Financial Data and Key Metrics Changes - Total revenues for Q4 2024 were $379.6 million, representing a 5% year-over-year increase [10] - Normalized FFO was $5.3 million or $0.02 per share, exceeding consensus estimates and showing a 31% sequential quarter increase [22] - Same property cash basis NOI was $63.7 million, an 18.7% improvement year-over-year [22] Business Line Data and Key Metrics Changes - SHOP sector achieved 80% occupancy for the first time since Q1 2020, with a 56% improvement in SHOP NOI and a 7.3% increase in SHOP revenues year-over-year [11] - Average monthly rate in the SHOP segment increased by 6.7%, contributing to margin expansion of 250 basis points [12] - Medical office and life science portfolio had same-store occupancy flat at 90.2%, with new and renewal leasing activity completing approximately 112,000 square feet [13] Market Data and Key Metrics Changes - The company completed property sales close to $179 million in Q1 2025, including the sale of the Muse Life Science campus for $159 million [15] - Approximately 7.9% of annualized revenue in the medical office and life science portfolio is scheduled to expire through year-end 2025 [13] Company Strategy and Development Direction - The company is focusing on strategic dispositions, with 34 communities in various stages of the disposition process, targeting proceeds of $68 million [17] - The company plans to invest between $150 and $170 million on CapEx in 2025, with a focus on senior living communities [32] - The company is actively marketing six MOB life science properties for estimated proceeds of $35.2 million [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the existing operators to drive recovery in the SHOP segment, highlighting a dedicated in-house asset management team [42] - The company is not planning to extend the maturity of zero coupon bonds to 2027, focusing instead on paying them down before the January 2026 maturity [45] - Management noted that adverse weather events are hard to predict and generally not included in forecasts, but guidance will be updated if necessary [54] Other Important Information - The company ended the quarter with approximately $145 million of unrestricted cash and has made significant progress on its financing strategy [26] - The company expects to close on the sale of 18 communities for $135 million shortly [18] Q&A Session Summary Question: Why did SHOP beat guidance this quarter? - Management noted occupancy growth reaching 80% and that the estimated insurance impact aligned with expectations [39] Question: How confident is the company in existing operators for 2025? - Management expressed comfort due to ongoing collaboration with operators and a dedicated asset management team [42] Question: What is the plan for the zero coupon bond? - Management clarified that they are not planning to extend the maturity and are focused on asset sales to pay it down [45] Question: What is the expected interest rate on the $340 million term sheets? - The expected weighted average rate is about 6.5%, which is favorable compared to the 9.75% debt being paid off [48]

Revenue Sources and Financial Performance - For the year ended December 31, 2024, the majority of net operating income (NOI) from senior living communities was generated from properties where revenues are primarily derived from tenants' and residents' private resources[67]. - A small portion of NOI was generated from senior living communities dependent on Medicare and Medicaid programs[67]. - Future adjustments in Medicare rates may not compensate for increased costs incurred by tenants for services provided to residents[70]. - Healthcare providers face increasing scrutiny and cost control pressures, impacting their ability to cover rising costs, including rent[78]. Regulatory and Compliance Risks - The company faces potential adverse effects from recent legislative and regulatory actions regarding federal Medicare rates and state Medicaid rates, which could impact tenants' ability to pay rent[69]. - Increased enforcement efforts targeting false claims and fraud in healthcare have led to higher civil monetary penalties and criminal sanctions for noncompliance, affecting the company's operations[71]. - The company is subject to extensive federal and state laws regarding data privacy and security, including HIPAA and state-specific regulations like the California Consumer Privacy Act (CCPA)[74]. - Noncompliance with privacy laws such as the CCPA could result in penalties of up to $7,500 per violation[75]. - The company and its tenants are required to comply with various state and local regulations that may impact their ability to expand into new markets[63]. - Regulatory changes could adversely affect the profitability of managed senior living communities and the values of properties owned by the company[62]. - The company has been subject to increasing inspections and audits, which may lead to sanctions if deficiencies are found[64]. - Compliance with federal, state, and