A deep dive to numbers, go through the current shareholder structure, and then go through the guidance at the end. The plan is to leave as much time as we can also for the questions. If looking at the highlights for the quarter, the Q2 was a very strong quarter for us. If you look at the top 20 countries where we operate, 17 out of 20 were actually growing and the 15 out of those 20 top countries were actually growing in a double-digit manner. If looking at the tonometers, intraocular pressure measurement devices, and then the imaging devices. Both product lines were actually growing really well. As I said, U.S. growing well, key European biggest countries growing really well.
I think the highlight was also the Latin America. They started to recover after the COVID, and this applies both for the tonometer side of the business plus the retinal imaging devices. In addition to the normal business what we have, device business, we also launched the iCare ILLUME platform for diabetic retinopathy screening. The package includes the iCare DRSplus device. We updated the software functionality for the device so that with the single button press, the iCare DRSplus imaging device is taking the image, sending that one to the ILLUME cloud software, and then from there, it's automatically images are transferred to the third-party AI software, which is Thirona, as we speak today.
We get the results back to the iCare ILLUME cloud software. This software solution is based on the Oculo platform assets which we acquired a bit more than a year ago. If looking at the current market conditions and uncertainties, as said already during the Q1 earnings call, we have stopped all the business for Russia and Belarus, and the stopping here means that we have actually terminated all distribution contracts. It's a full-on exit out from these markets. A couple of uncertainties. The components, of course, they have been there for the longer time. According to our view, still the Q3 is going to be struggle in terms of the components.
We have weekly challenges related to the components, but we haven't had any impact to deliveries during the Q2. In that sense, everything is okay, but it requires a lot of planning, a lot of man and woman hours to sort out the challenges week by week. We have a view that because of the overall economic slowdown, it seems to be like perhaps during the Q4, Q1 next year, also the component situation is going to be easing up. Let's go through the first half numbers in a bit more detail. Net sales grew 25.1% up to EUR 44.6 million.
That was a good first half for us. I think we have to remember that we also had a boost from the U.S. dollar. If we look at the currency adjusted growth of net sales in January to June, the number was 17.6%. If looking from the absolute euro terms, the first half boost in the sales was roughly EUR 2.9 million. EUR 2.9 million from the strong U.S. dollar. If you look at the impact to the EBIT line, which was EUR 12.7 million, roughly 60%. Roughly 60% of EUR 2.9 million then falls down to the EBIT line.
Also, on the profit side, we got nice lift up due to the U.S. dollars. Robin is going to go more detailed, the cash flow and the other key financials. Over to you, Robin.
Thank you, Jouni. Like Jouni mentioned, we're extremely happy to be able to present these numbers for the second quarter. In sales, it's actually the best quarter ever as a company, as a medical technology company for us, supported by the strong FX, of course. But basically comparing to even last year, in the first half last year, our growth was more than 40% for the first half. Being able to report again.
For the second quarter, actually last year, the FX-adjusted growth was 43%. Report 30% growth again quarter-over-quarter year-over-year is extremely good. 25.1% to EUR 44.4 million growth in the first half. Also the U.S. dollar has an impact on the gross margin. It is actually slightly better what we maybe thought even ourselves when we started this year. A lot of our sales are in U.S. dollars, and of course, our manufacturing costs are in euros, so that all plays into the gross margin as well. The gross margin improvement for the second quarter actually went from 69.1% to 71.3%, so 2.3% improvement year-over-year. Much of that is actually U.S. dollar supported, but also a very good product mix.
Actually, our manufacturing costs also we've been able to control those quite well, and actually even improve them in some products. Our operating profit, EUR 12.7 million, up by 40% for the first half. Just as a reminder, last year we acquired Oculo. For Q1 last year, we did book roughly EUR 700 thousand of acquisition-related one-time costs, which we have adjusted here out. On the adjusted EBIT line, you can see the comparable number being instead of EUR 9 million, EUR 9.7 million. Compared to the adjusted comparable number, our EBIT still grew this year more than 30%. Also as a reminder, last year the Oculo acquisition took place on end of April.
Basically, I think it was April 28th. Basically we are, our costs for the comparable period does not include the Oculo team costs roughly for the first four months. Those costs obviously are actually a lot more than the acquisition costs. That also something to be kept in mind. EPS improvement very much in line with the EBIT. Net gearing better than last year. I'll actually cover that a bit more on the next slide. Then the average employee number also going up a bit, but there also the comparable period doesn't include the whole Oculo team for the full quarter. As it's an average number, something that's one of the bigger areas of where we got the number or the growth for the employees.
