Welcome to the Orchid Board! That's a nice plant you got, for a nice price
It will be exciting to see what it looks like when you nurse it to blooming health!
The medium certainly is very degraded. Usually, regardless of the growth stage of an orchid, if the medium is that bad I'd repot it immediately. Fortunately for you, the plant is beginning to put out some new growths, which means it will soon be making new roots. This is important, because old roots don't adjust well to drastically different conditions, so you could end up losing a portion of the root structure until new roots grow into the new medium.
As far as what medium to use, it will really be up to you, your watering schedule, and your growing conditions. Your orchid appears to be some kind of oncidium, so I would suggest choosing a medium mixture that can retain a bit more moisture than what you'd use for a phalaenopsis or cattleya. Perhaps some of the bark with a small amount of sphagnum mixed in?