Health

Why Microsoft’s $19.7B deal to acquire Nuance is a ‘perfect fit’ and ‘trophy’ for Redmond tech giant

Microsoft’s giant buy: The tech giant its second-largest acquisition ever on Monday: a pending $19.7 billion deal to swoop up Boston-area firm Nuance Communications, a longtime chief in synthetic intelligence-fueled speech expertise.

Why Nuance: The deal displays Microsoft’s continued guess on healthcare. Nuance focuses on “conversational AI” for functions in hospitals and physician’s workplaces; 77% of U.S. hospitals are Nuance prospects.

“Nuance has large attain amongst medical doctors and different well being professionals, who will spend a number of hours on it per day,” stated , a well being tech investor at OMERS Ventures. “It’s additionally deeply built-in with the most important well being IT gamers, together with the digital medical document firms.”

Microsoft has teamed up with Nuance previously to mechanically create paperwork within the digital well being document (EHR) following a healthcare go to. Nuance already makes use of Microsoft’s Azure cloud computing platform, and is built-in with Microsoft Groups.

“This acquisition brings our expertise instantly into the physician-patient loop, which is central to all healthcare supply,” Microsoft CEO Satya Nadella stated on a name with analysts Monday.

Extra from Nadella: The CEO additionally famous the pandemic-driven digital acceleration transformation “pushed by industry-specific cloud options.”

“It’s now very clear that healthcare organizations that speed up their digital investments can enhance affected person outcomes and scale back prices at scale,” he stated. “Advances similar to AI can have an infinite influence on augmenting human functionality in healthcare. AI is expertise’s most necessary precedence, and healthcare is its most pressing utility.”

Final yr Microsoft rolled out . It additionally has an .

Nadella stated the Nuance deal will enhance the corporate’s whole addressable market in healthcare to practically $500 billion. He additionally famous functions for Nuance’s tech past healthcare similar to enterprise AI and biometric safety.

Why Microsoft’s $19.7B deal to acquire Nuance is a ‘perfect fit’ and ‘trophy’ for Redmond tech giant Microsoft

“An ideal match”: That’s how Xealth CEO described the deal for Microsoft. McSherry leads Seattle healthtech startup Xealth and bought Swype to Nuance for $100 million in 2011. He stated tech giants together with Microsoft, Amazon, and Google have dabbled on the sides of healthcare with horizontal options however haven’t earned significant income.

“Healthcare normally requires verticalized options given all of the regulatory, workflow, and privacy-related necessities to meet the wants and discover buyer traction,” stated McSherry, nominated for CEO of the 12 months on the . “This could possibly be a long run try for Microsoft to reinvent EHR beginning with a voice-first strategy.”

“A trophy for Redmond”: That’s the response from Dan Ives, an analyst with Wedbush Securities, noting that the deal represents a “distinctive asset” for Microsoft.

“The Nuance deal is a strategic no-brainer in our opinion for Microsoft and matches like a glove into its healthcare endeavors at a time by which hospitals and medical doctors are embracing subsequent technology AI capabilities from thought leaders similar to Nuance,” Ives wrote in a analysis notice.

Ives expects no main regulatory hurdles for Microsoft. He added that the corporate is on the “M&A warpath over the subsequent 12-to-18 months,” citing latest stories of Microsoft’s curiosity in shopping for Discord and its .

Cloud enterprise increase: The deal ought to add much more progress to Microsoft’s cloud arm. The corporate’s income climbed 17% to greater than $43 billion , and income rose 33% to $15.5 billion, eclipsing Wall Road’s expectations amid rising demand for its cloud companies.

Among the many firm’s three fundamental enterprise divisions, the most important income enhance got here within the Clever Cloud section, up 23% from the prior yr to $14.6 billion. Microsoft expects Nuance’s financials to be reported as a part of the Clever Cloud section.

Sturdy Seattle ties: Nuance already has a giant presence within the Seattle area close to Microsoft’s HQ as a results of a number of acquisitions together with VoiceBox, Swype, Tweddle, Varolii, and Jott. Nuance in February , a Seattle health-tech startup that makes a voice assistant for clinicians.

, a Seattle tech vet and co-founder of Jott, stated he was “psyched” for Nuance. He famous how the corporate has been shedding different enterprise strains similar to cellular and automotive — “and it seems prefer it actually paid off,” Pollard stated.

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