Nuance Acquires Software Firm

The speech-software developer picks up a medical transcription software company.
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SAN FRANCISCO -- Investors gave a thumbs up to Nuance's (NUAN) - Get Report purchase of a medical transcription software company Tuesday.

Speech-software developer Nuance will buy Needham, Mass.-based eScription for $363 million, primarily in cash. In connection with the deal, private-equity firm Warburg Pincus is investing $100 million in Nuance.

Shares of Burlington, Mass.-based Nuance were up $1.01, or 5.8%, to $18.45 in recent trading.

Nuance expects the acquisition to add $16 million to $18 million in revenue, excluding items, in 2008 and between $63 million and $68 million in 2009.

Excluding items, eScription's earnings are expected to either break even on a per-share basis, or add a penny, in fiscal 2008, and are expected to add 6 cents to 8 cents a share in fiscal 2009.

eScription, which delivers its on-demand software on a subscription basis over the Internet, will become part of Nuance's Dictaphone Healthcare division.

Nuance estimates its on-demand revenues from the combined services will be $175 million to $200 million in fiscal 2009. Nuance had subscription-based revenue of $165.5 million in 2007 and total revenue of $602 million.

Nuance is the largest standalone developer of text-to-speech and speech-to-text software. Several large software companies, such as

Microsoft

(MSFT) - Get Report

and

IBM

(IBM) - Get Report

, have acquired speech-software developers and offer comparable services.