Nuance to acquire medical transcription firm Transcend

Transcend will provide to Nunace a foothold in the small and mid-size hospital market

Expanding its software-aided medical transcription services, Nuance Communications will purchase medical transcription service provider Transcend Services for US$300 million, the two companies announced Wednesday.

Nuance will fold Transcend's service into its own significant medical transcription and health care natural language processing (NLP) services. In particular, Nuance is interested in Transcend's strong presence in the small- to mid-size hospital market, which accounts for about 90 percent of all hospitals in the U.S.

Medical transcription already accounts for approximately 30 percent of Nuance's annual revenue, said Carina Edwards, Nuance vice president of healthcare solutions marketing. The purchase of the Atlanta-based Transcend will boost Nuance annual revenue by about $140 million to $150 million per year, the company estimates. The company's health care practice accounted for $527 million in revenue for its fiscal 2011.

Today a big portion of medical transcription is done through speech recognition software augmented to understand clinical vocabulary. A doctor or medical professional will record his or her notes, which the software will then transcribe into text. Medical transcribers then review and edit the resulting copy for accuracy, Edwards said. The medical NLP capabilities can also be used for computer aided phone support systems.

Nuance will fold Transcend's transcribers into Nuance's own workforce, and they will be able use Nuance's software for increased productivity. Additionally, key members of Transcend's management team will continue to work at Nuance, including President and Chief Operating Officer Susan McGrogan and Chief Financial Officer Lance Cornell.

Although best known for its general use speech recognition software, Nuance also supplies its software for third party applications and services, such as for automobiles, handheld devices and call routing systems.

For the acquisition, Nuance will purchase 11.1 million shares of Transcend stock, at $29.50 per share. Each company's board of directors has approved the deal, though it still requires regulatory approval. The acquisition is expected to close in about three to six months.

Joab Jackson covers enterprise software and general technology breaking news for The IDG News Service. Follow Joab on Twitter at @Joab_Jackson. Joab's e-mail address is Joab_Jackson@idg.com

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