Alan - 2023 Q4 Letter to Shareholders

Dear Alan friends and investors,

What a year 2023 was! 

In 2023, our core business performed very well; we broadly met or beat most of our targets and expanded into new segments with success, proving our strategy. We also just reached our milestone of 500,000 members! 

With a growth of Annual Recurring Revenue (ARR) of more than 38%, and over 5,000 new customers including, Celio, Clinitex, Duracell, Mantu, and Sia Partners choosing Alan as the health partner for their employees, this was an exceptional year in the history of Alan.

We just rolled out a new revamped version of our app which is the result of all of the hard work we did in 2023. Our decision in early 2023 to bundle all of our health services and features into one product has paid off significantly:

It was a massive undertaking requiring the migration of the stand-alone Alan Mind app into the main app, re-building the full Alan experience, re-building our go-to-market and sales motions, and we delivered on it.

2023 was also the year where we broke the glass-ceiling in several segments. After continuous investment, in the Enterprise segment, during 2023 we signed over 10 companies totalling over 20,000 employees while in the Civil Servants segment which paid off as we notably signed the “Assemblée Nationale” (French Parliament).

In 2023, we also exceeded our plans in Spain and Belgium, signaling a bright future for our international operations, both in those two important countries and for future expansion.

All of this, while navigating a macro context that was extremely challenging.

When it comes to health with Alan our members and customers are never alone. Hearing our members’ stories and experiences always reminds us why we do what we do. We envision a world where everyone has the power to actively influence their physical and mental health. By transforming how individuals impact their health, Alan strives every day for a healthier humanity, starting with healthier people and healthier businesses. Alan is the health partner who prevents, insures, and cares daily.

This is only the beginning of our long journey. After bundling the best health insurance offering with industry-leading innovation in health services, in 2024 we will continue to redefine what members deserve (and can expect) from their health partner.

We maintained strong growth in 2023, growing our signed ARR by c.35% and our portfolio of members by c.30%.

This growth was mainly driven by the Enterprise segment (+20% vs. target, +300% vs. 2022), and proved the attractiveness and the resilience of our model, with a higher diversification of our sources of revenue away from the tech segment. 

We achieved a great milestone with civil servants where we successfully signed and onboarded Assemblée Nationale with great feedback from the admins, unions, and users. This is only the beginning!

2023 was a great year for Spain. Despite the negative economic context, both signed members and ARR grew by over 120% year on year and we signed numerous large customers like Eventbrite, Cabify, and Signaturit. We ended the year with 16.3k members and €7.7m of ARR, over delivering on our business plan targets.

Despite a high inflation context with automatic salary indexations (>10%) significantly impacting HR budgets, we delivered strong growth in 2023. We grew our signed members base by +69% and ARR by +77% reaching 41k signed members base and a €14.3m ARR (both beating our plan).

This growth was mainly driven by the Enterprise segment. Despite 2023 being the first year that we targeted this segment, we managed to drastically shorten the sales cycle, out-performed our budget by 105%, and welcomed great large companies like Delaware, Vandemoortele, Beobank, AS Adventure, … as customers. These early successes should enable us to further scale the enterprise segment in 2024 and beyond.

The team size remained stable with 547 Alaners (excluding interns). We fully trust our current team to achieve our ambitious plan for 2024.

2023 was a memorable year on the product side with major progress made across the whole health partner lineup.

We are very proud of every product we rolled out in 2023 including, repositioning our app with a greater focus on healthcare services, accelerating health-at-work solutions for our customers, catering for less tech-savvy members to unlock larger deals, and unleashing the latest AI advancements.

Cracking new market segments requires us to expand our insurance capabilities to match new expectations from customers and members. 

In Q4, we launched an offline experience for offline Members, giving very large companies the ability to cover their retirees in their collective plan.

In Q4, we achieved significant milestones in our healthcare offering, laying a solid foundation for increased adoption, enhanced value to members and customers, and further differentiation of our offering in 2024.

In early 2022, our health offering was primarily a GP medical chat, with an app design that reflected this.

In 2023, we significantly expanded our health services. We introduced mental well-being support, a contact lens shop, back pain treatments, and a coaching program in our clinic service, featuring 80 health professionals across 10 specialties.

