Chewy Sees Recurring Revenue Promise in Pet Health Offerings

Chewy app

Online pet product retailer Chewy touted the potential and growth opportunity of its pet health offerings as it released quarterly earnings Wednesday (Aug. 31).

On a conference call with investors, CEO Sumit Singh said the company is expanding CarePlus, its wellness and insurance program, and PracticeHub, an eCommerce solution for veterinary practices.

See also: Chewy Expands Wellness Offerings With Pet Insurance

Launched in two states in June, CarePlus is now available in 31 states, with a nationwide rollout expected by the end of the year. Singh says the company wants to spend this year trying to “iterate and learn” what it can about this space.

“So, while CarePlus won’t have a meaningful financial impact on 2022, over the longer term, we believe CarePlus will provide us an opportunity to help grow the historically underpenetrated pet insurance TAM and gain market share in a high-margin business,” Singh said.

Practice Hub, which launched in 2021, has grown from 300 practices in March to 1,000. It lets vets create, approve and manage medications and diet prescriptions in a single place, and earn recurring revenue when customers place orders or buy products from the Chewy website.

Read more: Petco Looks to Fish, Birds, Snakes to Boost Subscription Revenue

The news came one day after Petco announced it was expanding its subscription health and wellness program Vital Care — previously open to just cats and dogs — to cover birds, fish, reptiles and small pets.

The program offers pet parents “savings and rewards” on things like nutrition, supplies, services, and veterinary care, with benefits tailored to different animals’ individual needs.

Meanwhile, Chewy reported a 13% increase in net sales, which Singh attributed in part to the “predictable nature of our Autoship program.” The program accounted for nearly three-quarters of the company’s net sales for the quarter, a new record.

Most of those sales were from “nondiscretionary recurring revenue categories like food and healthcare,” Singh said, while Chewy saw softer demand in the quarter for discretionary products such as hard goods.

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