Nuance Stock Dips on Reduced Sales Ahead of Microsoft Acquisition

  • Nuance reported adjusted earnings per share of $0.08, matching analyst expectations exactly.
  • Nuance’s $321.4 million in revenue fell very slightly below the $321.44 million analysts estimated.
  • Microsoft is expected to complete its acquisition of Nuance this year following EU regulatory approval.

Nuance Shift

Nuance Communications (NUAN) announced Q1 FY2022 financial results that essentially met analyst projections but caused a dip in stock price nonetheless. The company’s $321.4 million in revenue was slightly under the $321.44 million projected by analysts, though the $0.08 in adjusted earnings per share met the expectations precisely. Nuance is currently undergoing a $19.7 billion acquisition by Microsoft, recently approved by the European Union. The erratic stock price as the deal moves ahead has been one of the side effects, though nothing that might impede the sale. The deal will see Microsoft acquire all of the outstanding shares of Nuance common stock for $56 per share, paid for in cash. The transaction will let Microsoft end public trade in Nuance as it absorbs the platform. The deal is expected to be complete by the end of the year, so there was no discussion of projecting Nuance’s future stock price and revenue. A dip in sales led to the unadjusted earnings per share of -$0.18, but that was anticipated as the acquisition by Microsoft moves forward.

“We continue to execute on our primary objectives across our Healthcare and Enterprise divisions, and got off to a good start to our fiscal year 2022,” Nuance CEO Mark Benjamin explained. “In Enterprise, we remain encouraged by the demand for our Security & Biometrics and Digital Engagement cloud solutions. Our total Enterprise revenue declined 16% year-over-year as we accelerated our transition from an on-premise license model to a recurring, cloud-based model.”

Healthy Growth

The sale of Nuance’s medical transcription and electronic healthcare records business a year ago heralded some of the changes. That said, the healthcare products Nuance retained have been a source of continued success for the company as it readies its shift into a Microsoft brand. Nuance’s Dragon Medical Virtual Assistant has run on the Azure cloud platform since 2019, transcribing conversations between doctors and patients and helping fill in electronic health records. Microsoft added virtual check-ups via Nuance to the Teams messaging platform in 2020 as telemedicine exploded in popularity due to the COVID-19 pandemic. Nuance launched a COVID-19 and vaccine assistant at the end that year, following it up with a voice assistant for Walgreens to help schedule vaccine appointments. Nuance’s acquisition of medical voice tech startup Saykara in February will also likely play a role in future Microsoft offerings.

“In Healthcare, we saw strong cloud revenue and ARR growth, in particular from our Dragon Medical and DAX solutions where cloud revenue grew 29% year-over-year,” Benjamin said. “Overall Healthcare revenue grew 1% year-over-year in Q1, as cloud growth more than offset the planned wind-down of a non-strategic government Coding contract.


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