Microsoft’s Nuance purchase a $26b healthcare bet

Dina Bass and Liana Baker

Apr 13, 2021 – 5.28am

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Microsoft is buying speech-recognition pioneer Nuance Communications in an all-cash deal valued at $US19.6 billion ($25.8 billion), gaining artificial-intelligence technology aimed at helping doctors predict patients’ needs and upgrading hospitals’ digital record-keeping.

The software giant is offering to purchase Nuance at $US56 a share, a 23 per cent premium to Friday’s close, according to a statement on Monday (Tuesday AEST), which confirmed an earlier Bloomberg report. The deal marks Microsoft’s largest acquisition since LinkedIn Corp.

Microsoft has been trying to make inroads into the health care sector, selling more cloud software to hospitals and doctors. AP

The transaction value is derived by the $US56 a share multiplied by about 350 million fully diluted shares of Nuance, including stock options and stock awards. The acquisition will decrease earnings by less than 1 per cent in the year that begins July 1 and start to add to profit the following year, Microsoft said.

Microsoft is tapping the company tied to the Siri voice technology to develop solutions that free doctors from note-taking and better determine healthcare needs. It has been working with Nuance for two years on AI software that helps clinicians capture patient discussions and integrate them into electronic health records, and combining the speech technology company’s products into its Teams chat app for telehealth appointments.

“The Nuance deal is a strategic no-brainer,” Wedbush Securities analyst Dan Ives wrote in a note. It “fits like a glove into its healthcare endeavours at a time in which hospitals and doctors are embracing next-generation AI capabilities,” Mr Ives said, also praising Nuance chief executive Mark Benjamin for leading a turnaround that has made his company a “unique asset” for Microsoft.