Nuance enters definitive agreement to acquire Transcend

Nuance Communications, Inc. (NASDAQ: NUAN) and Transcend Services, Inc. (NASDAQ: TRCR) today announced a definitive agreement for Nuance to acquire Transcend, a leading provider of medical transcription and speech editing services, for approximately $300 million, net, in cash.

With Transcend, Nuance will accelerate access to and expand its customer base within the small- to mid-size hospital market, which comprises approximately 90 percent of hospitals in the U.S. and increasingly demands cost effective, voice-enabled, clinical documentation solutions to achieve Meaningful Use and the transition to ICD-10. With Nuance's voice-enabled and Clinical Language Understanding technologies and deep electronic health record (EHR) integration, combined with Transcend's high-quality transcription and editing services, hospitals can make clinical documentation and workflow more productive and cost efficient and extract greater value from clinical information.

"The acquisition of Transcend will expand the delivery of our innovative voice and Clinical Language Understanding solutions especially to small- and mid-size hospitals," said Janet Dillione, executive vice president and general manager of Nuance's Healthcare business. "With Transcend, we will drive change and improvement to the way these hospitals capture and leverage clinical information. The acquisition is a natural extension of Nuance's existing healthcare business, and will strengthen our solution and services portfolio, as well as enhance our profitability."

Nuance has agreed to acquire Transcend through a cash tender offer of $29.50 per Transcend share, representing an approximately 30 percent premium over Transcend's 90-day volume weighted average share price. The transaction has been unanimously approved by the board of directors of each company. Based on Transcend's 11.1 million diluted weighted average shares outstanding as of December 31, 2011, the acquisition is valued at approximately $300 million, net of Transcend's estimated cash at closing. The transaction is expected to close in the second half of Nuance's fiscal 2012, subject to regulatory approval and other conditions.

Nuance expects the acquisition in fiscal 2013 to add between $140 million and $150 million in revenue; non-GAAP earnings between $0.08 and $0.09 per share; and, GAAP earnings between $0.02 and $0.03 per share. See "Discussion of Non-GAAP Financial Measures" below for further information.

The addition of Transcend brings many advantages and synergies to:

• Accelerate Growth within the Small- to Mid-Size Hospital Market - Transcend brings operational excellence and customer satisfaction, as well as a leading position with national Group Purchasing Organizations (GPOs) particularly within the small- to mid-size hospital market. Greater access to these organizations will expand the delivery of Nuance's voice-driven and Clinical Language Understanding solutions in this segment and in turn will contribute growing revenue streams for Nuance's healthcare business.
• Strengthen Services for Healthcare Organizations - With Transcend, Nuance will gain additional medical transcription and editing capacity for its healthcare offerings. Together, the combined organization will help a broader set of healthcare organizations achieve cost effective, efficient clinical documentation workflow.
• Drive Recurring Revenue and Enhance Profitability - The acquisition of Transcend is a natural extension of Nuance's existing healthcare business that affords a stable, recurring revenue stream from its strong customer base and will enhance profitability within the division.

"Nuance recognized Transcend's services experience and excellence and saw real benefit in adding Transcend's employees and management team to its healthcare business," said Larry G. Gerdes, CEO of Transcend. "Both Nuance and Transcend share a vision to reduce healthcare costs through technology and increased efficiencies. The strength of the combined organization will truly benefit the industry and we look forward to providing Transcend customers access to Nuance's leading HIT technology."

Key members of the Transcend management team will play integral roles in strengthening Nuance's position in the healthcare industry, including Susan McGrogan, Transcend's president and chief operating officer, and Lance Cornell, Transcend's chief financial officer.

The tender offer is expected to commence on or before March 20, 2012. The offer will be open for a period of not less than 20 business days from its commencement and will be conditioned upon valid acceptances of the offer in respect of shares representing at least a majority of the outstanding Transcend shares on a fully diluted basis as well as other closing conditions, including receipt of required regulatory approval. The tender offer will be followed by a merger in which each Transcend share not acquired in the tender offer will be converted into the right to receive $29.50 per share in cash, without interest. The transaction will be financed through cash on hand at Nuance.