Microsoft pushes deeper into healthcare by buying Nuance for $16 billion

Microsoft, on an accelerated growth push, is buying speech-recognition company Nuance in a deal worth about $16 billion.

The acquisition will get Microsoft deeper into hospitals and the healthcare industry through Nuance’s widely used medical dictation and transcription tools.

Microsoft will pay $56 per share cash. That’s a 23% premium to Nuance’s Friday closing price. The companies value the transaction, including debt, at $19.7 billion.

Nuance has been a pioneer in voice-based artificial intelligence technology and was instrumental in helping to power Apple’s digital assistant Siri.

It has since shifted its focus to healthcare, including a product that listens in on exam-room conversations between physicians and patients and automatically writes up the doctor’s recommendations, such as for prescriptions or lab work.

“This clinical documentation essentially writes itself, giving physicians time back to focus on patient care,” Microsoft CEO Satya Nadella said on a conference call about the deal Monday.

Microsoft and Nuance had already formed a business partnership in 2019. That relationship grew during the pandemic, enabling Nuance to bring its patient-physician transcription services into telehealth appointments using Microsoft’s videoconference app Teams. The Redmond, Washington, software giant said that this month’s deal will double its potential market in the healthcareprovider industry to nearly $500 billion.

“Put Microsoft and Nuance together and it allows Microsoft to go after the exploding healthcare market, which is on fire right now as it’s modernizing, adopting digital engagement and moving to the cloud,” said Forrester analyst Kate Leggett.