local laws is essential for tenants and managers, with potential adverse effects on profitability and rent payments if violations occur[76]. Environmental and Sustainability Initiatives - As of December 31, 2024, 25 properties received LEED® designations, representing 18.7% of the Medical Office and Life Science Portfolio[89]. - 21 properties achieved ENERGY STAR certification, accounting for 22.1% of eligible properties and 25.8% of rentable square feet[90]. - The company has captured data through real-time energy monitoring, generating $3.7 million in cumulative savings, with $0.9 million generated in 2024[88]. - The company is subject to environmental risks and liabilities, which may require significant costs for compliance and remediation[93]. Corporate Governance and Diversity - The Board of Trustees consists of 43% women and approximately 29% members of underrepresented minorities, reflecting diversity and inclusion efforts[100]. - The company relies on its manager, RMR, for workforce development and community engagement initiatives[98][99]. Taxation and REIT Compliance - The company has been organized and operated as a REIT since its 1999 taxable year, and it believes it will continue to qualify for REIT taxation[113]. - The company is generally not subject to federal income tax on net income distributed as dividends to shareholders, provided it meets REIT qualification tests[114]. - The company’s counsel has opined that it has qualified for taxation as a REIT for the years 1999 through 2024[115]. - If the company fails to qualify as a REIT, it could face significant tax liabilities, reducing cash available for distribution to shareholders[116]. - The company may be subject to federal tax on undistributed REIT taxable income, including ordinary income and net capital gains[117]. - The company will be taxed at regular corporate income tax rates on any undistributed "real estate investment trust taxable income"[117]. - The company has protective TRS elections in place to mitigate risks associated with subsidiary REITs not qualifying for taxation as REITs[128]. - The company is permitted to own up to 20% of its total assets in TRS investments, which are taxed as regular C corporations[129]. - The company must distribute all inherited C corporation earnings and profits from acquisitions to maintain its REIT status[119]. - A penalty of $50,000 may be imposed for each failure to meet REIT qualification conditions due to reasonable cause[123]. - The company’s subsidiaries that are C corporations will be subject to federal corporate income tax on their earnings[119]. - The company expects to make appropriate provisions for tax liabilities associated with built-in gains when selling assets that may incur such taxes[119]. - At least 75% of gross income must be derived from real property investments, while at least 95% must consist of qualifying income[133]. - The company believes that all or substantially all rents and related service charges qualify as "rents from real property" under Section 856 of the IRC[136]. - The company aims to avoid transactions that could be classified as prohibited transactions, which are subject to a 100% penalty tax[139]. - The company believes that gains from asset dispositions will generally qualify as income satisfying the 75% and 95% gross income tests[140]. - If the company fails to meet the gross income tests, it may still qualify for taxation as a REIT under certain conditions[141]. - The company is confident in its ability to satisfy the 75% and 95% gross income tests on a continuing basis[144]. - The asset tests must be satisfied at the close of each calendar quarter, and fluctuations in asset values do not affect REIT qualification[145]. - The company maintains records to document compliance with REIT asset tests and intends to cure any failures within thirty days after the close of any quarter[148]. Debt and Financing - As of December 31, 2024, the total outstanding fixed rate debt amounts to $3,047.998 million, with an annual interest expense of $126.706 million[450]. - The company has senior unsecured notes totaling $380 million at an interest rate of 9.750%, maturing in 2025, and $940.534 million in senior secured notes with a 0.000% interest rate, maturing in 2026[450]. - If the fixed rate debts were refinanced at interest rates one percentage point higher, the annual interest cost would increase by approximately $21.1 million, excluding the $940.5 million senior secured notes[451]. - The company does not have any floating rate debt obligations as of December 31, 2024, and February 21, 2025[454]. - The company’s mortgage note due 2034 is a fixed rate, interest-only loan of $120 million, while the mortgage note due 2043 requires principal and interest payments[451]. - The company’s debt agreements allow for early repayments, which may help mitigate refinancing risks at maturity[453]. - The company’s fixed rate debt obligations are affected by market interest rate changes, with increases decreasing