Microsoft Corp (Nasdaq: MSFT) is to acquire Nuance Communications, Inc., (Nasdaq: NUAN), a Burlington, MA-based cloud and AI software leader, in an all-cash transaction valued at $19.7 billion.
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.
Led by Mark Benjamin, CEO, Nuance provides conversational AI and cloud-based ambient clinical intelligence for healthcare providers. Its products include the Dragon Ambient eXperience, Dragon Medical One and PowerScribe One for radiology reporting, all clinical speech recognition SaaS offerings built on Microsoft Azure. The company’s solutions work 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 Nuance’s fiscal year 2020 (ended September 2020).
Beyond healthcare, the company provides AI expertise and customer engagement solutions across Interactive Voice Response (IVR), virtual assistants, and digital and biometric solutions to companies around the world across all industries.
The acquisition represents the latest step in Microsoft’s industry-specific cloud strategy. The Redmond, WA-based company led by Satya Nadella, CEO, has accelerated its efforts to provide industry-specific cloud offerings including the Microsoft Cloud for Healthcare, introduced in 2020, which aims to address the comprehensive needs of the healthcare industry.
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.