Microsoft Acquires Nuance to Enhance Healthcare AI, Cloud Strategy

April 12, 2021 - Microsoft has announced that it will acquire Nuance Communications, Inc., a leading provider of conversational artificial intelligence and cloud-based ambient clinical intelligence.

Microsoft will acquire Nuance for $56.00 per share, about 23 percent above its closing deal. The transaction is valued at $19.7 billion, which includes Nuance’s net debt. Mark Benjamin will remain the CEO of Nuance, reporting to Scott Guthrie, executive vice president of Cloud & AI at Microsoft. The deal is intended to close this calendar year.

The acquisition builds on Microsoft’s efforts to offer healthcare-specific cloud capabilities to support customers and partners as they respond to new opportunities and disruption. These efforts include the launch of Microsoft Cloud for Healthcare, which was introduced in November 2020.

Microsoft Cloud for Healthcare aims to address the comprehensive needs of the healthcare industry. The acquisition of Nuance represents the latest effort in Microsoft’s industry-specific cloud strategy.

The acquisition also builds on the existing partnership between the two companies, announced in 2019. By enhancing the Microsoft Cloud for Healthcare with Nuance’s solutions, Microsoft will be able to provide healthcare leaders with comprehensive ambient clinical intelligence and other cloud services.

The acquisition will double Microsoft’s total addressable market (TAM) in the healthcare provider space, bringing the company’s TAM in healthcare to nearly $500 billion.

Nuance and Microsoft will broaden their existing commitments to the extended partner ecosystem, as well as the highest standards of data privacy, security, and compliance.

“Nuance provides the AI layer at the healthcare point of delivery and is a pioneer in the real-world application of enterprise AI,” said Satya Nadella, CEO, Microsoft.

“AI is technology’s most important priority, and healthcare is its most urgent application. Together, with our partner ecosystem, we will put advanced AI solutions into the hands of professionals everywhere to drive better decision-making and create more meaningful connections, as we accelerate growth of Microsoft Cloud for Healthcare and Nuance.”

Nuance is a leading provider of conversational AI and cloud-based ambient intelligence for healthcare. Currently, 55 percent of physicians and 75 percent of radiologists in the US use Nuance solutions. The company’s products are also used in 77 percent of US hospitals.

Nuance also provides AI expertise and customer engagement solutions across Interactive Voice Response (IVR) virtual assistants, as well as digital and biometric solutions to companies around the world across all industries. This expertise will come together with the breadth of Microsoft’s cloud, including Azure, Teams, and Dynamics 365.

“Over the past three years, Nuance has streamlined its portfolio to focus on the healthcare and enterprise AI segments, where there has been accelerated demand for advanced conversational AI and ambient solutions,” said Mark Benjamin, CEO, Nuance.

“To seize this opportunity, we need the right platform to bring focus and global scale to our customers and partners to enable more personal, affordable and effective connections to people and care. The path forward is clearly with Microsoft — who brings intelligent cloud-based services at scale and who shares our passion for the ways technology can make a difference. At the same time, this combination offers a critical opportunity to deliver meaningful and certain value to our shareholders who have driven and supported us on this journey.”

The Boards of Directors of both Nuance and Microsoft have unanimously approved the transaction. The deal is expected to close by the end of this calendar year and is subject to approval by Nuance’s shareholders, the satisfaction of certain regulatory approvals, and other customary closing conditions.