Nuance Acquires Philips Speech Recognition Systems, Expands European Healthcare Business
biz.yahoo.com
Wednesday October 1, 6:00 am ET
Nuance's Healthcare Business in North America and Europe Projected to Deliver Revenues in Excess of $410 Million with Rapid Expansion of Operating Margins in Fiscal Year 2009
BURLINGTON, Mass.--(BUSINESS WIRE)--Nuance Communications, Inc. (NASDAQ: NUAN) today announced that it has acquired Philips Speech Recognition Systems (PSRS), a business unit of Royal Philips Electronics (AEX: PHI, NYSE: PHG) and leader in speech recognition solutions, especially in the European healthcare market. With the combined resources of Nuance and PSRS, Nuance significantly enhances its ability to deliver innovative, speech-driven clinical documentation and communication solutions to healthcare organizations throughout Europe.
Through this transaction, Nuance expands upon its mission to transform the way healthcare organizations document patient care. In recent years, Nuance’s healthcare solutions have become the industry standard for automating clinical documentation in North America, targeting the estimated $10 billion spent annually for medical transcription alone. The opportunity for automated documentation solutions is also significant in Europe, where an estimated $2 billion is spent each year for manually processing clinical information and where governments have made substantial investments to digitize healthcare systems, such as the $24 billion applied to the National Health Service National Programme for IT in England.
“Nuance has been disciplined and focused in our pursuit of the healthcare opportunity in North America, a strategy that has paid dividends both in our rapid growth and the broad adoption of our solutions,” said Paul Ricci, chairman and CEO at Nuance. “PSRS provides a solid foundation of customers, partners and European language-solutions as we expand our business in Europe and enable broader geographical leverage for Nuance’s portfolio of healthcare products and services.”
Under terms of the agreement, consideration for the transaction is 66 million Euro, or approximately $96.1 million. Consideration comprised a cash payment of 21.7 million Euro on September 26, 2008, and a deferred payment of 44.3 million Euro to be paid in cash on September 21, 2009. Nuance expects the acquisition in fiscal 2009 to add between $36 million and $39 million in GAAP revenue; $37 million and $40 million in non-GAAP revenue after adjusting for revenue lost to purchase accounting; GAAP earnings between $0.00 and $0.01 per share; and non-GAAP earnings between $0.02 and $0.03 per share. See “Discussion of non-GAAP Financial Measures” below for further information.
“Nuance’s strong European operational performance this quarter and fiscal year provide motivation for the acquisition of PSRS,” commented Tom Beaudoin, CFO at Nuance. “In addition, our sustained performance of positive cash flows in the fourth quarter and projected cash flows in fiscal year 2009 give us confidence in funding this acquisition with cash.”
Beaudoin continued: “We anticipate that our Healthcare business will now deliver worldwide revenues in excess of $410 million in fiscal year 2009. Operating margins in our healthcare business should be up sharply, above the corporate average for the full fiscal year, as we realize the synergies from fully integrating PSRS and leverage the operational momentum in our North American healthcare business.”
Headquartered in Vienna, Austria, PSRS has proven itself a market leader in Europe with consistent customer growth and partner relationship expansion. PSRS offers speech recognition solutions in 25 languages, the most comprehensive language portfolio in healthcare, to meet virtually all medical documentation requirements regardless of location, medical vocabulary or healthcare provider’s native language. Through more than 100 integration partners worldwide, PSRS solutions can be used with healthcare IT applications found in hospitals, practices and other healthcare organizations, as well with medical transcription platforms. In addition, recent acquisitions in both Germany and Spain have further broadened its operations and capabilities for the European healthcare market.
“With multiple industry initiatives and significant government investment toward healthcare information standardization, Europe offers a large and growing market for innovative technology that improves provider productivity and the clinical documentation process,” said Marcel Wassink, CEO of Philips Speech Recognition Solutions. “Together with Nuance and our broad partner base, we believe we can accelerate access to advanced, speech-enabled solutions that enhance the way medical reports are created and shared, as well as speed the utilization of electronic medical records. In addition, we are fully committed to - and will expand upon - the benefits we deliver to our customers and partners today.”
