Microsoft to buy AI firm Nuance for US$16 billion to boost healthcare business

Microsoft buying Nuance Communications Inc for US$16 billion to boost healthcare business..
Photo credit: Reuters

Microsoft says it will buy artificial intelligence and speech technology firm Nuance Communications Inc for about US$16 billion (NZ$23 billion at the time of publishing), as it builds out its cloud strategy for healthcare and enterprise customers.

The deal comes after the companies partnered in 2019 to automate clinical administrative work such as documentation and as Microsoft tries to extend its leadership in vertical cloud solutions in major industries including healthcare.

"This acquisition brings our technology directly into the physician and patient loop, which is central to all healthcare delivery. The acquisition will also expand our leadership in cross-industry enterprise AI and biometric security," Microsoft CEO Satya Nadella said on an investor call.

Nuance, known for pioneering speech technology and helping launch Apple's assistant Siri, has been doubling down on healthcare and enterprise AI. The company has spun off and sold a number of less profitable business units.

"Nuance has been in the midst of an unprecedented strategic turnaround the last few years under the leadership of CEO Mark Benjamin and we believe the company represents a unique asset on the healthcare front for Microsoft," said Dan Ives, analyst at Wedbush wrote.

"We also believe Microsoft can further integrate Nuance's advanced speech technology throughout its consumer and enterprise ecosystem over the coming years to leverage this M&A move."

With operations in 28 countries, the Burlington, Massachusetts-based company reported US$1.5 billion in revenue in fiscal-year 2020.

The company said it serves 77 percent of US hospitals, providing intelligent solutions including clinical speech recognition, medical transcription and medical imaging.