CTEK - Earnings call transcript Q1 2018

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Operator

Good day and welcome to the CynergisTek’s First Quarter 2018 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Bryan Flynn, CynergisTek Investor Relations. Please go ahead sir.

Bryan Flynn

Thank you, operator. everyone first welcome call. XXXX to want to quarter CynergisTek’s earnings I

Financial us includes Officer; Chief Chief Company from Mr. Mac Anthony, Joining the and Mr. today McMillan, President Paul Officer. Executive

could obligations to presentation, these conference and in others, update forward-looking I'd its we whether are some actual the I or made under otherwise. those or may uncertainties are cause as results those risks filings. forward-looking statements, of the to on new and time, the to this uncertainties including a SEC subject or Before be McMillan. would and such our CynergisTek the webcast, future in events like and is statements described the differ and like begin expressly call. described a call regarding information, turn to remind to risks detail of materially CEO, everyone to industry that Company's Certain over Mac At number and that of future no alter formal in greater financial results prospects, obligation result be will any among from call the disclaims

Mac McMillan

morning of when trusted the healthcare list continued within stressing our is that were be testament the recognition XXXX always on our This clients. March, by need CIO the companies everyone. increased and and to We an recognized the industry. a humbling awareness, as honor was CynergisTek commitment Bryan, to you, that you Thank only ten cybersecurity healthcare-focused the you cybersecurity best good in and the healthcare recognized further for In readiness protection are It’s industry serve. one of Bulletin. firm partner to

the difficult to industries, cyber all on attacks. it with with As sophistication and of slot up keep is

systems Orangeworm remediate at attacks this seen industries privacy the building and clients at systems, data, the assist higher the evolve damage by our privacy Their the Medicaid. PCs because serve. in latency the seen malware conducting was rate by healthcare and of of that the cyber and Healthcare launched espionage. U.S. cyber on are and approaches did of link and much According making being provide industry offer environment X-ray, new an hacker weak an reported causing healthcare exploitation. risk which it’s them continue continues to of profiles advantage environment attackers paradigm Orangeworm shown and to to and thought targeted other recent and within and evolving taking hacker protection focus the of the more an protecting remain operations medical as maintaining processes. Internet sophistication This respecting those as than devices purpose IoT executives’ other for CynergisTek, mitigate statistics in industries continues the significantly that to possibly for Study-after-study for a hackers. traditional to incidents, new unprecedented attacks has a than they instance, at more patients the increase and for operating the cost and rather also are full age-old demonstrate group the a attacks forefront MRIs is programs and healthcare up-to-date and most well. traditionally advanced For and strive to At attack we that easier attacks group particularly though patch a rate these healthcare is cybersecurity attacks, of from devices opportunity where need growing has the technologies like that not basically other should in healthcare that constantly things, fertile of in target

quarter the we the generally remain to perspective cautious uncertainty sales systems about this it to things experienced which continued in comfortable market, many its and our slower last on out to the in Turning of beginning At of impacts to call in expected, with together, recovered healthcare seem as as due quarter, the new consistent. causing became spending. the be Washington of the But message industry and more be the reimbursement. potential to last quarter month

the existing And seasonality our our low-margin would managed again with services, and continue reevaluating incident professional the growth. coupled pipeline device help expectations the offering. response which was monitoring, three-fold: improvements that am you services, EBITDA. all initial made of managed with initiatives. biggest security I our QX future. However, maintain due with we the I the we to hit of our normal particularly line our focus pleased equipment and And the our clients, strengthen the our on new like took the growing in of accelerate finally, service in sales margins our see segment, typically these services, for to see biomedical and spend. our strong affected to with recall, with to as But their performance growth completing offerings clients progress was Overall, exception top-line QX patient all to of business capital revenue to that service privacy in in have relationships

services the saw maintain new continue operations of the on within some client pipeline completed of in managed to We our losses even to the service from last restructuring MPS a the comparable growth maintain side rate, business. margins to and the the continuing XX% impact year and the with gross organization renewal for

today. of sold this programs cross-selling as a notable cybersecurity service success deals in an some an we assessment and MPS component slower Also, that in win MPS security first seeing we late QX. Children’s, both became Arkansas had have cross-selling of was program. they managed an are we that sold represented were having While hoped, largest closed was example MPS by opportunities win part our MPS client XXXX full-service security an they as the quarter in MPS print security as cap first of the our XXXX cap integrated growth Other time of