PSRS brings many advantages to Nuance including proven solutions, a talented team of employees, a roster of premier partners and customers, and critical intellectual property that will accelerate Nuance’s strategy to transform clinical documentation across the global healthcare market. Highlights of the transaction include:
* Rapid International Expansion – The acquisition of PSRS provides Nuance with an immediate leadership position for healthcare speech recognition solutions in Europe, with more than 8,000 installations, 100 OEM and channel partners and support for 25 languages. It also provides Nuance with a team of experienced sales, marketing, development and support personnel throughout Europe.
* Language Portfolio – With the addition of PSRS’ expanded speech recognition vocabularies (medical, legal, insurance and correspondence) Nuance gains significant language coverage and enhanced recognition accuracy for its solutions. PSRS offers 25 continuous speech recognition languages and 150 specialty foreign language vocabularies. Nuance is also pleased to add Philip’s strong worldwide patent portfolio, primarily focused in the areas of speech recognition and associated workflow solutions and expects core recognition accuracy improvements to its speech based solutions for businesses and consumers worldwide.
* Dedicated Distribution Channels – With more than 100 integration partners worldwide, PSRS maintains longstanding relationships with many of the largest healthcare IT vendors in the industry, including 3M Health Information Systems, Agfa Healthcare, Carestream Health, Dolbey, GE Healthcare, MedQuist, Microsoft, Philips Healthcare and Siemens Healthcare. These partners provide speech driven solutions for hospital information systems, electronic medical record (EMR) systems, picture archiving and communication (PACS) systems, departmental information systems (radiology, cardiology, pathology, etc.), reporting workflow applications and transcription platforms. Nuance will leverage the PSRS partner channel to expand its delivery of speech enabled clinical documentation and communication solutions in the European healthcare market, where speech recognition is becoming ubiquitous.
* Strong Customer Base – With more than 8,000 SpeechMagic deployments, PSRS’ established customer base of leading healthcare provider organizations can be leveraged to generate new opportunities for Nuance’s existing healthcare product portfolio, accelerating Nuance’s global strategy to radically improve speech driven clinical documentation and communication through the delivery of innovative technology solutions. Customers include numerous NHS Trusts (UK), several complete Health Regions throughout Spain, Norway, Denmark and Italy and a large number of hospitals in the Benelux, Germany, France, Sweden, Finland, Austria, the Middle East, Asia Pacific and Latin America.
* Robust Solutions Portfolio – PSRS provides a robust set of core speech recognition and workflow solutions including SpeechMagic, an award winning speech recognition platform that enables healthcare IT systems providers to deliver seamlessly integrated digital dictation and speech recognition capabilities to hospitals, clinics and group practices. Nuance will add SpeechMagic to its existing portfolio of market leading OEM solutions, which include Dragon® Medical SDK and PowerScribe® SDK. Nuance plans to continue to fully support all PSRS customers and partners worldwide moving forward.
PSRS’ solutions will become an integral part of Nuance’s healthcare portfolio of proven, speech-enabled clinical documentation and communication solutions including Dragon Medical for real-time medical speech recognition, the eScription on-demand platform for computer aided medical transcription, the Dictaphone Enterprise Express on-premise platform for integrated transcription workflow and speech recognition, and radiology solutions including PowerScribe®, RadWhere™, RadPort™, RadCube™, and Veriphy™ critical test results management. Nuance’s healthcare solutions are used by leading healthcare provider organizations including Baptist Health System, BannerHealth, Children’s Hospital of Pennsylvania, MeritCare Health System, New England Medical Center, Spectrum Health and SunHealth. For more information on all of Nuance’s Healthcare solutions please visit: nuance.com. |
