Step count incorrect in Health app

I had battery drain issue after updating my Apple Watch 5 to WatchOS 7. I followed the reset instruction in the Apple support article which solved the battery drain but now the step count in the Health app does not match what the Watch reports. For the last couple days the Health app typically shows 3000-4000 fewer steps. Interestingly the Fitness app on the iPhone still shows the correct step count from the watch.

I did make sure to move the Apple Watch back to the top of the list under Steps => Data Sources after pairing it to my iPhone but that does not fix the problem.