march 2018 nyse american: ctek - cynergistek, inc. · 2020-01-23 · year ended december 31, 2016;...

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Investor Presentation March 2018 NYSE AMERICAN: CTEK

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InvestorPresentationMarch2018NYSEAMERICAN:CTEK

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SafeHarborStatementsThispresentationcontains,andourofficersandrepresentativesmayfromtimetotimemake,“forward-

lookingstatements”withinthemeaningofthesafeharborprovisionsoftheU.S.PrivateSecuritiesLitigationReformActof1995.Forward-lookingstatementscanbeidentifiedbywordssuchas:“anticipate,”“intend,”“plan,”“goal,”“seek,”“believe,”“project,”“estimate,”“expect,”“strategy,”“future,”“likely,”“may,”“should,”“will”andsimilarreferencestofutureperiods.Examplesofforward-lookingstatementsinclude,amongothers,statementswemake(hereinorotherwise)regardingthesizeofthepotentialmarketforourservices;thenumberofpotentialcustomers/clientsforourservices;plansandstrategiesofCynergisTekanditssubsidiariesforfuturegrowthandperformance;marketacceptanceofourbusinessmodel;ourabilitytointegrateacquisitionsandmergedcompanies;andtimelinesrelatingtogrowth,milestones,andstrategicfocus.

Forward-lookingstatementsareneitherhistoricalfactsnorassurancesoffutureperformance.Instead,theyarebasedonlyonmanagement’scurrentbeliefs,expectationsandassumptionsregardingthefutureofourbusiness,futureplansandstrategies,projections,anticipatedeventsandtrends,theeconomyandotherfutureconditions.Becauseforward-lookingstatementsrelatetothefuture,theyaresubjecttoinherentuncertainties,risksandchangesincircumstancesthataredifficulttopredictandmanyofwhichareoutsideofourcontrol.Ouractualresultsandfinancialconditionmaydiffermateriallyfromthoseindicatedintheforward-lookingstatements.Therefore,youshouldnotrelyonanyoftheseforward-lookingstatements. Importantfactorsthatcouldcauseouractualresultsandfinancialconditiontodiffermateriallyfromthoseindicatedintheforward-lookingstatementsinclude,amongothers,theriskfactorsdiscussedthroughoutPartII,Item7.Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations,andinPartI,Item1A.RiskFactorsofourAnnualReportonForm10-KfortheyearendedDecember31,2016;andthroughoutPartI,Item2.Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperationsofourQuarterlyReportsonForm10-QforthequartersendingMarch31,June30andSeptember30,2017.Anyforward-lookingstatementmadebyusinthispresentationisbasedonlyoninformationcurrentlyavailabletousandspeaksonlyasofthedateonwhichitismade.Weexpresslydisclaimanyobligationtopubliclyupdateanyforward-lookingstatement,whetherwrittenororal,thatmaybemadefromtimetotime,whetherasaresultofnewinformation,futuredevelopments,orotherwise.

Introduction

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CynergisTekCybersecurityandInformationManagementforHealthcare

NationwidePresenceConsultantsaverage15yearsofexperienceintheirdomainexpertisewith100+individualindustryrecognized

certifications

2016Revenue$60M

AdjustedEBITDA$3.8M

CoveredEntities*1,000healthcare

providerlocationsandbusinessassociates

Contracts70%ofclientsin3-5

yearmanagedservicescontracts

*Coveredentities are defined intheHealthInsurancePortabilityandAccountabilityAct(HIPAA)rulesas(1)healthplans,(2)healthcareclearinghouses,and(3)healthcareproviderswhoelectronicallytransmitanyhealthinformationinconnectionwithtransactionsforwhichthedepartmentofHealthandHumanServices(HHS)hasadoptedstandards.

MarketOpportunity

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PrintHasIncreased11%SignificantrisktoPHIandcostsavingsopportunityforhospital.

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CostofaBreachBreachescostthehealthcareindustry$6.2B/yr1,90%ofall

hospitalshadabreachinthepasttwoyears.2

HealthcareITIndustryDynamics3.5MillionCoveredEntitiesand35MillionBusinessAssociates

ITSpendonSecurity3

Healthcare4-6%Financial10-12%Government7-9%

InternetofThings(IoT)Estimated27billiondevicesby

2019.Biomedicaldevicerisk.

