Microsoft Corp. makes a big bet on artificial intelligence in healthcare.
The software giant is going to buy Nuance Communications Inc., is tapping into the company that is connected to Siri voice technology, to revamp solutions that free doctors from notes and better predict a patient’s needs. According to people familiar with the matter, Microsoft may announce the deal as soon as Monday.
The price being discussed could value Nuance around $ 56 a share, a 23% premium to closing on Friday, said one of the people who asked not to be identified because the information is private. Becomes Microsoft’s largest acquisition since LinkedIn Corp., the acquisition will give Nuance an equity value of approximately $ 16 billion, according to data compiled by Bloomberg.
Microsoft has tried to enter the healthcare sector and sell more cloud software to hospitals and doctors. It has been working with Nuance on AI software for two years, helping clinicians record patient appointments and integrate them into electronic health records, and combine the products of the speech technology company in its Teams chat app for appointments in health .
The “Nuance deal would be a trophy for Redmond,” Wedbush analyst Dan Ives said, referring to Microsoft in Redmond, Washington. “Nuance has been in the midst of an unprecedented strategic turnaround over the past few years under CEO Mark Benjamin, and we believe the company represents a unique healthcare asset for Microsoft.”
Under Benjamin, Nuance has narrowed its focus and separated marginal businesses, such as Cerence Inc., the car AI unit that was abolished two years ago. The company also sold its $ 400 million imaging division to Thoma Bravo’s Kofax and instead zoomed in on partnerships with healthcare providers and the largest electronic medical record companies.
A Microsoft representative declined to comment. A Nuance spokeswoman based in Burlington, Massachusetts, did not immediately respond to a request for comment.
Digitization Health care
Nuances Shares rose 3.4% this year, according to the company, which laid the foundation for the technology used in Apple Inc. see Siri Inc. used, gave a market value of almost $ 13 billion. Profits continued to rise 9.9% in the S&P 500 index, while Microsoft added 15%.
As AI software becomes better at analyzing language and predicting medical needs, Nuance and Microsoft can develop technologies that look for certain words in health records to make physicians better suggestions for patient care.
“It can really help Microsoft accelerate the digitalization of the healthcare industry, which has lagged behind in other sectors such as retail and banking,” said Anurag Rana, senior analyst at Bloomberg Intelligence. “The biggest short-term benefit I can see is in the field of telehealth, where Nuance transcription product is currently used by Microsoft Teams.”
Nuance, whose products include Dragon Speech Recognition Software, had net income of $ 91 million on income of $ 1.48 billion for its fiscal year ended September 30, after losing $ 217 million the previous year.
There has also been an increasing focus on Microsoft health care. In May, the software maker unveiled a package of industry-specific cloud software and also appointed managers with medical backgrounds and machine learning and AI tools for areas, including clinical trials.
Coincidentally, one of Microsoft’s offices in Boston is in Boston right next to Nuance’s headquarters.
Still active
With a market value of $ 1.93 trillion, the most in the world after Apple, Microsoft remains actively at the forefront.
Last month, Bloomberg News reported that the software giant was in talks to acquire Discord Inc., a video game community, for more than $ 10 billion. It also has videogame maker purchased Zenimax Media Inc. for $ 7.5 billion in cash in a deal signed this year.
The Nuance acquisition, according to Microsoft’s second largest acquisition behind the LinkedIn acquisition in 2016, would be worth more than $ 26 billion in equity.
Decades ago, Microsoft entered the realm of artificial intelligence with research projects and an early focus by co-founder Bill Gates to find ways to make it easier for people to speak with computers in plain English.
The Nuance acquisition will complement the efforts of the past few years, where Microsoft has assigned thousands of employees to their AI work and tools that customers can use to build applications that understand speech and translate, recognize images and detect anomalies. The company considers AI to be an important driver for future sales of cloud services.
The acquisition could also boost Microsoft, as it faces stiff competition in the AI space, while rivals like Alphabet Inc. see Google and Amazon.com Inc. also invested heavily in the field.