Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

Valeant's revenue and earnings fell short of Wall Street estimates in the second quarter, which would be disastrous news for most companies.

But Valeant's miserable year and a nearly 90 percent share-price decline from a peak last August have lowered the bar inches off the ground for the embattled pharma company. Its shares rose 17 percent on Tuesday after management merely reaffirmed its full-year guidance for 2016, breaking a long string of forecast cuts. Valeant also said it had sold a real asset (Ruconest) for real money ($60 million up front) instead of just talking about it. It also intends to negotiate more wiggle room on its debt covenants. After a series of shambolic, share-price-crushing conference calls from management, this one was surprisingly competent.

But the company offered more reassurances than concrete evidence of recovery. Actually hitting its targets and maintaining Tuesday's share-price gains will be an uphill climb.   

Participation Award
Valeant shares rose after its latest earnings report, despite revenue and earnings missing analyst expectations, as the company reaffirmed full-year guidance, ending a string of forecast cuts
Source: Bloomberg

Dermatology, a core franchise Valeant desperately needs to stabilize, continues to be a disaster. Sales were down 55 percent from a year ago, a more than $200 million drop.

The company's biggest U.S. business, which combines its neurology, generic, and "other" drugs fell nearly $60 million, an 11 percent decline from the same period last year. This is alarming because this division had been holding up fairly well amid Valeant's other struggles. Major culprits were Isuprel and Nitropress, two heart drugs on which the company controversially raised prices last year. Sales of the drugs fell 19 and 46 percent, respectively, from a year earlier -- and this is before generic competition, which is expected to arrive for both sometime within the next year. 

The Struggle is Real
Most of Valeant's biggest U.S. businesses continue to suffer, big time. Quarterly sales growth.
Source: Valeant

In order to meet the guidance it just maintained, Valeant's results will have to improve substantially. It's 48 percent of the way to meeting its revenue target, but has a lot more ground to make up on earnings. That might be tough for a company already running lean on expenses and R&D. It cut some costs in the second quarter, and it has drug launches approaching, which require cash for marketing. Valeant also intends to sell non-core assets that account for as much as $2 billion in revenue. 

One Third Half Way
Valeant has to pump up revenue, EPS, and EBITDA in the second half in order to meet guidance it just maintained.
Source: Bloomberg

The company pointed to dermatology and Salix as its second-half saviors. That's a lot of pressure on some struggling businesses. We've already discussed the dermatology disaster. Salix, which Valeant won in a bidding war last year, has continually disappointed as it works through seemingly endless inventory issues. The crown jewel of the acquisition, Xifaxan, saw sales decline sequentially in the quarter.

And though Valeant says it's no longer selling dermatology drugs at a loss through its partnership with Walgreens, a new program designed to get insurers to pay for its drugs may not be able to reverse a sales free-fall. Continued price pressure and generic competition are a constantly looming risk. 

To meet its goals Valeant needs few setbacks, excellent execution, and a dose of good luck -- all in short supply for it over the past year. 

Avoiding another guidance cut and reassuring investors it's not in (immediate) danger of violating debt covenants was enough to make investors happy on Tuesday. To actually move out of the share-price basement for good, Valeant will have to prove it can keep a promise for more than a quarter.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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Max Nisen in New York at

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Mark Gongloff at