IncreasedRegulationOCRenforcementofHIPAAamong

coveredentitiesandbusinessassociates.

LackofResourcesCybersecuritylaborcrunchtohit1.5millionunfilledjobsby20194 with84%ofhospitalslackingadedicated

securityleader5

Referencesonslide24.

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$11BDomesticMarketOpportunity

Healthcare$11B9 Market

EHRproduces60% ofprintvolume6

-Paperrepresents30%ofallbreaches

$65B- estimatedcumulativehealthcarecybersecurityspendonproductsandservices

overthenextfiveyears7

Hackingincidentsinvolvingransomware

andmalwaredoubled from

2016to20178

37% ofdatabreachesin2017weretiedtoinsidererrororwrongdoing,whichcompromised

nearly1.7millionpatientrecords8

Thefundamentaldifferencebetweenhealthcareandotherindustriesisthatit’snotjustaboutmoneyandinformation,it’saboutthequalityofcareandpatientsafety.

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IntheNews

HealthcareOrganizationswillbethemosttargetedsectorwithnewsophisticatedattacksemerging

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Ransomware64%ofvictimsintheU.S.payransom

ThreatsTrendof1breachadaycontinuesinto2018(Healthcarespecific) 8

WeaponizedIoTdevicesTakedowncriticalcloudservices

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5

DisruptiveAttacksShutting downhospitals

IdentityTheftEverytwosecondssomeoneisavictimofidentitytheft

6GlobalNearly1billionpeoplegloballywerevictimsofcybercrimein2017up45%from2016 10

Victimsofcybercrimegloballylost$172billion 10

Solutions

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TheServicesWeProvide

ConsultingServices

• RiskAssessment• TechnicalSecurityAssessment

• PrintSecurityAssessment• ArchitectureAssessment• SocialEngineeringandPhishing

• PrivacyProgramAssessment

• PolicyandProcedureDevelopment

• ComplianceProgramEffectivenessAssessment

• HIPAAResearchProgramAssessment

• MeaningfulUseAudits

ManagedServices

• ComplianceAssistPartnerProgram

• VendorSecurityManagement

• PrivacyMonitoring• VulnerabilityManagement

• ManagedPrintService• IncidentResponseManagement

ProfessionalServices

• Remediation• ProgramDevelopment• StrategicStaffing• VirtualCISO

Security/Privacy/Compliance/CostAvoidance

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CompetitiveAdvantageUnmatchedHealthcareCybersecurityExperts

StrongRelationshipsandTrackRecord

ThoughtLeaders

TrustedAdvisor

WellKnownIndustryPlayer

MarketDriven

TailoredSolutions

CynergisTekwonthe2017BestinKLASAwardforCyberSecurityAdvisoryServices

FinancialPerformance

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SnapshotNYSE AMERICAN 2/27/2018

Shareprice $5.31

Marketcap $50M

FDSharesOutstanding 10M

SharesOwnedbyMgmt.andBoard

25%

IncomeStatement 2016 YTDQ32017

Revenue $60M $53M

AdjustedEBITDA1 $3.4M $5.3M

AdjustedEarnings1 $3.3M $3.9M

Cash $6.1M $2.7M2

Debt $1.3M $21.4M1 Pleaseseeourannualandquarterlyearningsreleasesforcompletedetails.2Companymaintainsa$5Mreceivablebasedlineofcreditwith$0balanceoutstanding.

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RevenueFinancialHighlights

$44

$61 $60

$53

19% 17%

20%

29%

$44 Q3YTD

2014 2015 2016 YTD3Q17

Revenue GrossMargin YTD

$INM

ILLIONS

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AdjustedEBITDAFinancialHighlights

1AdjustedEBITDA:adjustingEBITDAforstockbasedcompensation.2AdjustedEarnings:adjustingnetincomeforestimatedcashtaxadjustment,amortizationofintangibles,stockbasedcompensation anddepreciation.

$2.1$1.8

$3.4

$5.3

$1.8 $1.7

$3.3

$3.9

2014 2015 2016 YTD3Q17

AdjustedEBITDA AdjustedEarnings

$INM

ILLIONS

AboutUs

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SnapshotofClients

Samplerepresentationofmorethan1,000healthcareproviderlocationsandbusinessassociates.