their fair value[452]. Shareholder Distributions and Tax Implications - The company is required to make annual distributions equal to at least 90% of its REIT taxable income to maintain its REIT status[157]. - The company may face a 4% nondeductible excise tax if it fails to distribute 85% of ordinary income and 95% of capital gain net income within a calendar year[159]. - The company may need to arrange new debt or equity financing to meet distribution requirements if it lacks sufficient cash or liquid assets[160]. - The company can rectify a failure to pay sufficient dividends by issuing deficiency dividends in a later year[161]. - The company may elect to retain some net capital gain and pay income tax on retained amounts, allowing shareholders to include undistributed capital gain in their taxable income[163]. - Distributions to shareholders may include cash, property, and deemed distributions, with tax treatment varying based on shareholder status[169]. - Noncorporate U.S. shareholders face a maximum federal income tax rate of 15% for long-term capital gains and most corporate dividends, increasing to 20% for those exceeding income thresholds[170]. - Distributions designated as capital gain dividends will be taxed as long-term capital gains, provided they do not exceed the actual net capital gain for the taxable year[172]. - Non-U.S. shareholders receiving distributions will not be subject to higher federal tax rates if the shares are listed on a U.S. national securities exchange[184]. - Distributions to non-U.S. shareholders not designated as capital gain dividends will be treated as ordinary income dividends to the extent made from current or accumulated earnings and profits[185]. - Non-U.S. shareholders may be subject to a 30% federal income tax withholding on distributions unless they qualify for a lower rate under a tax treaty[186]. - Capital gain dividends paid to non-U.S. shareholders on shares listed on a U.S. national securities exchange are not subject to withholding[187]. - Non-U.S. shareholders can seek a refund from the IRS for any excess tax withheld on distributions exceeding their allocable share of earnings and profits[188]. - If shares are not listed on a U.S. national securities exchange, distributions may be taxed as effectively connected with a U.S. trade or business, with up to 21% withholding required[189]. - Non-U.S. shareholders may treat undistributed capital gains as actual distributions, allowing them to offset U.S. federal income tax liabilities[190]. - The company expects its shares to not be classified as U.S. real property interests (USRPI), thus non-U.S. shareholders' gains on sales will generally not be subject to U.S. federal income taxation[191]. - The company believes it qualifies as a "domestically controlled" REIT, meaning less than 50% of its shares are held by non-U.S. shareholders[193]. - If the company fails to meet the "domestically controlled" REIT status, non-U.S. shareholders may face U.S. federal income tax on gains from the sale of shares[194]. - Non-U.S. financial institutions must comply with diligence and reporting requirements to avoid a 30% withholding tax on applicable payments[200]. - Changes in tax laws may affect the company's ability to qualify as a REIT and the tax consequences for shareholders[201].

Financial Performance - The company reported a net loss of $87.4 million, or $0.36 per share, for Q4 2024, compared to a net loss of $98.7 million, or $0.41 per share, in Q3 2024[11]. - DHC's total revenues for Q4 2024 were $379.6 million, up from $373.6 million in Q3 2024[13]. - Total revenues for Q4 2024 were $379,619,000, a 5.4% increase from $361,535,000 in Q4 2023[15]. - The net loss for Q4 2024 was $87,446,000, compared to a net loss of $102,564,000 in Q4 2023, representing a 14.3% improvement[15]. - The net loss for the year ended December 31, 2024, was $(370,255,000), compared to $(293,000,000) for the previous year, representing a deterioration of approximately 26.4%[69]. - Cash Available for Distribution (CAD) for the year ended December 31, 2024, was $(33,037) thousand, a significant decrease from $(45,006) thousand in 2023, showing an improvement of about 26.6%[73]. Occupancy and Leasing - DHC achieved 80% SHOP occupancy for the first time since Q1 2020, with a year-over-year improvement of 56% in SHOP NOI and a 7.3% increase in SHOP revenues[4]. - The occupancy rate for the Medical Office and Life Science Portfolio was 90.1%[19]. - The occupancy rate increased to 80.0% from 79.3% year-over-year, indicating improved utilization of available units[40]. - The average occupancy for the Senior Living segment was 80.0% as of December 31, 2024, compared to 79.3% in the previous year, showing a basis point change of 70[48]. - The company executed 112 leasing activities in the last quarter, including 10 new leases and 102 renewals, resulting in a total of 397 leasing activities for the year[1]. Revenue and Income - Normalized FFO increased by 31.4% year-over-year to $5.3 