A Closer Look at the AUXILIO / Sodexo Partnership
Ken Nagy, CFA
AUXILIO (AUXO) is the only health care exclusive, vendor neutral Managed Print Services (MPS) firm that provides document production management strategies, services and solutions to hospitals and health care systems throughout the United States. AUXILIO’s continuous workflow improvement methodology enables hospitals to reduce costs and waste in their operational and clinical functions through paper volume reduction techniques and end-to-end document production efficiency strategies between printing and copying equipment and technology. AUXILIO should see a tailwind in its top and bottom-line growth given the Health Information Technology federal mandates; the fact that hospitals are seeking efficiencies to reduce the cost of health care to the public, and because of increasing reductions in Medicare reimbursements.
In May 2011, AUXILIO expanded its marketing alliance with Sodexo Inc., a global leader in comprehensive service solutions that has over 1,300 U.S. hospitals as part of its customer portfolio.
Originally, the Company had entered into a five year joint marketing agreement with Sodexo in 2008, whereby AUXILIO’s MPS program was offered to Sodexo’s health care customers as part of its service offering. Sodexo does not offer document production solutions as part of its core programs.
This agreement led to four MPS contracts in 2010, including a five-year, multi-campus contract with the prestigious Johns Hopkins Health System (JHHS). The Johns Hopkins Hospital, flagship of JHHS, has been ranked America’s #1 hospital by U.S. News & World Report in its annual “Best Hospitals” issue for the past 20 years. This prominence in the health care industry by an AUXILIO’s customer should, over the course of time, influence other potential large health care systems to take notice of AUXILIO’s intelligent solutions, risk-free program and guaranteed savings.
Under the terms of the new and enhanced marketing agreement, Sodexo doubled its investment in AUXILIO’s sales and marketing resources, which bolsters the Company’s ability to leverage Sodexo’s hospital customers, gain access to more C-suite decision-makers at hundreds of hospitals across the nation and capture more share in the $22 billion market in which AUXILIO competes.
We anticipate the company will start experiencing traction from the expanded agreements in late 2012. In the meantime, it is important to note that much of AUXILIO’s 34 percent year over year increase in second quarter 2011 sales was due to organic sales force efforts. This in turn should prove beneficial to AUXILIO and its shareholders as the Company further advances its sales progress as well as expands its ability to attract and sign new customer contracts. Besides JHHS, since July 2011, the Company has signed new, expanded or extended contracts with Saint Joseph’s Medical Center, NY; New York Hospital Queens, NY; Sutter Health West Bay Region, CA; St. Joseph’s Health System, CA; Barnabas Health, NJ; MemorialCare Health, CA; Holy Cross Hospital, MD, and Saint Alphonsus Health System in Idaho.
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