Microsoft Acquires Voice Recognition Company Nuance Communications

Microsoft will acquire Nuance Communications, Inc. in an effort to deliver new cloud and artificial intelligence (AI) capabilities across the healthcare industry. The all-cash transaction—which took place on April 9—is valued at about $16 billion and $19.7 billion with debt. The deal is expected to close this calendar year and comes after the two companies announced a partnership in 2019.

Mark Benjamin will remain CEO of the cloud and AI software company and will report to Scott Guthrie, executive vice president of Cloud and AI at Microsoft. The decision comes after the introduction of Microsoft Cloud for Healthcare, announced in 2020, which set out to manage health data at scale to help organizations improve patient experience, coordinate care, and drive efficiency.

"Nuance provides the AI layer at the health care point of delivery and is a pioneer in the real-world application of enterprise AI," said Satya Nadella, the 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."

The company provides conversational AI and cloud-based ambient clinical intelligence for providers with products including the Dragon Ambient eXperience and Dragon Medical One and PowerScribe One for radiology reporting. These solutions work with core health care systems, including electronic health records, to help ease clinical documentation. Currently they are used by over half of the nation’s physicians and 75% radiologists, in addition to 77% of U.S. hospitals. Nuance also provides solutions across interactive voice response, virtual assistants and digital and biometric solutions.

The company’s health care cloud revenue saw a 37% year-over-year growth in its 2020 fiscal year, which ended in September 2020. The acquisition marks a doubling of Microsoft’s total addressable market in the health care provider space, raising it to nearly $500 billion.

"Over the past three years, Nuance has streamlined its portfolio to focus on the health care and enterprise AI segments, where there has been accelerated demand for advanced conversational AI and ambient solutions," Benjamin said.

"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."