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💻 Nuance: In Good Hands?
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💻 Nuance: In Good Hands?
Microsoft (MSFT) announced that it will be acquiring Nuance Communications (NUAN) for a whopping $19.7B, including Nuance's net debt. The acquisition will be Microsoft's second-biggest after Linkedin. (Tweet This)
Background: Founded in 1992, Nuance combines AI and speech technology to provide solutions to understand, analyze and respond to humans. The company helps thousands of organizations globally to increase productivity and simplify communication. Nuance was also behind the success of Apple's Siri, building its backend. Nuance went public in 1995 and currently has a workforce of over 7K, with a $15B market capitalisation.
The acquisition stemmed from a partnership between the two companies, formed in 2019, to automate clinical administration work. About 80% of hospitals in the US are Nuance's customers, using its technology to transcribe a doctor’s dictation. Microsoft's interest in Nuance is a matter of complementarity to its healthcare cloud service that was launched last year. At the same time, Nuance will benefit from strengthening its offering by leveraging Microsoft Azure and its expansive global customer base.
Decades of hard work seems to be paying off for Nuance as it joins as part of a larger ecosystem.
What Happened?: The deal will consummate by the end of this year as both company boards have agreed on the acquisition. It’s an all-cash deal that values Nuance at $56 per share. Nuance's CEO Mark Benjamin will continue leading the company while reporting to Scott Guthrie, who is in charge of Microsoft's cloud and artificial intelligence businesses.
Nuance's Dragon Ambient eXperience, or DAX, released in February 2020, is the at center of this power play. DAX records voice conversations between doctors and patients using AI to understand the discussion and automatically creates clinical documentation for review. Nuance states that DAX reduced doctor's fatigue to 17% from 72%, making it a powerful tool in the current climate.
With Covid-19 slowing but not backing down, the healthcare industry will continue to be under stress for the foreseeable future. Analysts believe the partnership between the two companies will revolutionize the future of healthcare.
Nuance has suffered a bit in revenue compared to last year but will now catch up faster than ever with Microsoft. While the other tech giants are mired in monopoly hearings in the US Senate, Microsoft is using the opportunity to strengthen its offerings in a crucial part of the economy - healthcare. Now, that’s a very nuanced position to take!
Market Reaction: NUAN closed the day at $52.85, up 15.95%.
Company Snapshot 📈
NUAN $52.85 +7.27 (15.95%)
MSFT $255.91 +0.06 (+0.02%)
Regulations: China forces Jack Ma's Ant Group to restructure (BABA +9.27%)
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