Microsoft doubles down on cloud healthcare business with $16 billion Nuance buy

By Chavi Mehta and Krystal Hu

(Reuters) – Microsoft Corp mentioned on Monday it could purchase synthetic intelligence and speech expertise agency Nuance Communications Inc for about $16 billion, because it expands cloud options for healthcare clients.

The deal comes after the businesses partnered in 2019 to automate scientific administrative work resembling documentation. It exhibits Microsoft’s ambition to increase its management into an the place digital transformation has picked up velocity through the pandemic. Healthcare suppliers have invested extra in expertise to enhance productiveness and digital well being companies.

“This acquisition brings our expertise straight into the doctor and affected person loop, which is central to all healthcare supply. The acquisition may also broaden our management in cross-industry enterprise AI and biometric safety,” Microsoft CEO Satya Nadella mentioned on an investor name.

Microsoft’s supply of $56 per share represents a premium of 22.86% to Nuance’s closing value on Friday. The shares gained 16% to shut at $52.85 on Monday.

Nuance, identified for pioneering speech expertise and serving to launch Apple Inc’s digital assistant, Siri, has gone by way of strategic evaluations led by Chief Government Mark Benjamin. As soon as providing voice recognition applied sciences throughout industries, the corporate now focuses on healthcare and enterprise AI after spinning off and promoting a variety of much less worthwhile enterprise items.

The corporate mentioned it serves 77% of U.S. hospitals, offering clever options together with scientific speech recognition, medical transcription and medical imaging.

“Nuance’s sturdy place on the edge (medical dictation and transcription) will in the end tie healthcare clients extra strongly into Microsoft’s Azure Cloud and clever companies,” Forrester analyst J.P. Gownder wrote in a word on Monday.

With operations in 28 nations, the Burlington, Massachusetts-based firm reported $1.5 billion in income in fiscal-year 2020, with two-thirds of it coming from healthcare.

Benjamin will stay CEO of Nuance and can report back to Scott Guthrie, govt vp of Cloud & AI at Microsoft, the corporate mentioned. (https://refini.television/3a5Ux5z)

The deal follows Microsoft’s latest $7.5 billion acquisition of gaming firm ZeniMax Media, and stories that Microsoft was in talks to purchase messaging platform Discord, which additionally permits reside audio occasions.

As soon as closed, the deal for Nuance can be Microsoft’s second-biggest, after its $26.2 billion acquisition of LinkedIn in 2016. Together with internet debt, the all-cash transaction is valued at $19.7 billion.

Goldman Sachs is the monetary adviser to Microsoft, whereas Evercore suggested Nuance.

(Reporting by Chavi Mehta in Bengaluru and Krystal Hu in New York; Modifying by Susan Fenton and Matthew Lewis)

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