Microsoft expands cloud solutions for healthcare customers, acquires Nuance for $16 billion

In a statement Microsoft Corp said, it would acquire artificial intelligence and speech technology firm Nuance Communications Inc for around $16 billion.

The development sees Microsoft’s expands in the cloud solutions for healthcare customers.

The deal comes in the wake of a 2019 partnership wherein both companies had partnered to automate clinical administrative work including documentation.

“This acquisition brings our technology directly into the physician and patient loop, which is central to all healthcare delivery. The acquisition will also expand our leadership in cross-industry enterprise AI and biometric security,” said Microsoft CEO Satya Nadella on an investor call.

Microsoft’s offer of $56 per share represents a premium of 22.86% to Nuance’s Friday closing price. With the news reaching the market, Nuance’s shares rose by 16% to close at $52.85.

Known for its pioneering speech technology and helping launch Apple Inc’s virtual assistant, Siri, Nuance has gone through strategic reviews led by Chief Executive Mark Benjamin.

In a statement Nuance said, it serves 77% of the U.S. hospitals, providing “intelligent solutions including clinical speech recognition, medical transcription and medical imaging”.

“Nuance’s strong position at the edge (medical dictation and transcription) will ultimately tie healthcare customers more strongly into Microsoft’s Azure Cloud and intelligent services,” wrote J.P. Gownder, an analyst from Forrester in a note.

Operating across 28 countries, Burlington, Massachusetts-based Nuance reported $1.5 billion in revenue in 2020, with two-thirds of it coming from healthcare.

Benjamin will continue to lead Nuance and will report to Scott Guthrie, executive vice president of Cloud & AI at Microsoft, said the company.

Once closed, the deal marks Microsoft’s second-biggest acquisition after its $26.2 billion acquisition of LinkedIn in 2016. Including debt, the all-cash deal is valued at $19.7 billion.

While Evercore advised Nuance on the deal, Goldman Sachs was Microsoft’s financial adviser.


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