We that sales new building continue on pipeline in – the print for XXXX. our our focus for managed to our brings revamped efforts potential offerings and to that

new developing changed. in both hasn’t deliver well grow as from offerings market to services, Our continuing services devices, provide new ability as our complete solution medical software by and managed biomedical and impact We focus designed to risk as will managed effective and and more set to more services meet manage existing categorize security with offering demand to to biomedical conjunction continue device high to their support In clients evolve a devices review want These service our and for services and such protect maintenance requirements, our finally caliber the to to hospitals respect to expand pipeline medical with resilience device cybersecurity integrate the networks. management and security, healthcare of U.S. leading we better activities secure identify, for in biomedical devices GDPR. are a provider. on our create safer

Our to for SEC that of also in serve. could Technology SEC CRR Institute the GDPR they in conjunction new with are affect The Paul, cybersecurity it has the result. said of resilience in over concerns Europe Security ahead. protection on seeing will the of privacy as information be XXXX. risks States awareness areas passing growing clients directors has of Boards incidents interest Paul review to for general directors many highlights address was business recent go cybersecurity the regarding program the corporate should that quarter specific financial please addresses the a of cyber of of data of and developed and cognizant from Standards regulation an National increase of to now Homeland the I of threat the around heightened privacy Department in hand from United behalf issues our review we needs the the The the the healthcare companies around first leaders. by as ten of

Paul Anthony

to Consulting and $X.X and million and we’ve revenue resales in the to decrease $X.X margin we existing The XXX result classifying provided services, Good XXXX There adjusting the XX% per million in But morning revenues compared method adjusted for Non-GAAP Mac. everyone. recognition. for MPS decrease $X.X we in non-renewals revenue our adopted of XX, recognition at QX at We XXXX, effective the gross XXXX, services On or categories, balance five and company previous now and retained stock-based million equivalents million managed quarter change consulting EBITDA, past for of in and key compared prepaid more a income services the XX-Q. topic by in senior and financial X, quarter maintained beginning into commissions new by the are and services will and sheet. of share result, consulting executive intangibles, XX, to increased long-term current Equipment, discussed $X.X our XXXX, security-related in $X was XX%. to assets At from million, debt in basic resales. that to period this when are of XXXX. as and are quarter charges, a million services million, our to Breaking managed revenue was detail professional the decreased Deferred revenue customers. back expense corresponding now compared cash first million existing adjusted services March stock-based and into reported the Mac the customers. project-based XXXX. professional in a following found diluted XXXX a our managed services, back related increased depreciation, the in $X for The first March, $X.X This deferred and services charges in million XXXX, new the where departure predominantly or or as closing by professional of XXXX was $X.X $X.X fact revenues and revenue of between non-cash services basic the and revenues growth after guidance. short-term X% the $X.XX XXXX. to for and for the three non-recurring the call for XX% per managed in offset cash $X.X a and year adopted categories, as X, increase due from January and and $X.X quarter earnings. by $X.XX be included hardware, Non-GAAP security-related growth which was other December of deferred January million with contracts million. professional million $XX.X had down period three compared million same This XXXX, to portion. non-recurring to or financial using software remarks. the software commissions X% share revenues comp, refinancing disclosures the for down full diluted services I We we are in per concludes the is XX% revenues earnings, first The consulting same over of professional $X.XX predominantly versus new the revenue in of growth revenue from turn tax to of same no the to was of and amortization MPS customers after pronouncement. new drop adding in and nature. hardware $X the was a Thanks, XXXX. comp, recent to can consolidated difference consulting QX at

Mac McMillan

defensive, monitor Security Healthcare systemic security and presence failure attacks longer Information just aimed in down a taking that the new Officer enterprise. and implement and enforce on sophisticated coordinated but a entire comprehensive With causing can rise. infrastructure cyber the must of role critical IT. at continued framework their organizations longer No policy cybersecurity the of no be cybersecurity and Chief proactively the executives and is or the on expands heightened

solve Now, CynergisTek helping the emerging. remain will in current and a to on everyone clients role both cybersecurity challenges focused protecting has continue workplace. our

the position We prepared our services look please expand that partner. questions. This also the our partnerships remarks. support open for floor will new to and Operator, concludes solutions as through our clients’ trusted

Operator

[Operator first Craig-Hallum Instructions] Group. at go Matt Hewitt Capital We’ll to

Matt Hewitt

update the providing taking Good questions. morning, gentlemen. for our and Thanks

Mac McMillan

Thank you.

