The technology and software giant Microsoft Corp. (NASDAQ: MSFT) is making another big push into the healthcare market. The company is buying Nuance Communications, Inc. for $19.7 billion ($56.00 per share) in cash, the largest transaction in the healthcare market of the year so far. The price is a 23% premium to the closing price of Nuance on Friday, April 9, and is valued at approximately 14.25x and 89.47x Nuance’s Q4:20 annualized revenue and EBITDA, respectively.

Nuance provides conversational AI and cloud-based ambient clinical intelligence for healthcare providers. Nuance’s products include the Dragon Ambient eXperience, Dragon Medical One and PowerScribe One for radiology reporting, all leading clinical speech recognition SaaS offerings built on Microsoft Azure. Nuance has partnered with more than 75% of hospitals in the United States.

Microsoft’s acquisition of Nuance builds upon an existing partnership between the companies that was announced in 2019. The two companies have been working together on AI software that helps doctors capture patient discussions and incorporate them into electronic health record (EHR) systems.

By combining the Microsoft Cloud for Healthcare platform with Nuance’s solutions, as well as the benefit of Nuance’s EHR systems providers, Microsoft will be better able to assist healthcare providers with clinical intelligence and other Microsoft cloud services. The acquisition will double Microsoft’s total addressable market (TAM) in the healthcare provider space, bringing the company’s TAM in healthcare to nearly $500 billion.

This is the first acquisition in the healthcare market for Microsoft in over a decade, but Nuance Communications has been an active buyer lately, according to search results in our Healthcare Deals Database. Just in February, the company added Saykara, Inc., which developed a mobile AI assistant to automate clinical documentation for physicians. With Microsoft’s ubiquitous reach and Nuance’s AI capabilities, it seems like the two are going to be a big player in the healthcare market.