Americans’ love for their pets is big business. In 2024, U.S. households spent nearly $40 billion on veterinary care and pet pharmaceuticals alone, making it the second-largest category of pet spending after food and treats. The broader pet market is projected to reach $173 billion by 2027, with veterinary care expected to accelerate as millions of pets adopted during the pandemic enter their senior years and require more medical attention.
Along the way, Chewy has also become the largest online pet pharmacy in the U.S., with $1.1 billion in annual sales and a 7% market share. However, Nagle’s team estimates only about a quarter of Chewy’s customers use these pharmacy services, leaving significant room for growth. If penetration rises to 40%, they said, Chewy could unlock an additional $750 million in sales, especially as pets age and require more medications.
For example, one positive review simply states: “Always loved the company and now them having a vet is a win-win for Chewy.”
Negative reviews mention high prices and diagnosis issues. One customer said they’d “never paid such a high price for a wellness visit,” while another said the CVC gave them steroids instead of antibiotics.
BofA thinks Chewy can grow its vet hospitals rapidly. Looking at its books, with about one-third of capital expenditure dedicated to growth initiatives, BofA sees capacity to pick up the pace significantly. If Chewy dedicates 15% of its capex to vet clinics, BofA analysts estimate the CVCs could generate $335 million in revenue by 2030, with 20% EBITDA margins—adding 4% to Wall Street’s current EBITDA estimates.
Chewy has 17 fulfillment centers nationwide and says it can deliver to 80% of the population overnight and almost 100% in two days. It has fewer pharmacy fulfillment centers, but it still boasts a nationwide footprint, with room to expand.
Chewy’s expansion into vet care and pharmacy positions it to capture a growing share of the booming pet health market. As the company scales its clinics and deepens its pharmacy penetration, BofA estimates that it could add over $1 billion in new revenue. That’s a lot to chew on.
Chewy declined to comment.
For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.