Matt Hewitt

okay? me, hear you Can

Mac McMillan

yes. Okay,

Matt Hewitt

Okay, me. A few good. questions from

business, anything you and of guess, this discussed those thinking it had First, And should that little in be which that accelerated in we come services off? previously bit the greater there about how remainder did I falling year? guys a than had contracts the over Was management decline I disclosed anticipated.

Mac McMillan

have particular anticipated. this start and the we in from to some quarter in out additional to quarter versus what see flatten do stood second still had then Nothing drop We it and should out. expect

success haven’t we As activity. mentioned, the cross-selling we quite seen a in

say, can this to in the XXXX. at to, look back going for are little and think we of then So, flat start I more the driving see it rest remain come And year. see it bit for I a least in then year, down up QX

Matt Hewitt

the What services Okay, thanks. that you’ve out And on those As update has service? talking revenues thanks that device been And could you assessment what the do reception then, start customers, quickly for been the how for to medical the reception? and has ramping? platform. think been

Mac McMillan

the them. we things which an was like the began that link that’s evaluation activities and had, and with provides those that solutions we there So, information are associated maintenance give the missing several the probably the to excited devices, we That that’s actually find that at actually maintain that the devices in inventory, risk one ability the is to those wasn’t on an did kind we about to now that over the security the three months with assess necessary of go the create and leading that of integrate hospital working, us the past. the most

that to customer every about have reception just talk very to fact time they out And and come completed for as is around guys we positive solutions into with about full solution And just relationship are optimization and a perform telling perform we somebody literally security we that we solution like, that then of us in the ago, the solutions for have in to three we for to that we assessment. the so, particular a a this and what was talking go in we to very could and we have preparation that understand talk create solution the terms About ago. the if us hospital less that that’s the months we hospital device waiting involves solution a actually out and And of that thing of and that solution impressed for to with of sales they market healthcare been began working and what desire. do allows strategic began the have, the lot provider set to turnkey now then it and a managed We one allows over hospital. has it with customers solution And a that one we on Everybody conversation we’ve solution solution our for perform that of to that where closely or most what we developing software began biomedical that, working we problem. that overwhelming. can up just that we half-a-dozen a with go received. incredibly been proposals a just a with were all implementation very, are every a they it’s would them think our that to automate already did we it. look potentially start rolled a and than the I positively this the We service can can has identified month

of the yet. know not terms I – In don’t are that how we to revenue, predict

that are We the soon. take-off are pieces hopeful assessment

hospitals, getting are very the We things aspect some least because are us. because forward in with place, hard are I very discussion to that we and those be looking but it’s we it. in revenues a see provider service positive been I have probably until we solution the the we this, with do to from work terms working really think to of But, at still for won’t – of on managed think And realistic, QX. real probably

Matt Hewitt

with or that? are you device manufacturer I sounds potential working correctly, the there with if it like mishear others one and now I am is add to hearing did you that later right And Okay.

Mac McMillan

– No, solution on when I are there. actually am out that the the that say allows solutions, I the us about talking do the inventory to devices collect

our very solution front-end also customers. able developing are to sell So, on we interested to of being also are are and put in other it they because themselves, several their device that solution working their they with that here the we manufacturers

provide There the different themselves they a devices – and device some And are developed client to company solution risk sell this they through which clients also our because we manage But not with hospitals, us are us working solutions in there the to automate two where several as is devices allows only the are process. their to case and inventory of of ultimately it’s is to the that one looking a them to working hospital sell that as for So, are device with aspect well. actually developing to us aspects have manufacturers the who kind hospitals manage device they the set partner we that all for medical it. is has with but well. for that security we evaluation they

Matt Hewitt

Okay.

device and So, the with paying that whose is the that and it protecting – it customer making the back sure is ultimately it companies or your those in would to to relationships, will hospitals is be are hospitals go relationship. patients going that how the again, contract or you

Mac McMillan

In that would device our particular relationship, customer. the be manufacturer

Matt Hewitt

of of Obviously That’s despite And little opportunities. me. it talk for I I’ll other better one into you. lead you’ve than that margins could a implemented part to the Thank back I came on business? revenue was Maybe Obviously, expecting. then the think, gross in help queue. interesting. the things bit to Maybe about hop line that some Okay.

