By almost all accounts, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) should be falling today. Not only did revenue decline 8% on a year-over-year basis last quarter, but the company is still booking GAAP losses, and was even forced to cut its full-year top-line guidance.

Yet, there it is: VRX stock is up a healthy 9% Tuesday morning following the release of what can only be described as a lackluster second-quarter report.

What gives?

In simplest terms, although the drugmaker did poorly in Q2 in the aggregate, Valeant demonstrated some success in two key areas that mean the most to the market right now: debt reduction and sales of gastrointestinal drug Xifaxan.

Valeant Earnings Recap

Valeant has been on the defensive since 2015. Aside from an accounting scandal — complete with the creation of a sham specialty pharmacy — the exit of a CEO and a mountain of debt, sheer distaste for its model of acquiring specialty drugs and cranking their prices up to extortion-like levels finally caught up with the company.

Oh yeah … the portfolio and pipeline isn’t exactly thrilling, either.

The end result? VRX stock fell from a high of $263 in August 2015 to a low of near $8 in April of this year as years of bad decisions came back to haunt the company. Deteriorating sales were one of the company’s lesser problems.

The tide started to turn in April, though. That’s when shares of Valeant reversed course and as of yesterday were trading at $15.37. Today’s 9% advance from VRX stock translate into an 83% advance in just four months.

The prod for Tuesday’s surge wasn’t the raw second-quarter numbers. They were good, but they weren’t that good. For the quarter ending in June, Valeant earned an operating profit of $1.05 per share on revenue of $2.233 billion. Both were better than the pros’ expectations for profits of 94 cents per share on a top line of $2.228 billion.

It wasn’t the beats that fanned the flames for the rally, however. Indeed, on a GAAP basis, Valeant Pharmaceuticals still lost $38 million.

What the bulls latched onto were a very specific pair of encouraging changes.

Two (Big) Glimmers of Hope

The ho-hum Q2 report ended up a sizzling one on the backs of two key catalysts.

First and arguably foremost, Valeant reported it would reach its debt-reduction goal of $5 billion earlier than expected.

Debt has been a monkey on its back for a while now, and not a cheap one. Last quarter, the company spent $456 million on interest payments (that’s $456 million it doesn’t really have to spend) servicing $28.4 billion worth of long-term debt on its books.

That’s a lot of leverage for a company with Valeant’s limited revenue-generating potential, and has made the difference between a GAAP profit and a loss in recent quarters.

CEO Joseph Papa had been planning on culling $5 billion worth of debt by February (some of it’s already gone) largely through the sale of assets and traditional debt-extinguishment measures using cash flow, but now thinks he’ll be able to meet that goal even sooner.

The other big victory in its second quarter numbers: Sales of Xifaxan were up 17% last quarter. This matters simply because Xifaxan is the company’s best-selling drug, and Valeant needs to be able to lean on it while it rebuilds itself and its pipeline. That growth shows success in the way Valeant markets the drug.

Looking Ahead for VRX Stock

Valeant Pharmaceuticals didn’t offer any per-share profit guidance, though it did offer a revised full-year revenue outlook. It was calling for sales of between $8.9 billion and $9.1 billion in 2017, but pared that back to a range of only $8.7 billion to $8.9 billion. That’s right in line with the average of $8.79 billion analysts had been modeling for the year, and down from last year’s $9.67 billion.

VRX doesn’t provide profit guidance, but as of the latest look they’re calling for operating income of $3.67 per share, down quite a bit from last year’s earnings of $5.47 per share.

Still, in that stocks mostly trade on forward-looking growth rather than the past, traders were willing to buy into VRX stock on Tuesday, as there’s just enough hope on the horizon to keep them interested.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.