Stanley M. Bergman
Chairman of the Board and Chief Executive Officer at Henry Schein
Thank you, Graham. Good morning, everyone and thank you all for joining us. Today we are pleased to report record second quarter financial results that reflect the good underlying momentum in the business and execution on our strategies. Sales were particularly strong in our technology and value-added services businesses and our medical businesses. Although there were some near-term headwinds in the quarter due to COVID infection rates among other factors, our solid operational execution this quarter and our results demonstrate the strength, the underlying strength of the business.
In June, we saw COVID-19 infection rates which we believe contributed to -- so there was rising COVID-19 infection rates which we believe contributed to a decline in patient traffic. This is particularly so in our Dental business. We expect patient traffic to increase again when the infection rates moderate, and this is to some extent quite regional. While we are maintaining our full 2022 full year guidance for EPS for 2022 and that's the guidance range of $4.75 to $4.91, we are adjusting our expectations for full-year sales growth to reflect changes, which include continued strengthening of the U.S. dollar and declining demand for COVID-19 test kits.
The company's management team is laser-focused on executing our above plus one 2022 to 2024 strategic plans priorities, thereby providing our customers with an exceptional experience delivering differentiated solutions that make our customers practice most -- practices most successful and improved patient outcomes, leading to delivery of our financial goals as we've set out in 2022 to 2024 strategic plan. We believe that the long-term trends across our end markets, provide a solid platform for us to deliver on our goals.
In short, Henry Schein remains well positioned to deliver consistent sustainable profit growth and to create value for our shareholders as we have for almost 28 years as a public company. Before we turn to our business update and the progress we have made in executing on our strategic growth initiatives, I would like to touch on macroeconomic challenges in general and discuss Henry Schein's ongoing efforts to be best positioned to succeed in this dynamic environment that we're now living through.
First, concerns with the potential economic downturn. Given the Henry Schein's broad portfolio of medical, dental products and services, we are an important partner to healthcare providers treating the patients and keeping communities healthy. The market Henry Schein serves have weathered past slowdowns quite well. During the challenging economic times, consumers continue to need services from office-based healthcare practitioners. It's both medical and dental and from the alternate healthcare sites that we service.
That said, we are working to mitigate the future impact of any potential economic slowdown on our key stakeholders including advancing efficient and low-cost supply chain solutions and practice management solutions in general, such as patient demand generation services and generally, those services that can help the practitioner operate a more efficient practice, so that they can provide the best clinical care for their patients.
We are announcing today a restructuring plan that is focused on funding the priorities of our strategic plan. In other words, moving resources to the areas we want to focus on, but at the same time, streamlining operations and other initiatives to increase efficiency. Ron will speak more about this topic in a moment. Second, we continue to work with our suppliers to limit the impact on inflation on price increases for products suppliers as well as the cost of transportation of those goods.
During the second quarter, we estimate the price inflation for non-PP&E merchandise from brand and manager -- managed manufacturers have ticked up to approximately 3%. It could in fact be slightly lower. We've, I think, done a good job working with our manufacturers on this and inflationary impact on equipment sales in other words not other than non-PP&E merchandise, the impact of inflation on our equipment sales was relatively insignificant, because on PP&E significantly down because of the deflation in global prices.
When customers express price concerns, we believe that given the breadth of our offering we are typically able to provide a lower cost national brand solution or corporate brand alternative allowing us to maintain our margins, but also helping our customers deal with inflation, so with the impact of inflation on their practices. So third, while global supply chain pressures have been relatively stable over the past three quarters, our product portfolio, which we believe is the industry's broadest once again affords us a competitive edge as is more easily -- as it more easily enabled substitutions when a particular product or brand is in short supply.
We continue to expect that supply chain issues for traditional equipment will impact sales through the year-end. That said, the situation appears to be stable and probably improving but some of our suppliers, particularly on the traditional side will be stand expand capacity and are now providing us with much better service than 3 or 4 months ago and, let's say, better service and talking about on fill rates. Our strong order book on the equipment side across the board, actually in all product categories globally, and backlog continues to grow and do well, supports good equipment sales over the next few quarters.
Henry Schein is well positioned to manage rising interest rates, our low level of borrowings means that our interest expense is not significantly affected by interest rate changes. And at the same time, most of our current debt is at a fixed interest rate. The primary area of our business that could be impacted is dental equipment as those purchases are typically finance. Having said that, it's important to bear in mind that interest rates are still relatively low from a historical context and equipment order book remains strong and is tending to get stronger.
Last, regarding -- last of our macro trends, regarding the shortage of labor and skills, Henry Schein has always been an attractive place for talent to build a career. The team Schein values and philosophy is an attractive place for talent. Of course, we are continuously evaluating supporting our pool of human capital to make sure we retain our existing personnel while attracting those skills we need. We believe our internal talent pool is better than ever and will be instrumental in Henry Schein executing on our growth plans.
