Alan - 2023 Q3 Letter to Shareholders

Our mission is to add millions of high quality years of life expectancy to society. To get there, we are making health the best HR investment a company can make.

We believe that Alan is at an inflection point to deliver on the above. We are building fast to become the one-stop health partner, and we see all our decisions compounding everyday.

1️⃣ Solid Q3 performance paving the way for exceptional Q4

We ended Q2 on a very positive note, and continued on that path in Q3 with improvement of metrics across the board. We are confident Q4 will keep seeing that snowball effect and strong acceleration (we had fantastic signals in October).

All countries are progressing well

🇫🇷 France is on track for profitability in 2025

We are mitigating the difficult macro context with a lower than anticipated churn rate and great progress on signing enterprise clients.

We have reached €280m ARR, a +32% Year-On-Year growth, 393k signed members.
Stellar cost to serve already 27% better than our End Of Year target.
The sales momentum in the enterprise segment is fantastic and accelerating with the signing of many new customers we will announce soon ! Stay posted 🙂
We have also increased our market diversification, with growing success in retail, manufacturing and the public sector (civil servants).

🇪🇸 Confirming our market fit in Spain, and overdelivering on targets

Despite lower pace on Sales acquisition in Q3, Spain is meeting or exceeding all key targets.

We have a great market fit, with exceptionally low churn.
We have reached €5m ARR, 12k members.

🇧🇪 Expanding in Belgium despite a tough economic context

We have signed our first enterprise clients and are seeing the positive momentum this creates with other prospects. We are on track to overachieving on all targets.

We have reached 30k signed members and €10m ARR.
Our self-serve offer for small companies is live.

2️⃣ Category creation is paying off

We have a winning business model

The more we are building Alan, the more we believe in our winning fundamentals :

Product & ROI-led growth, building the best product for our customers & members, generating very differentiated value, thus leading to scale, leading to even better Return On Investment for customers, which drives expanding margin and reduced cost to serve, allowing us to invest even more into the best product.
Reducing cost of health thanks to innovation, verticalization, and managing the supply.
Progressively becoming an aggregator with the ability to upsell.

Our differentiation is highly valued

9 months ago, we made a decision to position our offering as the one-stop-health partner. It meant bundling all health services that have launched and will launch in the future, and increase the HR return on investment. With a member Net Promoter Score (NPS) of 69 and customer satisfaction score (CSAT) of 86%, we are perceived as the best product in the market by a wide margin.

After 9 months pushing for it, we already observe very interesting insights :

The differentiation has increased, and resonates quite well with our customers. Our health partner positioning is now considered our number one differentiator point by the sales community.
50% of our key accounts want to know more about the Return On Investment (ROI) Alan provides, and we have compiled interesting studies that confirm our superior return on investment proposition. Customers also appreciate our pragmatic approach to pricing. Our price increases for 2024 are lower than the competition because we have been better at anticipating evolving consumption patterns over time.
We are unlocking the enterprise segment with numerous flagship deals signed and a healthy pipeline through to year-end and into 2024. Insight selling and the one-stop health partner positioning play an important role in closing these deals.

While our model works, we know it is only the beginning. We are changing the health paradigm, and we can still better convince some companies on our value offering (not only an “old style” insurance).

We are working hard on boosting engagement on our services and are making steady progress.

3️⃣ Product Acceleration

Providing more flexibility in our core insurance experience

We have added additional flexibility in our insurance stack to keep increasing our differentiation and make sure we remove all blockers to sign deals.

We now support contracts with more than 2 options and have adapted the experience accordingly.
Insurance offers and termination can now be self-administered by admins.
We shipped a pilot of automated employee removal.

Doubling down on the one-stop health partner

We are always pushing to change the way our members manage their health, empowering them to live a longer, healthier life, by becoming their one-stop health partner.

Q3 saw the release of many new features to further consolidate our leadership position as the one-stop health partner.

We launched (for a sample of our members) Alan Daily: a health ritual helping members to pick a health goal across a wide range of topics, and providing daily advice to make an impact on this goal.

We also reworked how we package different health topics with spaces, a new way to organize our health offer along different topics (baby, woman health, mental wellbeing, back pain, skin, sexual health and nutrition).

In Q4 we will focus on increasing adoption, boosting effectiveness for members and demonstrating the Return On Investment of our solution. We also improved our customer health partner offer: we acted on Q2 learnings to improve our solutions to deliver turnkey & actionable recommendations (improved prevention plan & proposed solutions to address HR problems such as attrition). This led to Q3 being the highest adoption quarter for Customer features on health at work.

We also improved the booking experience for members in Spain with a Concierge Service.

Reducing cost of claims

We have been able to reduce the cost of claims thanks to Alan Clear, now offering :

A contact lenses shop there by materially expanding the effecting reach of Alan Clear A global optic service via our partnership with Krys group enabling wearers of progressive lenses, who cannot be served digitally through Alan Clear to order progressive glasses with 0 out of pocket.

We also improved on controlling claims and fraud, saving €1.9m on an annual run-rate basis. Many new levers to reduce these costs are coming in Q4.

Reducing cost to serve

Our 27% outperformance is due to the optimization of our processes across the company, and some Q3 major releases for this great feat:

AI-enabled claim management: 45% of insurance documents are now analyzed by AI, and we can identify in real time the documents members send to us with 96% accuracy
AI-enabled support: We can automate 32% of eligible support requests from members, a big milestone, and it is only the beginning.

Our leading position in AI implementation helps powering our flywheels

We see very high potential in the use of AI at Alan and we have first proof of product differentiation. It serves our flywheels to drive growth acceleration and increased profitability through significant expansion of our gross margin and a reduction of our cost to serve.

We are uniquely positioned with a combination of the expertise, the infrastructure, the dataset, and the right business model (high potential to reduce costs of claims).

Team: attracting & retaining the best

We kept our hiring standards to the same level in an effort to build the best possible team. With 52 Alaners hired during Q3 2023, we reached targets early and started hiring for Q4. We are on track to meet the 2023 hiring plan. In Q4 we are focusing on Care and Sales to ensure these communities have a stable set up for 2024.

Our offer acceptance rate increased: 90% of offers accepted vs 78% in Q2, and 87% in 2022.

What’s ahead

Rome was not built in a day, and we believe that next year we will benefit from the stability in our strategy, both in terms of product roadmap and brand awareness

In Q4, we are focusing on doubling down on our efforts to reach our 2023 targets:

Lead the one-stop health partner category
- Deliver on requirements for our customers.
- Deliver a better health partner experience on core stories, improve our offering with new features.
- Continue delivering value to members and customers to drive adoption.
Control our cash burn by reducing cost to serve and cost of claims
- Leverage AI automation, reduce money leakage and control the cost of third-party providers, to reduce our cost to serve.
- Reduce fraud, abuse, and verticalize to further reduce our cost of claims.

We are more excited than ever about our mission, the quality of our team, and the compounding effects we see everyday. The decisions we made years ago are paying off more and more everyday. Let’s continue increasing the life expectancy of our members by millions of years while building a generational company.

Thank you for your trust!

Jean-Charles, for the Alan team

Published on 03/11/2023