Microsoft to Acquire Nuance Communications for $16 Billion to Bolster Healthcare AI Solutions

This article is sourced fromYicai。

Microsoft announced on Monday that it would acquire speech technology company Nuance at $56 per share, representing a 23% premium over Nuance’s closing price on Friday. Nuance’s shares surged more than 16% in Monday’s opening trade.

The acquisition of Nuance will also be Microsoft’s largest deal since its 2016 purchase of LinkedIn. Earlier reports indicated that Microsoft had considered acquiring the chat application Discord for $10 billion. Last month, Microsoft completed its $7.6 billion acquisition of gaming company ZeniMax.

Microsoft stated that Nuance’s technology will be integrated into its Microsoft Cloud for Healthcare products. Satya Nadella, CEO of Microsoft, said on Monday that Nuance’s healthcare tools were the primary driver behind the acquisition.

Nadella stated in a press release, “We are witnessing a rapid digital transformation in the healthcare sector. Nuance provides AI-driven support in healthcare, where artificial intelligence is a top technological priority, particularly for applications in this field.”

Last October, Microsoft Cloud for Healthcare was officially launched. Nuance and Microsoft have collaborated to develop a solution that enables teams to integrate patient data with other information in electronic health records (EHRs), allowing clinicians to automatically populate clinical documentation directly within patients’ medical records.

“Nuance’s rapid integration of telehealth services with Microsoft Teams underscores the importance of combining cloud computing with healthcare technology,” said Diana Nole, Executive Vice President and General Manager of Healthcare at Nuance.

Tom McGuiness, Vice President of Microsoft’s Global Health Division, stated, “Healthcare organizations can engage with patients in a more proactive manner and provide caregivers with tools to improve data interoperability, enhance workflow efficiency, and streamline interactions.”

McGuinness stated, “Since the onset of the COVID-19 pandemic, there has been substantial demand for digital health solutions, with healthcare providers increasingly leveraging remote technologies to communicate with patients.”

Nuance’s speech recognition technology enjoys a strong reputation in the industry and has long been regarded as an acquisition target for companies such as Apple and Microsoft.

Microsoft has never ceased its efforts in AI voice technology and has embedded speech recognition capabilities into many of its products. However, it has recently discontinued some products featuring the Cortana voice assistant. Last July, Microsoft announced that it would spin off its Xiaoice AI business into an independently operated company.

Acquiring Nuance will help the tech giant identify truly viable application scenarios. Zhou Ming, former Vice President of Microsoft Research Asia who left Microsoft last year, told Yicai Global, “Nuance and Xiaoice are not in the same league; their competitiveness is entirely different.”

Li Zhifei, founder of the Chinese AI speech recognition company Mobvoi, told Yicai Global, “This acquisition represents a strong alliance that will create significant complementary advantages for AI-to-B solutions.”

Nuance, founded in 1992 and headquartered in Burlington, Massachusetts, USA, gained prominence for its role in helping Apple launch Siri. Since then, the company has been dedicated to providing intelligent solutions for the healthcare sector, including clinical speech recognition, medical transcription, and medical imaging solutions.

As of last September, the company had more than 7,000 employees. Nuance’s latest financial report shows that its net profit in the fourth quarter of 2020 was $7 million, with revenue of approximately $346 million, a 4% year-on-year decline. For the full year 2020, Nuance’s revenue totaled $1.5 billion.

Microsoft stated that Nuance CEO Mark Benjamin will remain with the company and report to Scott Guthrie, head of Microsoft’s Cloud and AI business.