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ManagementTeam

MacMcMillanChiefExecutiveOfficer

PaulAnthonyChiefFinancialOfficer

Machasnearly40yearsofbothgovernmentandprivatesectorexperience.HeservedasDirectorofSecurityfortwoDefenseAgenciesandasanIntelligenceOfficerintheU.S.Marines. Hehasworkedinthehealthcareindustrysincehisretirementfromthefederalgovernmentandcontributesregularlytoindustrythoughtleadership.

PaulisaCertifiedPublicAccountantandanexpertinfinancialmanagement,investorrelations,tax,treasuryandriskmanagementwithover25yearsofprofessionalservicesexperiencewithworldwideenterprises,publiclytradedcompaniesandstart-ups.HiscareerhasincludedtimewithKPMG,PeatMarwickLLPandIBM.

AngelaRiveraEVPOperations

DavidFinnEVPStrategy

AngelaRiveraisapassionateexecutivewith25yearsofexperienceinthehealthcareindustrywithsignificantfocusservingthehealthcareproviderindustry. Ms.Riveraservedthelast17yearsinvariousrolesatComputerTaskGroup. InhermostrecentroleasVicePresident,HealthSolutionsforComputerTaskGroup,sheheldexecutiveresponsibilityforsolutionsandgrowthstrategy,qualityservicedelivery,andmanagementoftheprofessionalconsultingbasethatdeliveredinformationtechnologyservicesandsolutionstoCTG’shealthcareprovider,payer,andlifesciencesclientsinNorthAmerica.

David,comesfromSymantecandhasbeeninvolvedinleadingtheplanning,management,andcontrolofenterprise-wide,mission-criticalinformationtechnologyandbusinessprocessesformorethan30years.Hisuniqueexperienceinriskmanagementandcontrolobjectivesoftechnology(includingaudit,security,andprivacy)allowshimadistinctiveperspectiveinthedesignandimplementationofbusinessapplicationsandtheprocessesthatthetechnologymustsupport.

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Create$150MRecurringRevenueHealthcareIT

ServicesBusiness5yeargoalwith>15%adjusted

EBITDA.

GrowthInitiatives

EmployeeInvestmentContinuetostrengthenandbuildontheteamsdepthofknowledgein

cybersecurity.

CybersecurityFocusContinuegrowingserviceofferings

tomeetmarketdemand.Bethe#1trustedsourceinthe

market.

IncreaseShareholderValue

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BoardofDirectors

J.D.AboucharChairmanoftheBoard

DrexDeFordDirector

PrincipalatDrexioDigitalHealth,formerHealthcare

CIO

MacMcMillanDirector

CEOOFCynergisTek

JudyKrandelDirector

SnapInteractiveCFO

MarkRobersonChairmanoftheAudit

CommitteeCOOofChanticleerHolding,

Inc.

TheresaMeadowsDirectorSVP/CIO

CooksChildren’sHealthCareSystem

Dr.MichaelMathews

DirectorCOOofCynergisTek

TransitionofBoardin2016and2017

bringinginhealthcareITandcapitalmarkets

expertise

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InvestmentThesisfortheNewCTEK

FY17:Transformation

FY18:Execution

FY19&FY20:Opportunity

Growanddeployprofessionalandprivacyservicesofferingsthathelphealthcareorganizationsremediate,developandimplementprogramsandtechnologytofulfillshort

andlong-termsecurityandprivacyroles

Wellpositionedforsustainablemidtohighorganicrevenuegrowth

Fundamentaloperationalimprovementsexpectedtoresultinindustry-leadingoperatingmargin

Experiencedmanagementteamwithprovenoperationalsuccessanddeephealthcarecybersecurityknowledge

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Questions

[email protected]

Questions?

?

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References

HealthcareITIndustryDynamics:1 Beckers HealthcareITandCIOReview,20172 HIMSSAnalyticsHealthcareITSecurityandRiskManagementStudy,20163 SANSITSecuritySpendingReport,20164CybersecurityVenturesHealthcareCybersecurityReport2017Edition5BlackBookResearchQ42017surveyofUSHealthcareIndustry

$11BDomesticMarketOpportunity:6 Nuance7 CybersecurityVenturesHealthcareCybersecurityReport2017Edition8 Protenus,Inc.andDataBreaches.Net 2017AnnualBreachBarometer9 GrandviewResearchIncHealthcareCybersecurityMarketAnalysisandSegmentForecastto2022

IntheNews:10 2017NortonCybersecurityInsightsReports– GlobalResults