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 seems to be better at boosting drug prices than its own stock price.

The embattled specialty pharma firm's shares have tumbled 28 percent from a peak of more than $31 in August. That month, the company enjoyed a string of rare positive headlines, including a 2016 revenue forecast that surprised investors by holding steady instead of being cut for the umpteenth time.

Since then, Valeant's headlines have again turned bad, and its financial situation has not improved. Perhaps most tellingly, a Bloomberg Intelligence analysis published on Thursday finds a much-needed recovery in the company's prescription-drug business simply isn't happening. 

Set to report third-quarter earnings in the next few weeks, Valeant is primed to do what it does best: disappoint. 

Up and Down
Valeant's recent share-price recovery was all too brief for hopeful investors
Source: Bloomberg

Prescription volume for Valeant's eye drugs fell 6 percent in the third quarter from the second quarter, according to the BI report. Volume for the core dermatology business fell 1 percent sequentially in the third quarter. In its second-quarter results, Valeant reported dermatology revenue had tumbled to $208 million from $461 million a year earlier; the bleeding is apparently not over.

Valeant's gastrointestinal drugs grew by a meager 2 percent sequentially in the third quarter, according to BI. Xifaxan, the flagship drug Valeant acquired in its $13.4 billion purchase of Salix, grew 2 percent sequentially after two straight quarters of decline. 

Valeant's earnings in the first two quarters of 2016 missed analyst expectations; meeting its full-year guidance will take a substantial second-half recovery. That doesn't seem particularly likely given these trends. Analyst consensus estimates for the year have already slipped below the midpoint of Valeant's guidance, suggesting many expect a cut or earnings disappointment is coming. 

Halfway, Scared
Valeant has a lot of ground to make up to meet its revenue and earnings guidance
Source: Bloomberg

Another guidance cut may not terrify investors quite as much as it did before the company negotiated looser terms with creditors to put off the risk of default. But it certainly wouldn't be the evidence of recovery anyone's looking for, given the company's ongoing losses.

Even if default doesn't loom, Valeant's $31 billion in debt casts a long shadow. And the company's promises to sell off likely depreciating assets to raise cash have translated into little action.

Meanwhile, sentiment about Valeant and its business model hasn't improved. Since its previous earnings report, a criminal probe and a major shareholder lawsuit have arisen. The company has come under fire for under-the-radar price hikes and for failing to follow through on promised drug discounts.

Its peers are still under scrutiny, too. Horizon Pharma, which has been a notorious price hiker in its own right, cut its 2016 guidance on Tuesday in part due to concessions made to payers. Mylan has been publicly savaged for price hikes on EpiPens.

Valeant keeps asking investors to believe the worst is over. But first it must prove it can at least keep its financial guidance intact for more than a few months. 

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

(Updates fourth paragraph to reflect that Valeant has not announced an earnings date yet.)

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Max Nisen in New York at

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