Valeant Pharmaceuticals International Inc (VRX.TO, VRX.N) will sell billions of dollars of non-core assets and could accept offers for its main businesses, its chief executive said on Tuesday, as the drugmaker worked to restore investor trust after a year of bad news.

Valeant's U.S. shares shot up 19 per cent, touching a two-month high, after it outlined its reorganization and sell-off plan, and also confirmed full-year forecasts. Even so, the stock is down 90 per cent from a year ago.

Read our updates of Valeant's second-quarter earnings

Last fall, political concerns about Valeant's sharp drug price increases and investor scrutiny of its dealings with pharmacy Philidor RX dragged down Valeant's shares. Congress and several U.S. government agencies also opened investigations and the company restated earnings earlier this year.

Since then, its largest investor and board member, activist Bill Ackman, has been leading a drive to try to stabilize the company. New Chief Executive Joe Papa joined in May, replacing longtime CEO Mike Pearson.

Papa announced a few small sales on Tuesday, and said Valeant was eyeing US$8 billion worth of sales for non-core assets. He said in an interview he may go further, after receiving unsolicited interest in core businesses as well.

"We have to think about any alternative in front of us as we look to improve shareholder value," Papa said in the interview. "We're going to take anything that we get, from an offer or unsolicited bid, very seriously."

The Laval, Quebec-based company still has US$30.77 billion in long-term debt, a legacy of Pearson's strategy of expanding through serial mergers and acquisitions.

SECOND QUARTER FALLS SHORT

On Tuesday, Valeant reported adjusted second-quarter earnings and revenue that fell short of analyst expectations, but stuck by full-year forecasts.

"I don't want to suggest for an instant that there (aren't) challenges, but we like our position for 2016," Papa said during a conference call.

Valeant has previously missed deadlines for filing financial reports due to the sales and earnings restatements, triggering default notices. It has repaid US$1.29 billion in debt this year and wants to renegotiate lender agreements to give itself a larger "cushion," Papa said.

That action on debt lifted shares, according to Oliver Marti, portfolio manager at Columbus Circle Investors.

"The stock is really driven by cash flow and covenants with the focus on stabilizing the business, and making progress on paying down debt. That is what they showed this quarter," Marti said.

Valeant said it will break into three business segments around its Bausch & Lomb eyecare business; branded products including gastrointestinal drug Xifaxan and toenail treatment Jublia; and certain products including Obagi skin care treatments. It said its core geographies are the United States and Canada.

Wells Fargo analyst David Maris, a long-time critic, questioned on the call whether the plan was just "new paint on the same old shed."

Valeant is being investigated by the Securities and Exchange Commission as well as the U.S. Attorney's offices in Massachusetts and New York. The government is looking at its pricing practices and its patient assistance programs.

Valeant said it still expected full-year revenue of US$9.9 billion-US$10.1 billion and adjusted earnings of US$6.60-US$7.00 per share.

Second-quarter revenue fell to US$2.42 billion from US$2.73 billion a year earlier. Analysts on average had expected revenue of US$2.46 billion, according to Thomson Reuters I/B/E/S.

Excluding items, Valeant earned US$1.40 per share, missing analysts' average estimate of US$1.48.  

 Updates of Valeant's conference call from BNN's Jameson Berkow: