF CynergisTek

Judy Krandel

Director Snap Interactive CFO

Mark Roberson

Chairman of the Audit Committee COO of Chanticleer Holding, Inc.

Theresa Meadows

Director SVP/CIO Cooks Children’s Health Care System

  • Dr. Michael

Mathews

Director COO of CynergisTek

Transition of Board in 2016 and 2017 bringing in healthcare IT and capital markets expertise

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Investment Thesis for the New CTEK

FY17: Transformation FY18: Execution FY19 & FY20: Opportunity

Grow and deploy professional and privacy services offerings that help healthcare

  • rganizations remediate, develop and implement programs and technology to fulfill short

and long-term security and privacy roles Well positioned for sustainable mid to high organic revenue growth Fundamental operational improvements expected to result in industry-leading operating margin Experienced management team with proven operational success and deep healthcare cybersecurity knowledge

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Questions

Mac McMillan mac.mcmillan@cynergistek.com Questions?

?

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References

Slide 6:

1 Beckers Healthcare IT and CIO Review, 2017 2 HIMSS Analytics Healthcare IT Security and Risk Management Study, 2016 3 SANS IT Security Spending Report, 2016 4 BI Intelligent Estimates – Global Data, 2015

Slide 7:

1 Nuance 2 Bitglass Breach Report 3 Modern Healthcare December 2016