Microsoft disclosed that it is buying the speech recognition company Nuance in a deal worth about $US19.7 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 $US56 cash per share. That’s a 23 percent premium to Nuance’s Friday closing price.

The company 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 health care, including a product that listens in on exam room conversations between physicians and patients and automatically writes up the doctor’s recommendations.

“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 on 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 on Microsoft Teams.

The software giant said this month’s deal would double its potential market in the healthcare industry to nearly $US500 billion ($655 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 modernising, adopting digital engagement and moving to the cloud,” said Forrester analyst Kate Leggett.

Nuance’s products include clinical speech recognition software offerings such as Dragon Ambient eXperience, Dragon Medical One and PowerScribe, all of which are built on Microsoft’s Azure cloud platform.

The companies said Nuance products are used by more than 55 per cent of physicians and 75 per cent of radiologists in the US, and by 77 per cent of US hospitals.

Revenue from its healthcare cloud business grew 37 percent in the 2020 fiscal year. “AI is technology’s most important priority, and health care is its most urgent application,” Mr. Nadella said.

Musa Suleiman
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