Microsoft announced Monday it will acquire Nuance Communications in an all-cash transaction in a deal valued at $19.7 billion, inclusive of Nuance's net debt. Nuance supports cloud and AI software mostly in the healthcare and enterprise AI industries.
The acquisition price, $16 billion, pushes Microsoft deeper into health technology and adds to its range of software tools it offers.
This is Microsoft's second-largest acquisition, following its purchase of LinkedIn in 2016 for $26.2 billion.
Nuance CEO Mark Benjamin will remain with the company, reporting to Scott Guthrie, executive vice president of Cloud & AI at Microsoft. The transaction is intended to close in this calendar year.
Nuance, based in Burlington, Massachusetts, sells software that helps to transcribe speech. The company, for example, powered the speech-recognition engine behind Siri, Apple's voice assistant, and is known for being a pioneer in conversational AI and cloud-based ambient clinical intelligence for healthcare providers.
Speaking at a conference in 2013, at the time Nuance CEO Paul Ricci finally confirmed the company's technology was part of Apple's Siri.
Dragon, one of Nuance’s early consumer products, was released in December 2009 as a free app. It is now commonly found licensed in vehicle infotainment systems and healthcare equipment. Dragon Dictation speech recognition is based on Dragon NaturallySpeaking speech recognition technology.
Now the company’s products include Dragon Ambient eXperience, Dragon Medical One and PowerScribe One for radiology reporting, and all clinical speech-recognition SaaS offerings built on Microsoft Azure.
Nuance'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 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 the company.
Nuance's Healthcare Cloud revenue experienced 37% year-over-year growth in Nuance's fiscal year 2020, end September 2020.
Microsoft said the acquisition will double its total addressable market in the healthcare industry, bringing its TAM in healthcare to nearly $500 billion.