microsoft carbon

Microsoft bets on speech AI in healthcare with $20bn acquisition

Image credit: Dreamstime

Microsoft has announced that it will buy AI and speech recognition company Nuance Communications for approximately $16bn in cash plus debt, adding to its growing healthcare services portfolio.

Massachusetts-based Nuance is recognised for its expertise in speech recognition, with products including tools for transcribing medical appointments. It also offers general cloud, AI and healthcare technology services.

The company previously helped Apple launch its iOS virtual assistant Siri. In 2019, it also partnered to deliver some administrative work on behalf of clinicians, such as documentation. They have since benefitted from the sudden shift online of many healthcare services – such as initial GP consultations and occupational and psychological therapy – amid the Covid-19 pandemic.

Microsoft plans to acquire Nuance for $16bn in cash ($56 per share), representing a premium of 23 per cent to Nuance’s last close. Including net debt, the transaction is estimated at just below $20bn. This would mark Microsoft’s second-largest acquisition since its $26bn acquisition of LinkedIn in 2016.

Mark Benjamin will remain in his role as Nuance CEO, now reporting to Microsoft’s head of Cloud and AI.

Microsoft said in a statement that the acquisition of Nuance is part of its healthcare industry-specific cloud strategy, which involved the launch of Microsoft Cloud for Healthcare last year. Nuance’s products work seamlessly with core healthcare systems, including with longstanding relationships with Electronic Health Records (EHRs), alleviating administrative burdens. Microsoft said that Nuance products are used by 55 per cent of doctors and 77 per cent of hospitals in the US.

The acquisition will double Microsoft’s total addressable market in the healthcare space, bringing it to nearly $500bn. Microsoft hopes that the acquisition will put it in a better place to provide for the healthcare industry’s needs for “ambient clinical intelligence” and other cloud services.

“Nuance provides the AI layer at the healthcare point of delivery,” said Microsoft CEO Satya Nadella. “AI is technology’s most important priority and healthcare is its most urgent application.”

Benjamin added: “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. 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, which brings intelligent cloud-based services at scale.”

Microsoft’s other recent acquisitions include coding platform GitHub and gaming company Zenimax. It also made a failed $30bn bid for social media platform TikTok while the Beijing-based company was put under pressure to sell assets to a US-based company by the former US President.

Microsoft is also reportedly in talks to buy chat platform Discord for approximately $10bn.

Sign up to the E&T News e-mail to get great stories like this delivered to your inbox every day.

Recent articles