MDR Valens Credit Analysis – No Traded CDS, Base Case iCDS 620bps, Negative Case iCDS 1183bps, 2024 10.625% Bond YTW of 21.100%, iYTW of 7.610%, B- Rating from S&P, XO- (equivalent to BB+) Rating from Valens, High Refinancing Need

• Cash bond markets are grossly overstating credit risk with a YTW of 21.100%, relative to an Intrinsic CDS of 620bps and an Intrinsic YTW of 7.610%. Meanwhile, S&P is materially overstating MDR’s fundamental credit risk, with their B- rating five notches lower than Valens’ XO- (BB+) rating
• Incentives Dictate Behavior™ analysis highlights mostly positive signals for debt holders. MDR’s compensation metrics should drive management to focus on all three value drivers, which should lead to Uniform ROA expansion and increased cash flows available for servicing obligations. Moreover, management members have low change-in-control compensation, indicating they are unlikely to accept or pursue a sale of the company, reducing event risk for creditors. However, most NEOs are not material owners of MDR equity relative to their annual compensation, indicating they may not be well-aligned with shareholders for long-term value creation