Rating Action: Moody's changes Viant's outlook to stable from positive; affirms Caa1 CFRGlobal Credit Research - 20 Jan 2022New York, January 20, 2022 — Moody's Investors Service ("Moody's") changed the rating outlook for Viant Medical Holdings, Inc.'s ("Viant") to stable from positive. At the same time, Moody's affirmed the company's Caa1 Corporate Family Rating (CFR), Caa1-PD Probability of Default Rating (PDR), B3 rating of senior secured first lien credit facilities and Caa3 rating of second lien term loan.The change of outlook to stable from positive reflects Moody's updated expectation that the company will be unable to achieve metrics that would support higher ratings within the next 12-18 months, including adjusted debt/EBITDA below 7.5x. While Moody's expects Viant to continue its volume recovery from the impact of the covid-19 pandemic, the company has experienced an earnings decline year-to-date through October 1, 2021 relative to the comparable period in 2020. The recent EBITDA decline partially reflects challenging labor and supply chain conditions that have negatively impacted profitability. While Moody's notes that the company may return to EBITDA growth in the coming quarter(s) as these challenges potentially moderate amidst an ongoing volume recovery, the stable outlook at current ratings reflects heightened uncertainty in the company's path to deleveraging.The following rating actions were taken:Affirmations:..Issuer: Viant Medical Holdings, Inc..... Probability of Default Rating, Affirmed Caa1-PD.... Corporate Family Rating, Affirmed Caa1....Senior Secured 1st Lien Bank Credit Facility, Affirmed B3 (LGD3)....Senior Secured 2nd Lien Bank Credit Facility, Affirmed Caa3 (LGD5)Outlook Actions:..Issuer: Viant Medical Holdings, Inc.....Outlook, Changed To Stable From PositiveRATINGS RATIONALEViant's Caa1 Corporate Family Rating reflects the company's very high financial leverage and slow pace of recovery from coronavirus pandemic-related disruptions. Viant also faces high customer concentration as three customers represent more than 40% of revenues. Viant's financial policies are expected to remain aggressive reflecting its ownership by private equity investors. Moody's adjusted debt/EBITDA, was approximately 10.6x for the 12 months ended September 30, 2021.The company's rating benefits from a diversified product portfolio across multiple therapeutic areas and stable demand for contract manufacturing services, notwithstanding delays in elective procedures that impacted order volumes at the height of the covid-19 pandemic. Given regulatory constraints, the switching costs for the company's customers is high.Moody's expects that Viant will maintain adequate liquidity over the next 12 to 18 months. Liquidity is supported by $30 million of cash on hand, and Moody's expectation for flat to slightly positive free cash flow over the next 12 months. External liquidity is supported by the company's $70 million revolving credit facility expiring in July 2023, which is currently undrawn. Moody's notes this facility is subject to a springing first lien leverage ratio covenant of 6.5x at 30% utilization ($21 million). The company's first lien leverage ratio was 7.1x at October 1, 2021, thereby limiting liquidity from the revolver to the utilization threshold at this time (to avoid an event of default). Alternative sources of liquidity are limited as substantially all assets are pledged.Social and governance considerations are material to the rating. For Viant, the social risks are primarily associated with responsible production including compliance with regulatory requirements for the safety of medical devices as well as adverse reputational risks arising from recalls associated with manufacturing defects. These social risks are partially offset by favorable demographic and societal trends, including an aging population and the rise in chronic disease. Governance risk considerations include the company's financial policies which we expect to remain aggressive, reflecting its ownership by a private equity investors.The stable outlook reflects Moody's expectation that the company will be unable to achieve metrics that would support higher ratings within the next 12-18 months. While Moody's expects that Viant's financial leverage will remain very high, the risk is somewhat tempered by liquidity that is currently adequate, but may weaken in the near-term if the company is unable to successfully extend its revolver expiring July 2023 or if it is unable to grow earnings and generate positive free cash flow.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSRatings could be upgraded if the company improves its free cash flow generation and reduces its leverage, likely driven by higher earnings. Ratings upside is also contingent upon a successful extension of the company's revolver, which expires in 2023. Quantitatively, ratings could be upgraded if debt/EBITDA is sustained below 7.5x, assuming liquidity remains adequate.Ratings could be downgraded if the company's liquidity weakens, and/or if Moody's expects the company to generate negative free cash flow. Moody's could downgrade the ratings if the company incurs meaningful contract losses or if operating performance further weakens such that the sustainability of the capital structure comes into question.The principal methodology used in these ratings was Medical Products and Devices published in October 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1278812. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.Headquartered in Foxborough, MA, Viant is an outsourced manufacturer of medical devices serving a broad range of therapeutic areas including cardiovascular, orthopedics and advanced surgical. Viant is owned by affiliates of JLL Partners and Water Street Healthcare Partners. The company's revenue in the LTM period ending October 1, 2021 was $852 million.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Michael Weinstein Vice President - Senior Analyst Corporate Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. 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