Speech-recognition technology provider Nuance Communications (NASDAQ:NUAN) lost 5% in April this year. The company's shares were under pressure as there was a correction in the stock market. However, Nuance is doing well as far as the business is concerned. Its health-care and automotive segments, along with mobile, are driving growth. The company's recent innovations and strategic moves should help it do well in the future, while its Apple (NASDAQ:AAPL) partnership is another tailwind.
Healthcare and automotive on a roll
Nuance's health-care segment is witnessing good demand because of solutions such as Dragon Medical. The company is well-positioned in health care with a number of new products in its pipeline. Nuance recently announced that it has enhanced its PowerScribe 360 platform. As a result of this new addition, it has improved the capability of the solution with online workflow for routing reports to support staff members or back-end service providers. This would help them in correcting transcripts and get the data from the reports recorded correctly in electronic health records and insurance claims.
With this new addition, Nuance expects a boost in its market share in radiology imaging. It claims to have 60% market share in this area. Further, it has a strong customer base of 1,600 facilities that produce around 60% of radiology images in the U.S. Hence, with the addition of more value to its offering in the health care segment, Nuance is definitely making the right move.
The speech recognition technology provider also has great expectations from its Clintegrity solution. Clintegrity is a clinical documentation process that provides an efficient way for clinicians to create complete and compliant clinical documentation. At the same time, the solution helps improve coding, downstream revenue cycle, and quality reporting processes. Nuance is gaining more customers for this solution and has won key contracts. According to management, the company recorded a number of important competitive wins for the Clintegrity Solution, without going into much detail.
The automotive segment of Nuance is also expected to be an important growth driver. Nuance had acquired Tweddle Connect for $80 million last year to enhance its connected car solution. With Tweddle Connect, Nuance is focused on delivering a better and smarter connected car experience. In addition, Nuance's Dragon Drive application is seeing good traction in the market and is gaining popularity. This application is being used by some top automakers such as Audi, BMW, Chrysler, Ford, General Motors, Hyundai, Toyota, etc.
Besides health care and automotive, Nuance is also trying to profit from the mobile market, and it certainly has the right partner to benefit from mobile growth. Apple uses Nuance's technology, so with an increase in sales of the iPhone, Nuance is in a solid position to benefit from the mobile market. Apple is planning to upgrade its product portfolio this year by bringing out a couple of large-screen iPhones.
According to various sources on the Internet, upcoming iPhones will come in 4.7- and 5.5-inch screen sizes. As a result, Apple will have a better chance of capitalizing on the growing market for big-screen phones. According to IDC, 20% of all smartphones shipped in China last year were five inches or larger. By 2017, this share is expected to grow to 50%.
Now that Apple has a deal with China Mobile in place, the company is making a smart move by developing a bigger iPhone as Chinese consumers clearly have a preference for large screen sizes. So, as Apple's addressable market grows, Nuance will benefit since it supplies its technology to the smartphone company.
Nuance's performance has not been very attractive in the last one year, with its shares down by almost 30%. But a turnaround cannot be ruled out in the future as the company is releasing new solutions. With growth in mobile, automotive, and health care, Nuance seems well positioned for the long run as it could deliver returns to patient investors.
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Sharda Sharma has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple and Nuance Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.