Diversified Healthcare Trust (DHC) stock plummeted by 23.86% on November 5, 2024, following the release of its third-quarter 2024 financial results. The sharp decline reflects growing concerns among investors regarding the company's high debt levels, poor cash flow visibility, and slow pace of asset sales.

Despite improvements in the SHOP segment, which saw a 38.4% year-over-year increase in same-property net operating income, DHC continues to struggle with its high debt burden and poor cash flow generation. The company's debt-to-EBITDA ratio remains alarmingly high at 10.6x, and its interest coverage has deteriorated due to the issuance of 2026 notes with a 0% coupon but a steep 22% discount to par value.

Furthermore, DHC's progress in selling non-core assets has been painfully slow. Since the beginning of 2024, the company has sold only $35.675 million worth of assets, far below the pace required for a distressed company with a CAA3 credit rating. Analysts have expressed concerns that DHC may become a price-taker if credit markets tighten before it can offload a substantial portion of its asset portfolio.