Talking about growth plans and strategic plan addresses, how we will stay ahead of the fundamental shift affecting our customers is a significant amount of change taking place in the dental and medical professionals -- professions and we are addressing these plans through our strategic -- these dynamics through our strategic plan. These plans include the goal to accelerate the adoption of digital technology, not only within the company, but also helping our customers digitalize and it's a great pressure on our customers to digitalize their practice.
And we are providing excellent handholding consulting services, and of course an excellent offering of digital products to help our customers advance the digitalization of the practices. So in this connection, yesterday we announced three new senior executive strategic roles designed to further enable us to fill our strategic plan. We are forming three new teams led by experienced leaders, actually exceptional leaders, who will work together to advance digital technology to create an exceptional customer experience with Henry Schein and accelerate the development of new and complementary technologies and platforms, of course, as I noted, to drive efficiency in our customers' practices while positioning them to provide better quality of care, but at the same time also to drive efficiency within Henry Schein.
We expect this will enable our sales team and customers to collaborate together to have honest this technology. These three teams we've set up each one led by an outstanding executive will enable our sales teams to provide even better connectivity to our customers as our customers go through this massive change in running their practices driven through digitalization. Okay. Management systems and of course the clinical support.
The first is Leigh Benowitz, who has been named Senior Vice President and Chief Global Digital Transformation Officer Leigh, the member of our executive management cabinet committee report -- is reporting to Chris Pendergast, our Chief Technology Officer. Leigh will be responsible for enabling the delivery of digital sales by developing our e-commerce infrastructure capabilities and will continue to lead the implementation of our global e-commerce platform, GEP, which is well underway and Leigh has played a key role in getting us to where we are and will lead us to the successful implementation of GEP. Leigh is a terrific executive.
There is a press release that was issued this morning talking about Leigh and Ronald will speak about in a minute. And another press release about Mark Hillebrandt and I think you'll read those and you will understand why these three executives are so important to the future of Henry Schein and at the same time, appreciate what they've done and what they're going to do. The second is Trinh Clark, who has been named Senior Vice President and Chief Global Customer Experience Officer, also a member of our Executive Management Committee and Trinh reports to Brad Connett, CEO of our North American Distribution Group.
Trinh will be responsible for designing, developing and implementing a consistent customer experience and brand marketing strategy globally. Well, the strategy is to a large extent are developed and print, we'll take them down too much more detail and be responsible for implementation and working with the entire organization on driving consistent customer experience, branding of course given the change in the environment from a technology point of view. And Trinh will also continue to lead our technology enablement and strategic marketing teams in North America.
And finally, Mark Hillebrandt has been named Vice President and Chief Digital Revenue Officer also reporting to Brad. Mark will be responsible for engaging customers online through our e-commerce platform to drive digital transactions, while also securing a healthy pipeline of digitally sourced teams lead -- sorry, digital source leads and new prospects to be delivered to our field sales organization.
Mark has done a pretty -- has done a very good job in setting us up with respect to digital leads, making shopping experience from a digital point of view much better. And in that context, working closely with our sales organization and in the end are responsible for driving sales and through our consultative selling methodology, that's worked so well for the company.
We're also making very good progress on our one distribution strategy contained announced strategic plan. In other words operated operationalizing one distribution dental medical. In May, we announced the appointment of Dirk Benson as Chief Commercial Officer of our North American Distribution Group. Dirk joined Henry Schein following distinguished career with Medline Industries, also reporting to Brad Connett, Dirk is responsible for the entire dental and medical distribution groups, customer facing organization in the U.S. focused on helping us to advance our goal of exceptional customer experience, increased efficiency in sales growth in these businesses.
So that's a little bit about the implementation of our strategies. So let me pivot a little bit now to suit provide some color on the performance of each of our business units. Starting with our dental distribution business. The second-quarter growth in our global dental business once again was driven by strong global equipment sales as dentists continuing to invest in their practices, consumable merchandise internal sales growth in local currencies excluding PP&E and COVID-19 related products, and Ron will give specifics, was impacted by an increase in patient appointment cancellations and staff shortages, which we believe were related to COVID-19 infection rates.
Lower sales of PP&E products in the quarter were mainly a result of the decline in glove prices. Glove prices reached a peak at the end of the second quarter 2021 and have been coming down inflation. And so, we expect pricing will continue to be a headwind for the next quarter or two, albeit to a much lesser extent. So we had these two factors taking place in the second quarter, impacting our dental distribution, internal growth, internal growth rates. One, of course was the appointment cancellations and staff shortages. And the second is deflation with respect to glove prices.
Now, internal sales growth in our North American Dental equipment business, as noted earlier, reflects continued demand in both traditional and digital restoration categories of both of them. Our equipment results also benefited from sales to some of our larger DSO accounts, we expect will continue to be investing in their practices. And as I noted earlier, our equipment order book remains solid. Our international equipment sales were strong too similar trend.
