Microsoft acquires clinical voice-to-text company Nuance for $19.7B

• Microsoft will acquire the clinical documentation and artificial intelligence company Nuance Communications for $ 19.7 billion, two years after entering an initial research and development partnership with the voice and text leader.

• The Redmond, Washington-based tech giant announced Monday that it has signed a definitive agreement to acquire Nuance for $ 56 a share, a high price that represents a 23% premium over Friday’s closing price. Nuance develops conversational artificial intelligence and cloud-based clinical ambient intelligence for doctors’ offices and hospitals.

• The all-cash deal, which Microsoft says will double its total addressable healthcare market, is expected to close this calendar year. Nuance shares rose 18% on Monday morning.

Microsoft expanded its presence in the healthcare industry by launching Microsoft Cloud for Healthcare, the first vertical cloud offering, in May of last year. The deal with Nuance is the latest step in Microsoft’s industry-specific cloud strategy, the company said in a press release Monday. It’s Microsoft’s largest acquisition since it bought LinkedIn for more than $ 26 billion in 2016.

Nuance, based in Burlington, Massachusetts, sells products for businesses ranging from clinical speech recognition to radiology reporting, workflow management, and clinical decision support.

Nuance has customers for voice, text and digital assistants in a variety of industries, but over the past three years it has optimized its portfolio to focus on the healthcare and corporate artificial intelligence segments due to growing demand, said CEO Mark Benjamin in an explanation. The company says that healthcare cloud sales increased 37% year-on-year in 2020.

Nuance products are currently used by more than 55 percent of physicians and 75 percent of radiologists in the United States and 77 percent of hospitals in the United States, the company said.

Nuance first established a relationship with Microsoft in October 2019 to work on Ambient Clinical Intelligence, an artificial intelligence software that understands doctor-patient conversations and can automatically integrate this data into a patient’s medical history.

Last year, Nuance launched a nationwide artificial intelligence tool developed in collaboration with Microsoft that, with the express consent of a patient, can listen to a doctor’s visit, convert the conversation to text, retrieve relevant medical information, and automatically enter these data in the electronic medical record so that the patient can consult and sign for the doctor.

In September, Nuance and Microsoft announced that they were both integrating Nuance DAX into Microsoft’s video conferencing platform for telemedicine visits.

The ongoing partnership with Nuance and its vendor relationships greatly expands Microsoft’s reach in the medical field. Microsoft said the acquisition will double the total addressable healthcare market to nearly $ 500 billion and dilute it minimally in fiscal 2022 before increasing profits in 2023.

Upon completion, Microsoft expects Nuance financial data to be reported as part of Microsoft’s Intelligent Cloud segment. Nuance CEO Mark Benjamin will remain CEO of the company and report to Scott Guthrie, Executive Vice President of Cloud & AI at Microsoft.

Healthcare IT companies, startups, and tech giants are scrambling to develop products that create documentation problems for vendors. Documentation is one of the top contributors to physician burnout, estimated to affect about half of US physicians.

Microsoft, Google, Apple, and Amazon have developed or support clinical assistants, and many use speech-to-text software. And the room is packed with notable players like Google’s voice-activated digital assistant, Suki, Apple Watch-based Notable platform, and Amazon’s voice-to-text service, AWS’s Transcribe Medical.