Chewy Eyes Pet Health, AI and Clinics to Drive Its Next Growth Phase
Tue, September 15, 2026 at 12:02 PM GMT+3 6 min read
Key Points
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Chewy is making pet health a central growth engine, targeting pharmacy, supplements, prescription diets, insurance, telemedicine and veterinary clinics. Pharmacy customers generate an estimated $300–$500 more in annual spending, while the company's 60 clinics are outperforming expectations.
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Despite softer demand for discretionary pet products and below-normal pet additions, core food and medication sales remain strong. Chewy continues to target 150,000–250,000 net active-customer additions and aims for long-term high-single-digit to low-double-digit revenue growth.
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Chewy is using Autoship, mobile engagement and artificial intelligence to increase retention and spending while largely self-funding investments. Acquisitions in health are prioritized after reinvestment, with international expansion remaining a lower priority.
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Chewy (NYSE:CHWY) is prioritizing U.S. health services, customer spending expansion and artificial intelligence capabilities as it seeks to build on its pet retail foundation, Chief Executive Officer Sumit Singh said during a Goldman Sachs conference fireside chat.
Singh said the company's investment in supply chain and technical infrastructure, coupled with Autoship adoption across food and medication categories, has created a more stable base for reinvestment. He characterized pet health as a roughly $50 billion total addressable market, including an estimated $12 billion to $15 billion in products such as medications, prescription diets, supplements and flea-and-tick treatments.
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Chewy entered the health category in 2018 and has become the country's largest pet pharmacy, Singh said. He added that the company is capturing about $0.70 of every dollar moving online in the pet medications and related product space. Over the past six years, Chewy added approximately $9 billion in incremental revenue, with about $4 billion coming from Chewy Health, according to Singh.
Consumer demand and customer growth
Singh said consumer enthusiasm for discretionary pet categories has softened, particularly following what he described as increased marketplace stress beginning in March and April. The company saw pressure on attachment rates, or purchases of additional products beyond core needs, and adjusted its forecast accordingly.
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However, he said trends have since stabilized. Adoptions and relinquishments are "roughly at parity," while Chewy's food and medication businesses remain strong and health services are outperforming the company's expectations relative to its April outlook.
Singh said shelter and rescue organizations account for roughly two-thirds to 70% of pet adoptions, while breeders represent the remainder. He said dogs are modestly underperforming and cats are outperforming at shelters and rescues, resulting in an overall balanced adoption picture. He also said breeders of certain popular breeds have not seen a slowdown in litter production, though puppy prices have risen.
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While normalized annual pet additions to the market would typically total 10 million to 12 million, Singh said the current figure is running below that level. Even so, Chewy's gross customer additions from consumers shifting from other retailers are exceeding its 2019 gross-add levels, he said.
The company continues to target 150,000 to 250,000 net active-customer additions, even if broader market conditions remain subdued. Singh said Chewy's longer-term aspiration is high-single-digit to low-double-digit revenue growth, supported by customer additions and higher net sales per active customer, or NSPAC.
Health, clinics and customer spending
Singh identified pharmacy, supplements, prescription diets, insurance, telemedicine and veterinary clinics as major components of the company's health strategy. He said about one-quarter of Chewy's customers currently buy from its pharmacy, while fewer than half of consumers know Chewy sells pet medications.
Each existing Chewy customer who becomes a pharmacy customer adds approximately $300 to $500 in NSPAC, Singh said. The company plans to focus marketing efforts on improving pharmacy awareness and expanding medication attachment among existing customers.
Chewy operates 60 veterinary clinics, which Singh said are performing better than the case the company outlined previously. A Chewy Vet Care clinic is expected to generate about $3.5 million in revenue, plus roughly $800,000 in additional sales on Chewy's website, for approximately $4.3 million in combined revenue. Singh said the company is outperforming those metrics and reaching break-even in about 20 months.
He also said four out of 10 clinic customers are new to Chewy. The company acquired Modern Animal to immediately double its clinic base and gain additional capacity to expand. Singh described the acquisition as a fit based on culture, customer orientation and technology, adding that it provides the company with options for both asset-light and company-operated clinic models.
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Chewy's average veterinary recruiting time is about four months, Singh said.
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Its one-year veterinarian retention cohort is in the high-80% to low-90% range, he said.
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The company expects telemedicine products to improve affordability and access to veterinary care as regulations allow the category to develop further.
Autoship, AI and capital allocation
Autoship remains a key contributor to customer spending and retention. Singh said Autoship orders carry a mid-single-digit higher average order value than non-Autoship orders. Chewy has also doubled mobile-app penetration over the past three years, and Singh said app users tend to be more engaged, have higher Autoship participation and generate higher order values.
The company is testing efforts to use pet-profile data to expand Autoship beyond food and medications into additional merchandise categories. Singh said the product works in market tests, but its near-term contribution has been affected by broader pressure on discretionary attachment rates.
Chewy is also developing AI-driven tools internally, including "Cai," or Chewy AI, to handle post-purchase service needs. Singh said the company is building additional agents to improve search, discovery and shopping, and eventually to use customer signals to manage relationships more individually through the app.
Singh said Chewy does not expect to enter a broad new investment cycle and does not need additional investment to maintain market-share gains if market conditions do not improve. Instead, he said the company intends to make durable, non-promotional investments in growth while using its base business, clinic margins and an expected $50 million in AI savings in 2027 to self-fund most initiatives.
After reinvestment, Chewy's next capital-allocation priority is evaluating potential acquisitions, primarily in health, followed by returning capital to shareholders, Singh said. International expansion remains a lower priority, with the company focused on U.S. health services, digital products and clinics despite positive lessons from its Canadian launch.
About Chewy (NYSE:CHWY)
Chewy, Inc is an e-commerce company focused on pet products and services. Through its website and mobile applications, the company sells pet food, treats, supplies, toys, bedding, medications, and other products for dogs, cats, fish, birds, reptiles, and small pets.
Chewy supports recurring purchases through its Autoship program and provides access to prescription and over-the-counter pet medications through Chewy Pharmacy. The company also offers pet health-related services, including veterinary consultations in certain markets, and sells products under a range of national and private-label brands.
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The article "Chewy Eyes Pet Health, AI and Clinics to Drive Its Next Growth Phase" was originally published by MarketBeat.
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