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Microsoft doubles healthcare market with acquisition of Nuance

Acquisition to deliver new cloud and AI capabilities across healthcare and other industries.

Susan Morse, Managing Editor

(Photo by Cavan Images\Getty Images)(Photo by Cavan Images\Getty Images)

Microsoft is acquiring Nuance Communications in an all-cash transaction valued at $19.7 billion, inclusive of Nuance's net debt. The transaction is intended to close this year.

Nuance is a cloud and software provider of conversational AI and cloud-based ambient clinical intelligence for healthcare systems.

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 with electronic health records on clinical documentation. 

Mark Benjamin will remain CEO of Nuance, reporting to Scott Guthrie, executive vice president of Cloud & AI at Microsoft. 

WHY THIS MATTERS

With this acquisition, Microsoft is doubling its total addressable market in the healthcare provider space to nearly $500 billion. 

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, according to Microsoft. 

Nuance's Healthcare Cloud revenue experienced 37% year-over-year growth in fiscal year 2020, ending September 2020.

By augmenting the Microsoft Cloud for Healthcare with Nuance's solutions, Microsoft is looking at giving providers ambient clinical intelligence for the exam room, in which clinical documentation writes itself. 

THE LARGER TREND

The acquisition represents the latest step in Microsoft's industry-specific cloud strategy.  Microsoft introduced Cloud for Healthcare in 2020.

Microsoft's acquisition of Nuance builds on the successful existing partnership between the companies that was announced in 2019 with the delivery of ambient clinical intelligence technologies.

Beyond healthcare, Nuance provides AI expertise and customer engagement solutions across interactive voice response, virtual assistants and digital and biometric solutions to companies around the world across all industries. This combines with Microsoft's cloud, including Azure, Teams and Dynamics 365, for customer engagement and security solutions.

ON THE RECORD

"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 of 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."

"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 of 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."

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com