Microsoft has completed its acquisition of software company Nuance Communications, adding to the tech giant’s portfolio of cloud and artificial-intelligence products in healthcare, the company said Friday.
Here are five things to know about the deal:
1. Redmond, Washington-based Microsoft announced plans to purchase Burlington, Massachusetts-based Nuance, a software company that sells AI tools across multiple industries, including AI documentation tools for healthcare, for $19.7 billion in April 2021. U.K. regulators cleared the deal this week; U.S. regulators had OK’d the deal in June 2021.
2. Microsoft in a news release Friday described the deal as a “strategic, highly complementary acquisition” to accelerate its cloud strategy in specific industries, including reducing clinician burnout in healthcare. Microsoft, which has been building up its business software for hospitals, already struck a partnership with Nuance in 2019 to develop AI that “listens” in the background of patient visits and automatically documents clinical notes.
Microsoft in April said acquiring Nuance would double Microsoft’s total addressable market of healthcare providers to nearly $500 billion.
3. Nuance’s CEO Mark Benjamin will continue to serve as CEO, reporting to Scott Guthrie, executive vice president of Microsoft’s cloud and AI group.
“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,” Guthrie said in the news release. Microsoft plans to develop tools to ease clinician burden, bring together disparate datasets and develop best practices for virtual care, according to a blog post Microsoft published outlining its strategy for the acquisition Friday.
4. Microsoft posted $51.7 billion in revenue for the second quarter of its fiscal 2022, the most recent quarter for which it’s reported financial results, up 20.1% year-over-year. Microsoft previously said that it plans to report Nuance’s financial results within its “intelligent cloud” segment, which contributed $18.3 billion in quarterly revenue.
Nuance in its most recent quarter—the first quarter of its fiscal 2022—reported $321.4 million in revenue, down 7% year-over-year and including 1% growth in revenue from healthcare.
5. Microsoft’s planned purchase of Nuance was the second largest acquisition announced in 2021, according to Modern Healthcare’s Digital Health Business & Technology, after Oracle’s plan to purchase Cerner for $28.3 billion. There were 255 announced or completed mergers and acquisitions of digital health companies in 2021, compared to 184 in 2020.