million, or $0.02 per share, maintaining the same per share value as the previous quarter[11]. - The average monthly rate rose to $5,249, representing a year-over-year increase of 6.7%[40]. - Total residents fees and services for the quarter reached $315,736,000, up from $294,336,000 in the same quarter last year[40]. - The total NOI for the Senior Living segment was $24,933,000 for the three months ended December 31, 2024, an increase of 56.0% from $15,978,000 in the same period of 2023[48]. - The company reported a cash basis NOI of $64,424,000 for the three months ended December 31, 2024, compared to $63,113,000 for the previous quarter, marking an increase of about 2.1%[69]. Assets and Liabilities - DHC's total assets decreased to $5.14 billion as of December 31, 2024, from $5.29 billion in the previous quarter[13]. - Total assets decreased to $5,137,005,000 as of December 31, 2024, down from $5,446,136,000 a year earlier, reflecting a 5.7% decline[14]. - Total liabilities increased to $3,178,162,000, up from $3,109,245,000, marking a 2.2% rise[14]. - The total shareholders' equity decreased to $1,958,843,000 from $2,336,891,000, a decline of 16.1%[14]. Capital Expenditures and Investments - Total recurring capital expenditures for the three months ended December 31, 2024, amounted to $44,241,000, an increase of 15.5% compared to $38,274,000 for the previous quarter[24]. - The total capital expenditures for the same period reached $72,841,000, reflecting a 44% increase from $50,525,000 in the prior quarter[24]. - The company has $340 million in anticipated mortgage loan proceeds and $145 million in cash at year-end, aiding in managing upcoming debt maturities[5]. - DHC executed term sheets for anticipated aggregate loan proceeds of $159 million from property sales, with expected sales representing a 25% premium over allocated fair values[5]. Debt and Interest - The weighted average interest rate for total debt was 4.160% as of December 31, 2024[17]. - Interest expense for the year ended December 31, 2024, was $235,239,000, compared to $191,000,000 in the previous year, indicating an increase of approximately 23.1%[69]. - Interest expense for the three months ended December 31, 2024, was $59,518,000, consistent with $59,443,000 in the previous quarter[71]. Impairment and Expenses - The company incurred impairment of assets totaling $70,734,000 for the year ended December 31, 2024, compared to $18,000,000 in the previous year, indicating a significant increase in asset impairment[69]. - General and administrative expenses for the year ended December 31, 2024, were $26,518,000, compared to $26,000,000 in the previous year, reflecting a slight increase of about 2.0%[69]. Market and Portfolio Overview - DHC's primary markets consist of 31 of the largest Core-Based Statistical Areas (CBSAs) in the United States[96]. - As of December 31, 2024, the company's portfolio includes approximately $7.2 billion in assets, comprising 367 properties across 36 states and Washington, D.C., totaling approximately 8.0 million square feet of medical office and life science properties[61].

Company Overview - Diversified Healthcare Trust (NASDAQ: DHC) is a real estate investment trust focused on senior living and medical office properties [1] - The company has faced significant challenges, particularly in liquidity and cash flow management, leading to severe stock underperformance as it approaches 2024 [1] Investment Focus - The analysis emphasizes income investing strategies, which may include common shares, preferred shares, or bonds [1] - The author has a background in finance and economics, indicating a strong analytical foundation for evaluating investment opportunities [1] Market Context - The current market environment for real estate investment trusts, particularly in the healthcare sector, is under scrutiny due to the company's financial difficulties [1]

Financial Data and Key Metrics Changes - DHC reported mixed financial results for Q3 2024, with a consolidated SHOP NOI increase of 32.6% year-over-year, driven by operational improvements and favorable market trends in the senior housing portfolio [9] - Normalized FFO for the third quarter was $4 million or $0.02 per share, with same property cash basis NOI at $65.8 million, reflecting a 16.1% year-over-year improvement but a 1.5% sequential decline [23][24] - The company is lowering its full-year SHOP NOI guidance to $102 million to $107 million due to additional costs from recent hurricanes and lower-than-expected occupancy growth [31][32] Business Line Data and Key Metrics Changes - The SHOP segment experienced a revenue growth of 6.4% year-over-year, with a same-store occupancy increase of 130 basis points year-over-year and a sequential increase of 40 basis points [24][13] - The medical office and life science portfolio saw a decrease in same-store occupancy by 150 basis points to 87.8%, attributed to a known vacate in North Carolina [10][23] Market Data and Key Metrics Changes - Approximately 