Valeant Pharmaceuticals shares tumbled today after the company not only missed earnings estimates but also slashed its guidance for the full year. Two key themes popped up in the initial reports following this morning’s earnings release. The first was that the reduction in guidance was much worse than expected, and the other was a call for more clarity regarding the company’s ability to meet its debt covenants, which management provided on the conference call this morning.

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Valeant’s guidance cut was bigger than expected

Most of Wall Street expected new CEO Joseph Papa to reduce full-year guidance, but the reduction was larger than anyone expected. The company reduced its revenue outlook to between $9.9 billion and $10.1 billion from between $11 billion and $11.2 billion. The cash earnings per share outlook was reduced from a range of $8.50 to $9.50 to a range of $6.60 to $7 per share. Valeant Pharmaceuticals also reduced its adjusted EBITDA outlook to between $4.8 billion and $4.95 billion, compared to the previous guide of $5.6 billion to $5.8 billion.

RBC Capital Markets analyst Douglas Miehm had been expecting the revenue outlook to be set at $10.2 billion to $10.6 billion. He had been expecting the adjusted EBITDA range to be set at $5.2 billion to $5.5 billion as higher selling, general, and administrative expenses impact it more than they do the top line.

Morgan Stanley analyst David Risinger and team noted that the biggest components of that reduction in the top-line outlook were the dermatology business and Xifaxan. They were actually surprised that this is the case, especially the fact that Xifaxan made up such a large chunk of the cut. They attribute the decline in the drug’s sales to the ramp of Allergan’s Viberzi.

Valeant says it can meet debt covenants

Valeant has had its share of problems recently as it’s been under fire for its huge price increases and under scrutiny for its dealings with mail order pharmacy Philidor. The drug maker also delayed its regulatory filings, and there were concerns about it defaulting on some of its debt. However, this morning management assured investors and analysts that the company can make good on its $30 billion in debt.

According to The Wall Street Journal, Papa said on Valeant Pharmaceuticals’ earnings call that they “have a solid position” in terms of liquidity. The drug maker must pay back $273 million in loans by the end of the year and has already repaid $730 million year to date. It had $1.3 billion in cash as of the end of March.

In addition to giving assurances on the debt covenants, Papa highlighted problems with sales of Xifaxan and the company’s dermatologic drugs. Xifaxan had been Valeant’s best-selling drug, and the Valeant CEO said that although prescription numbers for the drug are rising, sales aren’t going up as much as they had hoped they would because of high turnover in the sales force. Further, officials had ordered the drug maker to cut prices on two heart drugs it raised prices on significantly, which is also impacting revenues.

He explained that they’re also working with Walgreens Boots Alliance, their new mail order pharmacy partner, to fix the problems their relationship has encountered.

Shares of Valeant Pharmaceuticals declined by nearly 15% to $24.56 during regular trading hours on Tuesday.

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