Microsoft puts AI at heart of digital health strategy with Nuance deal

Solving the elective care conundrum through digital innovation

Microsoft has made its aspirations in digital health clear with a whopping $19.7 billion deal to buy Nuance Communications and its artificial intelligence platform for speech recognition that is increasingly being used for clinical applications. 

The $56 per share deal is all about increasing Microsoft's position in digital health, and represents a hefty multiple on Nuance's current revenue stream, which was running at around $350m in the fourth quarter of 2020.

It also speaks to Microsoft's ambitions in healthcare that this is the second largest acquisition it has ever made after its $26 billion takeover of social media platform LinkedIn.

The tech behemoth hasn't been so active in building in digital health as rivals like Google and Apple, but made a big play last year with the launch of its Microsoft Cloud for Healthcare in 2020.

"AI is technology’s most important priority, and healthcare is its most urgent application," said Microsoft chief executive Satya Nadella.

"Together, with our partner ecosystem, we will put advanced AI solutions into the hands of professionals everywhere to drive better decision-making and create more meaningful connections," he added.

Nuance has long been a specialist in speech-to-text software – laying the groundwork for the initial version of Apple's Siri voice service – and in recent years has expanded its focus to include conversational AI and cloud-based ambient clinical intelligence for healthcare providers.

It's been working closely with Microsoft since 2019, and its main products – including Dragon Ambient eXperience (DAX), Dragon Medical One and PowerScribe One for radiology reporting – are all built on Microsoft's Azure cloud platform.

Using ambient intelligence, DAX listens in to consultations between doctors and patients and automatically transcribes notes into health records, while Dragon Medical and PowerScribe are speech recognition platforms for clinical note taking, data sharing and patient follow-up.

The takeover could give Microsoft an immediate leg-up in the healthcare sector as Nuance's software products are already used in 77% all US hospitals, 55% of physician offices and 75% of radiology suites, according to the tech giant.

Nuance CEO Mark Benjamin will retain his role, reporting to Scott Guthrie, executive vice president of Cloud & AI at Microsoft.


Benjamin said the deal brings together Nuance's "deep domain expertise in conversational AI and ambient solutions with [the] incredible scale and platforms that Microsoft has with their cognitive services and other attributes".

With the pandemic focusing attention on the potential for digital health to ease physician workload and improve patient care, there has been something of an M&A spree in the sector, which shows no signs of letting up.

This week also saw UK-based digital health startup HealthHero enter the French market with its acquisition of telehealth startup Qare – just three months after buying Ireland's telehealth player MyClinic.

HealthHero says that the Qare takeover means it now provides digital health services to around 22 million people – making it one of the largest telehealth players in Europe, and is on track to provide just under three million consultations this year.

Meanwhile, in the US telehealth startup Zipnosis has been bought by insurance company Bright Health Group. Minneapolis-based Zipnosis' platform provides virtual triage and consultations to nearly 60 health systems across the US, covering around 500,000 people.