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Why is Nuance acquiring Focus Infomatics? |
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This acquisition will expand Nuance’s ability to deliver Web-based speech recognition editing services and significantly accelerate Nuance’s strategy to automate manual transcription in healthcare, where an estimated $15 billion is spent worldwide each year. Focus’ proven technology and services portfolio, in conjunction with the Dictaphone iChart Web-based transcription solutions, will ensure the most efficient and scalable Internet delivery of automated transcription as a service.
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Who is Focus Infomatics? |
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Focus Infomatics is one of the most respected speech recognition services organizations in healthcare, serving some of the U.S.’s largest healthcare organizations such as Ardent Healthcare, MD Anderson Cancer Center and Brigham and Women’s Hospital. The company combines the use of speech recognition, a web-based editing platform and an optimized India-based operation to achieve superior customer satisfaction, turnaround time and cost efficiency. Focus’ practices have garnered the industry’s highest customer satisfaction as evidenced by its 2006 Best in KLAS® ranking by KLAS Enterprises, an independent organization that monitors performance of healthcare vendors worldwide.
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What are the opportunities for the combined company? |
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The combination is positioned to significantly accelerate Nuance’s strategy to automate manual transcription in healthcare, where an estimated $15 billion is spent worldwide each year. The transaction also adds significant, recurring revenue streams from Focus’s speech editing services, as well as efficient operations and cost structure. As part of Nuance, Focus will deliver speech-based editing and transcription services to the customers of Nuance’s Dictaphone Healthcare Solutions division in addition to its existing direct customers, many of which work on platforms other than Dictaphone.
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Will this deal impact Nuances current set of iChart transcription service provider partners? |
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Focus expands Nuance’s ability to deliver and support the rapid growth of the Dictaphone iChart managed offerings, ensuring the most efficient and scalable Internet delivery of automated transcription services. In addition, it enables healthcare provider organizations and Dictaphone’s existing Preferred Service Providers to accelerate the automation of their clinical documentation. Focus uses a combination of speech recognition, a Web-based editing platform and optimized India-based operations to achieve superior customer satisfaction, turnaround time and cost efficiency.
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When is the transaction expected to close? |
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The acquisition has been approved by both companies’ Boards of Directors and is expected to close by March 31, 2007 subject to customary conditions.
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What are the terms of the transaction? |
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The acquisition was funded with cash. Consideration after adjustments is approximately $58 million.
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How does this announcement fit into the companies’ growth objectives? |
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Nuance’s growth strategy is focused on expanding the use and value of its speech-based solutions. The transaction brings together a diverse set of services, experience, customers, partners and resources that will better enable the Company to do just that. More specifically, the acquisition affords a stable, recurring revenue stream from its speech editing services. In addition to delivering these speech-based services to the customers of Nuance’s Dictaphone Healthcare Solutions division, Focus will continue to service and expand its existing customer base.
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How does the acquisition affect Nuance’s financial outlook? |
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Nuance expects the acquisition to add between $7 million and $9 million in Dictaphone healthcare revenues in fiscal year 2007 and between $18 million and $22 million in fiscal year 2008. The acquisition is expected to be dilutive to earnings on a GAAP basis by approximately $(0.02) to $(0.01) in fiscal year 2007 and $(0.01) to $0.00 per share in fiscal year 2008. On a non-GAAP basis, the acquisition is expected to be accretive to earnings, excluding amortization, acquisition-related costs and stock-based compensation, by approximately $0.00 to $0.01 per share in fiscal year 2007 and $0.02 to $0.03 per share in fiscal year 2008.
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What benefits and synergies can Nuance expect from the transaction? |
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Important benefits from the transaction include:
- Accelerated Growth for Dictaphone iChart – For the past year, the Dictaphone iChart managed transcription service has been a significant catalyst of growth for Nuance. This acquisition provides the Company and its iChart Preferred Service Providers with additional infrastructure and capacity to achieve high levels of accuracy, reliability and scale in this extremely fertile market.
- Recurring Revenue Stream –Within Nuance, software as a service continues to become an integral component of the Company’s financial performance. The acquisition of Focus Infomatics affords a stable, recurring revenue stream from its speech editing services. In addition to delivering these speech-based services to the customers of Nuance’s Dictaphone Healthcare Solutions division, Focus will continue to service its existing customer base.
- Improved Operating Efficiencies – The acquisition is expected to improve earnings through immediate improvements to Dictaphone operating margins and enhanced synergies over time. In particular, Focus’ India-based operations allow for an efficient, cost-effective delivery of Nuance’s automated speech services.
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Will Nuance continue to look for additional M&A opportunities? |
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Yes, Nuance will continue to pursue opportunities that provide operational and strategic benefits.
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Where is Focus located? How many people work for the company? |
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Focus has operations in both India and the United States and has more than 1,500 employees and contractors on staff.
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Does Nuance anticipate a reduction in force as a result of this transaction? |
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No layoffs are planned as part of the transaction.
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How will Focus be integrated into the Nuance organization? What happens to the Focus executive team? |
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Focus will be treated as a distinct operating unit within Nuance. The Focus executive team will remain intact and will continue to manage the Focus Infomatics business.
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Who are some of Focus’ customers? |
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Focus is one of the most respected speech recognition services organizations in healthcare, serving more than 100 facilities, including some of the largest healthcare organizations such as Ardent Healthcare, MD Anderson Cancer Center and Brigham and Women’s Hospital. |