Mac McMillan

that, we how efficiencies there things that’s restructuring and we’ve that do obviously about talked the helps how deliver things and services margins. created several we economies operations is and there So and revamping

our out as margins us we to services actually side. keep these that And our new able give of we’re on diligently are healthy rolling are We very well. and sure margins increase security lot that working the make margins to up

So, is you also security that helping helping as are overall and I margin will. we the which because think it if side you that’s healthier because to think so I margins is very grow it’s what excited that overall, picture continuing that’s seeing and incrementally, to are about it grow, has continues

Matt Hewitt

Got right. it. All Thank you.

Operator

We’ll at to move next D’Silva Andrew Riley FBR. B.

Andrew D’Silva

morning. good Hey,

Paul Anthony

Hey, Andy

Andrew D’Silva

hey, my my for going? Thanks Thanks for questions. is taking – it how taking

And could if boring be EPS Paul, from the flow maybe you Just little you to count diluted do share as for a a look here, you year-over-year, comparing color for well about help be to Cash year, bit one as operations, useful. understand adjusted using well, expect are margin you period, me last on and start from could. similar would as And you seasonality what the helpful. then CapEx year revenue this would a any with somewhat seasonality standpoint? pretty

Mac McMillan

those course, CFOs So, initially And their up reevaluating going reevaluating pronouncements in it picked and had slower in dollars questions. year contributed Paul it’s is as it significantly of seasonality roll past. slower, quarter which the spend, their is continue this But, are period to or as away. services that, hoping year more was think smooth you were affected still, and MPS or definitely are when my been. obviously those the way an to some do of more impact kind the We to for last – to opinion, pretty We’ve managed it we of and impact is don’t starting fall-off of them on – exacerbated seems increase don’t that at course this off freed sales it you side budgets, and slower all we up first year first refreshes news of good to course, – I sort than latter out. is starting that that What much. out Medicare do, out the than that’s of in eventually seen back out equipment the start by the there even to that always right the going of the of of But there, first pulling is that the – number unfortunately, year quarter we tends of that and that, first caused year that has came of it on Actually answer end the I even some the around expect well. even think in year. March. over by this has the closing time this always some be the and the part happen But, of was, those deals when to always the where seasonality the quarters the still a

from as But a don’t part I there just it’s to of comparison seasonality of always amount industry. year think apples-to-apples that certain this So, there year. this is an last

Paul Anthony

cash was diluted then, equipment quarter and of operations number this cash the capital nothing flow was and minor $XX,XXX Okay then from There for on year. XX.X. provided was CapEx material fully is $XXX,XXX, it’s the

Andrew D’Silva

following Thank at on you just Perfect. last said, quarters. you. just Mac, if year, so, the And you look up what

The first quarter is period. actually second strongest

just should from deviate the as on that year away we to than expect continues maybe for else. So more anything quarter-over-quarter that top-line look the basis on a improvements just to and progress

Mac McMillan

that’s think I correct.

there. side seeing professional will are managed or we we continuing And start MPS and some and kind the an in services those seeing progress. of impact we is sales. to of business on we over I continued kick long we and and cycle services the side what I gets – the or is continues to with – off associated have time, cross-selling that, of is the MPS security has fully slower start to And the growth We that obviously show new think feeling the to sales are the than services it to but of The are to – and been upselling an and services MPS of just ground. make it going hoped impact still impact, has it’s the a the newer had in have MPS is what it it’s grow so guess, again

Andrew D’Silva

for now color wherever like looking they hospitals stop causing just healthcare what’s it it security focus implementations say the the focused situation on cybersecurity perfect. lags security more color on landscape servicing okay, you it lagging Any sectors a physician it? retention – seems it issues the over expense And is as Thanks other more spending standpoint. other that. behind more to just gets spending general, Is focused industries? catch-up or are maybe and from for is in Okay, then, what to initiatives applications the that and perpetually where moves on think – with related right Or and needle it from on matter?

