Letter to Shareholders – April 2015

Dear Fellow Shareholders:

First of all, I hope this letter finds you and your loved ones well.  As you may be aware, the past year has seen some significantly transformative and exciting times for Auxilio.

We were able to secure significant MPS contracts with two of the nation’s largest health systems, expanding our services to hospitals located within the majority of the United States. Combined, these deals total over $68 million over the next five years.  These contracts affirm our ability to guarantee cost efficiencies and process improvement to major health systems, and firmly positions us as a leader in the MPS space. Our current book of business provides visibility and paves the way for sustained, double-digit top-line growth for the next two years.  We believe this will translate into incremental business with existing customers and additional wins with new players, including those based in the Midwest, a region in which we are, for the first time, firmly planted.

As you may also be aware, this past July Auxilio acquired Delphiis.  This acquisition allowed us to create the Security Solutions Group which we hope will drive incremental revenue growth by providing Healthcare Information Security Services.  We also recently acquired Redspin, which we announced on our earnings call at the end of March.  These businesses directly complement each other and bring robust cross-selling opportunities across our respective client lists.  Going forward, we will utilize our position as a valued provider to healthcare systems to further advance our risk and information security offerings. This is an area of our business which we believe can grow significantly due to on-going HIPAA compliance requirements which include: maintaining, safe-keeping, transferring and securing all aspects of personal health information (PHI).  This need is further bolstered by high profile breaches and resulting large fines. In addition to driving organic growth across existing and new healthcare customers, we will continue to evaluate targeted acquisitions which could expand the breadth and depth of our offerings in this vertical.

During the recent conference call to discuss 2014 year-end results, I laid out certain goals for 2015.  I would like to reiterate those goals in this letter, which are:

  • Successfully implement and build upon the recent large scale MPS customer wins.
  • Sign additional MPS business with existing and new accounts.
  • Successfully integrate Redspin into our Security Solutions Group, further expanding our suite and creating a seamless end-to-end offering.
  • Win more Security business, including our first existing MPS customer win.
  • Diligently work on key acquisitions to further strengthen the Security business.
  • Secure an up-listing to a major exchange. This is a key corporate goal, and as our growth becomes more apparent in our reported financials, we hope to make this a reality.

To this end, I would like to encourage you to vote in our proxy that has been sent out for the 2015 annual shareholders meeting. In this year’s proxy, one of our main goals is to elect our current slate of directors, many of whom have been with us for a number of years and have provided tremendous value to our organization.  We have also introduced two new Board candidates.  We are excited about the prospect of these gentlemen joining our already-impressive team.  In addition, the approval of a reverse stock split has been renewed on this year’s ballot. This reverse split would only be utilized as a last resort for an up listing to a major exchange.  Our Board and Management team feel strongly that the company has reached a maturity level whereby being on a major exchange would benefit the company by, among other things, exposing us to a larger base of shareholders. Your support in these matters will enable us to execute on our operating plans and, in the end, create more value for all of us as shareholders.

In closing, I want to acknowledge and thank you, on behalf of all of our key stakeholders, for your outstanding support of Auxilio. Whether you’re a long-term investor or have been introduced to our company more recently, I want you to know that we take very seriously the responsibility of building a great company – one that strives to consistently deliver solid results to our customers and shareholders.  And finally I’d like to recognize the entire team here at Auxilio for all of their hard work and their commitment to our company. I really appreciate their extraordinary dedication to making this company a special one.  We continue to be focused on building a great company that will make a difference in the lives of our customers, employees, shareholders and the nation.

Thank you,

 

Joseph J. Flynn

President and Chief Executive Officer