Nuance Communications Inc. and Dictaphone Corp. yesterday announced a definitive agreement whereby Nuance will acquire competitor Dictaphone. Under the terms of the agreement, consideration for the transaction is $357 million in cash, subject to adjustments. The acquisition has been approved by both companies’ Boards of Directors and is expected to close by March 31st.
This acquisition significantly accelerates Nuance’s strategy to automate manual transcription in healthcare, where an estimated $15 billion is spent worldwide each year. Nuance expects the acquisition to add between $80 million and $85 million in revenue in fiscal year 2006 and between $180 million and $200 million in fiscal year 2007.
“Improvements in speech technology and pressures on the healthcare industry create a compelling opportunity for our companies to transform manual transcription through speech-enabled solutions,” said Paul Ricci, chairman and CEO at Nuance. “The combined resources, experience and talents of Nuance and Dictaphone will help accelerate the adoption of speech recognition to eliminate most manual transcription for healthcare in North America this decade, delivering over $5 billion in savings to care facilities and transcription service organizations.”
Since 2004, Nuance said it has steadily increased its investments within healthcare, putting substantial resources in product development, sales, business development and marketing behind this effort. The company has continually enhanced its medical version of Dragon NaturallySpeaking, formed a dedicated sales and business development organization and recently acquired MedRemote to broaden its solutions portfolio and expand its presence in healthcare. These investments produced record dictation revenues for Nuance in 2005.
Dictaphone's dictation, transcription and speech recognition technologies serve approximately 4,000 hospital and outpatient facilities and two out of every three physicians in North America.