Mac McMillan

look you never historical at if they been Well, from really perspective, it a Sure. always an lag. have And they adopter. early

So, going certain amount be of a there that. is to always

there AMA that talking and if do else. I it, am to the like regulation I also, somewhere was experiencing of and healthcare some always some of we enforcing think, say, part not causes lag around are impact out also the the not of But the I or what forced today people spend discussion and to some like the have those is, government we about of well, dollars regulation. say, I’ll

doing they do. always business balance to you they need then, this between them. the What so And have requires is regulation And threat from what think then. what to do them to

that number listen of And there couple dollars high end I threat But what counterbalance the has spent equipment you is to talk if have today. another of are profile bed one another today. of the either associated the incidents because have the clinical CIOs very it’s here what been dollars or that. the balancing years and still, it’s with That there these threat the or much concern at opposed nurse hospital right, about or the number cost administrators still still concerned day, the They profile. you. balance, so, last their two piece mean, are still for very of another or particularly is to as they cybersecurity for is about, exists and you

is they’ve So the think, that pressures in been are terribly what different always ten I for don’t I the last instance. But, today than years balance there. think

with going how regulation they could just with and what’s in risk on a balancing between going Just act what’s on and the take. healthcare, business it’s feel always much they

Andrew D’Silva

on vendor are And the That as question, if examined of as And and just a layer automatically is could you that I a shelved how a now, right know contract sense Okay, you the to again, renewal any takes got situation response And your have such it. where, this until incident or customers? these useful. last on very offerings what was you but, get customers place? XXX existing are XXX response, so discuss, we this the opportunity. a are look averages the typically, by average my playing then the and on go adoption we what help and could just is probably you so, through as are a into services obviously seeing like Is just me XXXX off, situation make sense biomedical more sense new as go XXXX.

Mac McMillan

Sure.

buyer I and not they it’s contract. mean, people So, that into am services what terms of going I different – one because, roll in the contract we’ve do mostly discrete a are think renewal buyer. and generally enough first actually try wait of is all, speaking, of seen saying, of I I But the part and/or terms am assuming there is to in probably some it well, to effects

chain if privacy or So, CIO compliance service, Vendor whoever managed that security management it look the for supply could compliance. owns or is security the typically or at or a monitoring the you instance, is our privacy the be could CIO buyer officer either officer. the it is be the whereas security for patient usually

these of now program is different literally managed that own the are one that who get parts there of to number a going these services So, involved and buyer. individuals

will have going that’s that, you I’ll if So just on. wait impact, to kind renewal of a you

interested they up. what seen soon respect far, to it with bring so response, biomedical, relates we particularly we’ve as as And as seeing incident very, in those to are very them

it’s concern So, on a priority it’s doesn’t wait matter something generally high list, it’s It’s or renewal. of it them – until later. something a pain they’ll that that’s their now, causing right than if address if sooner

a So, front it getting hospital enough at buyer and people. right of it presenting it’s just to of in the matter the

Andrew D’Silva

forward going this thank you Okay, good for year. Perfect, the and luck color

Mac McMillan

Thanks.

Operator

go We’ll at Partners. Capital ROTH William next to Gibson

William Gibson

Hi, Mac. Along the…

Mac McMillan

Bill. Hi,

William Gibson

the happened breach where – lines interacting to? there Hi, in breach through Honda one of General you Laguna was you? patient was you of it’s with their yes. a Or to suppliers. news Area Is about the Along don’t it something and Or timeline triggers data what the a Francisco this that on just like something discussing, that? a were non-customers Bay San the that sort respond that week and of at Hospitals what’s call

Mac McMillan

unfortunately became obviously with there public calls is incident typically they it So, press. or you all enough and different requirement too if not and a they they we’ll they’ll obviously and that number do relationship customer perspective. often talk have somebody of of in you that a it have Those are the forensic who pick-up organization going to one was particular a we a times, what in they having in don’t phone enough, have that enough require peer they’ll of some cases, to you the And out saw, incidents should trust that big reach question times way if an somebody, depends, call. of cybersecurity from folks. that know, their insurance, to first country it If lot the ask get call reach or times to ours insurance that customer, and saw that vendor as is them are there on, think of quickly lot a with do and will in don’t and the a to? a that out kinds because that it a local the happens they often they But, that over

them somebody ours, receive they a everybody thing that we customers one couple a don’t will vendors. them, out ask of when that’s most last directly so, do best reach because a from do inbound help because have ours them a to what say, of from get not lot if find we if us. so, has customer we that found times way not to the reach they we proactively, customer that of somebody often doing for things calls in. lot people When recommended to is away, do one, But and out phone they one to other are person and of them called they is of, and and And is often that here to times doing our help? near to is we are referred us need the are peer, hear picked times incident able you. And incident up to want of peer, that we’ll an is a things, reach times, hear and the that’s of generally is to We are we it’s them we’ve effective of a to customer that’s a and the near that being out person because and an the you is a by help of right

