So by the time you reach the other side of the ocean, you might miss your intended port by a couple of hundred miles. And while a business is a perpetuity it doesn’t have a destination, the same thing is true by being a little bit off in a number of these areas, but always off for the wrong side, we’ve gotten off course and you can see that clearly in our margin profile. Getting back on course is about making small course adjustments in a variety of places within our business. It’s not big changes. It’s not blowing up anything that we do today. We don’t need entirely new sales force. We don’t need anything that we don’t already have within our portfolio. It’s about the small adjustments, some of which we’ve already started to make that will increasingly be seen in our financial results.
So it doesn’t happen in a day or a week, but it will happen consistently, I would say, give us a few quarters to start to see some of the impact. We’ll point to some of the impacts as it happens as a living indicator will give you a report card as we proceed. But you should expect a slow but steady progression back in the right direction, which will be most clearly seen over time in gross margin rate of this business.
Operator: The next question we have is from Brian Tanquilut of Jefferies.
Nur Robleh: This is Nur Robleh in for Brian. Tom, now that you are back at the helm, I guess I just want to first get a high-level forward view of what your strategic priorities are moving forward as we go into Q4 and into 2024?
Tom Leonard: The wide-open question. What I’m really excited about spending my time doing right now is getting back deep into the heart of the business and working with the teams to understand exactly where we are, which things are going well and what adjustments we need to make to make this business that extraordinary financial engine that used to be able to set your watch too, it’s something that gives me great joy and it’s one of the things I’m most excited about as I return to the business. This is an amazing business. It is under achieving, I think, by a wide degree, what its true potential is. So getting there quickly again, is the biggest near-term priority that I have. Longer term, what makes agility unique is this is in a bet on a single technology.
It’s not a bet on a short-term trend. What we enjoy, what powers this financial engine is a local market infrastructure of teams and capabilities when it comes to managing, maintaining, repairing, mobilizing medical devices. The longer-term opportunity for this business is to continue to drive profitable volume, not just of the solutions that we enjoy today, but the others that we might build or acquire and a business really has untapped potential in terms of the future for it. So near term, it’s getting back to a healthy margin profile. Longer term, it’s really about driving growth organically and inorganically by driving meaningful volume through our local market infrastructure, where we can do it more profitably and without peer better than anyone.
Nur Robleh: Great. And then for Jim, I guess, I’m curious to know some of your capital allocation priorities. You noted that you paused M&A and aren’t doing any share buybacks. But given that half of the overall debt of the company is at a variable rate, how are you thinking about paying down the debt versus investing in the business?
Jim Pekarek: Yes. Look, I think we’ll be very thoughtful about it. Obviously, we know our cost of debt has gone up. So I think we’ll be pretty well balanced with both paying down debt as well as reinvesting in our business for all the reasons that Tom pointed out in his script. That’s the way to think about it.
Operator: [Operator Instructions] The next question we have is from Kevin Fischbeck of Bank of America.
Nabil Gutierrez: This is Nabil on for Kevin. Recently, hospitals have been talking about cost pressure from labor and professional fees. Is that having impact on your conversations with clients on where they can save money elsewhere? Or is it preventing them from having conversations with you at all because they’re distracted by it.