9% of DHC's annualized revenue is set to expire through year-end 2025, with significant known vacates impacting future revenue [11] - The company is under agreements to sell 25 properties for gross proceeds of $333 million, highlighting its ability to achieve premium valuations [19] Company Strategy and Development Direction - DHC is focusing on a portfolio transition strategy, including the disposition of 32 SHOP communities to improve overall performance and focus on high ROI assets [16][18] - The company is expanding its refinancing strategy to address $440 million of maturities due in June 2025, engaging with multiple lenders to secure favorable financing terms [21][28] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the slower-than-expected recovery in the SHOP segment, attributing it to operational challenges and external factors such as weather events impacting occupancy and sales [41][42] - Despite mixed performance results, management remains optimistic about the senior living industry, citing supportive tailwinds and ongoing initiatives to enhance occupancy and community performance [33] Other Important Information - DHC completed 83,000 square feet of new and renewal leasing activity in its medical office and life science portfolio, with a rent roll-up of 4.8% [10] - The company invested over $50 million in capital during the quarter, with a focus on SHOP communities and ongoing refresh projects [30] Q&A Session Summary Question: Can you provide more details on the GSE agency debt and issuances? - Management confirmed they are negotiating a $106 million financing on eight communities and exploring additional financing options with other lenders [36] Question: Will you start paying down some of the $975 million debt with the cash you have? - Management indicated they would likely start chipping away at the debt as cash becomes available [38] Question: What is causing the persistent increase in costs impacting SHOP NOI? - Management attributed the cost increases to nonrecurring expenses, including insurance deductibles from a fire and hurricane-related remediation costs [40] Question: Were there any properties closed during the hurricanes? - Management confirmed temporary relocations were necessary for some residents due to hurricane damage, impacting results [43] Question: What is the estimated value of the SHOP portfolio if liquidated today? - Management suggested that values could range from $50,000 to $150,000 per unit depending on the asset quality and market conditions [45][46] Question: What is the expected Q4 SHOP NOI? - Management confirmed that Q4 SHOP NOI is expected to drop to around $24 million due to costs related to the October hurricane and lower occupancy expectations [50] Question: What is the status of the Muse marketing process? - Management reported that occupancy is just below 50% and they are in advanced stages of the marketing process [54]

Group 1 - The Conservative Income Portfolio focuses on value stocks with high margins of safety and reduces volatility through well-priced options [1] - The Enhanced Equity Income Solutions Portfolio aims to generate yields of 7-9% while minimizing volatility [1] Group 2 - Previous analysis of Diversified Healthcare Trust (NASDAQ: DHC) indicated some margin of safety in asset value relative to debt, but concerns were raised regarding poor management and high debt levels [2]

Group 1 - Diversified Healthcare (DHC) reported quarterly funds from operations (FFO) of $0.02 per share, missing the Zacks Consensus Estimate of $0.05 per share, and down from $0.03 per share a year ago, representing an FFO surprise of -60% [1] - The company posted revenues of $373.64 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 0.84%, compared to year-ago revenues of $356.52 million [2] - Diversified Healthcare shares have lost about 7.2% since the beginning of the year, while the S&P 500 has gained 20.1% [3] Group 2 - The current consensus FFO estimate for the coming quarter is $0.10 on revenues of $386.02 million, and for the current fiscal year, it is $0.20 on revenues of $1.51 billion [7] - The Zacks Industry Rank for REIT and Equity Trust - Other is currently in the top 27% of over 250 Zacks industries, indicating a favorable outlook for the industry [8]