William Gibson

Appreciated. Mac. Thanks,

Operator

to [Operator Jeff Instructions] We’ll go next Pacific Partners. Bash General at

Jeff Bash

Good morning, Mac, Paul.

Mac McMillan

Jeff. Hi,

Jeff Bash

How you? are

Mac McMillan

Good.

Jeff Bash

contract. did over management that have the couple to in we time I quarter. the or calls had had a margins new you six question a increasing on I slump to XX% first the here you hoped manpower XX% remember that are business reducing margin. usual so had first Yet, the the gross technology on the ago, of at the get for months services the up and of indicated not by

So standing this I margins on this getting up initiative the how wondering, MPS am point? at is

Mac McMillan

the… So,

Paul Anthony

Jeff, Mac. ahead, this Yes, Go is Paul.

Mac McMillan

Paul. ahead, Go

Paul Anthony

result that’s year-over-year margins flat on? least existing focus to just are of some Jeff, quarter, those least this ensure was fill on steps able our take successfully in Mac, to maintain you want at going we in the do was to accounts so. comment with again, the that of do I we what to that to as loss While business, a at and

Mac McMillan

question, well. Jeff, it to think so the I balance relates going while and new contracts take to change it’s have margin your relates still contracts, legacy contracts business MPS as and answer or enough all the as that new overall it said, we on side. dealing working that is to the with initiative as Yes, a to to Unfortunately, of so, - to Paul are

of we’ve new on had the changes in wins place, two one model. put which since So, we those was

only was really in that last or quarter closed the model one the we just one So new quarter. had this we which

you that had forward so, prior will legacy provisions still contracts if all those are we in we all And place. of putting those to carrying

as improvement those had with it for. But some the haven’t restructuring see I cost looking delivering are relates that result recouping services. margins mean, to did new margins, we enough as of those a have and Now, associated of some we overall, the of the to yet wins that impact we

Jeff Bash

I a contract. understand new on that

that opportunity the to So, changed, materially reorganize, clients restructure, be to the existing services provide cycle? is you won’t the how

Mac McMillan

Jeff. percentage, account. material margin a be that’s won’t the the to change margin existing There a in From right,

Jeff Bash

Okay.

the the integrated Now am are delivering? period I in longer-term? few that and this that make long-term mix And am or various after kind this could companies on over I after in year what through these we years, of a range just some because this of interested a you after-tax margin have you aware sort and have business idea it can that business see you changes, you net the get generate depends of two

Mac McMillan

on like Yes, the we’d more ours this like will business high years, still based the four out still three, the the thing in see we we and still where say, we years on see basis, revenue teens. is to trying a Jeff, get mix go mean, in but to off are in see I pretax this It to going. long-term,

Jeff Bash

out? other you to and kind as with biomedical existing there fraction, million, the get pretax. And Of aspects, the any sold, years what devices but, million course, great, ones it a all new two significant total of might wouldn’t Okay, the addressable do is course, is of to $XXX in maybe services or this you business any a have this revenue thoughts $!X even have you market Or biomedical a on installed the respect I industry, do mean, ten device of be that? one but thoughts of industry? potential there

