Microsoft Corp. is making a massive bet on artificial health intelligence.
The software giant is ready to buy Nuance Communications Inc., using voice technology company Siri to review solutions that free doctors from taking notes and better predict a patient’s needs. Microsoft could announce the deal immediately after Monday, if the talks are successful, according to people familiar with the matter.
The price discussed could value Nuance at about $ 56 per share, a 23% premium until Friday’s close, said one of the people, who asked not to be identified because the information is private. Set to be Microsoft’s biggest acquisition since then LinkedIn Corp., the acquisition would give Nuance a capital value of about $ 16 billion, according to data compiled by Bloomberg.
Microsoft has tried to make a foray into the healthcare sector by selling more cloud programs to hospitals and doctors. He has been working with Nuance for two years on AI software that helps clinicians capture patients’ discussions and integrate them into electronic medical records and combine speech technology company’s products into the Teams chat app for telehealth appointments.
“The Nuance deal would be a trophy for Redmond,” said Wedbush analyst Dan Ives, referring to Microsoft, based in Redmond, Washington. “Nuance is in the midst of an unprecedented strategic shift in recent years, led by CEO Mark Benjamin, and we believe the company is a unique asset on Microsoft’s healthcare front.”
Under Benjamin, Nuance reduced its focus and separated peripheral businesses, such as Cerence Inc., the automotive AI unit that was launched two years ago. It also sold its imaging division to Thoma Bravo’s Kofax for $ 400 million and expanded its partnerships with health care providers and the largest electronic medical record companies.
A Microsoft representative declined to comment. A Nuance spokesman based in Burlington, Massachusetts, did not immediately respond to a request for comment.
DIGITIZATION Health
Shade shares rose 3.4% this year, giving the company, which laid the foundation for the technology used in Siri by Apple Inc., a market value of nearly $ 13 billion. The gain followed the 9.9% jump of the S&P 500 index, while Microsoft added 15%.
As AI software becomes better at analyzing language and predicting medical needs, Nuance and Microsoft may be able to develop a technology that searches for certain words in health records to make better suggestions to physicians for patient care.
“This can really help Microsoft accelerate the digitization 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 see is in the field of telehealth, where the Nuance transcription product is currently used with Microsoft Teams.”
Nuance, whose products include Dragon speech recognition software, had a net income of $ 91 million on revenue of $ 1.48 billion for the fiscal year ended September 30, after losing $ 217 million the previous year.
Microsoft has increasingly focused on health. In May, the software maker unveiled an industry-specific cloud software package and also hired directors with physicians and machine learning and AI research for areas, including clinical trials.
Coincidentally, one of the Microsoft offices in the Boston area is located right next to Nuance’s headquarters.
Still active
With a market value of $ 1.93 trillion, the largest in the world after Apple, Microsoft remains active on the transaction front.
Last month, Bloomberg News reported that the software giant is in talks to buy Discord Inc., a video chat community for over $ 10 billion. Also bought video game maker Zenimax Media Inc. for $ 7.5 billion in cash in a transaction this year.
The acquisition of Nuance would rank as the second largest acquisition of Microsoft, behind the acquisition of LinkedIn in 2016, at a capital value of over 26 billion dollars, according to data compiled by Bloomberg.
Microsoft entered the field of artificial intelligence decades ago, with research projects and a first focus of co-founder Bill Gates on finding ways to make it easier for people to talk to computers using plain English.
The acquisition of Nuance will complement the efforts of recent years, where Microsoft has assigned thousands of employees to its AI work and launched tools that customers can use to build applications that understand and translate translations, recognize images and detect anomalies. The company sees AI as a key factor in future sales of cloud services.
The acquisition could also give Microsoft a boost as it faces stiff competition in the AI space with rivals such as Google Alphabet Inc. and Amazon.com Inc., which are also investing in the industry.