Leslie Trigg: Sure, yes. Why don’t I take that? Let me — so, I’ll address capital first and kind of what are we seeing and hearing is the first part of your question chain that I heard. And then I’ll move on to parts two and three. We have been keeping a close eye, as I think many MedTech companies have on the capital spending climate and interest rate environment since the beginning of this year. This quarter for us, it really started to manifest itself more tangibly in the form of hospitals talking about pressure on their capital budgets and the impact of rising interest rates which then affects the financial analysis around leasing options. So put together what we’re hearing and seeing is more scrutiny, more justification necessary to allocate capital to specific projects, even for projects like Tablo insourcing which deliver a very tangible economic value with a relatively short payback period.
I think the capital spending climate is leading where we’re seeing more customers to evaluate multiple leasing partners, multiple leasing options, trying to negotiate better terms, weighing the buy versus lease route, maybe not once, but twice and three times in some cases, and certainly facing then longer, more involved, approval processes, with more stakeholders internally. So again, that’s what we’re seeing. Importantly, we have not lost any deals, and customers have continued to reinforce their intent to move forward, while we have seen again, a little bit of a delay in the timeline to get across the finish line on the deal close front. So hopefully that gives you the color that you’re looking for on the capital spending environment. What gives us confidence in hey, how do we know these orders are deferred versus out of the pipeline?
We have and will continue to scrutinize every single deal at a very microscopic level. And we do know what is in the pipeline for close in Q4. We have had very specific conversations with each and every one of those customers. And as I just mentioned, each and every one has continued to reinforce their intent to move forward. Our deal flow cycle is backend weighted to the end — the quarter end. I’ll be a little bit more specific about the sales process, we have around financing. How is it going to be financed? Is it lease or buy, does come at the end of our sales cycle, which means at the end of the quarter, and so you always run the risk that you have a handful of bigger deals that just fall on the wrong side of the quarter. But we do have great confidence in what we have communicated for the remainder of the year and next quarter.
Last you talked about kind of giving or asking for more color around an extension to sales cycle. Our sales cycle actually over the last 12, 18 months has really been quite steady around that 9 to 12 month range. What has extended it from time to time have been specific exogenous events. For example, if I think back, the last year or two staffing shortages for example, did extend it further. In the past, we were able to overcome that. We were able to return back to our steady state kind of 9 to 12 month sales cycle. At present it is looking like the capital spending environment may prove to be a sales cycle extender through Q4 and stretching into 2024. I’ll just tell you that we’ve been very mindful of that, and thinking about our Q4 forecast, and injecting more conservatism into how we call the timing of these deals.
And then we’ll talk about our approach more specifically to 2024 during our November call.
