- Microsoft is acquiring clinical documentation and artificial intelligence company Nuance Communications for $ 19.7 billion, two years after first inking an R&D partnership with the speech-to-text market leader.
- The Redmond, Washington-based tech giant said Monday it has entered into a definitive agreement to acquire Nuance for $ 56 a share — a hefty price tag, representing a 23% premium on the closing price on Friday. Nuance develops conversational artificial intelligence and cloud-based ambient clinical intelligence for doctor’s offices and hospitals.
- The all-cash deal, which Microsoft says will double its total addressable market in the healthcare provider space, is expected to close this calendar year. Shares of Nuance were up 18% Monday morning.
Microsoft has been expanding its presence in the healthcare industry, notably introducing Microsoft Cloud for Healthcare, its first vertical cloud offering, in May last year. The Nuance deal is the latest step in Microsoft’s industry-specific cloud strategy, the company said in a Monday release, and is Microsoft’s biggest acquisition since it bought LinkedIn for more than $ 26 billion in 2016.
Burlington, Massachusetts-based Nuance sells products for tasks running the gamut from clinical speech recognition, radiological reporting, workflow management and clinical decision support.
Nuance has clients for speech-to-text and digital assistants in a variety of industries, but has streamlined its portfolio over the past three years to focus on its healthcare and enterprise AI segments, due to growing demand, CEO Mark Benjamin said in a statement. The company says its healthcare cloud revenue grew 37% year over year in 2020.
Currently, Nuance’s products are used by more than 55% of physicians and 75% of radiologists in the U.S., and in 77% of U.S. hospitals, the company says.
Nuance first inked a relationship with Microsoft in October 2019 to work on ambient clinical intelligence, AI software that understands patient-clinician conversations and can automatically integrate that data into the patient’s medical record.
Last year, Nuance launched nationwide an AI tool co-developed with Microsoft that — with a patient’s explicit consent — can listen in on a medical visit, transcribe the conversation into text, pull out relevant medical information and auto-populate that data into the EHR, for the physician to review and sign.
And in September, Nuance and Microsoft announced the duo were integrating the product, called Nuance DAX, into Microsoft’s video conferencing platform for telehealth visits.
Permanently marrying itself with Nuance — and its vendor relationships — greatly expands Microsoft’s reach in the medical sector. Microsoft said the acquisition will double its total addressable market in healthcare to almost $ 500 billion, and will be minimally dilutive in the 2022 fiscal year before contributing to earnings in 2023.
Upon closing, Microsoft expects Nuance’s financials to be reported as part of Microsoft’s Intelligent Cloud segment. Nuance CEO Mark Benjamin will stay on as chief executive of the business, and will report to Scott Guthrie, EVP of Cloud & AI at Microsoft.
Health IT companies, startups and tech behemoths alike are racing to develop products to ease documentation headaches for providers. Documentation is a major contributor to physician burnout, which by some estimates impacts roughly half of U.S. clinicians.
Microsoft, Google, Apple and Amazon have all developed or are backing clinical assistants, many using voice-to-text software. And the space has quickly become crowded with notable players like Google-backed, voice-enabled digital assistant Suki, Apple Watch-supported platform Notable and Amazon’s speech-to-text service, AWS’ Transcribe Medical.