In one of Microsoft’s largest acquisitions, the software giant is acquiring voice recognition and artificial intelligence specialist Nuance Communications in an all-cash transaction valued at US$19.7 billion. The acquisition is Microsoft’s second largest purchase following its US$26.2 billion buy of LinkedIn in 2016.
Microsoft CEO Satya Nadella said the acquisition of Nuance will effectively double Microsoft’s total addressable market (TAM) in the health-care provider space, bringing the company’s TAM in health care to US$500 billion.
“Nuance provides the AI layer at the health-care point of delivery and is a pioneer in the real-world application of enterprise AI,” said Nadella in a statement. “AI is technology’s most important priority, and health care is its most urgent application. … 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 growth of Microsoft Cloud for Healthcare and Nuance.”
Nuance is a cloud and AI software standout providing conversational AI and cloud-based clinical intelligence for health-care providers and is best known for its Dragon software. The company’s offerings are extremely popular in U.S. hospitals, currently being used by more than 55 percent of physicians and 75 percent of radiologists, as well as being used in 77 percent of America’s hospitals, according to Microsoft.
In 2020, Microsoft launched its Microsoft Cloud for Healthcare Division, designed to address the needs of the rapidly transforming health-care industry. Nuance will augment the Microsoft Cloud for Healthcare business, and Microsoft will also benefit from Nuance’s expertise and relationships with electronic health records system providers.
Nuance CEO Mark Benjamin said demand for advanced conversational AI is accelerating rapidly. “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,” he said. “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.”
AI is technology’s most important priority, and healthcare is its most urgent application. Together with @NuanceInc, we will put advanced AI solutions into the hands of professionals to drive better decision-making and create more meaningful connections. https://t.co/ipdP6qZTx9— Satya Nadella (@satyanadella) April 12, 2021
Nuance’s products include the Dragon Ambient eXperience, Dragon Medical One and PowerScribe One for radiology reporting, all of which are leading clinical speech recognition SaaS offerings built on Microsoft Azure. The company’s Dragon software uses deep learning to transcribe speech and improvise its accuracy over time by adapting to a person’s voice.
Microsoft officially will acquire Nuance for US$56 per share, a 23 percent premium to the closing price of Nuance on April 9, in a transaction valued at US$19.7 billion, inclusive of Nuance’s net debt.
Benjamin will remain CEO of Nuance and will report to Scott Guthrie, executive vice president of Cloud and AI at Microsoft, once the deal closes.
The deal is expected to close by the end of 2021.