The biggest release of this year was in this Q4 where we revamped the app by proposing a brand-new navigation and simplifying the discovery of our healthcare offering.

We significantly simplified the navigation, making it more personalized and relevant for each of our members.

The new home screen emphasizes our health offering, while tailoring it to the member's personal experience: Doing the Back Pain program? Then you’ll be able to access it from the top! Need to join a psychology appointment? It’s the first thing you’ll see!

Mental well-being, sleep, nutrition, back pain... With more than 80 health professionals and 150 articles and videos, accessible from this Home screen, with Alan, our members are never alone.

We also clarified the organization of our health offering by:

By enabling health professionals to recommend our comprehensive health content via chat, we're taking a significant leap toward fulfilling our ambitious vision for multichannel support.

In Spain, we redesigned the appointment booking experience. ​​And, members can now access meditation and breathing exercises in Alan’s main app.

Online booking adoption increased by +130% just after launch.

In the background, we made the most of advancements in AI to cut costs across our operations, enhanced fraud detection, and made progress globalizing our technical stack to support Spain, Belgium.

Lowering our cost of claims helps us deliver strong margins while remaining competitive on price.

In October, we launched our Contact Lenses Shop, which quickly gained a 13% market share of lenses purchased by our members by November, demonstrating our successful verticalization of care.

Moreover, we improved our enhanced fraud detection, with our new Fraud Machine Learning Scoring Model, Penny.

We made major strides in Q4 on cost to serve initiatives which contributed to overperforming on our cost to serve targets. We reduced our cost to serve by 28% vs. 2022 and beat our target for 2023 by 13%.

Our AI-enabled claim management achieved a 54% automation rate (+21 pts vs. the start of 2023).

Meanwhile, our AI support has already automated 1.4% of Care contacts. In 2024, we plan to save 14% of Care time by achieving an 18% automation rate for care contacts.

We have seamlessly blended this automation with member delight and we finished 2023 with an average member satisfaction of 4.7/5.

Our aggregation stream is about selling more products which will increase revenue per member and per customer over time.

In 2023, members bought glasses & lenses in our app. Those are included in our insurance coverage with a yearly limit over which members pay out-of-pocket.

All of our energy is now focused on 2024, with extraordinary emphasis on our two flywheels and four streams. 

1️⃣ Our unique healthcare bundle model (health insurer and healthcare provider, all in one) allows us to continuously add new health services (eg. back pain, mental health) to the bundle which differentiates our offer, making it more attractive both to:

2️⃣ Reducing cost of claims through verticalization of care, fraud management, prevention, the use of AI, and even at some point building our own medical centers.

3️⃣ Aggregation: use our broad member base and our healthcare bundle to deliver more of the healthcare products and services needed both by customers and members. We increase revenue per member over time while delivering a far superior and integrated experience. We already sell glasses, contact lenses, therapies, workshops, etc.

4️⃣ Cost to serve: Bundling, vertical integration, and aggregation increase our differentiation, enabling strong growth. Through this growth of members, customers, products, and services, we are able to achieve economies of scale, subsequently reducing the cost to serve and our investments in AI and automation tools.

The combination of all these factors allows us to be the player with the broadest, most comprehensive offering that creates the most value for our customers and members.

We manage to do this at competitive prices, due to having the best claims cost and service cost. The value created is distributed among members, customers, and us.

All these factors further reinforce growth, presenting compounding advantages that improve over time.

Alan’s 2024 plan builds on the key blocks of success from 2023 and aims to accelerate them.  In 2024, we plan to significantly accelerate growth based on the foundations we have established. 

Our roadmap is aligned with our flywheels:

Overall we see significant upside opportunities ahead of 2024 and we are really looking forward to delivering on it, especially now that we have found our execution rhythm, a rhythm that will allow us to become one of ‘the biggest companies’ in the world. 

As you have surely understood by now, Alan is on the most important mission there is—one that will help us live better, longer, fulfilling lives. This represents a market depth that is infinite, growing, and in which we are capturing more and more, positively impacting the lives of our members at scale, across all their health interfaces, while also providing the best People return on investment a company can have. And that is a business model that makes us unstoppable over time.

Thank you for your trust, for supporting us, and let’s continue to build the future of healthcare together!

Jean-Charles, for the Alan team