Mac McMillan

players around in the I managed own relates market them know manage Philips themselves combination numbers market the to the biomedical isn’t it’s portion I that ArrowMark, have thoughts it’s managing of, organizations directly in a given large any We’ve then the to to that for got as as think Catholic But large you some And that I seen providers and level of out who and of understand Ascension there still am range that that. of it Health fully-owned bit this the I devices. et we solution behalf don’t have to new are devices. on being very that valuation have it’s who because big like think, primarily a little But skeptical – GE their Initiatives, and that think some have function those a and the discussion the really I you well. do quoted. sense subsidiary – that some you’ve going the health by too of with be partnership on And those that somebody. cetera systems, people organizations of like, just

for it because, both the well tremendous this attention. a and a that how healthcare that out a been has put people will cyber not it because, scares to think be know safety but been I plays heck the of a don’t real great only I It’s a think moment, it’s the to risk. plaguing but decade. So you over if the to – risk, it’s of it I that say to a patient say will, amount be It interesting it’s has at is out. I see gotten that problem potential I’d number that’s safe reason opportunity also –

that. genuinely why I something we And looking so that we’ve seen such a solution about it’s are response they think to positive talk far to. that’s from for So, really everybody

flow of industry about I is that’s is there industry, think been past. on kind probably risk most This with a And are as of problems around real what’s are. of because are the respect that what if all we things been one exciting around so, – they this ebb where one in will the are for you a to are hasn’t the solution going energy and issues and the But I sort addressing people mainstream guess, the other probably on these is itself. with of this in that things one the now, this is probably, because, right most of that’s the solution, – working this in they

like And kind this seen And so, few one that in of of the this a wide that see and you here. that we’ve times Greenfield really it’s is industry.

to place very playing it’s be moment. And a the at so, exciting

Jeff Bash

healthcare and all way you do company the for there offer all tools so conceptually, the drag an just forth, of overall Related, and sorts focus this although, need then of longer-term? compare that your computers obviously is healthcare, control and industries, kinds industry a might to is devices, beyond machine think opportunity

Mac McMillan

it tied the healthcare, it and because various the to us medical and to with that not but the other is, There those in three absolutely said, providers different was the as – endless we there like I identify evaluated of ability it of gave strongest were databases us devices related fact, themselves, to associated back and vulnerability devices. the only one databases solution it also of the one the three those,

devices second place, we kind could took and other perform other would of just trying evaluated we its the put the those the we to approach IoT. particular for out of that around that more in that – with to one risk solutions issue. get is have other of to against hospital. that of tools to evaluation actual will, a very respect So be was you any a that the But applicable an if endpoint it this about security there device network arms And tool one industry

particular with at is implementation of identifying working we working them we as IoT devices well. understand that how in network. in least terms yes, it where tool there company, one environment are and actually of to have actually the that And we are with we the so, And have and on works

absolutely exploring is, question and well. your that to answer are as the so, we And

Jeff Bash

Okay, thanks a lot guys.

Operator

And from at HCW. Dede Kevin we’ll our next take question

Kevin Dede

Mac. Hey,

just a there questioners bit mean, delay? kind you guess, why a implementation? on, when couple of an are about? is you you the think could back for? I I they Going you, don’t earlier, I little elaborate Is do I they worried delay balance. But they I understand just And really of come it think are most guess, to what looking understand and I a what just understand

Mac McMillan

When you here, you second a when you mean, delay in for delay, help – me so, buying? say,

Kevin Dede

of adopting in protection? but terms No, be plus curve behind yes, IT seem XX,XXX why the well, industry, in the just - the that, healthcare providers also to

Mac McMillan

on I part Well, so it focused are they put care, is clinical think, of care. much everything And singularly clinical they to else care. pretty because, secondary on

care, – it’s and it’s them. It still foremost they is first going and that something make their Anything to processes they are clinical when sure in are purchases their and and a adequate with they needs, is number protect that’s dollars, they spend to. their in typically, and requirement how for making paying so, mind such regulatory cetera, has they to cetera systems huge decision clinical you through one. et And respect that making protections that And making et it’s that be then, the of everything think And even unfortunately, and think is though, critically around in should and that two. – number it’s had would decisions. we since is those important number so, everybody cybersecurity else. operator’s something three or investments are is And data healthcare doing not particular, applications IT, attention are that want not outside they would in when that

that so, been always way. And has that

they health even understand I dollar $XXX,XXX secure. give better in I about better at they is that of $XXX,XXX have another out now efficient. a system, think know But use more I That I came very – use discussions we buy – that in it’s us to particular need I America a today, been But, can cybersecurity an topic large more we out make a were need nurse. systems to what were multi-billion – now a it, I’ll would make – that. having largest us because as appreciation make a around keep protection. that in example. do you CFO get they cyber I – relates the We the can mind, said, that this health and for one flat us enough – make to and – have and well, would think it to incidents there think it I

