Microsoft Corporation buys AI speech tech firm, Nuance to accelerate its industry cloud strategy for healthcare

Written by
Microsoft
  • 1 month ago
  • Posted: April 12, 2021 at 6:54 pm

Microsoft Corporation has announced that it is buying Nuance, a pioneer and a leading provider of conversational AI and cloud-based ambient clinical intelligence for healthcare providers. The deal will see the tech giant enter into a definitive agreement with Nuance Communication for $56.00 per share, implying a 23% premium to the closing price of Nuance on Friday, April 9, in an all-cash transaction valued at $19.7 billion, inclusive of Nuance’s net debt. Mark Benjamin will however remain the CEO of Nuance, reporting to Scott Guthrie, executive vice president of Cloud & AI at Microsoft.

Microsoft hopes to accelerate its efforts to provide industry-specific cloud offerings to support customers and partners as they respond to disruption and new opportunities. These efforts include the Microsoft Cloud for Healthcare, introduced in 2020, which aims to address the comprehensive needs of the rapidly transforming and growing healthcare industry. By augmenting the Microsoft Cloud for Healthcare with Nuance’s solutions, as well as the benefit of Nuance’s expertise and relationships with EHR systems providers, Microsoft will be better able to empower healthcare providers through the power of ambient clinical intelligence and other Microsoft cloud services.

“Nuance provides the AI layer at the healthcare point of delivery and is a pioneer in the real-world application of enterprise AI. Together, with our partner ecosystem, we will put advanced AI solutions into the hands of professionals everywhere to drive better decision-making and create more meaningful connections, as we accelerate the growth of Microsoft Cloud for Healthcare and Nuance,” said Satya Nadella, CEO, Microsoft.

The acquisition will double Microsoft’s total addressable market (TAM) in the healthcare provider space, bringing the company’s TAM in healthcare to nearly $500 billion. Microsoft Corporation says it will deepen their existing commitments with Nuance to the extended partner ecosystem, as well as the highest standards of data privacy, security, and compliance. The transaction has been unanimously approved by the Boards of Directors of both Nuance and Microsoft. The deal is intended to close by the end of this calendar year and is subject to approval by Nuance’s shareholders, the satisfaction of certain regulatory approvals, and other customary closing conditions.

READ  Laptop of Tomorrow: Asus ZenBook Pro Duo review

Nuance is a pioneer and a leading provider of conversational AI and cloud-based ambient clinical intelligence for healthcare providers. Nuance’s products include the Dragon Ambient eXperience, Dragon Medical One, and PowerScribe One for radiology reporting, all leading clinical speech recognition SaaS offerings built on Microsoft Azure. Nuance’s solutions work seamlessly with core healthcare systems, including longstanding relationships with Electronic Health Records (EHRs), to alleviate the burden of clinical documentation and empower providers to deliver better patient experiences. Nuance solutions are currently used by more than 55% of physicians and 75% of radiologists in the U.S. and used in 77% of U.S. hospitals. Nuance’s Healthcare Cloud revenue experienced 37% year-over-year growth in the Nuance’s fiscal year 2020 (ended September 2020).

“Over the past three years, Nuance has streamlined its portfolio to focus on the healthcare and enterprise AI segments, where there has been accelerated demand for advanced conversational AI and ambient solutions,” said Mark Benjamin, CEO, Nuance.

“To seize this opportunity, we need the right platform to bring focus and global scale to our customers and partners to enable more personal, affordable, and effective connections to people and care. The path forward is clearly with Microsoft —  who brings intelligent cloud-based services at scale and who shares our passion for the ways technology can make a difference. At the same time, this combination offers a critical opportunity to deliver a meaningful and certain value to our shareholders who have driven and supported us on this journey,” he added.

Upon closing, Microsoft Corporation expects Nuance’s financials to be reported as part of Microsoft’s Intelligent Cloud segment. Microsoft expects the acquisition to be minimally dilutive (less than 1 percent) in the fiscal year 2022 and to be accretive in the fiscal year 2023 to non-GAAP earnings per share, based on the expected close timeframe. Non-GAAP excludes the expected impact of purchase accounting adjustments, as well as integration and transaction-related expenses. The acquisition will not impact the completion of its existing share repurchase authorization.

READ  COMESA and Microsoft collaborate to promote access to technology to improve regional trade

Read Also: That Game of Learners (GOL) program by Microsoft is back for season 2

What is your opinion on the topic?
Article Tags:
Article Categories:
TECHNOLOGY