Like I mentioned, the quarter really strong, EUR 24.4 million. It's the best quarter in the recent or mid-term history of the company. Not going back to the early 2000s as I would have to go and check what those were there. But as a medical technology company, it's definitely the best quarter on top line we've had. Very good sales in all key regions, all key products, double-digit growth. Kind of here you can see the bit longer-term trend line. It's our business is a bit seasonal. Typically the end of the year is, in the Q4 is the best quarter in every year.
It's more Europe and Asia Pacific is more stable throughout the year, but especially in the US, the end of the year tends to be quite good. Also our business is very scalable, as we've mentioned many times. You can see when the top line goes up, the profitability goes up on the right side. The blue lines over here. Also you can see the EBIT profitability being more stabilized now. In 2020, when the corona broke out, the OpEx froze like in many other companies. Travel went to zero. Trade shows were zero. Everything basically stopped. Marketing was low. The profitability did go exceptionally high in Q4 2020.
Basically since then, when things have become more normalized, we've been able to stabilize also the profitability. You can see as the top line grows, the profitability grows with it. Also for the software solutions, we expect the cash flow from that business still to be negative for this and the next year. Our cash flow, similar seasonality a bit there. We typically pay or always pay our incentives out in the first quarter. That kind of is a big impact there on the operating cash flow. Then as we go into the other quarters of the year, the second half typically is the stronger time, where we collect the cash and make more cash on the operations. Equity ratio has been trending up slowly.
Basically we're now closer to 70% versus 60%, a couple years back. The net gearing, we're now at 7%. It's the orange line on the right-hand graph. You can see as it goes up and down, what it does basically, there's certain logic behind it. When you look at 2020, when corona broke out, our AGM was pushed out to June. Dividends were paid out in Q2. When the net gearing goes up, we collect the cash or kind of build up the cash balance in the bank for the rest of the year. Q1 2021, pay the dividends in Q1. Q2, we acquired Oculo with cash reserves. The net gearing goes up. Again, we build up the cash in the bank.
Q1 this year, nothing special there. Q2, the dividend payout of roughly EUR 9 million we had in the quarter actually brought up the net gearing up to 7%. Our interest-bearing debts versus cash, the balance there, I think it's roughly EUR 5.5 million. We have more debt than cash. Main shareholders. Nothing really has changed on the top ten list. Demant from Denmark is still the largest owner. They've actually increased their ownership during this year a little bit from, I think it was just over 12% at the start of the year. For the Q2, the bigger change, I guess, in ownership was that the foreign ownership went up roughly 1%. The shares went to Sweden, France mostly.
In the U.S. over the last couple of years, the U.S. ownership has increased. Maybe if you go back a couple of years, that's maybe together with the Demant coming in as an owner, those are probably the bigger changes over the last three years. U.S. ownership tends to used to be quite small, like three years back. Then the guidance, we expect our exchange rate adjusted net sales to grow strongly from the previous year, and profitability excluding non-recurring items is estimated to remain at a good level. Here, just as a reminder, the net sales are the FX adjusted, not the reported sales.
Hey, excellent. Thank you, Robin. I think we are ready for the questions.
Thank you. If you do wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. Our first question comes from the line of Daniel Lepistö from Danske Bank. Please go ahead.
Thanks. It's Daniel Lepistö from Danske Bank. I have just a couple of questions. First of all, you note that the component shortages did not impact your delivery capability in Q2. Is this something that has notably benefited you this year in terms of closing more sales or getting more customer interest as you have actually been able to keep delivering your products quite nicely? Thanks.
Hey. Hi, Daniel. I can pick up that one up. It's Jouni here. We have heard that the couple of clients. Sorry, not the clients, but the couple of competitors what we are having. Our view is that perhaps at least slightly we have been able to benefit from that one.
You said that the tonometer demand was very strong again in several different regions. What's your view on the current total market opportunity with tonometers and the sort of competition in this segment? I'm thinking about the fact that the Rebound technology should kind of soon be the globally leading one if you keep growing as you have.
How we basically see this one, we have been indicating that the tonometers including the probe, so that's roughly $200 million market. Last time when we checked our market share, it was way over 30%, but less than 35%. Our view is that we have been able to grow quite significantly the market share during the first half as the overall tonometer market based on our data is growing only 2%-3%. That's definitely growing. Now, of course, interesting to see when we get the latest analyst reports then during later in 2022. But anything, Robin, add on that one? I think that's for sure that we have been able to gain the market share.
I think the tonometer market share, I would expect it to be quite close to the Air-puff NCT technologies already, so. The market studies are on their way. I think we're gonna receive them in a few weeks, if I recall right. We'll know more.