to paying be good ran go to to to have business. is I is one one dollars IT how at data that match organization needs things in and CSO. a at I a the can It clinical of respect think and a So as what cybersecurity, need the important – need am healthcare. the issue. dealing doesn’t think I employees that another top-XX, mean, there they millions thousands leadership CIO top-XX or result on money constantly of security opposed will revenue health have of what on how of CSO it a It’s depending merger reason happens and have said, billions that country and tell to of That’s nurse. and and that Like, strong we systems, well, use is in other for being operator an CSO of typically very going you was issue dollars soon need the flow in well, ebb the as as hundreds they to two or a or important – will the between mean, to in tens a or with for requirements we has, I organization is with of are the of of when I it. so position wrestling awareness what back solution constant don’t the concerns and today. to systems a strong its they in into security nature a that’s from the a and on not the to the relegated organization security their is, CIO a being

Kevin Dede

at assets your – portfolio look has mean, In you most gets you of what them Or the Okay. how most I that the environment, bring that which of them, pitch excited? solutions you when excited? that they

Mac McMillan

that savings have articulate services them us we excited by been I the the our we of that have thing most for managed one we carefully that is really think generate we things services, gets excited to most very that provide. think that I are that and the cost because, well, the and So, them able have done

is not this schedules devices in to devices up things look expect. spend they very allows excited they is they reason for these the regulatory same new solution XX%, devices that that lot providing of very or that manual cost And for accomplish it a I’ve do by gets opportunity respect today, same exciting FTEs with maintaining them for about in our which And is maintaining a arbitrary, capability So, has that for Security the if to security, have new essentially actually you are do I two the with and of and the reduce meaning, one systems most patient everything at thing to your can of to or process. reduce get time, bottom-line is, it them fact, And have the huge of Vendor that. I their X on monitoring, and is have them the way the where do something them a on service them a to and yet. meet cost at be it’s out they that, that t we perspective, mean, least huge. dollars is requirement the of to that devices. are on on maintenance stuff. talking with you with saved thing got arbitrary the solution example, because, we when ready, task an FTEs, perform them ready and when that’s thing privacy quality do hem, it build the be and are I I don’t something schedule, said, they new may that as same some reason they perform about look biomedical you on maintenance they what’s may may at devices. of this ready, be just instance, what schedule Management on and some an then and as the of same two going because at, number that really health that security just for when them of know these us some is, that And need And or the we from of of a I biomedical several

my the salesman. lot same are your car for because , year, XX,XXX as you car you I will and drove it because miles So, of be cars together a all a miles year, I bought you a fly a us drive and as traveling XX,XXX

the car a car if I maintenance but healthcare there. just come be got maintenance., down going had for to Your what’s maintenance will sooner when before wouldn’t these – probably devices. got this probably up dealer you is than ready whereas with medical probably an would mine, schedule, for with maintenance on going lot That’s car break today arbitrary I have your

talking allows they if what are and the are around the and them maintenance huge know, some from those offline security that what of schedule this with able that they respect schedule With dynamic downtime today. terms utilize solutions are benefits – to to in be that solutions for these they at And we taken where better the them are security their these today about if for coming gets are devices in devices of with happening collect ready to These to excited. things of us out to directly managing you is them. maintenance of are. devices. able to offline, means them to some new issues lifecycle respect the it’s are have we with a don’t that data terms that And not they start to are and I you or need there employ, take will, more is those mean, less them processes develop those better when

Kevin Dede

for insight, you color. examples, Thank and appreciated. Much the the Thanks my Okay, the for taking Mac. question.

Operator

Mac turn And that I any this At conclude today’s for to McMillan over closing remarks. question-and-answer back will session. the Mr. time conference

Mac McMillan

So, I have already remarks what said. think I closing any don’t we’ve beyond

continue our the think to going plan. is, stay I bottom-line on executing focused we to are

for. services needs, be more you the to can are deliver opportunities We and to the that able be everybody and services continue that streamline deliver market we how timely joining to go to to we hope have the going and partnerships new new and in efficient industry and we hopefully terms relevant those in of that going ways so to for hope today. know after of to we obviously continue look and then and thank services that stay for we continue are us And margins all for

Operator

And you that does participation. conference. today’s thank conclude your for Again,

CynergisTek (CTEK) 14 May 182018 Q1 Earnings call transcript