Microsoft Accelerates Industry Cloud Strategy for Healthcare with the Acquisition of Nuance

MicrosoftMicrosoft Corp (Nasdaq: MSFT) and Nuance Communications, Inc. (Nasdaq: NUAN) have entered into a definitive agreement under which Microsoft will acquire Nuance 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. Nuance is a trusted cloud and AI software leader representing decades of accumulated healthcare and enterprise AI experience. Mark Benjamin will remain CEO of Nuance, reporting to Scott Guthrie, executive vice president of Cloud & AI at Microsoft. The transaction is intended to close this calendar year.

Microsoft has accelerated 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. Today’s acquisition announcement represents the latest step in Microsoft's industry-specific cloud strategy.

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 Nuance's fiscal year 2020 (ended September 2020).

Microsoft's acquisition of Nuance builds upon the successful existing partnership between the companies that was announced in 2019. 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. 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. Nuance and Microsoft will deepen their existing commitments to the extended partner ecosystem, as well as the highest standards of data privacy, security and compliance.

"Nuance provides the AI layer at the healthcare point of delivery and is a pioneer in the real-world application of enterprise AI," said Satya Nadella, CEO, Microsoft. "AI is technology’s most important priority, and healthcare is its most urgent application. 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 growth of Microsoft Cloud for Healthcare and Nuance."

Beyond healthcare, Nuance 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. This expertise will come together with the breadth and depth of Microsoft’s cloud, including Azure, Teams, and Dynamics 365, to deliver next-generation customer engagement and security solutions.

"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 meaningful and certain value to our shareholders who have driven and supported us on this journey."

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.

Upon closing, Microsoft 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 fiscal year 2022 and to be accretive in fiscal year 2023 to non-GAAP earnings per share, based on the expected close timeframe. Non-GAAP excludes 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.

Nadella, Benjamin, Guthrie and Microsoft Chief Financial Officer Amy Hood will host a webcast for investors and media on April 12, 2021, at 8 a.m. Pacific Time/11 a.m. Eastern Time regarding this transaction. The presentation is available via webcast at https://aka.ms/MS-Investor-Call or to international callers at +1 (201) 689-8023 (no password required), or to U.S. callers at (877) 407-0666 (no password required), at that time.

Goldman Sachs & Co. LLC is acting as exclusive financial advisor to Microsoft, while Simpson Thacher & Bartlett LLP is acting as its legal advisor. Evercore is acting as exclusive financial advisor to Nuance, while Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as its legal advisor.

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

About Nuance Communications, Inc.

Nuance Communications (NASDAQ: NUAN) is a technology pioneer with market leadership in conversational AI and ambient intelligence. A full-service partner trusted by 77 percent of U.S. hospitals and 85 percent of the Fortune 100 companies worldwide, Nuance creates intuitive solutions that amplify people’s ability to help others.

Most Popular Now

AI for Real-Rime, Patient-Focused Insigh…

A picture may be worth a thousand words, but still... they both have a lot of work to do to catch up to BiomedGPT. Covered recently in the prestigious journal Nature...

A "Chemical ChatGPT" for New M…

Researchers from the University of Bonn have trained an AI process to predict potential active ingredients with special properties. Therefore, they derived a chemical language model - a kind of...

Siemens Healthineers co-leads EU Project…

Siemens Healthineers is joining forces with more than 20 industry and public partners, including seven leading stroke hospitals, to improve stroke management for patients all over Europe. With a total...

In 10 Seconds, an AI Model Detects Cance…

Researchers have developed an AI powered model that - in 10 seconds - can determine during surgery if any part of a cancerous brain tumor that could be removed remains...

Does AI Improve Doctors' Diagnoses?

With hospitals already deploying artificial intelligence to improve patient care, a new study has found that using Chat GPT Plus does not significantly improve the accuracy of doctors' diagnoses when...

AI Analysis of PET/CT Images can Predict…

Dr. Watanabe and his teams from Niigata University have revealed that PET/CT image analysis using artificial intelligence (AI) can predict the occurrence of interstitial lung disease, known as a serious...

MEDICA and COMPAMED 2024: Shining a Ligh…

11 - 14 November 2024, Düsseldorf, Germany. Christian Grosser, Director Health & Medical Technologies, is looking forward to events getting under way: "From next Monday to Thursday, we will once again...

New Medical AI Tool Identifies more Case…

Investigators at Mass General Brigham have developed an AI-based tool to sift through electronic health records to help clinicians identify cases of long COVID, an often mysterious condition that can...

NIH-Developed AI Algorithm Successfully …

Researchers from the National Institutes of Health (NIH) have developed an artificial intelligence (AI) algorithm to help speed up the process of matching potential volunteers to relevant clinical research trials...

Jane Stephenson Joins SPARK TSL as Chief…

Jane Stephenson has joined SPARK TSL as chief executive as the company looks to establish the benefits of SPARK Fusion with trusts looking for deployable solutions to improve productivity. Stephenson joins...

MEDICA 2024 and COMPAMED 2024: Medical T…

11 - 14 November 2024, Düsseldorf, Germany. "Meet Health. Future. People." is MEDICA's campaign motto for the future in the new trade fair year 2025. The aptness of the motto...

500 Patient Images per Second Shared thr…

The image exchange portal, widely known in the NHS as the IEP, is now being used to share as many as 500 images each second - including x-rays, CT, MRI...