Daniel, if coming back to the second part of the question related to the competition. We haven't still got any Rebound competitors in the human side. We were, as in earlier calls, we expected to have the competition already end of last year, then we were expecting to have a competition in the USA during the May timeframe. The probable competitors who have indicated and announced that they are coming on the Rebound tonometry side, starting from the USA for the human side. There's no clearance from the FDA for those devices yet. That's where we stand today.
All right. That's very helpful. I think my final question is that can you sort of quantify the impact of these price hikes you mentioned and the volume growth behind the Q2 sales growth? Thanks.
Sorry, Daniel, can you repeat the question? The line was a bit breaking down towards us here. Sorry for asking.
Yeah, absolutely. Can you give us the impact behind the price hikes and the volume growth for this Q2 sales growth?
We haven't really disclosed that in detail, but we have done price rises for 3% last year in November and then again 4% in-
Beginning of May.
-in May. Yeah, the—o bviously, the unit growth wasn't as much as they say, the dollar growth, because the FX also has a big play there.
Yeah, thanks. That's all from my side. Thank you.
The next question comes from the line of Pia Rosqvist-Heinsalmi from Carnegie. Please go ahead.
Yeah. Hi Jouni, and hi Robin, and congratulations on a really strong report. Hey, on the super strong growth now in the second quarter, do you see any or do you hear any signs or any messages for in terms of pent-up demand still after COVID? Or would you describe that this, the current demand situation is really, it's normal replacement demand and new sales?
I would say, now Robin, please, help me if I'm not getting this one right. If looking now, I go through the geography by geography. If looking the USA, looking the key European countries, looking the APAC. I would say that mostly there's not too much pent-up demand. If you go certain Asian countries which have been in a lockdown, I would say that there's a slight pent-up demand. If you go for the Latin America, that was during the Q2, that was a quite nice surprise. They started to be more up and running. If you look the growth percentages, for example, in Latin America, they were quite high. I would consider that that's at least partly pent-up demand.
That's my understanding. Robin, anything to add?
Yeah, in the big picture, I think, it doesn't have a big impact that part. I think we're not much pent-up demand anymore left in the pipe. It's more business as usual in other key markets, I guess, right?
Mm-hmm.
Really U.S. and Europe, the strong demand is really, yeah, it's really new sales and nothing left from the COVID.
Replacement
COVID, collapse.
Yeah, replacement. New and then replacement.
Yeah. All right. Good. Hey, I noted that you did not repeat earlier comments, I think it was from Q1, that in the coming years you believe that the retinal imaging devices would grow faster than the tonometer business. Am I correct here that you've removed the phrase? If so, does this signal that something has happened with the tonometer market for you to remove this comment?
No, I don't think it's just maybe having a bit new message in the report is the reason for removing that. I think in the big picture, I think that's still true.
If looking at the Q2, I think it's fair to say that both were growing really well and if comparing those two product segments, the fundus imaging side, the growth was higher than the tonometers.
Okay. All right. Clear. If I still can continue on the tonometer side. Just to understand, can you share any, you know, information on which part of the tonometers are growing? I mean, probes, are they doing better than before, or is HOME2 gaining more, you know, tailwind or what's happening within tonometers?
Maybe I'll take that one.
Yeah.
All the key products, like we stated, are doing really well. The probes and the tonometers, and on the imaging side the same thing, not really anything special there. I think the iCare HOME2 in general, like Jouni, I think you mentioned this at last year's report, we said that it's been really well received in the U.S., especially the Bluetooth connection has been a real breakthrough and really important addition for the doctors. It does look very promising, and it is, like we'd earlier said, it is the fastest growing single product for us. We're very happy to see that the development has been like it has been and looking really closely how it continues from here on.
Everything looks good now on the HOME2.
Good. Still to clarify, these were the device-driven sales, but how about software? Can you say anything about, you know, software sales in the quarter? I'm thinking here about Oculo. Are you able to sell the product? Is it gaining traction?
We have been putting now a lot of effort to the ILLUME. If looking back in time about a year ago, we made a decision to focus on the diabetic retinopathy platform development with the Oculo team using the Oculo platform assets. We have been now really heavily working in order to get the first end-to-end solution out, meaning the new software for DRSplus, then Oculo platform-based ILLUME platform, and then all the AI components and now entering into the piloting work for those in order to guarantee that in the coming quarters we actually have a product to market fit. That's what.
What comes to the existing Oculo business, so that's as it stands, and we have been able to grow that one in Australia and New Zealand, but that's not visible in a big picture as such. What comes to the strategy, so the cornerstone of our strategy is to have a profitable growth. So what comes to the investment to the Oculo and the software in general, so we have a certain kind of a bucket of money, or how would I say it? So certain team size that we are carefully looking at so that we don't overspend and overinvest on the software platform development side so that we are able to provide the profitable growth.