Real Estate Assets - As of September 30, 2024, the gross book value of the company's real estate assets was $7.2 billion, with 368 properties owned across 36 states and Washington, D.C.[99] - The company holds equity interests in joint ventures owning approximately 2.2 million rentable square feet, which are 99% leased with an average remaining lease term of 15.2 years[100] - The total number of properties in the Medical Office and Life Science Portfolio segment remained stable at 90 as of September 30, 2024, with total square feet increasing slightly to 7,287,000[125] Financial Performance - During Q3 2024, the company generated revenues of $373.6 million, with a net operating income (NOI) of $63.9 million, representing 100% of total revenues[107] - Total revenues for the three months ended September 30, 2024, increased to $373,640,000, compared to $356,524,000 for the same period in 2023, representing a growth of 4.0%[121] - The SHOP segment reported revenues of $312,005,000 for the three months ended September 30, 2024, up from $293,134,000 in 2023, reflecting an increase of 6.0%[121] - For the nine months ended September 30, 2024, the company reported revenues of $952.8 million and a net loss of $292.8 million[228] Occupancy Rates - The company's Medical Office and Life Science Portfolio had an occupancy rate of 80.8%, down from 85.8% in the previous year, while the SHOP segment's occupancy increased to 79.4% from 78.4%[108] - The SHOP segment's occupancy rate improved to 80.3% as of September 30, 2024, compared to 79.0% in the same period of 2023[129] - Occupancy rate for medical office and life science properties was 87.8%, down from 93.7% in 2023[152] Net Loss and Income - Net loss for the three months ended September 30, 2024, was $98,689,000, compared to a net loss of $65,779,000 for the same period in 2023, indicating a deterioration of 50.0%[121] - The net loss for the nine months ended September 30, 2024, was $(282,809), compared to $(191,008) in 2023, representing an increase in loss of $91,801 or 48.1%[151] - Funds From Operations (FFO) for the three months ended September 30, 2024, was $(3.4) million, a decrease from $4.7 million in the same period of 2023[183] Operating Expenses - Interest expense increased by 24.5% to $59,443,000 for the three months ended September 30, 2024, compared to $47,758,000 in 2023[123] - Property operating expenses rose to $(268,883) in 2024 from $(258,709) in 2023, resulting in a $10,174 increase or 3.9% change[130] - General and administrative expenses rose to $27,763 in 2024 from $20,111 in 2023, an increase of $7,652 or 38.0%[151] Leases and Rental Rates - The company entered into new and renewal leases totaling 83 leases in Q3 2024, with a weighted average rental rate change of 4.8%[111] - For the nine months ended September 30, 2024, the company completed 285 leases, achieving a weighted average rental rate change of 9.5%[113] - Annualized rental income from lease expirations in 2024 is projected to be $39,267,000, with 36 properties contributing to this total[117] Economic Conditions - The company is closely monitoring economic conditions, including high interest rates and inflation, which may impact financial performance and capital deployment[102] - The company anticipates continued variability in labor, insurance, and food costs, particularly in the SHOP segment, but expects these cost increases to moderate[101] Asset Impairment - The company reported an impairment of assets of $23.0 million for the three months ended September 30, 2024, compared to $1.2 million in 2023[189] - Impairment of assets increased significantly to $41,718 in 2024 from $18,380 in 2023, an increase of $23,338 or 127.0%[151] Financing and Debt - As of September 30, 2024, the company had total indebtedness of $2.82 billion, with $2.0 billion in senior unsecured notes, $940.5 million in senior secured notes, and $127.9 million in mortgage notes[219][220] - The company completed a private offering of $940.5 million in senior secured notes due January 2026, with net proceeds of approximately $730.4 million after costs[193] - The company has access to various financing options, including debt or equity offerings, to support operations and debt repayments[211] Future Plans - The company expects to close the sale of 18 senior living communities for $135,000,000 in the fourth quarter of 2024[117] - The company plans to continue investing capital in its SHOP segment to capitalize on positive trends in the senior living industry[192] - The company expects to spend approximately $20.3 million of estimated unspent leasing related obligations over the next 12 months, funded by operating cash flows and property dispositions[205]

DIVERSIFIED HEALTHCARE TRUST Diversified Healthcare Trust Third Quarter 2024 Financial Results and Supplemental Information November 4, 2024 Table of Contents | --- | --- | --- | --- | |-------------------|----------------------------------------------------------------------------------------------------------------------|-------|-------| | FINANCIAL RESULTS | Diversified Healthcare Trust Announces Third Quarter 2024 Financial Results | 3 | | | | Third Quarter 2024 Highlights | 4 | | | | Third Quarter 2024 ...

RiverNorthPhotography/E+ via Getty Images Introduction Diversified Healthcare Trust (NASDAQ:DHC) is a senior living and medical office REIT whose share price has been deeply distressed since the start of the pandemic. I've covered Diversified Healthcare in the past, with a focus on the possibility of earning income from the company's baby bonds (NASDAQ:DHCNI) (NASDAQ:DHCNL). In May, I started feeling a little bit better about the company. After the second quarter earnings, I'm still on the sidelines, but do ...