Two fast-growing areas in digital dentistry, digital restorations and the traditional scanners, Chairside CAD/CAM, etc., and rapidly growing new area which is 3D printing. Based on significant business investments we have made in both of these areas over the years and our strong relationship with our suppliers, we believe we offer our customers a differentiated digital product offering across multiple brands and we expect these categories will continue to grow well for us into the future.
We have of course a goal of continuing to expand our geographic footprint and we recently announced the acquisition of Condor Dental, Condor Dental services general practitioner specialists and laboratories in Switzerland, the one market we don't have a strong general presence although servicing in dental market since 2004 through camalog our leading oral surgery business and kind of dental expands our presence in this market with a full service dental distribution offering.
Now turning to Dental specialty and technology value-added services. I'd like to touch upon the progress we're making with our goal of building complementary high growth, software services and specialty products and the shift in our corporate profit contribution to these higher margin products. We are -- we have invested in good properties. We expect to continue to invest heavily in this area. We have great management teams and are very enthusiastic about the potential.
So our high margin technology value-added services, especially products are growing at a good pace and now represent about 40% of our total sales, but more important 36% of our total operating income. Of course, there is no way to determine exactly which quarter these numbers will go up, but we are quite confident that we have a team in place that will drive these high-margin businesses with demand products towards a greater percent of our operating income.
So if we just look at the sales of our dental specialty products. They were very solid during the second quarter and we're driven by biohorizons are all surgery products in North America. This was partially due and by the way, in Germany, which is a big market for us in the implants, coverage was quite serious in the third and second quarter, but actually seems to have picked up again in July. This was partially due so biohorizons growth was partially due to the growth of our national DSO customers, but also across the customer landscape, including mid-size and smaller practices as we are seeing implants becoming adopted as a standard procedure overall dental care.
And I think we had outstanding marketing material salesforce and of course, backed up with great products. So we expect this trend to support continued growth. In this connection, we are pleased to announce the partnership between by BioHorizons and Camalog and also sell on the [Indecipherable] plus tissue membrane. This product has demonstrated positive qualities for tissue regeneration and we are excited to be able to further differentiate our offering in this area to our customers. BioHorizon and Camlog have exclusive global rights to this product in the dental field and a long-term supply agreements with cell and we expect to launch the product towards the end of the third quarter.
Within our endodontic products offering, we showed good growth and have been quite successful and actually quite excited with our recently launched EdgePRO irrigation laser. In the second quarter, we had good new consol sales and we're starting to see sales of consumables from our first placements in the first quarter, but it's good to see the positive feedback from customers and how will this product is being received in the marketplace. We're very, very excited about this technology.
Our priority in the orthodontic business is the Reveal clear aligner product. Sales in wires and brackets were not very strong in the second quarter. I think this is a market issue. Having said that, we've had quite a bit of success with our Reveal clear aligner product, specifically in the DSO market. The launch of our Studio Pro 4.0 software is giving the Reveal aligner business quite a boost. So we remain quite enthusiastic about our three specialty areas that is oral surgery implants bone regeneration products, our endodontic business and our orthodontic business, specifically as it relates to the Reveal clear aligner offering.
So now technology value-added services. We are pleased with the growth in our technology and value-added services businesses. Once again North America and international sales increased by double-digit percentages. Henry Schein One sales growth accelerated compared to the prior-year growth and we are seeing healthy demand from our national DSO accounts for these solutions, but also I might add for the Dentrix Ascend and entirely cloud-based solutions. Some are going into DSOs but general reception from GPs and specialists, small and mid-sized practices is also very good. Both the same and entirely showed solid increases in the number of users. In fact, one, Henry Schein One added more than 400 new cloud customers during the second quarter. Meanwhile, our total number of cloud customers is up 20% over the past 6 months, which demonstrates good momentum in this part of the business, again the movement of digitalization towards the cloud. We continue to invest in product development and customer service, and these impact -- these investments that impact the second quarter margins, we believe these investments are providing a solid growth driver for the business.
There are other services in this area that we report on financial services, a number of other publication services etc., but we are particularly pleased with the performance of ESS revenue cycle management solution that we acquired last June, a great complement to the business. In fact, helping our field sales consultants provide better consulting services, more relevant consulting services to our customers on the dental side.
Turning to our Medical business, this business has performed well over many years and again had another excellent quarter with double-digit internal growth in local currencies when excluding PP&E and COVID-19 related products. During the second quarter, we had strong sales in point-of-care diagnostic tests including flu tests as well as generic drugs and equipment, which is all a good sign. Patient traffic was bolstered by higher numbers of visits for seasonal influenza, which is a departure from prior years when the flu season typically ends during the first quarter. Surgical centers are still not up to where they were pre-COVID, but I think we're moving in the right direction. Having said that, the rest of the business is very solid in the medical arena. So with that overview of our business and the environment that we operate,
I will now ask Ron for a more detailed review of our financial results. Thank you. Ron, please.