Then if the team is limited, so if we have to pivot, so then we actually with the same team, we do pivot, pivoting in terms of the software business and in terms of the development side. Now the focus in delivering and getting the market traction for ILLUME and the diabetic retinopathy screening platform and enhancing that one. That's where the focus has been now the last three quarters. Now we have a first end-to-end product out and now heading for the pilots as we speak. Sorry for the long answer, Pia, but that's the full picture where do we stand.
Yeah. No, thanks for the clarification. To the imaging devices. It seems like that you are really I mean, you're enjoying good demand for DRSplus and the ultra-widefield lens as you've discussed earlier. What about the other products within the imaging segment? What can you do to speed up growth also in those?
Looking at the first half, Q2 in general, DRSplus selling really well. The EIDON ultra-widefield selling well. We also have the EIDON FA and AF, so those have been selling as well. Then, just why we put into the report the ultra-widefield, so that's now kind of a door opener for us because we haven't had a product before on a ultra-widefield segment. That's the reason why we have highlighted that one as a kind of growth spearhead for us in addition to the DRSplus. Other EIDONs have been selling also really well. We have been able to grow that side of the business.
If looking at the perimeters, the COMPASS, the perimeter business that's growing as well. In terms of the volume on the perimeter side, that's a way smaller. We have a high percentages on the perimetry side, but it's a tougher market, and the volumes are smaller than on the DRSplus and on the EIDON family side.
Okay. Clear. Thank you. My final comment, I think Daniel asked about the market share situation in tonometers, and the line broke up there a bit, at least for me. Robin, could you please reiterate your comment about your estimate about your market share in tonometers?
We haven't had any new information for the last year, but looking at our sales percentages and the market growth in general, the tonometer market growing roughly 2%-3%. Obviously if we are growing double digits, we are taking share, and kind of I would expect us to be quite close to the NCT market share. They used to be the dominant, still a year or two back, they were 40% market share. We were two years ago, like below 30%. I think last year we went to roughly 33%-34%, and I think now we probably should be quite close, my guesstimate would be.
Yeah. All right. Good. Thanks for that. That's all for me. Thank you.
We have one more question from the line of Nikko Ruokangas from SEB. Please go ahead.
Hello from my side. I hope you can hear me. I could continue with the AI team a little bit and your comments that the iCare DRSplus was growing very strong. Even though you wouldn't have sold any or provided any AI solutions yet, do you think that the potential to offer that in the future will boost demand for these devices already now in Q2 or this year in H2?
I would perhaps say that if first thinking the dynamics and the strategy on the AI and in the context of DRSplus, that's following. We have two streams ongoing. The first one is to guarantee that DRSplus, of course, the add-ons so they are compatible and especially going to be approved in coming quarters, at least in the USA, so that the device plus third-party AI algorithm, so that's working together. In Europe, the process goes so that it's okay if the DRSplus is having a regulatory approval and the AI algorithm is having a regulatory approval, so then you can use them.
If you go to the U.S. under the FDA, they should be approved as a package. Our strategy is following. We want to guarantee that our devices are working with the third-party AI algorithms. That's the goal number one. The second one is that we want to guarantee that the iCare DRSplus plus the iCare ILLUME plus the third-party AI algorithm is approved by one package so that we are able to actually sell that package. That's the second track that which we are advancing. If looking now in the future, our view is that iCare DRSplus as it's fully automated, you just press a button and it can access through the small pupil, it can access through the cataract and so forth.
It's really easy to use and fully automatic. In the coming quarters, in coming years, that's an excellent tool for different type of fundus imaging-based screening applications. We are at least in-house, we are believing that one, and we have a first signs of that one being true as well. That's shortly the case and the strategy how do we wanna play.
All right. Thank you. I have another question, still a little bit on the cost side . You had quite a big impact from FX effect, as discussed earlier, and you told earlier also that you had strong growth across the rest and then in Europe and in the USA. Thinking about that strong impact from FX, did you have exceptionally high share from the USA compared to other quarters? If you had, do you think that this is continuing?
No, it was quite typical. Nothing special on the kind of sales split between regions.
All right.
Nothing there that would explain it.
All right. Thank you. That was all for me.
Thank you.
As there are no further questions, I'll hand it back to the speakers.
Okay. Hey, great. Thank you very much for the interest. Thank you for your time. I think it's now the shorter period when we meet next. We come back after the Q3. Looking forward to that one, have a good rest of the summer. Thank you.
Thank you.