Microsoft has completed its $19.7 billion acquisition of Nuance Communications.
Done deal: Microsoft completes $19.7 billion Nuance acquisition
March 08, 2022
by John R. Fischer, Senior Reporter
Microsoft has completed its $19.7 billion acquisition of Nuance Communications.
The companies officially merged Friday after getting clearance earlier in the week from the U.K.’s Competition and Markets Authority, according to Seeking Alpha. The approval was the last the two needed to move forward with their all-cash payment deal, which is valued at $16 billion, plus an additional $3.7 billion in net debt.
Through the agreement, Nuance’s speech and conversational AI software will be integrated into the Microsoft Cloud for Healthcare technology to help providers improve productivity and financial performance as well as enhance patient experiences and better manage healthcare data at scale.
“Completion of this significant and strategic acquisition brings together Nuance’s best-in-class conversational AI and ambient intelligence with Microsoft’s secure and trusted industry cloud offerings,” said Scott Guthrie, executive vice president of Cloud + AI Group at Microsoft, in a statement. “This powerful combination will help providers offer more affordable, effective and accessible healthcare and help organizations in every industry create more personalized and meaningful customer experiences.”
The combination of both companies’ technologies is expected to automate note transcription for doctors and accelerate the adoption of cloud-based AI tools for providers. The two previously struck up a partnership in 2019 to automate clinical administration work including documentation, before deciding to become one company in April 2021.
Nuance’s products include the Dragon Ambient eXperience, Dragon Medical One and PowerScribe One for radiology reporting. All are built on Microsoft Azure and designed to recognize and transcribe speech in doctor office visits, customer service calls and voicemails. They can seamlessly integrate with EHRs to reduce clinical documentation and help providers create better patient experiences. They will also be used alongside Microsoft’s Azure, Teams and Dynamics 365 solutions to support customer engagement and enhance security.
Revenue at Nuance was approximately $1.5 billion in 2020, with 61.9% coming from its healthcare segment, according to the Boston Business Journal.
The deal is the largest made by Microsoft in years and is expected to double its total addressable market in the healthcare provider space and bring it to nearly $500 billion. But the idea of an acquisition has attracted opposition from competitors over the last year, with the main concern being the fact that Nuance serves 77% of U.S. hospitals and in any of its deals could use customer data to advance its voice recognition system. Since big cloud vendors do not have unrestrained access to customers’ data for research and development, competitors claimed that Nuance would provide Microsoft with unrestrained access to such information in the 77% of hospitals it serves.
They also claimed that Microsoft could use the deal to force its Office suite of products on these providers by integrating Nuance’s technologies. As a result, the U.S. Justice Department opened an investigation into the impact of the deal early last year but later gave its approval for it in June. Then in October, the Australian Competition Commission conducted its own probe before allowing it to proceed.
The EU followed suit and came to the same conclusion in December that the deal would not raise competition concerns.
Because of these back-to-back investigations, Microsoft and Nuance pushed the expected completion date from the end of 2021 to the first quarter of 2022. The U.K.’s Competition and Markets Authority was the last to launch an investigation in January. Its approval this week cleared the last hurdle for the both companies to come together as one entity.
“Combining the power of Nuance’s deep vertical expertise and proven business outcomes across healthcare, financial services, retail, telecommunications and other industries with Microsoft’s global cloud ecosystems will enable us to accelerate our innovation and deploy our solutions more quickly, more seamlessly and at greater scale to solve our customers’ most pressing challenges,” said Mark Benjamin, CEO of Nuance.
The deal is the second largest for Microsoft, following its $26.2 billion acquisition of LinkedIn in 2016.
The companies officially merged Friday after getting clearance earlier in the week from the U.K.’s Competition and Markets Authority, according to Seeking Alpha. The approval was the last the two needed to move forward with their all-cash payment deal, which is valued at $16 billion, plus an additional $3.7 billion in net debt.
Through the agreement, Nuance’s speech and conversational AI software will be integrated into the Microsoft Cloud for Healthcare technology to help providers improve productivity and financial performance as well as enhance patient experiences and better manage healthcare data at scale.
“Completion of this significant and strategic acquisition brings together Nuance’s best-in-class conversational AI and ambient intelligence with Microsoft’s secure and trusted industry cloud offerings,” said Scott Guthrie, executive vice president of Cloud + AI Group at Microsoft, in a statement. “This powerful combination will help providers offer more affordable, effective and accessible healthcare and help organizations in every industry create more personalized and meaningful customer experiences.”
The combination of both companies’ technologies is expected to automate note transcription for doctors and accelerate the adoption of cloud-based AI tools for providers. The two previously struck up a partnership in 2019 to automate clinical administration work including documentation, before deciding to become one company in April 2021.
Nuance’s products include the Dragon Ambient eXperience, Dragon Medical One and PowerScribe One for radiology reporting. All are built on Microsoft Azure and designed to recognize and transcribe speech in doctor office visits, customer service calls and voicemails. They can seamlessly integrate with EHRs to reduce clinical documentation and help providers create better patient experiences. They will also be used alongside Microsoft’s Azure, Teams and Dynamics 365 solutions to support customer engagement and enhance security.
Revenue at Nuance was approximately $1.5 billion in 2020, with 61.9% coming from its healthcare segment, according to the Boston Business Journal.
The deal is the largest made by Microsoft in years and is expected to double its total addressable market in the healthcare provider space and bring it to nearly $500 billion. But the idea of an acquisition has attracted opposition from competitors over the last year, with the main concern being the fact that Nuance serves 77% of U.S. hospitals and in any of its deals could use customer data to advance its voice recognition system. Since big cloud vendors do not have unrestrained access to customers’ data for research and development, competitors claimed that Nuance would provide Microsoft with unrestrained access to such information in the 77% of hospitals it serves.
They also claimed that Microsoft could use the deal to force its Office suite of products on these providers by integrating Nuance’s technologies. As a result, the U.S. Justice Department opened an investigation into the impact of the deal early last year but later gave its approval for it in June. Then in October, the Australian Competition Commission conducted its own probe before allowing it to proceed.
The EU followed suit and came to the same conclusion in December that the deal would not raise competition concerns.
Because of these back-to-back investigations, Microsoft and Nuance pushed the expected completion date from the end of 2021 to the first quarter of 2022. The U.K.’s Competition and Markets Authority was the last to launch an investigation in January. Its approval this week cleared the last hurdle for the both companies to come together as one entity.
“Combining the power of Nuance’s deep vertical expertise and proven business outcomes across healthcare, financial services, retail, telecommunications and other industries with Microsoft’s global cloud ecosystems will enable us to accelerate our innovation and deploy our solutions more quickly, more seamlessly and at greater scale to solve our customers’ most pressing challenges,” said Mark Benjamin, CEO of Nuance.
The deal is the second largest for Microsoft, following its $26.2 billion acquisition of LinkedIn in 2016.